Attacq Limited (ATT) Earnings Call Transcript & Summary

Okay. Let's start the presentation. Welcome to all of you. If I include all of you, it's all stakeholders. I've seen a number of staff members. I've seen front managers, shareholders, analysts. I saw our -- some of our funding providers, Java Capital. I saw some of the Waterfall people. So a big welcome to all of you. If you look at today's results, it was a team effort. So I think on behalf of myself and the whole Board, congratulations to the team. And if I refer to the team, I'm going to use the word is from A to Z. So for us as colleagues, it's from [ Anneke ] managing or servicing our guests, up until the [ Zenaide ] looking after our payroll. So it's really A to Z effort. And I would like to thank you for excellent set of results. If you look at our presentation, what we have done is exco. We've taken out the first slide. So if you look at this presentation versus last year or previous presentations, normally, what we do in the first slide, we provide, call it, the context of the industry, the context of the macroeconomic, the challenges and whatever else. But I mean you know, we know that most of that as is it's all negative news. So we said let's take all the negative news out of the presentation. Let's focus on our -- I'm going to use the word excellent results. Let's focus on our excellent results. If you look at the presentation itself, I'll do 2 slides and then I will come back and do another 2 slides at the end. So I'll give a high overview on the performance. Raj will unpack the performance more in detail. And then each one of the value drivers will be discussed by our exco members. If you look at the SA portfolio, as you know, it's about ZAR 21 billion out of our total ZAR 27 billion of assets. So Jackie will talk to that. Developments at Waterfall, it's about ZAR 2.4 billion. Giles will present on the developments at Waterfall. Investment in MAS, there's a number of slides on that. Pete will present on that. One of the reasons why we do have a late start for today is due to the fact that the MAS team has presented their results earlier today. So Pete, myself and Raj have attended today session. Our summary is on the back of their presentation. So Peter will talk about the Rest of Africa. It is one of our value drivers or call it key drivers, we would like to exit. So again, Pete will talk to that. Raj will go into the financial results. In the financial results, he will talk to some extent to IFRS 9, which talk about credit losses. He will talk about IFRS 16. And then what we have done, we have changed our valuation technique for our land, and Raj will go into a bit detail on that. And hopefully, that will be more understandable for the users of the financials. So Raj will spend some time on our land to license. I'll come back on update. We'll call it the way forward. If you look at financial performance, like we said to the media earlier today, the world has changed in the REIT world. And if I say the world has changed, it's the management of your distributable earnings, your core distributable earnings and then your payout ratio that gives your dividend per share. I think in the past REIT industry used to pay out 100% of distributable earnings. And that distributable earnings, again, was not always supported by cash. And then I'm going to use the word, we as an industry, although we were not REIT. When we as the industry used to pay out 100% and that the reality is unsustainable. So Raj will go into the detail around that. So there's a big focus on what is distributable earnings, what is your core distributable earnings. The difference between the 2 is taking out abnormal items. And then what is your dividend per share. So if you look at our numbers, core distributable earnings, it's ZAR 0.498 per share. It's up 23.9%. I'll go into detail on that. The dividend per share is ZAR 0.45 per share, which is -- or exceeds our guidance. That's why we are saying it's an excellent set of results. Our guidance was between 8% and 10%, and we came in at 11.1% at ZAR 0.45 per share. When I talk -- when I conclude, I'll talk to the guidance for the June 2020 year. Jackie and Charles will go into the number of properties we've completed because that's one of the reasons why we had quite a decent increase in our NOI. Again, Raj will talk to interest cover ratio and gearing. A big focus for us is not only the gearing, it's more the interest cover ratio. Interest cover ratio, like I said 6 months ago, if you have capital growth fund, debt works for you because the higher the debt the lower your equity check, the better your ROE. So 6, 7 years ago, when we've listed, our interest cover ratio was only 1.05x. Now that we are REIT, it's a big focus for us. We are still at the bottom end of the market in the REIT space. I'll talk to that when I conclude, that is, one of our focus areas is to improve our interest cover ratio. Gearing, as I've mentioned, Raj will talk to that. The gearing weakened. That's why it went up, but it's a REIT little triangle. It weakened to 39.1%. Our group gearing covenant from a funding viewpoint, on -- like I said, on a consolidated level is 60%. So we're definitely not near any covenants on a group basis. Then Mall of Africa, that's definitely one of our highlights. It's the fact that trading density growth with double-digit numbers, 10.1% in a tough, tough, tough economy. And that then helped our trading density growth on a portfolio level because that 5.7% is based on a weighted number based on the GLA of underlying properties. So the better the Mall of Africa does, the higher our portfolio training density growth will be. I must be careful that I don't say too much on this slide because Raj got a similar slide. So if you look at -- like I said, we are managing the business on 4 key drivers. We had a question earlier today from one of the media, and I said, what has changed in the life of Attacq, let's say over the last 2 years? And I think what has changed is, one, we are REIT. But two, there's definitely more focus in managing the business. There's definitely more focus in managing the different investment classes and then the underlying assets sitting in that investment class. So maybe just to explain the role we play for each one of those asset classes. So the SA portfolio, we are the property manager and the asset manager. So the property management team and the asset management team are internalized, and they report into Jackie. If you look at developments at Waterfall, we are the development manager. That's why Giles will talk to that, and Giles got a team of 10 or 11, don't remember now the exact number, 10 or 11 people. Investment in MAS and to some extent Rest of Africa, we're playing the role of investment manager. So we're not that actively involved in managing the asset. If you take MAS, for instance, I sit on the Board. I'm a non-executive on their Board. And then Peter de Villiers on our side will help us making sure that the tax strategy of our investment in MAS supports with Attacq strategy. And Pete is also playing a similar role with Wilhelm Nauta from Hyprop on the Rest of Africa. So we're not that actively involved in the property management. We're more involved in the asset management and then the investment management. I should stop here, otherwise, I'm going to repeat what Raj is going to repeat what I said, but I just want to conclude. So our focus is distributable earnings. Must always make sure that's supported by cash. And I think if you look at one of the lectures in the slide deck, so we will not go into the detail on that. In one of our lectures, we do reconciliation for you between cash flow generated and the distributable earnings because that is key for us. Maybe also what we have done, and Jackie will talk to that, and we've noticed that a lot of overseas funds are doing it. They don't talk about arrears. They talk about collections, and they also don't talk about vacancies. They talk about occupancies. So for us, collections is important. I've never liked the arrears number because the arrears number is a point-in-time number. So you measure arrears as at the end of December or as at the end of June. If you talk about collections, when you talk about how much have you collected over the financial period. So I know Jackie will talk to that because at the end of the day, you have to collect your rent to pay your dividend or to pay your interest on your loans. Coming back to what I wanted to say, distributable earnings, make sure it's supported by cash. And then we do reconciliation between distributable earnings and core DE, and Raj will talk to that. So I'm going to hand over to Jackie.

