Attacq Limited (ATT) Earnings Call Transcript & Summary

Good morning, ladies and gents, and welcome to our December 2020 results presentation. A special word of welcome to the nonexecutive directors, there's a couple of them on the call, and then also to our shareholders. If you look at our presentation, it's a similar format than what we have had in the past. There is the agenda. If you look at the agenda, it is, I think, about 38 slides. We've set aside an hour. So we will go quickly through some of the slides. If you do have questions, we have put aside, I think, also half an hour or an hour for questions. So you're more than welcome to ask questions. Or if we do run out of time, then please send any one of us an e-mail or phone us, and then we will schedule a one-to-one and we will take your questions. And like I said, we're following an open-door policy, and you are more than welcome to interact with us and we will respond to your questions. If we look at the agenda, I'll talk to a high-level summary. That's slides 2 and 3. Jackie will present on the SA portfolio; Giles on development. Pete will do MAS and Rest of Africa. Raj will talk to our financial results. And there will be a focus on our capital structure, and included in capital structure is our interest cover ratio, our debt and then also the maturity of our debt and also liquidity. And then Jackie will close out with a strategic update. And like I said, I mean, we, as a team, are available to take questions and answers. If we go to the next slide, this is an excellent snapshot of Attacq. So why you -- we've set up the company. It's on 4 different investment pillars, business units. We sometimes use the word "drivers." And then those 4 drivers are supported by the capital structure. And that's why I said the individual exco members will talk to the drivers, and then Raj will spend a lot of time on the capital structure. But if I -- please allow me a brief summary of our financial performance. So if you look at DIPS, which is distributable income per share, the DIPS collectively between the 4 drivers for the 6 months' period, it's ZAR 0.211 per share. If you compare that ZAR 0.21 per share with the first 6 months of the 2020 calendar year, so that was the last 6 months of the previous financial year, so it's ZAR 0.211, that was ZAR 0.233. So we're only ZAR 0.022 down from the first 6 months of the calendar year. However, in the ZAR 0.233, we had ZAR 0.14 coming from the MAS dividend. So if you carve out the MAS dividend from the previous distributable earnings per share, then from an SA portfolio viewpoint, we've definitely turned the corner and the performance is much better than the first 6 months of the calendar year. And it's also expected because we have seen most of our rental relief in the months of April, May and June. And then there were also more rental relief in the last 6 months, and Raj will talk to that, but just an interesting stat. There was a report issued by the SA REIT, as I said earlier in March. If you look at the total rental relief provided by the SA REIT, it's close to ZAR 3 billion. And that ZAR 3 billion is split between 80% discounts and 20% deferrals. If you look at our rental relief, let's say, then for the 2020 calendar year, it's ZAR 178 million, and the ZAR 178 million, the split between discounts and deferrals, it's 88% discounts, 12% deferrals. But like I said, both Jackie and Raj will talk to the rental relief and the impact of the rental relief on our distributable earnings per share. Important point to note, if you look at the 4 business units or drivers and ask yourself the question, what role do we as Attacq play, and it's important to understand that role because that role has an impact on do we control, do we influence and what value can we add. So if you look at the SA portfolio, we play the role of a property manager and asset manager. So we've internalized, we refer to as PM and AM, we've internalized the PM and AM function prior to the listing. And all the people, all our colleagues responsible for managing the ZAR 20 billion is sitting on the Attacq payroll. If you go to developments at Waterfall, there, we've internalized the development team, 1st of July 2016. So again, it's an internalized team. If you look at the minus ZAR 0.027 per share, that is the holding cost for our vacant land or the leasehold rights. Out of the ZAR 1.9 billion, about ZAR 1.46 billion talks of a vacant land, and then the balance is where we are currently under construction. And then once those buildings are completed, the buildings will then move to the left on the screen, which is the SA portfolio, and then it will sit in the property and asset management team. So the ZAR 0.027 per share, it equates roughly to ZAR 3 million per month, and that number, it's fairly predictable. It was, I think, in 2017, it was also close to ZAR 3 million per month. Also, a point I want to highlight is that we don't have any debt against our vacant land. So the holding cost talks about rates and taxes, marketing, security and I think POA levies. If you look at MAS, MAS and Rest of Africa, we, as Attacq, are playing an investment manager function. It sits in -- the responsibility sits with Pete. Rest of Africa, the asset management function is outsourced to Hyprop. And Hyprop is a 75% shareholder, and we're a 25% shareholder. Investment in MAS, I know that Pete and Raj will talk to that, but the reality why it's a negative is because we have not received any cash dividends from MAS. However, we had interest to pay, and we've also exited the forex hedge. And the cost of that forex hedge, which we've exited, was ZAR 11.8 million. Rest of Africa, it did not generate any cash yield for us, hence, 0 distributable earnings per share. If we go into the next slide, the next slide is a copy-and-paste of a sales announcement. That's why I'm not going to spend a lot of time on that, and I do know that Raj and Jackie and Pete and Giles will also talk to some of the points we've highlighted in the summary. But if you look at liquidity, it was a big focus for us, is that underlying capital structure supporting the 4 business units because what we have said is we want to create what we refer to as a sustainable optimal capital structure. And if your interest cover ratio is 1.4x, it's definitely not the ideal. I know that when we've converted to a REIT in May 2018, at that point -- or June 2018, we had a 1.6x interest cover ratio, and we did up it to 1.9x as at December 2019. But the point I want to make is when we've converted to a REIT in May 2018, so with the June 2018 results, I think I've used the term of fully fledged REIT, I said it's going to take a while to become a fully fledged REIT because we have to improve on our interest cover ratio. And now, unfortunately, due to this 1-in-100-year event, the interest cover ratio has weakened to 1.4x, where we were sitting on 1.9x. I always quote the number of 2.5x, but definitely exceeding 2x. So if you want to be a fully fledged REIT, your interest cover ratio must be closer to 2.5x in order to produce income yield for your shareholders. Liquidity improved to ZAR 1.3 million. We were ZAR 1.1 million. So the reason why we've increased to about plus/minus ZAR 200 million is due to the fact that we have not paid dividends. The MAS disposal sits outside of the ZAR 1.3 million. So it's not in the ZAR 1.3 million, it's on top of ZAR 1.3 million. However, we're going to utilize the MAS disposal to reduce some of our euro debt. I've talked to the interest coverage ratio, just again an interesting number. June 2017, we were on 1.12x. Like I said, June '18, 1.6x. It went up to 1.9x, and then, unfortunately, COVID happened. Distributable income, I've touched on that. It was ZAR 0.211 per share, where last year, December, we were sitting on ZAR 0.497 per share. Collections, we've collected more than what we've invoiced. Hence, there was a reduction in our outstanding debtors. The negative -- the negative value on our investment properties, it's minus 3.2%, and that then had a result of a minus 4.4% in our net asset value per share. Again, occupancies are quite high. I think the occupancies for Waterfall, it's close to 97%. So again, it tells you something about the quality of our portfolio. Also, an interesting number is that we've got only, and I'm saying only, 49 properties. Most of our offices are fairly new. Most of our offices, we've got long WALEs, and I mean, even more so in the industrial portfolio. Giles and his team are busy with 31 square meters. And hopefully, they get to sign a couple of more leases. I know that Jackie will talk to that. And Giles will definitely talk about the fact that we sold more than ZAR 1 billion of sales in Ellipse. So I'm going to hand over to Jackie.

