Attacq Limited (ATT) Earnings Call Transcript & Summary

Ladies and gentlemen, we will [ introduce ] the management team. Alternatively, if you're in the audience, please raise your hand, and we'll give you a mic, and we'll let you go in to ask your question. I now would like to hand over to Jackie. Go ahead. Thank you.

Thank you so much, Yesh. Can we please give the presentation up? In the meanwhile, good morning to everyone. It is absolutely fantastic to see people in person visiting us here at Waterfall. There we go. So thank you so much for everyone in person and everyone online. Good morning. Thank you so much for your time and logging in online. And then a big, heartfelt thank you for the Anchor and the RMB Morgan Stanley team for helping arranging us the day. So today, it's a really good day for us. We've got our pre-close to just chat about what we have done over the last 4 months in Attacq, but also walking the city, and I think that's vitally important. Being in real estate, we get excited walking our sites. And just sharing with you what we've done over the last 24 months, I think despite the pandemic and riots, as we stand back here today, we feel quite humbled in what our tech team has done over the last 18 months. So welcome, and thank you. How will this morning's pre-close look? I'll just start with a strategic update and a performance summary of Attacq. Raj is online. Raj has got a 7-day-old baby, new firstborn. So congratulations once again to the Nana family for the [ 7-day-old ]. And Raj, we must not see you at this presentation. You'll be in trouble. So stay at home with mommy and baby. So Pete is going to take over the capital structure today, and then we're going to hand over to Mike to give us a bit of an update. And we've got quite a bit of really nice, rich data to share with you, especially on the retail side, how we see behavioral changes, what's coming back, what is the new norm. And then Giles is going to give us a really good insight about the strategy of the city. What are we going to do with our bulk? How are we progressing with our development activity? And then we'll talk about our other investments with Pete as well. And then we'll open up the floor for Q&A. So if we stand back and we look at our strategic performance and summary for the year, we say that our vision is to create sustainable value for all stakeholders through a value-based strategy. And a lot of people say, "Okay, Jackie, but what's this value-based strategy that you keep talking about?" So we've broken it down and said we're a precinct-focused fund. We only focus on Waterfall. The Waterfall development is our core focus from a capital allocation point of view. And then our precinct is [ throughout ] South Africa. We have learned. A lot of people ask you, what is the lessons that we've learned over the last 18 months? Rapid changing environment, behavior changes. So our precinct focus having a scale of economy of real estate definitely works very, very well for us. And that's definitely going to remain our focus for the future. And we're also building up the skill and the expertise within Attacq to enable us to roll out these type of precincts. Our collection rate is at 95.6%. We've got leasing deals that's taken BO just under 42,000 square meters. Our team is currently working on a [ 20,000 ] imminent transactions hopefully to close it. And predominantly, these leases are office leases that we're talking about that the team is busy working on. Retail trade, we've definitely seen levels pre-COVID from a spend point of view. We see the footfall lagging still a bit, but Mike will go into quite a bit of detail on that. And we've earmarked ZAR 1 billion worth of strategic assets to sell. So this is noncore assets of Attacq. What have we done as a team? We looked -- sit back and looked at what assets from a capital allocation point is not making sense for us. And really, what will we do with that ZAR 1 billion is we'll give it to Pete and Raj, and we'll see how we can further improve our capital structure from an Attacq point of view. On the development side, our resi development, and we'll take you to go and see the Ellipse development, the first 2 buildings that has been completed. We're busy on Phase 2 now. And I think you've hit your presales targets almost. And then the mix, the smaller apartments that we're also busy selling, but we'll go show you today what is the mix about and how the Ellipse precinct is turning out. The development is under construction, just under 40,000 square meters predominantly in our logistics side. I think, Giles, we've run out of some land in the logistics land. And our next big focus is our Sanlam land that the team is working hard on proposals. And that's really the new venture will be the Sanlam JV land and focus on the development side REIT. Capital structure. If we think about what levers do we pull to maintain the strategic focus of being a precinct-focused development, a sound, healthy capital structure is very important to us. It is always going to be a journey for Attacq to get to the ICR levels and the LTV levels. We're looking at some various interesting development activity, but also how do we improve our capital structure and also remain a REIT plus developed. And that's always a fine balance that we as Attacq need to maintain. But if you sit here today, we've got liquidity levels of ZAR 1.6 billion. Pete will go into quite a bit of detail on the refinance, and that's why we've got the fund this year to show them what they're funding. Gearing levels added June valuations below 40% and the strategic exit out of Africa, which we'll -- Pete to talk about today. And then creating sustainable value for our shareholders and our stakeholders. We always talk about what is the strategy and what is your capital and what is your ICR, but the very, very important resource sitting with us is our culture, it's our people. We can sit with all the money in the bank. But if we don't have people that's got the skill and expertise to actually roll this out, we'd be lost. And that for us is very important. Our company culture, how does the people understand the structure? How do we communicate it? And we're very much driven off the experience of Attacq. How do we interact with our clients? You'll notice the subtle changes is we don't call it tenants anymore, it's a client because we have to service our clients. And a very important part of us is having a diverse workforce that's mentally strong. And we have seen remarkable people over the last 18 months, and we actually salute our Attacq staff. We've got frontline workers getting malls up and running. 4:00, we've had to fight off riots. There's so much that has happened, and it couldn't have been done, a remarkable set of results, without the Attacq employees. So that's a very key part, it's the resource and the ability of looking after the capital and our real estate portfolio. Then the second part of our vision comes to -- we say we want to ensure a positive impact in our communities and our environments we operate in. And you'll notice that we're getting a big change this year is we changed our reporting suite this year. So we -- last year we had an IR and an SR sustainability report. And we had long debates internally and robust debates amongst my fellow exco members and Brenda at IR, are we going to merge it into one? Because our vision is it must be an integrated vision. ESG cannot stand alone, technology innovation. It is the driving force of what we do in Attacq. So we recombined the report, and it's complete and integrated reports. On environment, the team is busy with further green certifications of our buildings. We're also looking at an energy resilience program, and that also touches with what are we doing with innovation? What does innovation mean for Attacq? So you've got a capital structure lever that we can pull, so we can sell assets. But we also need to be clear for how we manage cost of occupancy. And that comes in clever energy management. And those 2 are very much linked to each other. So we're looking at how do we innovate the cost of occupancy for our tenants, for ourselves? It's not just putting PV on the roofs. It's how are we clever with our energy. So Giles and his team are working on a big innovation program, which we will start evaluating early next year. And we'll put some serious capital behind the energy business of Attacq as we do use quite a lot of energy in Attacq, and that piece where the magic happens in our cost of occupancy for our tenants. Social. We've achieved a Level 3 B-BEE certificate in September. And then very proud, we embarked on like a Rise Against Hunger, which we've packed 90,000 meals over a day. And that all goes into the communities of Attacq. It's our communities. We look after our communities and we build our communities. Our governance, very proud to say that we've launched a company-wide ethics program. As governance for us, it's about ethics and the way we conduct ourselves, the way we handle our business. And the innovation, as I spoke about, very much driven on the cost of occupancy. And then Mike is busy with his shopping app, and we're busy further developing the POC that we're busy developing and really making sure that the behavioral changes we capture and we'd be able to bring the spend back into the mall but in a clever way. And Mike will talk all about that. And then the technology. Embedding new technology in everything that we do where we've seen quicker decision-making, better way of harvesting our data. And we'll also show you how we're starting to look at behavioral analytics, putting that into one and making better informed decisions. I always say I'm a person that looks at the gut feeling, but sometimes I do need data to make a better decision. And that's why we're building a modern data platform, harvesting all of the Attacq -- pooling all of the Attacq data together. Just once again, the Attacq focus areas on our DIPS. Definitely, the Waterfall story, Rest of Africa and other investments, which is MAS in Africa. Definitely, we'll see that the DIPS will turn to the positive with MAS declaring a dividend this year. So the future will look vastly different. From a DIPS point of view, where does our risk lie in our income side of our portfolio, is the uncertainty of the reletting of the [indiscernible] building. We'll pick up in the documentation [ a little tromp around ] Waterfall Circle. Our team is busy, hopefully concluding quite a big transaction in the next month, where we will be able to relet that building. So that definitely we see as an uncertainty sitting in our DIPS, but then also I think there will be a lot of questions of what's happening with the Cell C lease. Our core strategy with Cell C is reducing the footprint with Cell C. And in the next few months, we will be able to start announcing that strategy. We actually go into our investment committee this week on the first phase of what the team is currently executing, working with Cell C, reducing their footprint, but also protecting as much as possible as our DIPS, very big focus for us. And then on value, the big question will be what will happen with valuations in December. We're definitely getting a feeling of a stable outlook, but last week was the Omicron virus. We were scared about what's happening with the fourth wave. So I need to qualify the stable outlook with all the external factors that we are not controlling. But we're definitely seeing a stable outlook, and then also a big focus for us is the disposal of the ZAR 1 billion assets. I'm now going to hand over to Pete.