Good morning, everyone. Thank you, Melt. So what a year it's been so far. And we're only in the third month of the year. So it's definitely been an interesting year and also a fine year for us as Attacq. So just quickly on our core DPS in our SA portfolio, has contributed 16% towards growth. So we've seen a year-on-year growth of 16%. But drilling down into the numbers even more, like-for-like growth in our SA portfolio has brought an NOI growth of 7.6%, and that's really the number we focus on ensuring that our core portfolio grows on a like-for-like basis in healthy terms. The development team has kept us busy this year. We've completed 6 buildings for the year, office rental buildings that's coming into our portfolio. As Melt as mentioned, we've got a fairly young portfolio of 7.2 years. And if we look at our occupancy, it represents a 94% occupancy rate. And then importantly, collections of 98.8%. And that is really a testament to a lot of focus in our teams throughout the year. We really see how the teams are needing to put a lot of effort in, in collecting the arrears and ensuring that our tenants are on track. And also having that difficult conversation with the tenant when their shop is too big or they cannot afford our rent is to make those decisions quick and easy so that we can move on. Our WALE in our portfolio is 6.1 years. And our rental reversion over the last 6 months, we've seen a negative 7.5%, and I'll go through in a little bit more detail when we step into the sector analysis. And in our portfolio, we brought ourselves with a retention rate of 92%. And that's really a testament of where we stand and what we offer and what we stand for from an Attacq point of view. We look at ourselves in providing authentic and true experience to all our clients, ensuring that our stakeholders see the value in what we do and that at a certain alignment between us and our stakeholders. And that's really a testament that we get our stakeholders. We listen to our stakeholders, and that's why they stay with us and keep on renewing their leases with us. If we move over to the valuation for the year and our valuation cap rates, and discount rates has remained largely unchanged, except for the industrial portfolio that we've seen a 25 bp increase in the cap rates. Just to note, the numbers that you see on the screen and in your pack, this is non-IFRS adjusted numbers. So this is the valuation numbers. Major movements in our portfolio on a value basis is Brooklyn Mall. We've seen a negative adjustment, Glenfair and Lynnwood Bridge retail. And those adjustments are largely due to tenant reconfigurations, rent reversions and further configurations we did at those malls. In addition to that, in our office portfolio, we've adjusted the 2 Eglin Building, the old PwC building to a sale agreement. We have signed a conditional sale agreement for that building. And hopefully, within the next 2 months, we will be concluding the sale of 2 Eglin to a third party. We've also felt it's prudent to adjust the Cell C cap rate and discount rates due to the uncertainty of the tenant and as well as the Aurecon Building, we've adjusted values. In the leasing, and as Melt has said, we focus on occupancy. Our portfolio occupancy of 94%. I'm just going to highlight a few key metrics that I think is very important to take out in this slide. On the buildings completed during the end, as I said, the development team has kept us busy. We finished up 6 buildings for the year. The total let for that -- for end of this year was 67.9%. So of the buildings that was completed, that is where the buildings was let. Post year-end, you'll notice the filled post year-end, we've done a further 4,800 square meters of let. Of that, 1,600 contributes towards the speculative buildings. So our speculative buildings in our portfolio is now over 80% let. We've definitely seen a trend of tenants taking up post buildings have been completed, but they relatively need to stock on a short notice basis. The other stat that I just want to highlight is the Waterfall portfolio vacancy of owner -- sorry, occupancy of 98.6% comparing our Precinct vacancy with the Rosebank and also a Sandton vacancy, I think this is remarkable of only being 1.4% vacant in our entire Precinct. And that's really a balancing act that we need to achieve between development, speculative developments, our buildings getting older and also our renewals to ensure that creates the right attention and also the supply and demand. And in addition to that ensuring that our rentals stay intact. Focusing on our retail portfolio for the year, and this has been a fun year. You've all noticed we've started off this year with DionWired press release, the uncertainty of what the Dion Group has been doing. And our team has been very actively involved with the Massmart management of what we will do with our DionWired Store. But in summary, our occupation levels is 97.8%, our collection is 98.8%, rent reversions of negative 10.8%, and that was largely due to a Checkers lease that came up for expiry at Glenfair. It was a long lease. We felt it was prudent to bring the lease back into more market-related rentals. So that's what gave rise to the negative 10.8% rent reversion. We've also got on Section 11(f) being installed in our portfolio, and we further commissioned a PV plant currently being installed at Garden Route Mall that will contribute further towards efficiency ratios in our portfolio. And then 12, you've noticed that a few months -- a few results presentations ago, I don't know when Melt said, we're going to keep money back to install or to invest into generators. And I think investing money into the generators over December has really paid off in our portfolio because what we could have as a landlord is 97.4% of our portfolio could trade uninterrupted. Our tenants could have uninterrupted shopping, and that really talks to the experience we offer our tenants, but also our clients producing further stakeholder value for our