Thank you. Good morning, everyone. If we stand still in the SA portfolio, I think the theme and the message we want to get across this morning is that our portfolio has demonstrated resilience throughout the lockdown restrictions. The quality, the diversity of our portfolio has continued to attract new tenants and tenants, attracting not only in the industrial space, but in the office space. And we've also attracted amazing brands, especially in the Mall of Africa throughout the lockdown. And that, I think, is the key message coming out of the portfolio. And if Raj goes through the financials, you'll see it's evident coming through the numbers in the portfolio. Another key message is with a good base and a good quality base is standing back and thinking how do we rethink the physical space with a pandemic that has fast-track the online world, how do we rethink the value that we provide and also the value we preserve. Our teams have been working quite hard over the last 24 months on launching a digital app that will enhance the communication and the omnichannel experience between our shoppers, our tenants as well as our community within where we operate. So the first phase of the app will consist of a digital voucher application, loyalty programs as well as enhancing the digital experience of inviting our customers back into the mall. Standing back and looking at our portfolio and certain of the metrics that Melt has already highlighted, but I think it certainly stands for us to stand still on the valuations that we have gone through over the last -- that's been happening over the last 6 months. And I think there's one word that summarizes the valuations over this time is uncertainty. When we were evaluating the properties, we were looming lockdown 3. A second wave were starting to hit a certain of the regions in South Africa. And we've seen that the portfolio has really stood well through these uncertainties. The material changes in the valuation drivers have been largely the market rental rates because of the uncertainty of what market rental rights will bring in as well as the long-term vacancies. For the rest of the portfolio, metrics have stayed stable. It has contributed a 3.2% decline in our like-for-like valuations. Of highlighting Mall of Africa, had a decline of over ZAR 170 million, Garden Route Mall ZAR 190 million and Brooklyn Bridge was ZAR 118 million. Looking at the occupancy of the portfolio at year-end or at period end, we were 96.4% occupied in our portfolio, where retail contributed 96.2%. Offices have improved from 86% to 94%. And then light industrial and hotel did 100%. Post year-end, we've let a further 2,000-square-meter of space, of which 1,400 contributed to the Mall of Africa space. And really, the team working really hard in attracting and taking this opportunity, that we aim to attract new and exciting tenants within the mall. If we stand back and look at our reversions, over the period, we had 34,000 square meters of leases that were renewed. In the office side, we only had 1/3 of the office tenants that renewed the space. But I'm very happy to report that the tenant that did not renew the space, the space has been let to SC Johnson, which is a multinational company. So we really try to keep with good company in Waterfall with the tenants we attract. The rental reversions were 25% down. And once again, I think the reversions, if we unpack it a bit, there's definitely a flight to quality, safety that the tenants are looking at. And our exit -- average exit rentals was about ZAR 220, ZAR 230 exit net rentals, and the renewals ranged between ZAR 160 and ZAR 180 net rentals, which again is much higher than what was happening around Johannesburg and also in South Africa and once again, a testament to how well the portfolio is standing up over -- during these uncertain times. If we look at collections, and this has been a very, very topical time for our teams and quite a lot of admin that has gone through the collections. But how do we approach collections from a portfolio point of view, it's our tenant partnerships, our client partnerships. It's listen to understand, to design a bespoke solution for our tenants. Tenants had been more affected by the lockdown restrictions, trade restrictions, we have provided much more support to. And that has come through the numbers. We have maintained a lot of our tenants. Our tenants have renewed, especially in the retail space. They're open and they're trading. ZAR 64 million, we have provided in discounts, so ZAR 53 million and ZAR 10 million in deferrals. And then also, our year-to-date collection rate is at 106%. So we're not any more in survival mode. We are not any more in recovery mode. We're now in building mode, where our tenants have also weathered the storm, and we are seeing trade come through. Standing back and looking at our retail, with the average portfolio age of 12 years, we have seen a high client retention rate of 85%, our occupancy rate of 96%, that I've highlighted just before, and then a WALE of 3.7 years. Maybe just to stand still on the client success rate at Garden Route Mall, we had in October a material big renewal cycle that the team has done. And maybe also just a well done to the team, post the big renewal cycle, mall -- Garden Route Mall was fully let. So well done to the team there. Standing back and evaluating the trade, the impact of what our tenants and ourselves have gone through. This is a slide that is -- just tells you a little bit of the story of pre-COVID, the lockdown impact. And then, if you focus on the navy blue and red lines, the navy blue basically represents the tenants that have traded under -- with no restrictions. The red represents tenants that are trading with restrictions. Then the 2 lines is the 1 is turnover and the other is foot count. And really, seeing that the foot counts are much lower to what the turnover recovery in a percentage-wise is, and we're definitely seeing less visits to the mall, but more higher spend per head on the visits to the mall, and then really very evident of the impact the pandemic has had in the behavior change of our shoppers, less visits but more shopping at a time. And we've definitely seen also the impact over December and January, with the lockdown 3 restrictions and the trade restrictions that was imposed. Luckily post-lockdown, President Ramaphosa gave us a nice Valentine's gift and eased lockdown restrictions and also as we've seen the second wave infections reducing. You'll also note that the detail of the turnovers, you can find in the annexes of the portfolio, where we unpacked the last 6 months trade per mall, that you can refer to. Just on the trade and what is selling in our portfolio, trends of what sector of our retail is doing well, what is -- was lagging. You'll basically see that the electronics remains strong, the demand for electronics. And I think that's amplified by the work-from-home, online schooling. The need for personal electronics remains very high. You'll also notice that entertainment has had a perfect storm with Ster-Kinekor, Nu Metro, not receiving any content from the U.S. as the lockdown restrictions have hampered the production of new material, the trade restrictions, the capacity restrictions. So really, a perfect storm for the entertainment business, and we feel very strongly as it's something that we need to protect and then we also need to preserve. Food, again, our shoppers spending more money on food, dining at home and not dining in restaurants. Homewear, also very strong, and then sportswear and outdoor also remaining strong. And we're definitely seeing these trends are persisting as we continued in lockdown. And we're also seeing retailers starting to change their product mix to suit the needs and the changes of behavior of our customers. Standing back and looking at our office and our mixed-use portfolio, we are continually asking ourselves the question over the last 12 months, what is the long-term impact going to be on work-from-home, what is the gig economy going to do to our portfolio. And we have definitely seen, over the last 6 months, that the office market is certainly not dead. Our team has done exceptionally well in letting space to amazing tenants. In the last 6 months, our occupancy has remained very high, and the team are really working at offering our tenants a safe, bespoke leasing environment that accommodates for their needs. And we're also working very close with Giles' development team in offering a sustainable, flexible model of space, which I really believe is the future of the office market. Looking at industrial and the hotel portfolio, 2 small portfolios, but very strong portfolios. Our light industrial, with rental escalations of 6.9%, really at the high side, occupancy at 100% and a WALE of 8.5 years. Hotel portfolio, we've welcomed and opened up, subsequent to the period end, the Courtyard Hotel, that had a soft opening. So we've got 3 hotels in our portfolio, all backed by City Lodge. Our rental escalations at 7%, occupancy open and a very long WALE of 7.3 years. And we've definitely seen, as the lockdown restrictions open and close, how the trade of the hotel also -- the occupancy levels of the hotel goes up and down. But we really firmly believe that the City Lodge Group has weathered the storm, and we welcome them as a partner in our precinct. So I'm going to hand over to Giles to give us an update on the developments.

