Attacq Limited (ATT.JO) Earnings Call Transcript & Summary

Good morning, everyone. It's always so nice to have a full house here at Waterfall. And to everyone online, good morning. Thank you so much for joining us once again with our results presentation. I would particularly want to also welcome our Board members, and I would like to congratulate Ipeleng, who is sitting here, as our incoming Board Chair. Thank you so much for saying yes to the task, and we look forward to working with you. So congratulations, and thank you very much. And then also to Pierre, our outgoing Chairperson, thank you so much for, from day 1, steering the ship with us through ups and downs, also pushing us for excellence. So Pierre, a heartfelt thank you so much for all the years of dedication and the heart and the passion that you've steered Attacq with. We will always carry it with us, and thank you very, very much. All right. It's a busy morning. On the agenda this morning, I'm joined by Michael Clampett. He's going to give us an overview on the operational portfolio. David Oosthuizen is going to give us an update on developments at Waterfall, and Raj is going to go through the financials this morning. But if we stand back, it's really pleasing for me to sit here today. Years ago -- I sat this morning with Raj. I said -- I almost got a bit emotional. A few years ago, if you said to me, we're going to have these exceptional results with all the transactions and difficult decisions we had to make. And some roadshows, my husband reminded me last night, it wasn't always nice when Attacq didn't declare a dividend. So shareholders, we are declaring a dividend this morning. But we've had to make some really, really tough decisions and some difficult transactions to get over the line. And today, again, it's evident that the transactions we've done, the difficult decisions and the strategy is really unfolding, and it's evident in our numbers. Our distributable income per share grew by 25.6%, and we're declaring a dividend that grew by 26.1%. What drove this is the GEPF transaction. We've got a full year of the GEPF transaction in our numbers, but I think also disciplined capital allocation, a robust portfolio, and then Michael will take us through the numbers of how well we've contained our costs throughout the year and really managing our portfolio optimally. Then, I always call that my rock stars, is the debt guys, and Pierre and Raj have done phenomenal work with our debt strategy over the last 2 years, refinancing our portfolio this year. Interest cover ratio 2.95%. And again, standing back a few years ago, it was a dream, and the dream is reality today. Gearing at low 25%. And this year, we went for our first credit rating, achieved an A+ with a stable outlook. And then we also raised our first ZAR 750 million through the DMTN program, that Raj will take you through. But I think all in all, from a strategic point of view, lowering the cost of our gearing, and that was the main aim for us. In our operational portfolio, our occupancy is stable at 91%. We always like a higher occupancy and the team are working very, very hard to increase the occupancy levels. Our collection is at 100%, and we almost brush over the 100%. It's like, you know, the 100%. But through the quality of our clients, we're able to collect all our rent and also a shout out to the teams that are collecting the rent. It's not always an easy task being the creditor and collecting all of the rent, but well done to the team in collecting all of our rent that now goes to our shareholders. Our net operating income grew by 14%. What drove this 14% is the Mall of Africa acquisition last year, the additional 20%. But I also think it's, again, the cost containment, how we manage our municipal costs, our recovery ratios, the PV that's come online, really boosting the net operating income. Our weighted average trading density grew by 5%, and Michael will talk and give us detail on how the precincts performed over the year. At Waterfall, and I'm always proud to talk about Waterfall and what we've achieved. And sometimes it's not always so visible of what we've achieved. We launched Aspire with sales going well over 50%. We've got 90,000 square meters of developments in the ground. And I think as I said, you sometimes don't always see all of the great accolades the team achieved, but achieving the proclamation of Phase 1 at Waterfall Junction is so substantial for us. It's been 7, 8 years in the making. And the Phase 2 and 3 will be activated over the next 12 months as we unfold the infrastructure development. So well done to the team. Our client focus. We continue to attract top-tier clients, and that talks to the quality of our