shareholders. Then going into the retail, our trading density, as Melt has said. Our trading density grew by 5.7%. Mall of Africa contributing 10.1% of the trading density. But also furthering now regional shopping centers, a lot of our initiatives that we've been talking about over the last 12 to 18 months, really starting to pay of. The Dis-Chem expansion, the Woolworths expansion at our various malls really starting to translate into numbers that we see growth. We've also made the difficult decision of exiting less-known international brands and focusing on the more loved South African brands. And they're not that sexy ones. It's the PYT, the Dealz, but nor have we seen the increase in turnover. So really understanding what the consumer wants and supplying them with the right stores. We've also opened up the first iStore store in the Southern Cape, contributing over December, Michael, if I am correct, ZAR 40,000 rent trading density for the December trade, and really seeing the need for an iStore in the Southern Cape. So I think everyone got Christmas gifts of iPods for that month. But in summary, really understanding where our clients are, understanding our tenants and what the shopper wants. Moving into Mall of Africa, and this is really a slide that we are very proud of, showing the continuous growth improvement. And now Mall of Africa is really settling into becoming one of our things regional, super-regional dominant shopping centers. As you can see, the trading density keeps on continuing to grow. Our rolling foot count over the 12 months keeps on growing. Rent to turnover ratio, and this is a ratio we focus a lot on looking at our budgets, what is the budget for the year in terms of income, is it affordable for a tenant to be in our mall at 9.1%. And again comparing to super regionals, this is a really, really healthy number. Good occupancy levels, excellent collections. But then further to that, what we're sharing with you today is how do we take and understand the shopper behavior because we need to be able to measure it. And through the data that we collect, big brother watching you all the time, the collectors that we get through your cell phone, we're really starting to understand what does the shopper want, how do they behave when they're in a mall. And we're taking that data, and we're also sharing it with our retailers. Because if we don't share it with the retailer, we cannot get into a win-win situation. So the data that we're sharing with you today is the average time that a person spends in Mall of Africa is 119 minutes. The conversion rate of a mobile device entering into a store is 93%. The average store -- amount of stores that a mobile device visits is 7.4. And then loyalty, and this is the one that I really like the lot, most, and focus the most on is loyalty of 55%. And this is a person or a mobile device, should I rather say, that visits the mall more than once in 31 days. And really, we take all these different sets of data, we curated and we also provided back to our retailers to ensure that we've got the right tenant mix, the right shop fronts, the right location, to ensure that, again, the experience for our shopper is seamless and it's true, authentic experience. In the office and mixed-use portfolio for the year, again, occupancy of 85.7%. If we take out the Eglin Building, we move that up to almost 97%, collections 99.3%. So that's an excellent job in collecting those rentals. We've had a positive reversion of 7.1% positive rental reversion for the year. We're also starting to renew the Waterfall -- first leases in Waterfall. So we're definitely seeing that there is a good supply and demand in Waterfall and that our rentals at the moment is not over market. Our buildings on a certification is 59% of our portfolio is certified -- green-certified buildings. And we're on a big drive from a certification point of view to understand what is the efficiency ratio of our portfolio. And Melt always tells us manage what you can control. We cannot control Eskom, we cannot control municipalities, but we can control consumption. So the big idea from a green sustainability strategy point of view is understanding our consumption and seeing where can we reduce our consumption for ourselves and also for our tenants. And then in addition to what is not represented on the slide is the dealmaking team has concluded up until to date, not 31st of December, 40,000 square meters of new deals that we've brought into our portfolio, which I think is excellent. Unlike industrial, big major movement there is we have let a speculative warehouse to Glo Tool, and that's why your June occupancy went up from 96.8% to 100%, WALE of 9.6% -- good morning, you can come sit here in front. It's afternoon, sorry. Good morning, welcome. I'm not going to repeat everything I've just said, but you're more than welcome to go and talk to us afterwards. And then in our hotel portfolio, only representing 2 hotels. We're very excited with the third hotel that Giles will give you a bit of update that we're currently busy constructing at the moment. But good occupancy levels, long WALE, and what we've seen with the hotels and what is our goal in the SA portfolio to be retail dominant Precinct with office and mixed-use surrounding our retail dominant Precinct is that our hotel is such an important factor. A good quality hotel brings such a good element to the offering and the sustainability of our office tenants as well as our retail tenants. And then this morning at 5:00, when I stood back and reflected on the results, it is really a testament of what we've said is to do this year is we said we're going to focus, we're going to focus on our clients, we're going to listen and we're going to understand our clients to ensure that they remain in our portfolio, they trade optimally. And I think the SA portfolio and the results that we've just shown really is the testament. So well done to the teams. And I'm going to hand over to Giles to talk more about the developments.