Thanks very much, Jackie. So developments in Waterfall, ZAR 0.027 per share reduction on the overall number. That's an impact of the ZAR 36 million a year holding costs for Waterfall. And as Melt mentioned previously, it's ungeared land. And that's your rates and taxes security and maintenance. So it is -- it comes at a cost to hold it, but it is the best piece of land to hold at the moment in SA. Snapshot of the 6 months. I think a number of these numbers are static, being the developable bulk, but a number are moving targets. Completed one building in the period I mentioned, which is a midi warehouse. 28,000 was under construction at this point in time. We've finished 10,000 subsequent to that and started another 31,000. So we're sitting at a net level of just over 50,000 square meters currently in the ground at various stages of construction. Very excited about Ellipse, still continuing to sell exceptionally well for us in these trying times. As Melt mentioned also earlier, quite proud of a large amount of building certification happening in Waterfall. As of this morning, we've got another building that was certified, being the Deloitte building. It's achieved its LEED Silver rating. That adds another 48,000 squares to the city. And PV systems in storm capacity continues to creep up every year, I think in every period, should we say, and that's just really a result of rolling out a smart and sustainable city with a sort of utility resilience built into those buildings. The pipeline still shows a lot of activity on the western side of the city, still our focus, filling in between Maxwell Office Park and the Mall of Africa. Reds are completed buildings. Yellows are under construction. So that shows both period and post-period construction projects and the blue being pipeline. A number of moving parts in the pipeline, a number of buildings that are multi-phased, where we're looking at the final phase, for example, the Corporate Campus, and the other sites where the Nexus site, where the Courtyard Hotel is, has now kicked off its first office block. So a number of cranes up at the moment and a lot more coming up this year. In the logistics and distribution campuses, sort of running out of space, so to speak, a lot of blue. Those are deals currently in play or pipeline currently in play. And then Cotton On, the big one that announced this morning, broke ground 2 weeks ago. It's a fast-track distribution and head office for the group. And yes, I think this has been a success story for us on the eastern side of the city. And its location and the design intent, the quality of the product has really sold itself very well for us. As I mentioned, the fourth building in the midi units, which we completed last year, has completed and handed over to the tenant. That's a multinational. That building is now completed, handed over as we said, and trading. So that was the only building we really finished in the last 6 months, with most of it in sitting under construction. The picture in question, being the Courtyard Hotel, has completed post-period and handed over and has opened in soft launch with the operator. But continuing to roll out Corporate Campus, I think a very successful development for us and our JV partners. And Ellipse, as we noted, has sold well. I think it's -- the numbers are up even on this as a result of the last 2 months, which I'll talk about here. Being broken the ZAR 1 billion in sales on Ellipse, I mean, that's a substantial amount of apartments that have sold out or sold, should we say, over the last 2 years, including a penthouse at over ZAR 50 million. And that's Phase 1 and 2. As I said, a successful project for us looking to hand over to end users starting April, May this year, where practical occupation -- practical completion is achieved and transfers in June. Leading onto post-period developments, quite a lot happening. I think that's a nice picture on the left showing you really 5 cranes up, quite a lot of activity, focused on the east -- western side of the city. Building 6 at Corporate Campus, very successful. That number of 66% pre-let is now at 100%. We've concluded the last lease on that building. There's 2 tenants in that building. So that is, I think, in basement #2, hasn't really got to ground floor yet and is 100% complete. As well as Nexus Building 1 has started in the last 2 weeks, and Cotton On being the big one, of just under 21,000 square meters, that has just commenced. And Pete, I'll hand it over to you.