portfolio, the quality of how we manage our portfolio. Our people-centric approach. And again, this is something we're very proud about. You can't have thriving results without a thriving culture, and I think these 2 go hand in hand. And we're particularly proud of our employee survey satisfaction rate of 85%, talks to our culture, talks to our people, saying that this is the place that we would like to work, and you can see it's evident in our results. Our rooftop PV systems, we've implemented an additional 3.3 megawatts of PV systems during the year. So what drove our numbers this year. The total DIPS was 25.6% growth, and Raj is going to go into the detail of the numbers. But Waterfall City contributed 55.1%, growing by 10.4% for the year. And Rest of South Africa also growing by 55.1%. And I promise you, Raj didn't cook the books. Our auditors are sitting here this morning, but contributing towards 50.1%, but really strong results coming out of our portfolio. And then if you look at the 2 donut slides that we've put there, as we said, what is the makeup of value of our portfolio. And over the last few years, we've been strategically reshaping our portfolio. We've sold certain smaller assets. We have disposed of MAS, and I do not want to talk about MAS and drama of MAS today. We have also disposed our Africa assets to Lango, and you said, Jackie, you still own Africa assets. Yes, we do, but indirectly through Lango. But over the number of years, we've shaped our portfolio to a South African precinct landlord portfolio. So we are focused in South Africa. We are not focusing abroad. We are a South African precinct play portfolio. And that for us is the way that we have shaped our portfolio. I think also standing still on that 6.2% light shaded green, the leasehold land. That represents 1.1 million square meters of leasehold land of bulk that we can develop in Waterfall City. Now owning and developing a city comes with big responsibilities, but it also comes with great control, with flexibility and that we're able to partner and shape the city into something that we can see top-tier clients want, and we keep on attracting these top-tier clients. I think a notable infrastructure investment we're making is opening up the fourth entrance this year of Waterfall City, and David will go and show on the map today where this fourth entrance is. But how did we come about it is we had 50,000 square meters of residential bulk. We've converted it into residential bulk, and we did a deal with Balwin. And on the back of that conditional agreement, we're able to unlock the opening up the fourth entrance of Waterfall City. So Waterfall City providing this great canvas, this great opportunity for future growth, and that's definitely driving the growth and the focus for us in Waterfall. Over the next 24 to 36 months, what's going to be our major focus? As I said, we're an SA portfolio, focusing in Waterfall City and the rest of South Africa in our precinct. We've got our strategic objectives that we live by and it's our principles in our business. And then our strategic intent, as I said, is we're a precinct focused landlord with Waterfall City developments as a big component of our capital allocation. But we also are busy working on with great opportunities in the rest of our portfolio with opportunities of expansion and upgrades and also based on the success of what we've achieved at MooiRivier Mall, we definitely think there's some incredible opportunities in the rest of our portfolio. We'll continue to grow NII. And I guess, I'm going to put this on record, above market average NOI growth. So Team Attacq, we have made this promise. But I believe that through the quality of our portfolio, the strategic initiatives, our asset management initiatives, our leasing of our strategy, our energy initiatives as well as the cost containment and the close eye that we can keep on our costs, we're able to do that. With this, you need robust systems and support from our teams. We've embarked on this digital journey, what we call it. And over the last number of years, we've implemented a lady called SUH. It's a Smart Utility Hub. It's a very fancy name. But you can see it in the recovery ratio of what Mike will present today, putting robust proper systems in place, digitalizing our system, enabling our teams to be more efficient and provide scalability in our portfolio. And lastly, the golden rule in our business is disciplined capital allocation. And again, over the number of years, it's been evident in how we're allocating our capital, driving not day 1 growth, but long-term growth, coupled with a debt strategy that is unfolding. I'm going to ask Michael to give an update on the operational portfolio.