Thank you, Jackie. Talking about developments at Waterfall, overview of the master plan for the CBD of 3 separate sites under construction in yellow, 6 tower cranes up at the moment. Quite a healthy pipeline in the blue -- blue-green, showing a large amount of our focus is on the Northwestern side of the city. So building from the other side of the freeway towards the freeway, so to speak, completing the inner ring of the city. That starts to deliver the live-work-play environment that we have quite a healthy mix of commercial, hospitality and residential. And in fact, there's another development on the other side we'll talk about, industrial. So a healthy mix across all asset classes in the development space. Still a large amount of land to develop. Still another over 1 million square meters of bulk. Raj will unpack that a little bit further with regard to what the classifications of the bulk, not all bulk is equal. And I think that shows that we still got a lot of road ahead of us in this -- in developing the CBD. Completed developments year-to-date, just over 18,500 square meters. All office blocks at this stage, both in the core of the city, the Ingress, which is the [indiscernible] PSG 2 building developments. Ingress took 1, the other bond was a speculative development, currently sitting at just on 40 -- just under 40% unlet. That was completed in January. So it's quite a quick lease-up period in that building. PSG, the second building, 100% occupied. And then the 4 buildings of Waterfall Point, which was our first and probably the only sectional title scheme at the moment that we have planned. It's a noncore outside of the CBD on the peripheral of the city. I think that the market was looking for a smaller product with a slightly lower rental for people who wanted to be in the city, but wanted to be just outside the city at the same time. I think these with units at 250 to 350 square meters were smaller units for us. We've been very successful; 2 buildings fully let and 2 buildings, which were inventory for sale. One is 80% sold. The other one just on 50%. So again, a lot of interest in that particular product for us. But 18,000 square meters completed in 6 months is healthy for us. And subsequent to that, this lady came along, Deloitte, 43,000 square meters completed post end of year. So that handed over in January, currently tenanting at the moment. Deloitte are moving in an average of 500 people a week into the building. A predominant building to say the least sits on the off-ramp of the Allendale Road, understated in its lighting. I think it's a beautiful building, quite brutal on the outside, but very, very interesting on the inside. Anybody who came to our launch event have seen the spectacular internal atriums. And just to go back, that is a JV with Atterbury. This next scheme is a JV we do with Zenprop, same building development, office park. In the period post results, we have completed 1 building, which is Continuity, bottom left, that's handed over to and in trading. And we've broken ground on its neighbor, Building #4, with a tower crane up. So that's another spec building of 4,500 into 4,900 squares in the ground. And with strong interest in that side, I'd like that to be leased up before we complete. And I think at the way we're going, we should be. It's a good product. And as for the tenant that wants to be in Waterfall, but doesn't want to be in the core of the CBD. They want to be just peripheral [indiscernible]. They want all the benefits of Waterfall, but they also just want a little bit of privacy and a little bit of distance from the city. This is one of -- probably our second last industrial within the LP 8 North Precinct. It's Nespresso's new head office and warehouse. It's the fourth in a series of buildings, which we built 3 last year, which were the mini units, same architect, same architectural style. So it completes that Precinct. And as Jackie mentioned, this is the next hotel, 4 Star. It's a new product by City Lodge. It's their new courtyard hotel. So it's a vertical product for them rather than a horizontal low-key, low-rise building. It has topped out now, 10 stories topped out, and due to complete September this year for occupancy and trading. And that sits on the adjacent site to our residential scheme, the Ellipse, still sales going well. I mean, we launched the scheme in 1st of November 2018, broke ground October 2019. The numbers on that to date pulled up 214 sales in Phase 1. So that's an over 80% bankable on Phase 1. And hence, the 2 tower cranes up. We launched Phase 2, which was the tall tower right in the front, Cassini, that was launched on the 1st of November last year. 4 months, we've done 81 sales on that building. So in a quite depressed and flat market, I think high-end residential sales in Waterfall have been a shining light for us. We've got a good JV partner. We've got a fantastic piece of land. I think it's a very sexy building. It's taking high-rise residential to a new level for us in South Africa. And going gangbusters something for us. Ellipse has been a fantastic product. And with that, I hand over to Peter.

Thank you, Giles. Good afternoon, everyone. I'll discuss MAS and then Rest of Africa after that. MAS from a balance sheet perspective is ZAR 3 billion on our balance sheet at the end of December. It represents 11% of our total assets. From a core DPS perspective, it contributed 33% for the current period. That's ZAR 0.166 per share. That's a rather attractive increase from the last corresponding period, which when it was ZAR 0.123 per share. It's quite a busy slide. I won't go through all of it, but talking to MAS' strategy, in November last year, shareholders approved a transaction between MAS and Prime Kapital. In terms of that transaction, MAS acquired the 20% of the investment JV they held with Prime Kapital and also the Prime Kapital Asset Management platform. So this transaction when it was approved was a major step to transforming MAS into a CEE-focused property operator and investor. And with that transaction, MAS got new management in the form of Martin Slabbert and Victor Semionov. They will be well known to property investors in South Africa and also a reconstituted Board. The strategy of MAS remains unchanged under new management, and that strategy is to divest of its more mature Western European assets and invest those proceeds into the high-growth Central and Eastern European markets. There's some assets NAV and DE splits. These are extracted from MAS' proportionate accounts, which is an annexure to the IFRS accounts. We attended the MAS presentation earlier this morning, and they really have given a lot of disclosure, which will enable investors, including ourselves, to really dig into their current performance and what their performance can be. The main point in this, though, is how much of a contribution the Central and Eastern European markets are now contributing in the existing shape of MAS' structure and what -- and then given the additional information one can form a view of the performance that will come from the investments of the Western European property portfolio proceeds into that. Just to note, the head office number is quite large. Our head office is a bit smaller in a tech. Raj will share you later. That's actually their listed REIT portfolio. So I don't think they're in a large head office. From a -- from an interim distribution perspective, they declared an interim distribution of EUR 0.0424 per share. We will receive that as shareholders at the end of March. And then that will essentially be all that we will receive from MAS for this financial year. We account for MAS dividends as and when we receive them in the bank on a cash basis. We don't accrue for them. So once that dividend is received, then you can figure out what our MAS income is for the entire year. Raj will dig into that in a bit more detail later. Looking at -- I've