Thanks, Giles. Okay. Our investment in MAS at period end had a carrying value of ZAR 1.8 billion. which was 7.6% of our total asset base. As Melt mentioned earlier, MAS didn't pay a final distribution for the June 2020 year-end. That wasn't due to the state of the business, it was more out of an abundance of caution, just given the pandemic and the uncertainty that played ahead of their business as well as everyone else's who's going through this pandemic. We still have funding costs associated with their investments, and we also had some hedge closeout costs. And as a result, the DIPS that came out of the investment was negative ZAR 0.027 per share for the period. Looking at this slide and an overview of MAS. We've just chosen some of the key financial numbers. From an asset perspective, as of December, EUR 1.237 billion in assets. I think the takeaway here is if you look at the red and the gray blocks together, that's 58% of the assets are attributable to the Central Eastern European region. That's either directly or via the development JV. And we would expect that, that proportional increase as they implement their Western European disposal strategy. NAV of just under EUR 796 million, that translates into a per share NAV of EUR 1.16 per share. That's 8.4% up since the June period. Distributable earnings of EUR 21.5 million for the period, on a per share basis, that's EUR 3.12 per share. If you compare that to the June 6 months' ended, which is probably more comparable just given that both were affected to some extent by COVID, that was EUR 3.11 per share. So fairly stable and also, I think, a testament to the underlying quality of the portfolio and the quality of the developments in that portfolio. I think also what underpinned the results was a strong rebound in the CEE retail environment. And what definitely helped contribute to the strong NAV growth was what can only be described as an exceptional performance in the execution of the Western European exit strategy. I think during the period, they contracted EUR 317 million of -- EUR 316 million of asset disposals. And if you compare those disposals to the carrying value of those assets in the books, I think they were carried at EUR 294 million. So there's a nice NAV uptick in the execution of that disposal strategy. From a balance sheet perspective, MAS is certainly in a very healthy position, had some EUR 85 million, EUR 86 million in cash at year-end. They've got access to further funding. They had an LTV of 26% at year-end, which if you take the contracted asset disposal into account, will drop to below 12%. So certainly very well-positioned to take advantage of investment opportunities that come their way in CEE as well as to execute on their stated strategy. If we look at how MAS is accounted for in the tax financials, we equity-account for the investment just given that we owned 20% throughout the period, or an excess of 20%. In June, we had an equity-accounted value of ZAR 3.2 billion, that we impaired down to ZAR 1.9 billion at June. It was based on the closing spot price of the MAS share as at the end of June. The reason for that was the large disconnect between net asset values and equity prices on the listed exchange. Obviously, with COVID and the onset of COVID, we saw a large disconnect coming out, and we were required to test for impairment and impair the asset down accordingly. If we fast-forward that to 6 months later, as of December, we've done a similar exercise. We've accounted for our holding in MAS on a market basis or a fair value basis. The only difference is, as at the end of December, we had announced a ZAR 500 million disposal and we valued that tranche at the disposal value. And in the balance of our holding, which is about 101 million shares, we valued at the closing spot price of ZAR 12.75. Subsequent to period end, we have disposed of 2 tranches of our MAS holding, taking our holding down to 10.9% of MAS' issued share capital, and we raised some ZAR 885 million in those disposals. From a strategy perspective, we took the opportunity to execute on those disposals to do what was right for our balance sheet and to derisk our balance sheet. And we certainly still back MAS. We think there's a lot of value left in the stock, and we look forward to seeing management execute on their strategy in future periods. Rest of Africa, we didn't receive any distributable income from the Rest of Africa during this period. And the value -- or the carrying value of our investments was some ZAR 423 million -- ZAR 431 million, apologies. That's made up of just under ZAR 48 million in cash, which is our cash sitting on our Mauritian subsidiary's balance sheet. Our investment in AttAfrica came in at ZAR 205 million. AttAfrica has invested into Ghana, into 3 retail assets there. And then our 25% interest in Ikeja City Mall was ZAR 179 million. I think most important to realize is we don't have any debt against these investments. If we can exit them as we intend to, this represents an opportunity to recycle this capital into our own investment pipeline at Waterfall as well as to reduce our debt. Ourselves and Hyprop had announced the conditional disposal of Ikeja City Mall in November last year, subject to conditions. Given the USD -- the U.S. dollar liquidity challenges Nigeria is experiencing, it is taking longer to close out that transaction than we initially envisaged. And ourselves and the buyers are evaluating alternatives to see how we can restructure the transaction and still close it out, but it is challenging. Nonetheless, we will pursue our exit strategy as and when opportunities arise to do so in a responsible manner. From a trading perspective, we did see trading conditions improve once various lockdown restrictions eased. The lockdown restrictions imposed in Ghana were not as strict as in South Africa. However, similar to South Africa and the rest of the world, we saw that leisure and entertainment tenants suffered the most. I think our key challenges going forward is from a tenant depth as well as U.S. dollar liquidity. And the operational focus is to fill vacancies, collect rentals and retain tenants and then obviously seek an orderly disposal in due course. Thanks very much.