The update on the operational portfolio for the 2025 financial period. If you look at the net operating income contribution, so these are the pro rata contributions per category of assets, you will see that retail now contributes 52% of the total NOI of our portfolio. That grew by 25% in gross terms, so definitely not on ratio terms. And that was due to the acquisition of 20% of Mall of Africa. What's very heartening is to see that the collab hub contribution in gross terms has also grown by 6.1% from the prior year, and it now constitutes 35% of the total NOI of our business. From a valuation perspective, we had good value increases this year on our property portfolio with an average of 5% increases. The standout this year was the retail portfolio at 6.9% -- or 6.8%. Of that, Mall of Africa grew at 7.8%. That was underpinned by good core growth in operating rentals, so basic rentals as well as great growth in our non-GLA income, either exhibitions, turnover rent or advertising income. From an occupancy perspective, Jackie mentioned earlier today that our occupancy at 30 June sat at 91.6%. That was slightly tapered by the logistics hubs at 30 June sitting at 86.4%. But of that vacancy, 10,200 square meters has already been let with one lease commencing on the 1st of September and the other lease that will commence on the 1st of December. So if you look at our occupancy bridge on the top left, you will see that we had about 145,000 square meters of expiries through this financial period. We renewed 85% of those leases. We also then added about 15,000 square meters of new deals, be that either existing vacancy or some of those renewals that didn't transpire. But then also importantly, we've added new let GLA. So 2,200 square meters was let at 30 June in the new Ingress 3 building that David will tell us a bit more a bit later. We also have 2 leases on the balance of that building. And then we've also expanded the Checkers at Mall of Africa by 2,000 square meters, adding new GLA to the portfolio. At the bottom, the occupancy over a period of time, very heartening to see the green line. Our collab hubs continue to increase in occupancy as we turn single-let buildings like the Waterfall View and Magwa View buildings into multi-let buildings, which is part of our strategy. From a renewals perspective, you will see that the reversion for retail landed at 5.1%. That was very positive. In the bottom bar, you will see that over 50% of that was positive. But it's important to also recognize that there were still some reversions in retail as not all categories and tenants traded in the same way. So the average of 5.1%, certainly very positive, but within that, still some tenants that did revert due to trade. From a collab hub perspective, our reversion was 18.7%. I think it's important to mention that within those 18 -- or 27 leases that expired, 4 of them totaled above 50,000 square meters. Now that's about 1/4 of our collab hub portfolio. So quite a significant portion of our portfolio that we've renewed. And in that sense, considering the exit rentals on those leases, the 18.7% is not a bad result at all. From a retail perspective, we had quite a good year. So from a portfolio perspective, we had an average trading density increase of 5%. The total portfolio turnover growth was slightly higher at 7.4%. The reason for the difference is, of course, the expansion of the Checkers at Mall of Africa and some other new tenants that took up space. If we look at the standout performance from an asset perspective, Garden Route Mall growing at 6.2%, Eikestad Mall at 5.4%, and then Mall of Africa growing trading density at 4.9%. Interesting to note some of the details. Accessories, jewelry had a stellar year in our portfolio and also health and beauty with some double-digit growth as a category. We also had good growth in our department stores, which for us would be the Big Woolies and Checkers Hyper offerings. But then apparel, slightly slower at just about 4% for the year with peaks and troughs throughout the year, nothing specific that we can pin it on. Important to note also, at Mall of Africa, the total foot count for the year now above 17 million. So that means we receive 17 million visitors at Mall of Africa per annum. Jackie mentioned this earlier. I think a big job that our teams have performed during this year was containing costs, focusing on the income. So not only the growth in income, but also the containing of the costs. And the net result, you will see here our net cost-to-income ratio dropping from 23.8% in the prior year to 22.3% in this year. A large part of that was supported by an increase in our utility recoveries, growing from 89.9% in 2024 to 94.4% in 2025. From a cost perspective, if you have a look at the bubbles there, you'll see that security costs comprise about 4.4% of our total cost, that will be including utility costs, and that grew at 20%. Important to note that we've made a strategic investment in a number of hardware solutions within multiple precincts. So that would mean the upgrade of control rooms, installation of new camera systems just to enhance our security posture around all our precincts. We had some once-off charges in repairs and maintenance, some waterproofing, some hail damage. And then, of course, deferred leasing, the more leasing deals you do, where there is a TI contribution that gets amortized and hence, the increase in that cost line item. From an operational sustainability perspective, let me kick off with water backups. It's something that's very topical. We've embarked on this process probably 3 years ago, first by measuring all the consumption on our precincts. And then based on what we've measured in terms of consumption, scoping and implementing backup water systems, our goal is to get to 5 days backup at all the precincts and all the buildings. Currently, we sit at 4,311 kiloliters of backup. Two major projects that were scheduled for this year that just slipped into 2026 due to some council approvals were Glenfair at about 430 kiloliters and Mall of Africa at another 1,800 kiloliters, and that should be added to that total very soon when those projects conclude. Jackie mentioned the Smart Utility Hub. It's a way for our teams to measure and monitor all the meters in our portfolio in time and also in-house. It's not outsourced. We've also installed 454 new smart water meters during this financial period. And from an electrical articulation perspective, we performed audits on 59 properties in the last 24 months. Now just for those nonproperty people, just some context, it's like having an engineer doing an audit on your building. You have to follow all the electrical installations, all the meters, ensure you understand where they go, and really a big acknowledgment to our operational teams to implement these strategic objectives that come from sort of a corporate decision-making process. And I can guarantee that both Jackie and I don't really compromise on the facility management while we have to implement all these strategic things. So we really, really appreciate all the time investment from our ops teams to get these things done. What is the net result? Better utility recovery ratios and better management of a very, very big cost item on our income statement. When I talk to people, I often mention we actually really have a simple business. There are these 5 key dominant precincts that we own and manage in South Africa. You will see, from a valuation perspective, the biggest one will be Waterfall City. It will always be Waterfall City. But we also have key dominant precincts outside of Waterfall City. They contribute a lot through value. They also contribute a lot through our reach, our tenant base in the country. If I look at the properties outside of Waterfall City, we've got about 380 clients sitting there and 370 clients sitting within Waterfall City. So really well balanced. And also from a social media reach, a website perspective, there are people out there interacting with our properties, and we're looking to grow that customer base. David?