already touched on MAS' Board and management and the changes that have taken place there. I've mentioned that they're recycling their Western European assets. So there's EUR 544 million of investment property, which they will be disposing off. They're targeting to do EUR 508 million of that within the next 12 months, so about 90% within the next 12 months. They've also said that they expect to crystallize EUR 36 million of costs in exiting Western Europe. A lot of that relates to breaking long-term funding arrangements. From a performance perspective, CEE in the current period contributed 46% of MAS' adjusted distributable earnings, and that's up from 34% in the prior corresponding period. In the existing portfolio, other than the organic growth, which they expect to achieve from like-for-like growth in participation in rising rents from and turnovers from their tenants, there are a number of extension and development -- of redevelopment opportunities. The Militari Shopping Center, they hope to commence with a major redevelopment there, adding about another 50,000 square meters. And that should commence fairly soon once they receive building permits. The Nova Park asset in Poland is currently undergoing a 3,000 square meter extension. And then there are major extensions and refurbs at the 2 Bulgarian assets at present. So there is some attractive opportunities coming out of the existing portfolio. That brings me to the development JV that they've got with Prime Kapital. The numbers you see here are all on a 100% basis. In other words, this is the development JVs pipeline. MAS has a 40% interest in this development JV. What would have been completed in the current year in this JV were 2 value centers. There's a lot of value center at an initial yield of 12.2% on development on cost, which if you know your development yield is a very attractive double-digit development deals are hard to come by. And the DN1 Value Center, which was also developed at double-digit development yields coming at 11.1%. I think what's also what I can, if you can see in MAS' promotional videos on their website, what's amazing to see is that asset was built in 5 months. And the DN1 value seems -- I think, it was in 6 months. The speed at which they can execute is very impressive. What is in the pipeline? The pipeline is very substantial. EUR 773 million of pipeline projects they've got. EUR 221 million of that is currently under construction, and there's EUR 552 million, which is in various forms of permitting. So speaking to some of the assets under construction, they've got 33,000 square meter Dambovita Mall in Targoviste, Romania. They're targeting a May 2020 target for trading date. There's a 92,000 square meter expansion of an existing asset, which will then become the super-regional Mall Moldova that's situated in Iasi, which is Romania's second largest city. The smaller retail -- or smaller value center development in a smaller town called [indiscernible] if I call correctly. And then they've also broken ground on their residential offering. This being the -- Marmura Residence is the initial offering in this space. It's a 465-apartment development in Bucharest, Romania, and sales have been progressing well there. In terms of projects under permitting, the most significant one is a development called the Silk District, which is also located in Iasi. It's a large-scale mixed-use development. It encompasses or includes 98,000 square meters of A-grade offices and 2,500 residential units. The start date for that is expected to be September 2020. They've got about a 2-month delay in just getting permits in place. But if all goes well, they'll be breaking ground in September 2020. Also under permitting is the Avalon Estate upmarket residential offering in Bucharest, Romania. I think it's about 750 units. And there, they're just waiting for 2 minor permits to come online and then they will be breaking ground on that as well. Looking at MAS in the tax financials. We equity account for the investment. We own at present 20.7%. In the prior corresponding of the prior year-end, which was June for us, we had 22.8%. The reason for the decline is the Prime Kapital transaction, which I mentioned earlier, which resulted in MAS issuing 67 million shares, and that diluted our shareholding down to 20.7%. So we started the year on 3-point -- just under ZAR 3.2 billion. We equity accounted ZAR 194 million of MAS's profits. There's some OCI in MAS where we pick up -- it wasn't a big number, so we got a percentage of that. That dividend there is the MAS final dividend for financial year 2019. As mentioned, we received -- we bank it in our books when we receive it in cash. And then there's an FX impact, which is negative, just given that the euro was quite weak relative to the rand at December. And that leaves us with just under ZAR 3 billion on our books from an investment perspective at year-end, which, as I mentioned, is 11% of our total assets. I'll now move on to Africa. Africa is smaller and smaller portion, every time I stand here, of our total assets. It's currently 2.8%. At 2.8%, we'll top into now. So it's just under ZAR 1 billion. It's a small contributor to this period to our core DEPS, only ZAR 0.017 per share or 3.4%. At present, we are -- and we've been quite clear on this. Our strategy is to exit these assets. That's a very similar strategy. It's perfectly in alignment with our co-shareholder and investor being Hyprop. We've partially delivered on that strategy to date having exited 1 asset in Ghana in June of 2019. And we also exited Manda Hill in Zambia in August. That leaves us with 2 territories, which we still invested into; one being Nigeria, where we've got 1 asset called the Ikeja City Mall in Lagos. And then in Ghana, we've got 3 assets, 2 in Accra and 1 in a smaller city called Kumasi. I think from an asset management perspective, ourselves and Hyprop have in-house asset management for the last at least 6 months, you can say. So asset management is something which the shareholders are now looking after and taking very seriously to preserve value in the interim. And then important to note is from 1 July, this year, all shareholder funding arrangements are now totally on a proportionate basis on a pari passu basis. Some of you who followed us and Hyprop for a longer period of time will recall there were differing arrangements in place during the first couple of years of this structure. Looking at the numbers. There's a breakdown of the ZAR 800 million at year-end. So that 2.8% includes cash. So that's quite a nice asset to have at the moment. That relates largely to Manda Hill's cash flows. As I mentioned, we exited Manda Hill during the current period. Those cash flows were paid out to shareholders in December. And we've got -- a large amount of that is sitting in net balance. We've then got our stake in Ikeja City Mall, which is actually just a shareholder loan. At the moment, we've got that at a value of ZAR 279 million. I'll discuss Ikeja now. So rent -- it was fairly flat year-on-year. We accrued interest of ZAR 15 million. We received ZAR 12.1 million in cash. Cash interest service, that then is the ZAR 0.016 per share you see towards our core DEPS. And then it's still at ZAR 279 million at year-end. Then AttAfrica, which is essentially just our [indiscernible] is valued at ZAR 307 million at year-end. During the year, we received cash out of the structure in the form of loans we paid of just under ZAR 114 million, and we injected another just under ZAR 50 million in terms of restructuring bank debt at property level and ended the year just under ZAR 307 million. I think what is important to note is we've got no debt against these Rest of Africa assets. This represents an opportunity for us to recycle capital. And once we exit these assets, the proceeds can be reinvested in our Waterfall pipeline or in reducing our debt. Thank you very much.