Thanks, Pete. Maybe before I start my presentation, our Head of Investor Relations came up to me before the presentation, saying Raj, you've got a beautiful face for TV, but the content of your slides is really boring, so move it along. So I said, Brenda, you're 100% right, I've got a beautiful face for TV. And so I'm going to maybe approach this slide slightly differently. If you look at this particular overview, I think it touches on the sort of 3 or 4 things that we believe are probably the most important things strategically that we need to be focusing on in the business. And so maybe just talking to the DIPS, distributable income per share, we previously used to report in distributable earnings per share, and we've changed our terminology to align to the rest of the REIT sector. So now we're referring to distributable income per share. And I think the decline of 57.5%, not a surprise. We issued a trading statement already sometime last year. And if you look at the makeup of our business, we've got the 4 drivers. We knew MAS had already not declared a dividend last year. So we were not expecting any inclusion in our results this year. The comparative period was a dividend of ZAR 121 million, so clearly, a significant impact on our distributable earnings in this period. And then Rest of Africa, we also knew that we were not going to receive any cash interest, and then developments at Waterfall, really from a distributable income perspective, a cost center rather than a profit center, but it obviously does contribute to future distributable earnings as and when we develop properties and it then gets transferred to the SA portfolio. So really, the -- I suppose the question mark was how was the SA portfolio going to perform. And I think Jackie's alluded to it, I think we're -- we believe it was a fairly resilient performance given the economic conditions that we were faced with, the various levels of lockdown that impacted more of the retail portfolio. And I'm going to quickly just move on to this particular slide quickly. You can see the SA portfolio, for the period, down 21.8%. And really, we had to unpack that, it came down to the rental discounts that we provided as support to the -- to our client base. And I'm going to quickly move to the next slide, just to quantify that. And if you look at the first column there, total rental relief comprising of ZAR 64 million, made up of ZAR 54 million of discounts, well, that's out-and-out discounts. And then just ZAR 10.2 million in respect of deferrals, where we believe we will earn that income but over a deferred period. And I think what's interesting to note is that total rental relief for the 6 months was ZAR 64 million, whereas in the prior financial year, being the 12 months ended 30 June, that was just under ZAR 114 million. So we've obviously continued to support our clients, and I think we believe that's good practice and supporting them in these difficult times. But clearly, the relief that's required is a lot less. And I think this is probably setting the base going forward, we'll continue to support our clients, but at much lower required rates. There's a number of adjustments that we make in terms of what the impact on our distributable income is, but on a net basis, that's impacted us by ZAR 56 million. To summarize the adjustments, we've really taken a very conservative approach. We've reduced our distributable income by all the bad debts written off, all of our increases in provisions in terms of bad debt or ECLs that we expected to come through. We've added back the deferrals, but then we make an adjustment for the net movement in our receivables. And in effect, what we're saying is if our receivables went up, we would have reduced our distributable income on the basis that we did not earn or rather to see that in cash. But in this period, we actually had a collection rate of over 100%, 100.6%, meaning that we collected more than we bought, meaning we're clawing back from the previous financial period and a good indication of, call it, the status or the quality of the receivables book. And we go back to the slide, and I'm not going to spend too much time, I think, between Giles and Pete, who have already touched on developments at Waterfall, investment in MAS, the dividend that we didn't receive during the period and then the distributable income of ZAR 148.4 million compared to ZAR 350.1 million in the prior period, down 57.6% on a rand nominal basis and on a per share basis, down 57.5%. Going back to the financial overview. I think the next couple of points around interest coverage, gearing, debt expiry as well as available liquidity and capital recycled, really talk to what we have, management, put forward at the end of our previous presentation in September in terms of what we're going to focus on. We said we're going to focus on preserving liquidity. We're going to look at our capital structure and improve that. And I think that's what we've done, just one of the few levers that you've got as a management team to move. The COVID pandemic impact on the portfolio is largely out of our control, but we said let's focus on liquidity and let's focus on the capital structure. And in doing so, and in light of that, the Board at the time made 2 key decisions not to pay out a full distribution or not to pay out a distribution for the full year ending June and then also not to pay a distribution for this period, ending end of December 2020. And so that was already communicated to the market and has helped us to preserve liquidity and I think with hindsight, a good decision. And I think some of our peers in the market have kind of followed us or followed a similar approach, given the uncertainty with the pandemic. So if you look at our available liquidity, ZAR 1.3 billion, comprising of ZAR 1 billion in cash, ZAR 310 million of available facilities, an improvement from the last reported liquidity position of ZAR 1.1 billion, and there was a balance sheet debt. Post balance sheet, as you're aware, we've completed 2 transactions with regards to the sale of MAS shares. We've realized ZAR 885 million in cash. And we'll utilize that in 2 ways: one, to maintain a healthy liquidity position; but two, to pay down some of our debt. And we've earmarked a significant portion of those proceeds to pay down our euro debt, which will also then help us manage the foreign exchange risk between the rand and euro exchange rate. And then we're also, for this period, ending -- or sorry, the next period, ending June 30, looking to, in total, pay down ZAR 1 billion worth of debt as a minimum, and that is a function of the proceeds that we've received, but also some of the disposals that have come through in the last 6 months, being the Eglin disposal of proceeds of about ZAR 75 million. But as you're also aware, we are under cautionary on a substantial transaction in respect of an investment property that we are currently negotiating in terms of a disposal. And again, the proceeds from that disposal will be applied to reducing our debt. And so if you look at total capital recycled to date, and that's -- that includes the post balance sheet transactions of MAS, just about ZAR 1 billion, but you can expect that number to increase over the next couple of months by the time we get to the end of the full financial year, being June 30, 2021. Maybe then talking to the 2 other metrics around interest cover ratio and gearing, really, that talks again to recycling of capital. Interest cover ratio declined to 1.4x from 1.91x last December, 1.68x last June. And we communicated to the market, pre-COVID, that we would like to target a long-term interest cover ratio of 2.0x, which we believe is more aligned to a REIT. And it is something that we've obviously had ourselves as target, and in this period, not receiving the dividend from MAS has obviously materially impacted that. But notwithstanding that, we still continue to recycle our assets and pay down debt, and we'll continue to do so. Gearing ratio, up from 45.7% to 46.3%. Jackie's alluded to one of the key drivers of that, call it, increase in gearing, that's ZAR 687 million that we've incurred in terms of negative fair value adjustments on our completed property. And I'm quickly going to go to that slide. Here you go. So this is the investment property bridge showing the movement between the opening balance and the closing balance of investment property. And if you look at the starting point being June 2020 versus December 2020, one of the key movements is, like I said, the fair value adjustments that we've made to the completed property portfolio of ZAR 687 million. And then the rest of the movement is relatively small: lease of land, that was a small fair value loss of ZAR 23.9 million; and then the CapEx that we've spent in terms of maintaining the completed portfolio as well as completing developments under construction of about ZAR 143 million. So like I said, that's contributed to this increase in our gearing ratio. Then maybe talking about, more specifically around debt, our debt profile and our hedging, I'm going to move towards this slide here. Just giving us a bit of a snapshot on our interest-bearing debt, ZAR 11.5 billion at balance sheet date, slightly up from the previously reported number of ZAR 11.4 billion. But what you notice here is the key movement is the debt between euro and rand. We converted about EUR 18 million in September last year into the rand equivalent amount. So you can see the reduction in euros and a slight increase in our ZAR debt. And again, we've done that to manage or mitigate the foreign exchange risk between the rand and the euro exchange rate. Weighted average loan term, I'm going to talk to that shortly. Gearing, I've touched on. Interest cover ratio, I've touched on. Maybe just talking about the group governance. So quite often, we get questions around whether the group has got any group interest cover ratios or any interest cover ratios relating to the euro debt or the MAS shares that we've got. So we don't have a group ICR covenant. And I think we're one of the few REITs within the REIT universe that don't have a group ICR. But we do need to manage our group gearing covenant and our minimum NAV, and those are set at 60% and ZAR 10 billion, respectively. And our actual measurements came in at 50.4% and ZAR 11.1 billion. So we still have got a reasonable amount of headroom in those covenants. Briefly touching on our funding mix. Not much has changed over the last 6 months. We're still very well-banked, if I can call it that, between the big 5 banks and a handful of institutions. And we continue to maintain those relationships, but we do expect some changes over the next 6 months as we close out some fairly large refinancings that I'm going to touch on in this slide. So if you look at this slide, this has been a key focus for us in the sort of last 12 months, managing the debt expiry profile and the hedge maturity profile. If you look at the next 24 months, we've got about ZAR 8.3 billion of debt maturing. ZAR 3.3 billion of that relates to our ARF Lynnwood Bridge portfolio. So the ARF portfolio, for those that are not aware, that is effectively all of our retail assets, excluding the Waterfall retail assets included in that portfolio, together with the Lynnwood Bridge Precinct in Pretoria. And we put that funding transaction together for the first time in 2015, and we've refinanced it a few times. We've got currently, I think, about 6 lenders in the mix. And we've started a refinance -- we've actually made quite a lot of progress in terms of the refinance. We've received term sheets a few weeks ago from the lenders. We are well subscribed, oversubscribed, in fact, by ZAR 750 million, and we're expecting to close out this transaction by 30 June 2021. And I think a fairly good outcome in terms of the RFP process that we follow there. We still need to make some key decisions. But I think the oversubscription, the type of pricing that we've seen relative to our REIT peers, I think we were very well and pleasantly surprised. The ZAR 2.5 billion of debt relating to Mall of Africa matures only in April '22 next year, and we've already commenced discussions with the incumbent bank to refinance that. And again, we're targeting end of June 2021 to have that wrapped up. I've touched on the liquidity position of ZAR 1.3 billion, which has been since improved further with the MAS disposal proceeds. And like I said, I've also talked about the ZAR 1 billion worth of debt we're expecting to permanently settle by the time we come to the end of this financial period. And then perhaps just to confirm, and we've said this a few times, but we don't have any debt capital market exposure. And I think we're fairly happy about that. I think it's been a fairly difficult space to navigate in the last sort of 6 to 12 months, especially we had debt that was coming up for a renewal that needed to be rolled over. And we also don't have any cross-currency swaps. It's a question that we get quite often from analysts, and we've never had any cross-currency swaps in the book. I think I've touched on most of the important points. Let's go to my main slide here to see if there's anything else. Yes. I think I want to hand over then to Jackie.