Thanks, Mike. Good morning, everybody. So I'll touch on the developments individually on slides further in the deck, but just focusing on a couple of highlights. So as Jackie mentioned, we have 90,000 squares of development activity defined by developments under construction and approved pipeline, which is roughly ZAR 2.3 billion. That's all in Waterfall. I think it's a very, very strong number. Of that, our effective share is 39,000 squares, which is just over ZAR 1 billion. This essentially makes up 6 developments. So that's defined at the bottom graph, but essentially, we've got 2 developments under construction, Ellipse Phase 3, the Vantage second building. And then we've got 4 pipeline approved developments of Aspire, a tenant-led warehouse at Waterfall City Junction, a spec warehouse at Waterfall City Junction and then our new collaboration hub spec, Gateway East. We launched Aspire in May of this year with Tricolt Properties as our JV partner. It's gone exceptionally well, 112 units of the 217 have already been sold, which totals just over 50%. We have proclaimed Phase 1 of Waterfall City Junction, which has been a long journey. We took Waterfall City Junction through IC in November 2019. It's been a journey to get to this point, but we're really, really excited that we've eventually been able to unlock Phase 1, giving us 150,000 squares of logistics bulk. And on the back of that, we are going to commence on infrastructure on Phases 1, 2, 3 and 4 to allow for development flexibility. Jackie touched on this briefly. We've never shown an image like this with infrastructure spend. So I'm going to spend a little bit of time on this. But essentially, our 2 big competitive advantages is the one is location of Waterfall. You can't build a mixed-use precinct of this size without a location that speaks to that type of product. And then secondly, which is more important, is that in my view, and I think our view, it's the best piece of modern infrastructure at this scale anywhere in South Africa at the moment. If you consider Waterfall, it's 2,200 hectares. Obviously, a large chunk of this infrastructure was put in around the time the Mall of Africa was built. But we're going into a new cycle now where we are spending a bit of infrastructure on -- a bit of money on more macro infrastructure. So I'll focus quickly on the red. That's Waterfall City Junction. As I mentioned, we're going to unlock Phases 1, 2, 3 and 4 now. That's essentially going to -- so we can get that to Section 29 so that we could proclaim. And I think what we're really excited about, as Jackie mentioned, is the conditional sale to Balwin Properties. So essentially, what we've done there is the purple piece of land there that you can see there on the corner of the K60 and the N1. We've converted 49,000 squares of collaboration hub into 1,100 residential opportunities. We're going to put the infrastructure in, and then on completion of the infrastructure, we'll sell on to Balwin. That essentially allows us to extend Simlak all the way through to Gate 4, which will connect with the K60. So there will be a new avenue into Waterfall, which I think is amazing. So this is a 3D model of the CBD of Waterfall. Just reiterating on our development strategy. Essentially, we're focusing on developing out from West to East, and focusing on sites which is proclaimed, because obviously that costs us higher rates and taxes, and then obviously converting sites where there is spend infrastructure. So that's essentially directed our strategy. Just talking to a couple of the highlighted buildings there. Essentially, the yellow is Ellipse Phase 3, which we are completing now. Aspire, as I mentioned, we've launched. Ingress 3, we've just completed. And with Gateway East, we have just started construction. So the focus is going to be that, then obviously on further developments around the Mall of Africa. So this is Ingress Building 3. We completed it at the back end of the financial year, 4,500 squares, a spec collaboration hub. As I mentioned, I think in interims, who would have thought that a few years ago. It's gone exceptionally well, 74% occupied at year-end. Some fantastic tenants that we've signed up there being Boogertman & Partners, a well-known architecture firm, Tiger Brands, and BASF. And there's also a lease-out and execution version for a new client of just over 1,000 squares as well. So I think what our view is on spec on the collaboration hub space is we are pro it, but in a very controlled and measured manner. So every year, depending on obviously how the letting goes in the previous spec, we will trigger a new spec, but obviously within those parameters. I think what also drove us to do Building 3 here is that when we did Building 1 and 2, we had to build a mass basement there. So essentially, Building 3 was sitting, we were sitting on unyielding CapEx of about ZAR 27 million. So that obviously made sense to build Ingress 3. So this is our new collaboration hub space. And essentially, as I said, we've done this on the back of the success of the Ingress Building 3. It's going to be at the entrance to Waterfall. It's 12,500 squares, attached to the Mall of Africa. I think it's going to be a real landmark building within the city. It's also going to have a retail/restaurant component at the bottom, which is flexible. You can have 1 tenant or 2 tenants. We are also going to upgrade the entrance to Waterfall within the same development. And again, what made us go for this site? When the Mall of Africa was originally built, the basement for this development was also built, which totaled roughly ZAR 79 million. So that's been unyielding CapEx for a number of years, makes sense to obviously build a development on here and turn that into yielding CapEx. We're coming to the end of our Ellipse journey. It's been a long road, about 6 or 7 years, but exceptionally successful. So this has been the first residential development that Attacq has been involved in directly with our partner, Tricolt Properties. So Phase 1, we obviously were in at 50%. And then Phase 2 and 3, we're in at 20% and 20%. It's been a huge success. Total units sold 98% of 672 units. So we've moved a lot of units. And of those, the total bankable is just over 96%. I think what we're very proud of is if you look at Phase 3, where transfer is going to start happening in November, out of the 220 units there, 212 are sold there and 204 of those are bankable. So there's still a huge demand even for the last phase. So on the back of that, we decided to do another JV with Tricolt Properties, Aspire. So talking to our strategy, we've put Aspire on the Mall of Africa, where we had 10,000 squares of residential rights. You'll see there it's opposite Ellipse. As I said, our strategy is to develop out from West to East, start densifying that part of the city. It's also going to be situated on Karkloof Road, where building is designed. You're going to have retail at the bottom. It's going to help activate that road, which is a huge focus for us as a team. 217 units. We are a 25% shareholder in there, launched in May of this year, sold out 51% of that. It's going to be iconic. It's 19 stories high. So when we hit our presale trigger, we will take that through to IC and hopefully commence construction during the course of next year. A development that I'm very, very proud of. So we started this journey 5 years ago with Vantage. It's essentially a data center precinct at LP9, which is the site attached to the N1 in Allandale and where Cummins warehouse is as well as Cotton On. The precinct there is about 120,000 squares, of which we can develop about 60,000 squares of data center space. It's not measured in GLA. It's measured in power. So currently, it's going to be at about 50 MVA, but scalable up to 150 MVA. We finished the first building of roughly 11,500 squares 3 years ago, and this is the second one. So this will be the second of Phase 2, which we are completing now. Practical completion will be the end of this month, which they refer to as ready for service date. And we are in discussions potentially on the second building within Phase 2. So when this precinct is completely built out, there will be 5 data centers here. So this is Waterfall City Junction. I've in the past shown some high-level designs, master plan designs. We spent a lot of time remodeling it. Essentially where Waterfall Junction sits from a size perspective is 1.5 million squares of land. Usable is about 1.2 million, and then your bulk is just over 600,000 squares. So I'm going to show a quick video. This video is designed to scale, but it will give you a really good idea of what we are planning here. And then you'll see the 2 buildings that have got more detailed design is essentially our spec warehouse and our client-led development in Phase 1. [Presentation]