It sounds like all the speakers that have come up before me have said that Raj is going to fill in the missing blanks. I think to the team, prepare better next time. I think [indiscernible] your CFO is not core. But good afternoon, everyone. I see a lot of familiar faces here. Thanks for joining us today. Maybe kicking off with a quick financial overview before we get stuck into some of the detail. I think a key highlight for us, core DEPS growth of 23.9%. I think given the economic environment, quite a good performance. Interest cover ratio improving from 1.85x to 1.91x. We've set ourselves a medium-term target of getting to 2.0x and over the longer-term target of 2.5x. So we seem to be making some progress on that. On a gearing perspective, gearing has increased to 39.1%. We'd like to get that to below 35%. But a key indicator for us in terms of leverage and gearing and gearing capacity has always been interest cover ratio. So that's something that we focus more on than on gearing. Debt expiry profile reduced from 3.6 years to 3.1 years. Weighted average cost of debt flat at 8.8%. I will get to that in a bit more detail on the following slide. Interest rate hedging increased marginally to just over 80%. And then for the accounting boss in the room, first-time adoption of IFRS 16 leases. Maybe just to touch on that on this slide here. The most material impact for us has been with regards to the Waterfall leasehold land that we hold. We pay 6% of net rentals that we receive from our tenants over to the MAS and that gives rise to a lease liability and a corresponding right-of-use assets in terms of IFRS 16. So effectively, for the period, we've raised a lease liability of ZAR 250 million and a corresponding asset right-of-use asset of a similar amount. I'm not going to go into too much detail. We've got a slide. I think it's Slide 58, which we've prepared, which shows the impact in terms of the income statement, the balance sheet as well as the cash flow statement for the current period as well as what the comparative period was treated like prior to IFRS 16. And then #8, leasehold land, change in valuation technique. We have changed, as Giles alluded to, the way we value our leasehold land. And I've got another slide where I can go into a bit more detail on that. Distributable earnings, I think from a South African portfolio perspective, a good performance there, growing 27.5% period-on-period, mainly as a result of completed buildings. From a Waterfall perspective, we filled some vacancies. And then we've obviously got in-force escalations. What underpins this growth is a strong NOI growth on a like-for-like basis of 7.6%. Developments at Waterfall from a DE perspective, really just the costs in terms of the landholding that we have that increased by 6.8%, and this pertains to rates and taxes, levies, marketing and security costs. Investment in MAS, a very good performance there, 35.2% growth period-on-period. If you look at the underlying growth in euro dividend, that was 23.3%. The rest of the growth came from an element of gearing as well as a weaker rand against the euro when we received the dividend. Rest of Africa retail investments. We've banked ZAR 12 million worth of interest income from Ikeja. The corresponding period shows an amount of ZAR 40 million. You'll recall that the majority of that was from AttAfrica as a result of them disposing one of the assets they were able to service interest and that we've excluded from our core DE in the previous period, but I want to touch on that just now. If you look at the cents per share basis, I'm going to fast forward to the DE on a cents per share basis of ZAR 0.53 -- ZAR 0.532 per share. We've made 2 adjustments before arriving at our core DE. The first one is in respect of sale of sectional title units. So what's obviously core to our business is to develop properties for the earning of rental and long-term capital appreciation. From time to time, we look at sectional title sales, which was, in this case, Waterfall Point, definitely not core to our business. So we've reversed the profit from that in terms of our DE of ZAR 0.013 per share. And then during the period, we canceled a lease with a tenant, which does happen from time to time, but this was fairly abnormal in that the lease cancellation fee was substantial. This related to the tall building, which we ultimately sold to NetFlorist. So we've reversed that fee income of ZAR 0.021 per share, which gave us a core distributable earnings per share of ZAR 0.498, which represents the 23.9% growth. Dividend per share, our Board has declared a dividend per share of ZAR 0.45, which represents growth of 11.1% from the prior period. Touching on the balance sheet quickly. If you look at the South African portfolio, increasing by 1.2%, a combination of things there. We've had a number of completed buildings transfer out of the developments in Waterfall segment into the South African portfolio. We've also recognized the IFRS right-of-use asset of roughly ZAR 250 million, but we've also had some impairments and negative fair value adjustments in the portfolio. South African portfolio, just like I said, ZAR 20.7 billion. Developments at Waterfall, almost flat, increasing just by 1.1%. Again, a combination of progress made on developments under construction like the Deloitte head office, including those development profits or surpluses that we've recognized on those developments. And then a negative fair value adjustment on our leasehold land, which I'm going to touch on just now. ForEx movements on risks -- maybe just quickly on investment in MAS. I think Pete added to that. The asset is now valued in our books at an equity accounted basis of just about -- just under ZAR 3 billion, down from the ZAR 3.2 billion in June '19. That is almost all relating to a much stronger rand at December -- 31 December. It feels like a distant past, but the rand was, I think, just under ZAR 14. And I think this morning, it was just under ZAR 15.50. So a significant devaluation in the rand against the rand and euro between reporting dating today. Head office. That's mainly consisting of our intangible assets and our goodwill, not much movement on that level. They gave us a total asset base of just over ZAR 27 billion, flat from our previous period. If you look at our liabilities, that increased 4.6%, a function of 2 things, mainly interest-bearing debt increasing by ZAR 300 million over the period. That is as a result of us funding our developments under construction. And then like I mentioned, the lease liability recognition for IFRS 16 of ZAR 250 million. That gave us a total equity base of just over ZAR 