Thanks, Raj. Here we go. If we just quickly go through the strategic update. Focusing on ESG as it is a very important pillar in the building foundation of what Attacq is and how we operate in our environment. To stand still on environmental, I think through Giles and Kyra, the custodians of the E of the environmental space, to highlight the eco-analytics dashboard is really digitalizing the tracking and monitoring of our carbon footprint. But also, I think it is for us to assess the low-hanging fruit, again, cost saving, tenant retention. A vitally important strategy for Attacq is minimizing the cost of our tenants, being efficient in the way -- and being proactive in the way we approach, the way we build our buildings and the efficiencies. On the social side, our team, really focusing on our communities, the learning, the development and supporting our shoppers in the communities that we operate in and ensuring that there's continuous upliftment and support within our communities. And then on the governance side, our exco, we're busy looking at revising our exco org structure, aligning to our business strategy and then also welcoming Allen Swiegers and Thabo Leeuw to the Attacq Board as nonexecutives. If we stand back, and we've called this slide Attacq The Future, you see, we have survived, we have recovered. And really, for Attacq, the phase now is to take the learnings, to reassess and to build the future and to take opportunities where we see. The other day, someone said, retail is not dead, just bad retail experiences. And I actually translate it into saying property is not dead, offices are not dead, retail is not dead, just bad property experiences are dead. And if we look at our vision, is we wanted to be the best provider of community spaces through creating a sustainable space with a remarkable experience in everything we do in Attacq. In our SA portfolio, we will continue to focus on the basics. We will continue to focus on our client retention, creating cost of occupancy opportunities and also creating a bottom line for us, for our shareholders, creating and not giving in on our bottom line, launching of our shopping application, bringing the omnichannel and embracing online in our retail space and unlocking further value in our spaces and as well as control capital allocation in our portfolio. We firmly believe we cannot stop capital allocation in our SA portfolio as we need to provide current, relevant shopping spaces and office spaces for our clients. In the development of Waterfall, we continue the rollout of our residential developments with the success of Ellipse and really evident that people really don't want to just come and work and shop here, but people really want to live in the city we're creating. Continue with tenant lead developments in the industrial, like the Cotton On lease that we have just signed and commenced with the development. Office developments, we have just started with the Nexus development, really some exciting news in the office development space. Continue to focus on quality and building a modern, smart city for our clients and for our shoppers and for our people that live here and unlock the further opportunities of the 31,000 square meters of developments we have just embarked on and then also unlocking a further 30,000 square meters of industrial warehouse space that our team is currently under negotiation. And sitting back and saying that, in the midst of a pandemic, that our team is working on 60,000 square meters of development activity is quite remarkable. As Melt and Raj have alluded to, very important is optimizing and a sustainable capital structure for us. Our liquidity is sitting at ZAR 1.3 billion. We're adequately resourced to unlock the 60,000 square meters of development that we are busy negotiating and finalizing. The progress on the disposals within our portfolio, as Raj has said, we're making very good progress on the disposal program. Pete and the Hyprop team will continue to focus to exit Africa in an orderly manner. We will -- as communicated in the past, we won't pay dividend in this interim period, but we also won't provide any guidance for the final dividend for you. And just to -- the sheer nature of uncertainty, the lockdown, the trade restrictions and also the vaccine rollout. But in Attacq, we leave you with a message of we're in a building phase and our portfolio has stood the test of time, and we will stand further test of times with the team that is currently managing the portfolio. And then if you would allow me, as this is Melt's last results presentation, that as stakeholders and also as staff, we would really like to say thank you to Melt. I think it's 7, 8 years. It's Melt's 15th results presentation today. And Melt has led the team with no ego. He's allowed us to grow. He's allowed us to shine. And he's built an amazing foundation. And with that, Melt, we would like to say thank you very much for your time, your willingness to share and the willingness for us to grow. And we don't know what Melt is going to do in his next journey, but we wish him well and we know that it will be a success for you and the family. So once again, thank you very much.

Thanks, Jackie.

And with that, we come to the end of our results presentation. Thank you so much for your time, and we will open up the floor for questions.

Okay. There are a couple on the chat here, Jackie.

All right then.

We have the first question from [ Migo ] from [ NS Madi ]. They're asking, are larger office tenants, such as Deloitte and PwC, considering subleasing space as their employees work from home? Has this space requirement evolved since they initially signed to the estate?

So the question is yes and no. Some of our big clients have definitely indicated that they will sublet space. We welcome those discussions proactively with our deal teams. So there has been some negotiation and the discussions with big tenants to sublet space. Our teams have put it on our radar, and we're proactively helping solve that space. We like welcoming in earlier, so that we also look at the development rollout and we take all of that into account when looking at office development especially and looking at letting those particular spaces underneath the main leases of certain of our tenants. So there has been discussions. There are movements in the market, but it's not a -- it's for all of the tenants as yet.

Thank you. The second question is from [ Anthony Berman ] from Anchor. He's asking along the lines of distributions ex MAS and others follow SA REIT practice of accruals, in brackets, he's placed not cash.

Yes. Maybe could you take that one, Raj?

Yes. I'll tackle that question. So I think it's a good question, maybe something I should have highlighted. If you look at our SENS announcement, there's an Annexure A, where we disclose all of our SA REIT financial ratios. And the first one is the SA REIT FF&O, and then we do a reconciliation back to our distributable income. SA REIT FF&O does require you where you hold an investment in an associate to accrue for that income on an FF&O-defined methodology. So in effect, you would be accruing for income. We have historically, prior to SA REIT FF&O, and we continue to employ this principle. If we're not receiving a dividend from the associate, then we're not going to include any income in our distributable income. It's a more conservative view, but we believe if you're not receiving any income, you shouldn't be including it in your distributable income because you'll be, in effect, inflating that because it's not backed by cash. So what we've done through the reconciliation, we started out with the SA REIT FF&O definition and included MAS on that methodology basis. And then we've stripped out all of the income because in this last 6-month period, we haven't received a dividend. So that's the methodology we follow in arriving at distributable income.

Okay. Thank you. There are 2 questions from Titanium Capital. The first one is how confident are we that the hotel operations are sustainable?

Okay. I'll take that one. So if we look at our exposure in Attacq, we have got exposure only to one group, and that's the City Lodge Group. So firstly, if we stand back and look at what the Attacq exposure is, is the City Lodge Group has definitely, as a company, been very prudent throughout the uncertainty that they have faced as a company. They've looked at their liquidity level. So we are comfortable that from a company exposure point of view, we are backing the -- definitely a good operator and a sound operator, at how they've looked after their business. Then second of all, if we look at our exposure, in what type of hotel exposure we are, we're definitely in the medium market, not the luxury travel or the luxury holiday market at this stage. And we have seen, evident through the data and also the bookings, as the lockdown restrictions eased, the occupancy levels of the hotel has started improving, which, once again, is evident that the quality, that the product mix as well as the locality of our hotels are very well-located to weather the storm with a right partner as City Lodge. So I have given City Lodge a good airwave here today. So we'll expect a rental increase from them.

Thanks, Jackie. The second question is the approach to the MAS investment is creating uncertainty as the Attacq investment case, that is, what is the group that investors are ultimately buying into? Is it the intention to ultimately exit MAS? Are investors essentially buying into Waterfall and the SA portfolio?

Shall I take that question?

Thanks, Raj.