Okay. So this is our client-led warehouse that we're doing in Phase 1 of Waterfall City Junction. It's going to be a JV with the client as well as Sanlam and AWIC. So AWIC 25%, Sanlam 25%, and then the client 50%. The client is putting a significant amount of CapEx into this building from the git hub point of view. I can't mention the number, but it is a large amount of money. Hence, the reason why they do want to take a shareholding in it. From a base cost perspective, you're looking at a total of just under ZAR 240 million. It's going to have 3 yards, 10.5 meter eave clearance. It's going to be insulated and refrigerated. And then in line with the tax sustainability initiatives, you're going to have 5-day backup water, rainwater harvesting, as well as solar-ready design. So we're going to do this building in conjunction with our spec warehouse. And the reason we're going to do that is to provide construction economies of scale. So if you saw the video, this is the one with the darker sheeting right next to the client-led warehouse. We are going to build this roughly of about 22,000 squares, 40-meter yards, very, very generic, a JV with Sanlam, so 50-50, finished probably back end of next year, around October, November. Also going to have 5-day backup water, solar-ready design, 13.5-meter yards and 24x24 floor panels, making this as generic as possible to allow for a number of different tenants to look at it and also allows us speed to market. So on the back of that, I'd like to hand over to Raj.

Thanks, Dave. So I think looking at our distributable income per share performance over the last year of 25.6%, and we have to then combine that with the prior year performance of 19.9% growth, we've grown distributable income by more than 50% in the last year. And I think it just talks to what Jackie was saying, really delivering on the strategy, the deal making, the focus on the South African portfolio really paying literally dividends. For this particular year, applying an 80.3% payout ratio gives us a ZAR 0.87 per share dividend, growth year-on-year of 26.1%. And then I think, again, an immense amount of work over the last 2 years. Looking at the balance sheet, really, really strong, 25.3% gearing, relatively stable relative to last year. Interest cover ratio going from strength to strength, 2.95x is what we printed this year and really as a result of a number of initiatives. And if you look at that graph at the bottom, really showing the journey that we've walked over the last 4 to 5 years, bringing down our average cost of debt coming down from over 200 basis points now to 148 basis points. And for all the bankers in the room, we're not yet done. So we'll be chatting to you soon. And gearing levels coming down from 43% down to 25%. And like I said, that interest cover ratio growing substantially. So a real great sort of turnaround strategy from a debt perspective. If you look at distributable income per share, distributable income per focus area, we've got obviously 2 major segments being Waterfall City and Rest of South Africa, both benefiting from significantly lower load shedding this year. So our diesel cost was relatively low. A lot of our PV was commissioned during the year, and that's also contributing to higher NOI, and then a lot of letting taking place in both portfolios, which I'll touch on a little bit later. So Waterfall City contributing roughly 50.9% of the overall distributable income, growing by 10.1%. What's included in that number is the uplift from the Mall of Africa, 20% acquisition that took place in the last day of the previous financial year. And then turning to Rest of South Africa, also contributing 50.9% to the overall group, but growing substantially more by 49.6%. And there's a reason for that. So Jackie chatted to it earlier, the MAS disposal took place in March 2024. And as a result of that, in this last financial year, we've had that recycling of capital earn at least a rate of return from placing it on deposit and/or paying down debt, whereas in the previous financial year, MAS obviously didn't declare any dividends and therefore, gave us 0 income return. Looking at other investments, we incurred some costs during the year to dispose of our Rest of Africa investments in exchange for Lango shares. That is once-off, and we don't expect that to reoccur in the following year, overall, contributing negative 1.8% to the group, giving us a total distributable income of ZAR 758.4 million. During the year, we only had 1 Ellipse unit transfer that was from one of the previous phases, Phase 2. And as Dave mentioned, Phase 3 is doing phenomenally well. Those transfers are expected to take place between October and November. And so we'll expect for that to feature quite heavily in the first half of FY '26 results. That gives us a total income of ZAR 759 million. If you look at the distributable income and dividend bridge, so starting with distributable income last year, what were the major contributors to the growth? NOI growing by roughly ZAR 200 million in total. The Mall of Africa, 20% acquisition contributing just over ZAR 91.5 million, and the remaining NOI coming from both portfolios, largely from the filling of vacancy. So that's the Allandale Building, Waterfall View as well as the Lynnwood Bridge Office Precinct, which is now fully let. And as mentioned, PV income also contributing to that number. The