15 billion, a movement of negative 3.3%. As I mentioned, valuation of leasehold land. Previously, we used to value our land on a land residual basis. We've moved towards a comparable sales valuation technique. And the rationale, there's multiple reasons for the rationale for it, but the land residual value required a number of assumptions and a number of inputs. And as a result, the valuation model was fairly sensitive to any movement within those assumptions or those inputs. And it's also a very complex model. So you put in a number of inputs and assumptions and you've got an answer, which you couldn't really understand by just looking at the output. If you look at comparable sales method, it's widely accepted both internationally and locally. A number of the local REITs do use it. And it's quite easy to understand the inputs, the valuation technique itself, and then the output is a lot easier to understand. So I'm going to quickly take you through this. There's quite a lot of information on the slide. But effectively, we've categorized our leasehold land in Waterfall into 3 different categories. The first category being unserviced land, and we then utilized a market-related rate per square meter for unserviced land and applied that rate per square meter on all of our unserviced land, which gives us a total of 70 million -- just over ZAR 70 million rather for that particular category. For the other 2 categories, we've categorized them as partially serviced land or -- and fully serviced land. Partially serviced land, we also use a market-related rate. But it's for a fully serviced land, we then make an adjustment for the cost to complete to bring that partially serviced land to a fully serviced level. And then we make a further adjustment to reduce it by the leasehold liability because the land is obviously on a leasehold basis. On a fully serviced land category, which is the third category, a very similar approach. So we use market-related rates per square meter. And then we make an adjustment for the small amount of servicing costs that may be required. Those are relatively small. And then again, we make an adjustment for the leasehold liability. The market-related rates per square meter, we received from an external valuer, they typically have a range of comparable sales, and it provide us with an indicator of kind of which price point or which market-related rate is appropriate. So we've provided the external value as range and then the actual rate per square meter that we've used. So I think this helps the users of the financial statements to effectively either agree or disagree with those rate per square meters and then potentially use their own rates to arrive at a potentially in a higher or lower amount. For the period, the leasehold land has been valued at just over ZAR 1 billion, and that represents a fair value adjustment downward of ZAR 51.2 million. I think it's important to note that for this period, this has been a director's valuation. For our full year ending 30 June 2020, a full external valuation will be conducted. Touching on some of our interest-bearing debt numbers. I've catered to interest cover ratio. I've catered to the gearing ratio. If you look at our weighted average cost of debt, whilst on a total basis, that's remained flat at 8.8%. On a rand-denominated basis, that's reduced from 9.9% to 9.7%. And our euro debt, which is previously recorded at 1.9%, has increased to just over 2%. I think it's 2.04%. But on a weighted average group consolidated basis, we're at 8.8%. If you look at the debt maturity profile, roughly ZAR 1.2 billion coming up for renewal or rather maturity in the next 12 months. Almost all of that relates to one of the tranches on the ARF/LBOP facility. That's a 6 lender deal; 3 banks, 3 institutionals. Quite comfortable that I think the maturity date is the 1st week of December that we'll refinance that. We're aiming for before 30 June, but fairly comfortable that there's a lot of appetite within that lender consortium to refinance that. If we look beyond the next 12 months, there's ZAR 4.4 billion. It looks like a big number. But if you break it down, it's 1.4 billion of euro debt. So our euro debt, we typically refinance for between 12 and 18 months. So almost every 6 months, we sit and look to roll that forward. Fairly comfortable that we'll roll that. So that's ZAR 1.4 billion out of the ZAR 4.4 billion. And then we've got, I think it's ZAR 2.4 billion of Mall of Africa debt that comes up in April '21. We've catered to -- I think, we've received term sheets from 5 lenders by the end of November last year. We're going to be making a decision in the next couple of weeks and then implementing the refinance of that ZAR 2.4 billion. And then the remaining debt is relatively small individual facilities on a bilateral basis. So no discomfort there. I think we look to refinance most of the ZAR 4.4 billion between the next 6 and 12 months. If you look at debt facilities, I think what I want to highlight there is that we've got about ZAR 900 million of facilities. That's mainly to complete some of the developments that we've got under construction like Deloitte. And then we've got a significant portion of that, which we maintain as liquidity facilities. On an NAV per share basis, I'd like to maybe just get some of the material movements between June and December '19. We've issued 411,000 shares as part of our LTI scheme, which increased our NAV per share by ZAR 0.01. We've recognized a loss through the income statement for the period of ZAR 0.06. So that includes a profit from operations, which was positive, which was set or offset by negative fair value adjustments and impairments. The net-net negative was a result of negative ZAR 0.06 per share. If you look at the dividend paid, there was a dividend that we paid out in October of ZAR 0.41, which obviously has come off our equity base. And then if you look at the other distributable earnings movement of positive ZAR 0.12 per share, that there's effectively the present value of a loan that we extended to the Newtown JV that's moved from a long-term loan to effectively held for sale on a short-term basis. So we were able to unwind the present value, which has come directly through equity, a positive ZAR 0.12 per share. The FCTR, Pete alluded to this, this is almost -- almost all of this is applicable to our investment in MAS. Like we've mentioned, the rand was fairly strong at balance sheet date. And so on a translation basis, we've recognized a negative ZAR 0.43 per share. And then the last item pertaining to our LTI scheme and share-based payments. So our closing NAV per share was ZAR 21.41.