I think if you look at the 2 disposals that we've done with regards to the MAS shares, we were approached by buyers. We looked at the transaction, the execution risk and also what it did for our own capital structure, and we proceeded with those 2 transactions. We're now sitting with about 10.9% of the MAS issued share capital. We fully bought into the MAS stated strategy, the management team, and we will continue to hold that for the long term. But from time to time, we'll reevaluate the returns from MAS, and if it makes sense, we'll continue holding it. But for the time being, that is the current position. If you look at the South African portfolio, and I think the second part of the question was the SA portfolio and Waterfall, the development pipeline, I think that's always been our unique value proposition. Waterfall is absolutely special and unique, and we've been busy with that over the last couple of years and we've got many, many more years to go on the development pipeline. It is creating this mixed-use city that's safe and sustainable. And we've seen a lot of clients that have appreciated that and wanted to set up their head offices here as part of this work-or-play city, including the residential component, the retail, et cetera. So I think that will continue to be a unique value proposition for investors.

Perfect. Thanks, Raj. Then we've got a question from Avior Capital, from Daniel King. He asks, how does your disposal pipeline impact total NAV? Does this not create a complication regarding the NAV covenant of ZAR 10 billion?

Yes. So I think if you just look at it on the face of it, if we're taking an investment property and we're disposing of it and we're converting immovable property into cash, it doesn't necessarily have an impact on your NAV. Obviously, we're selling it below book value, and then you can have a bit of a write-down and you're going to convert less of the property into cash. So on the face of it, as we dispose of assets at or close to book value, it will just convert fixed assets into cash. And when we utilize the cash to pay down debt, your NAV will remain the same. Your NAV will decrease when you start paying out dividends or when you start incurring losses.

Okay. Thank you. Then the next question is from [ Sandile ] from [ Ontombo Wealth ]. Are there any specific assets earmarked for disposal in FY '21? What is Attacq targeting as a gearing ratio for FY '21? And how are we looking to achieve this?

So the assets that we have disposed, we have not made it public. We're currently treading on the cautionary on certain of the disposals. We don't have a long tail in the portfolio. We probably could say that the [ tail of -- tail is ] Brooklyn Mall and Brooklyn Bridge Office Park. For the rest, we are treading under cautionary with certain of the disposals. And I think if we stand back, and Raj, maybe you can comment on what is the ideal loan-to-value, I don't think the loan-to-value is the biggest focus other than our interest cover ratio is really the focus that we are focusing on from -- in Attacq and what is the total return we provide to our shareholders by improving the overall capital structure of Attacq. Maybe Raj, you can comment on our targeted loan-to-value.

Yes. Thanks, Jackie. I think we've been saying for some time now that when it comes to our credit metrics or our debt capacity, we've always been focused on the interest cover ratio and not necessarily the loan-to-value or the gearing ratio. And the reason for that is that, historically, and perhaps less so now, is that not all of our assets produce income. And so whilst the gearing or the LTV ratio looked more healthy or kind of lower, that didn't necessarily translate into a good or higher interest cover ratio. An example of that is, obviously, the development -- the lease of land that we've got currently valued just over ZAR 1.1 billion. As it stands, it doesn't give us any income. Obviously, when we convert that into a -- complete the property, and it's ungeared, it can boost our earnings quite quickly and then contribute to a very healthy or healthier interest cover ratio. So we haven't been focusing purely on an LTV or a gearing ratio. We've signaled to the market that we would like to achieve an interest coverage ratio of 2.0x by the end of June 2022. And how do we achieve that, or how do we go about implementing that? It really comes down to the disposal strategy that we've talked about in terms of the property assets. Like Jackie said, we're under cautionary for one of them. We are talking to some other buyers and some other assets. We haven't disclosed them by name, but it really is recycling that capital, taking it out of investment property, paying the bank debt down, and that will increase both the interest cover ratio and improve the gearing ratio.

All right. Then there's another question from [ Albi Selias ]. In regards to the ZAR 2.4 billion fair value write-downs on newly completed buildings during the past 18 months, does that indicate too optimistic valuations to start with, given its new buildings? Or is it a development cost problem being too high for the market today?

Maybe I can chat to that.

Yes.

So I think if you look at our valuations, and it's been across the books, and perhaps maybe let's not single out the newly completed developments, in the previous valuation cycle, what we saw external valuers do was increase cap rates and discount rates. And we saw that had a marked impact on the overall completed property book. And I think that's been across our peer group. We've seen largely retail assets being harder-hit and to a lesser extent, office. And obviously, the light industrial portfolios have been fairly resilient in that sense in terms of cap rates remaining kind of static. In this last valuation cycle, we saw cap rates and discount rates remain fairly flat. But what we have seen is external value as being a bit more conservative in terms of market rental reversions, expecting market rates or rentals to come down, and that obviously has an impact on your DCF valuation. And they've also been a bit more conservative and perhaps a bit more prudent in how they look at long-term valuations. So long-term valuations were largely quite low in terms of your DCFs, and I've seen that in terms of the last set of valuations, almost double or triple, in terms of their long-term vacancy. So I think that provides the context. If you look at our newly completed developments, the methodology is absolutely the same as the completed portfolio or property. So I don't value newly completed developments in any other way. These are DCFs based on signed leases, with the same assumptions made with regards to market-related rentals, reversions, vacancies, discount rates and cap rates. But because of the last evaluation cycles, where some of these assumptions have been moved, it's had an impact on all properties, including those that were newly completed.

And maybe also, just to add, that if we stand back and look at the valuation cycle, the uncertainty of retail trade, the biggest component of our valuations was actually impacted by the retail portfolio and not our newly completed development portfolio. Just again, to just to put in context, and again, our retail portfolio is marked for base of rent-to-sales ratio. And what is a healthy rent-to-sales ratio, we adjust the DCF valuation drivers to market-related rentals, which, again, the uncertainty of lockdown, no trade, had a material impact in our retail portfolio's valuations.

Okay. There's another question from [ Albi ]. He says, in another REIT this morning -- another REIT this morning reported that the sales market has continued to deteriorate and it is becoming increasingly difficult to achieve sales. New sales are being concluded at wider discounts to book value given the limited pool of buyers and oversupply of assets. Do you agree with this? And will this impact your sales and disposal process, too?

Yes. I agree with the comment. It is an incredibly difficult market to dispose of assets at book value. Our strategy on our disposal prices have been maybe a bit different. The type of assets we have earmarked, the process that we have followed and also vetting our counterparties to ensure that the counterparties have got the needed substance to execute on these particular transactions. These transactions also take a lot of time as it's large transactions. And certain of the transactions we've already commenced on pre, the lockdown levels, in COVID, so just to give everyone the extent of time that we have been dealing with certain of these sales. So most of the sales, which we've currently agreed, is very close to book value because of the strategy and the type of assets we are disposing of. And then also agreeing it takes a lot of time, and yes, there is not a lot of liquidity and cash in the market to dispose of these assets. Coming back, Attacq hasn't got a long tail, so certain of the assets are a bit more desirable, which are attracting the book value, which represents in our book at this stage.