lower finance costs, ZAR 38.6 million, lower base rate, significantly lower margins, lower hedging rates, all contributing to that as well as a lower average loan balance for this year relative to last year. Other contributing roughly ZAR 11 million. And then if you look at the detractors, higher operating expenditure, 2 major factors there. Our IFRS 2 calculation as a result of a higher share price contributing to that as well as our current implementation of a new ERP system, resulting in some implementation costs as part of the operating costs. The minority adjustment of all of this is ZAR 59.5 million, giving us a total distributable income of ZAR 758 million. ZAR 609 million of that will be distributed, allowing us to reinvest the ZAR 149 million back into the existing portfolio. If you look at the balance sheet, key drivers of the total assets is actually our investment property, which I'll unpack in the next slide, but Waterfall City contributing -- or consisting rather of 2/3 of the total asset base, growing by 6.5%. Rest of South Africa contributing 29.1% and growing by 5.4%, again, driven by investment property fair value adjustments. Head office comprises cash balances, and then other investments is largely made up of our Lango shares, which includes a discount for illiquidity and lack of marketability given our small minority share. Total assets growing by 7.3%. Our liabilities increasing largely by the TMT issuance that we did in October last year, growing by 10.3%. And if you look at the equity attributable to our Attacq shareholders, ZAR 13.256 billion, growing by 5.7%, and on a per share basis, ZAR 18.94. The investment property movement really driven by 2 factors, additions in CapEx as well as fair value adjustments. So if you look at the additions of ZAR 738 million, ZAR 211 million of that was developments under construction. The Waterfall City Junction shareholding was converted into a direct 50% undivided share. So that means we had an increase in our investment property by roughly ZAR 247 million, and out on our investments in associates of about the same amount. And then we've made some significant investments in water and PV projects of about ZAR 65 million. We've done some servicing of land for about ZAR 20 million. And then the rest of about ZAR 132 million was a reinvestment in maintaining the existing portfolio. If you look at the fair value adjustments of just over ZAR 1 billion, 75% of that coming from our retail portfolio led by Mall of Africa, which grew 7.8% year-on-year, contributing ZAR 465 million of the total fair value adjustment. All of our retail portfolio -- properties rather growing positively for the year, say, for the Brooklyn Mall 25% that we own. We've had some small negative fair value adjustments on developments under construction and the lease of land, giving us an IP balance, investment property balance rather of ZAR 21.6 billion at year-end. Turning to our interest-bearing borrowings. We've got some of these numbers already in the presentation. So I'm not going to go through all of them, an increase in gross debt as a result of that DMTN issuance. We completed a major refinance just before year-end of about ZAR 5.9 billion, which extended the weighted average loan term from 3.3 years to 4 years. We've been actively managing our hedge book, which has now gone up to 86.8%. We've seen hedges or at least cost of hedges come off substantially over the last 12 months, and we've been actively monitoring that. And if you look at the weighted average term of hedges, relatively flat at 2.4 years, notwithstanding the fact that we've done a fair bit of hedging over the last couple of months. Weighted average cost of debt reducing by 80 basis points. And like I mentioned, a combination of base rates moving down, margins year-on-year down by about 24 basis points, and then hedges 50 basis points lower year-on-year. We talked about the gearing and the interest cover ratio already. If you look at our covenants, miles of headroom there, 25.5% gearing relative to a covenant of 50%, as well as an interest cover ratio of 2.95 relative to the covenant of 2x. Ample amount of liquidity, roughly ZAR 900 million of cash and cash equivalents and ZAR 700 million made up of prepaid facilities and available facilities. This is my last slide. So if you look at the roll-off profile of our debt, because of the refinance that we recently completed, almost no debt falling due in the next 24 months, giving us quite a strong liquidity profile over the next 24 months. We have a substantial amount of hedges that come off in the next 12 and the following 12 months, ZAR 1 billion followed by ZAR 2.3 billion. We recently concluded a ZAR 600 million trade at a very good swap rate. We continue to monitor. Like I said, we've got a 70% minimum hedge policy, and we'll make sure that we maintain that, we'll stay within that hedge policy rate. Looking at our funding mix, quite well diversified across our lending group. But as mentioned before, our DMTN program only contributing 11.4% and we see that going to somewhere between 25% and perhaps even 30% in the future. Our focus for the next 12 months is potentially tapping the DMTN -- the DCM market rather before this calendar year is over or potentially in the first quarter of next year and then making sure that our hedges that roll off are replaced with new hedges. Jackie?