Thanks, Jackie, Giles, Pete, Raj in that sequence. Time flies. It's unbelievable to think that 2 years ago, in fact 2 years ago, Jackie played for a role as Interim Head of Development and myself played for role as CEO and CFO. And I think it's 2 years later, I want to congratulate my fellow exco team, not only on the results itself, but also having a deep understanding of our business. It certainly gives me a lot of comfort. If you look at the update, I'm going to mention a couple of ideas, and then I'll talk about update and then I'll open the floor for questions. I've attended economy presentation a while ago. And then out of the audience, they had a question. And this individual asked a question, and the question was taking where we are in the cycle, and I've read Bloomberg earlier today, and I think they talk about recession now. But taking where we are in the cycle, what can we, as individuals, do? And then the response was reduce your debt and keep your job. It's as easy as that. Unemployment numbers are high. Debt reality is debt can kill you. And you can even look at some of our REIT peers. I mean debt, sorry to the banks, I'm not... So coming back to Attacq. And coming back to -- Jackie mentioned it, and I've also mentioned it right in the beginning, talk about focus. So I said to Jackie and the team, if we apply that to Attacq, what should we do? And it's completely oversimplified. What should we do? Keep our tenants happy and to reduce our debt. And it sounds easy, but Jackie can tell you it is extremely difficult, making sure that our occupancy levels are on the numbers, which they are. So that's my first point I want to make. My second point I want to make is of -- I read an article a while ago, and it talks about property and the future of property or call it real estate. And they invested many years ago, it was about location, location, location. Nowadays, it's location, experience and understanding data or artificial intelligence or the behavior of your customers, behavior of your tenants, behavior of your tenants and staff members. And that's exactly what we are doing. I mean if you go back to Slide 10, where Jackie briefly discussed the data, which we do have available in managing the Mall of Africa better. And I mean [indiscernible] the Michael. And I mean, in my mind, that's one of the reasons why our trading densities are 10.1%. I mean, a double-digit trading density growth in this environment is exceptional. It really is exceptional. So coming back to that or coming back to our update, on Jackie's portfolio, it's easy. We must keep our tenants happy. We must improve our occupancy levels to get it as close as possible to 100%. We must improve our collection levels to get it as close as possible to 100%. We must make sure that we retain those tenants. Once you've lost a tenant, it's difficult, difficult, difficult to get a new tenant. If you look at the rollout development, Raj and his team, they have got a lot of energy. Unfortunately, the market is against us. But there's a pipeline. We're working on the pipeline. And we're selling -- I don't want to say we're selling a dream, but we are selling the concept of a smart city. [indiscernible] in the back, that's looking after sustainability for us. So that's definitely -- I mean we sat in traffic 2 hours this morning coming from Pretoria into Sandton. I mean if you go to Waterfall, you don't have to sit 2 hours in traffic. I'll promise you. So again, it talks to location on the one side, it talks to experience, it talks to understanding your customer behavior, your tenant behavior. Then on MAS, Pete has touched on this. Martin and the team are currently in South Africa. They are busy with a roadshow. I think they're doing job work today and tomorrow when they're going down to Cape Town. If you do have questions on MAS, we are comfortable answering. It depends on the question, but we're comfortable answering the questions, but some of the questions, Martin and his team will be better equipped to respond to. Rest of Africa. Like Pete said, we want to exit. Fortunately for us, we don't have any debt against our ZAR 584 million. So if we can convert it into cash, we will use those proceeds either to put into Waterfall and/or to reduce debt. From a balance sheet viewpoint, comes back to my story, reduce your debt. We have to focus on improving our interest cover ratio. Will it be business as usual? No, it won't be. If it's business as usual, the 1.91 might become 1.98, 2.01 or whatever. We need to sell more assets to reduce our debt so that we can improve our interest cover ratio. So that's definitely, definitely a focus for us. I think Raj has quoted over medium term 2x, long term 2.5x. And that -- like I said, that is the focus for us. Maybe to conclude on the guidance, talks to my opening side. 6 months ago, we said guidance, it's between 8% and 10%. Let's talk to DPS, dividend per share. That's the actual amount we're going to pay out. We are now more optimistic taking into account our first set of results, also taking into account the MAS dividend because the MAS dividend will be baked into our second 6 numbers. So there's 100% clarity on that number, except for ForEx movement. So we would like to reaffirm the upper end of our guidance, which is that 10% in DPS growth. Anyhow, I'll open the floor for questions. We, as management, will stay for another hour or so. So please, if we've got one-to-one questions, we are available. But I'll open the floor for questions. No questions. Do you have a question?

A couple here, Melt. The first one, I think, is for Jackie. What does the conversion rates for the mobile devices actually mean? I think it refers to the Mall of Africa slide that you spoke to? What is being divided by what in this rate? And this comes from [ Alicia ] from Standard Bank.

Right. And Michael, you can jump in here. The conversion rate, basically, we talked -- if we say it's 93%, it's of all the mobile devices entered into the mall, the person -- the conversion rate is if that mobile device is from the common area into a store, eliminating then all the workers that's there every day. So it's a very simple conversion, right? Michael, have I missed anything?

No, you're spot on, just maybe for clarity and all the stats. So as soon as a mobile device arrives at one of a couple of our malls. We have just used Mall of Africa as an example. It gets a unique identifier. We then follow that unique identifier. And if it should go into a premises that we've indicated or marked as a store, then it gets counted and put in a bucket immediately. So really from a statistical point of view, we're dealing with 1's and 0's. We're not really dealing with anyone's data or details. And we've certainly written some rules. And as these mobile devices trigger some of these rules, we put the number in a bucket. And at the end, that's how we arrive at these stats.

Another one here. How do you expect to handle coronavirus impacting on retail sales?

That's certainly a discussion we had internally, and we're keeping close to it at the moment. Michael and myself, we're seeing the retailers next week. We've been talking to them. It's too premature to comment on something like that. But we are keeping close to what the retailers are saying. Some retailers are saying, they're going to maybe battle with winter stock, but we -- no official communication as yet, but we are visiting all of the next year and that is on the agenda topic to discuss.

Then finally, the last question here is, can you provide some comments on Atterbury Europe, which is subject to a corporate finance event? Have you looked at these assets? And will they make a good fit for Attacq or MAS?

The answer is no. Attacq comes out of our Atterbury stable. When we've listed, I think we had a 25% stake in Atterbury. 2 years later, we sold it down to 10%, and then subsequently, we've sold it. So if you look at the relationship between Attacq and Atterbury, it's a good relationship. If you look at the relationship from any legal agreement viewpoint, we've JV partners in the Deloitte's Building. We've JV partners in the Newtown Building. And we're 80% in the Mall of Africa, by 20% in the Mall of Africa. So we're not close to what Atterbury does in Europe or Atterbury Europe. We're definitely not close to that. There's no arrangement and/or agreement. And you can argue that MAS is competing with Atterbury in Europe. So I think we as Attacq, we support the MAS strategy, and we support the MAS management team. Any more questions? Okay. Thank you for attending. Appreciate it.