Okay. Thanks, Jackie. There's 2 questions from [ Ezekiel Matal ] from [ Matal Capital ]. The first question is what is our minimum ICR threshold? I'm going to just say the second question. The second question is, apart from the planned disposals, what other plans do you have to improve gearing? I think this one's for you, Raj.

So I think, maybe talking to the minimum ICR, as I've mentioned, we don't have a group ICR covenant. We've set ourselves a target of 2.0x. I think we are making very good progress on that. If you look at our ICR measurement 2 periods ago, 1.91x, so very close to the 2.0x. And obviously, market conditions, the MAS dividend, et cetera, has contributed to a lower measurement in this period. I think if you think about ICRs in the rest of the portfolio, we do have interest cover ratios on a portfolio level. That's where we've secured funding against a specific portfolio of assets. And those covenants are typically between 1.1x and I would say, 1.25x. And that's, like I said, specifically with regards to a secured portfolio and isn't necessarily linked to the group ICR that we've reflected as 1.40x. I think in terms of the gearing, when we set out our debt reduction plan, it has been largely focused on the property disposals. But again, I think we're nimble and we're agile. And as a deal team, when the opportunity came with the MAS shares, we assessed the opportunity and in quick succession, we executed into transactions that yielded just under about ZAR 1 billion. So I think we'll continue to assess opportunities in the market, but our primary focus is on disposing property assets to reduce the gearing.

Thank you. The next question is from [ Valentine Amshali ] from [ Ohmsben ]. They say the interim number shows a 3.2% decline in asset values. Do you think the valuation write-downs have bottomed given the current trading metrics? And assuming no further hard lockdown restrictions, is a similar view being expressed by valuers?

It's a very difficult question to answer. As I've seen this, our life has changed over a month-to-month period. So we definitely feel that at the point in time, the right metrics we use for the valuation. However, if trade persists to go down, if we go in a further lockdown, we don't know also the extent of the vaccine rollout, that will all play material factors in the valuation. We firmly believe, if we look at where we are trading our assets, certain of our assets at this stage, our portfolio is fairly valued, looking at what the outside market is prepared to pay for certain of our assets. So in summary, we feel the portfolio is well -- they're fairly valued. We don't have a crystal ball on what's to come. But if things would stay constant, we would not expect a material big deterioration of valuations.

Thanks, Jackie. The next question is from [ Nick Riha ] from [ Signal ]. He says he has a question on the refinancing of debt. What interest rates are being negotiated with the banks? Will Attacq fix these rates?

Pete, are you going to take that? Or -- yes.

I can maybe answer that. Yes. So we've embarked on, like I said, a major refinance involving our ARF and LBOP portfolio. It involves a number of lenders. So it's actually a good indication of, I think, where the market is pricing credit at this point in time. We've seen margins widen from the previous refinance that we've done on the transaction some time ago and I think really is reflective of where the credit markets are today. Early on in COVID, we saw liquidity spreads widen. I think those have narrowed. But we predicted, and I think correctly, so the credit margins would widen and that's what we're seeing now. Without talking to specific rates, what we see in the market is that we can achieve similar or perhaps slightly better margins than what our REIT peers are doing in the debt capital markets space. And so I think, from an Attacq perspective, a relatively good outcome. But I think, overall, definitely, margins are widening.

Thanks, Raj. The next question is from Madalet from Denker Capital. They say, have you adjusted your required returns for development projects?

Risk-adjusted?

Yes. So I think, again, it comes down to allocation of capital. And perhaps that's the indirect question, are we allocating capital correctly, are we selecting the right developments to back and put what is a very scarce commodity now being capital. And I think that's the attention that we have as an exco team and as an Investment Committee, when Giles and his team bring developments that obviously get them quite excited. We look at our cost of debt, our cost of equity and also our long-term objectives in terms of rolling out the city, and we've got to come up with a balanced view. And when we look at developments, we are really becoming very selective on the type of deals we're doing. We're looking for blue-chip tenants, and we're looking for long-term leases. And if we -- if there's an element of spec involved, then there's the next natural aversion to approving a transaction like that. And so absolutely, has our approach on approving developments changed, yes, it has.

You want to add? Okay. Thanks, Raj. Okay, final question, team, is from [ Ryan ] at [ MIGO ]. He says, hi, team. Thanks for the presentation. Please can you unpack the retail and office reversion rates on renewals? Was this due to a specific or single tenant? Does this reversion rate include both new leases and renewals? And can you expand new renewal reversions, please?

Okay. I'll take this. So let's quickly start with the retail. So on retail, we had 29,000 square meters. So firstly, the question is, it is not new leases. This is only represented on renewals that we have done in the portfolio. And as said, in October this year, we had a material big renewal cycle at the mall, Garden Route Mall. So of the 29,000, we had 20,000 square meters of tenants at Garden Route Mall that came up for renewal. And it was not one single tenant. It was a myriad of tenants in the particular mall. So unpacking that, our average rental on our retail section went from ZAR 240 to ZAR 250, and it's reset to about ZAR 200 to ZAR 180 a square meter. So just to give you the order of -- it was predominantly Garden Route Mall, October last year, and we sat with a lot of uncertainty at this time. The negotiations were tough with tenants. And certain of the tenants, we did long leases, and certain tenants, we did short leases just because of the sheer nature of uncertainty we faced when we were renewing certain of those leases. So in this leasing round, there was quite a lot of soft deals just to get the tenants through these uncertain periods at Garden Route Mall. Then at the office market, it was only 4,000 square meters, which I think represented 3 tenants. I'm looking at Debbie, our Asset Manager, of which one of the material tenants did not renew in the mall of -- in MOP, in Maxwell Office Park here in Waterfall, for various reasons. I think we mutually parted ways with the tenant. And then that particular space, we have relet. We have relet that space, which is not in these numbers, at ZAR 140 a square meter, which I think is well above the rates that is currently achieved in Sandton. And we've also got thresholds of deal limits, where we would not want to drop our net rental rates within the Waterfall Precinct. So sample size is very small. But is there reversions? Definitely. Long leases that have been tracking 7% to 8%, rental escalation has definitely come down, and that's also a big factor of the reversion that we are seeing in the market.

There's one more from [ Nick ], sorry. [ Nick ] from [ Signal ] asks, is it encouraging to see the recovery of trading densities in the Mall of Africa? Can you comment on this trend subsequent to year-end?

Yes, we can. January has been, throughout the portfolio, very, very slow as January is always a slow month. I think this has been exacerbated by trade restrictions. We all know the level 3 lockdown, the second wave, so we definitely had a very tough January. As I said, February started, we've got an uptick, Mall of Africa definitely showing recovery on trade and also all of our other malls. It's going to be a slow uptick, but there's definitely a positive trend. We're seeing footfall coming back as well as our restaurants trading also materially better since Valentine's Day. Yes. Are we done? All good. Okay, good. Thank you very much for attending. And then as Melt has said, our door's open, contact us with any further questions and also contact Brenda if there's any required for any further one-on-one. So thank you, and have a good week.

Thank you.