Thank you so much for my co-presenters this morning for presenting. If we look at guidance and prospects for the year, I think over the last number of years, as we said this morning, we've delivered on our strategy. We've got a robust portfolio. We think that our operational performance of our portfolio will continue with the momentum that we have built up in our portfolio. So hence, we're guiding that our distributable income per share guidance for the next year will grow between 7% and 10%. And we thank you so much for your time, for the Attacq team for delivering once a year, again, an excellent set of results, and for the support of all our stakeholders. Without everyone -- this is absolutely a group effort of contributing towards the success of Attacq. I'm going to open up the floor for Q&A.

[ Portia from Standard ]. So 2 questions on my side, balance sheet related and growth related. So your ICR and LTV have improved quite substantially to a very comfortable level. The question there is what is sort of your comfortable level? Can we expect that you will continue to -- those metrics will continue to strengthen over time? And then your growth prospects as well. You've exited the ROA market. Do you have any other growth prospects outside of South Africa? And what lessons have you learned in that market that you'll be applying going forward?

Yes. So from a gearing perspective, I think in the long term, we'll be comfortable to be between 30% to 35%. I think in the short term, we won't significantly move above 30%. If you look at the strategy of the GEPF transaction, it was to significantly reduce the gearing on day 1, but give us the sort of road to roll out Waterfall City Junction. So Dave has obviously chatted to a significant amount of bulk that we can unlock through Phases 1 to 4. We think that will take maybe between 5, 7, maybe even slightly longer than that in terms of rollout years. So in the short term, we'll stay closer to the 30%, but over time, we could grow into 35%. I think from a strategy perspective, you're 100% right. We've exited Rest of Africa. We're currently not actively looking at any other offshore markets. Our strategies very much focused front and center in terms of our existing South African portfolio. And in terms of growth, very much focused on Waterfall City Junction and the rest of the city. We've got a number of developments that we're looking at, potentially another hotel and conference facility and at some stage maybe unlocking some more offices. The residential forms part of that, even though it's not a long-term hold, we think it's crucial for the city to develop out further. So a number of developments rather than looking offshore.

You've asked what's the lessons learned. With everything, we need to be better at capital allocation going into the future. I think lessons learned for us is understanding your market better, dollar leases in a local currency that mismatch, you'll never catch up when there's a mismatch. Don't think you can take your South African design ethos and apply it in a different country. You must be humble and understand that. And I think some things we got right, some things we didn't get right. So yes, there's a lot of lessons learned. And then also, we're not yet to make money over 1 or 2, 3 years. We're here to make money for the next 10, 15 years. And what if we build something, we'd able to adapt over time, because retail changes, collaboration hubs change, logistics changes. And that asset that you put down there, can it adapt over time and what's the flexibility. And then we also learned in our South African portfolio. You've heard about Michael saying single-tenanted buildings we're converting into multi-tenanted buildings in the office space. And those multi-tenanted office space buildings is incredible for us. We don't stress when a tenant vacates. It's not big on our income statement. So we learn those lessons even in South Africa on a daily basis. Is there more questions from the floor? Pete, I can see there's a lot of questions online.

We have a few here.

Okay. Let's start. Is there any questions from the floor? I don't have someone of Attacq. I see there's -- no one from Attacq wants to ask questions.

This is not the time to discuss salaries.

Okay. Kicking off with Nazeem from Investec. First question is on industrial letting activity. There were 2 lettings in the industrial portfolio let post year-end. How did the rentals achieve compared to expectations?

Yes. So I mentioned that 10,200 square meters during the presentation. So one of them is the client walking center in the precinct we call Waterfall Connect. It used to be part of the old Cell C premises. And there, effectively, we've done a deal that covers all our costs, operating costs, utilities, et cetera, and we share all the revenue -- part of all the revenue generated on that facility in the near future. So we're comfortable with that from a lease perspective. The other one was the third [ building ] that we let post the balance sheet date. That was done at rates beating the original budget or the IC. I think the only, I would call, maybe disappointment was the timing of the vacancy until it got let. But from a rental perspective, we were happy with the rental achieved.

Yes.

Then Nazeem notes, the other spec is still unlet. Any reason why? And any interest in the ex Dis-Chem box?

Yes. Unfortunately, there's a deal that fell through this week on the Dis-Chem box. So the team is busy leasing with it. Unfortunately, that happens. We've been running with the deal for some time now. That unfortunately fell through this week, bad timing. And then we also stand back and evaluate why did the deal fell flat. Were we too harsh on rentals. We know where can we improve on as a team. The other warehouse box and other team has got 2 offers out, some really nice clients. So hopefully, we will get one of those offers through the door in the next month.

Can you provide color on office renewals in the second half of 2025? In terms of the larger leases, what was the expiring rent versus new rent?

Yes. So I mean we're not going to quote rents here, but just for context, once again, I mentioned that 50,000 square meters really 4 leases made up that big section. So Cell C was about 23,000 square meters of that; auditor General South Africa, 19,000 square meters; Resilient, which is sort of a disaster recovery client we've got here in Waterfall City, 5,600 square meters; and Colgate at 4,200 square meters. Now just taking Colgate as an example, that was a lease in Waterfall City. It ran for 10 years. It had an 8% escalation. So after the 10-year period, that's why I mentioned earlier, that aggregate of 18% reversion. If you have the context like it's 10-year leases, Cell C is something very similar. Just once again, a reminder, we did a deferral on the payment. We never reset the rental when we did the deal back with them in 2019, 2020. So these are 10-, 12-year leases that we are reverting on big pockets and hence, that 18% actually feels very good in the current environment. And if you consider what office rents have done over the last 3 to 4 years, remember post-COVID sort of 2020, 2021, really gross market rentals were flat, they didn't grow, and we kept renewing leases in an environment where gross market rentals didn't grow. And more recently, they have grown. So we were able to conclude these leases in an environment where gross market rentals are actually growing.

And does the Novartis lease expire in 2025 or next year?

The Novartis lease expired in May 2025. So that vacancy of what we now refer to as the Magwa View building is already represented in the numbers we disclosed.

Okay. And moving to infrastructure. Some indications of what is the total cost of infrastructure spend and over what period? What are the outcomes from the spend? Will cash landholding costs and debt costs increase? And will the split be between you and the GEPF on a 70-30 basis?

Yes. So can we chat to some of that. We're planning for about ZAR 83 million worth of CapEx for the FY '26 year. That will make sure that Phases 1, 2 and 3 are all ready for development. From a holding cost perspective, currently, the run rate is about ZAR 20 million per annum, and that will increase to about ZAR 39 million per annum.

And the split between ourselves and the GEPF?

Yes. So that's all expenditure, which means that will be pro rata 70-30 between ourselves and GEPF?

Okay. Then do you think average margins can improve further? If so, what are the key drivers? I'm assuming these are debt margins, so...

Yes. So we're expecting margins to compress a little bit more. We obviously just did our first issuance in the debt capital markets in October last year. We think if we tap that market again in the next 6 months, we'll be able to compress by maybe 10 to 15 basis points.

Okay. Then a question from Trinity of Anchor Stockbrokers. Congrats on a great set of results. Health and beauty continues to live up to its name in terms of annual trading density growth. Are you seeing the same trend across the portfolio? Or is this mainly driven by Mall of Africa?

Yes, that's a good question. So health and beauty, I've got the number here, so that grew by 10.1%. Included in that category will be the Clicks and the Dis-Chems across the portfolio. Those traded mostly at sort of CPI-linked growth numbers. Where the real trade came in is the mono brands. Of course, Mall of Africa has got a lot more exposure to new brands like Beauty on TApp skin brands that we were able to introduce to Mall of Africa over the last 5 years. But we've seen the same trend where we have the similar exposure in Garden Route Mall, where we have sort of mono traders trading very bespoke brands. They have also done well. So where we have exposure to these type of brands, yes, the growth has been across the board.

Then for Raj, any planned debt refinances in FY '26? And is it also fair to assume that all your hedges will be interest rate swaps?

Yes. So no further refinances. We've completed 2 major refinances in the last 24 months. [indiscernible] is actually taking some leave. He might come back in FY '27. But -- so no major refinance, but definitely, the debt capital markets is front and center of the strategy. Sorry, Pete, what was the last question?

Interest rate swaps, what format of hedges.

Yes. By far, the majority of our hedging strategy is interest rate swaps. We may use some interest rate caps, but by far interest rate swaps.

That's it. And I suggest we log off before...

Thank you, Pete. Any further questions from the floor? If there's not, thank you so much. We know it's a very busy day. Thank you for joining us. Thank you for everyone online. And if there's any further questions, please reach out at any point in time, but have a wonderful, wonderful day. Thank you.