Thanks, Jackie. Yes. I did offer my services for babysitting to Raj, but he doesn't trust me. So I'll take you through the debt slide. Just a couple of things to point out on the debt slide. We're comparing June and September. For the first time, we got quite low debt levels from -- in history. I don't know how many years back you'd have to go to see when we're below ZAR 9 billion. Euro debt, totally settled now, that to use some of the proceeds of our MAS disposals. So that would have been settled early in this 6-month period. Gearing, as Jackie has already mentioned, below 40%. That's obviously [ low ] on June goals and September debt levels. We've got quite a high debt or high hedge percentage, 80%. The reason for that is [indiscernible]. Based on last year's disposals, we took the decision not to settle the hedges. It's quite pricey to unwind hedges at the moment just given the shape of the curve. So you'll see that our hedge percentage has gone up as well as our ZAR weighted average cost of debt has also popped up a bit because we've settled some of the cheaper debt but kept some of the hedges on. If we look on the bottom right, there's an impact of what happens as our hedges roll off. Now bear in mind, this assumes that the base rates remain unchanged, which is not going to happen. And it also doesn't take into account that as a group, we do have a 70% minimum hedge percentage. So we just show you what happens over time, how the September weighted average cost of debt evolves. But obviously, before we get to 31 December 2022, we would put on some new hedges to maintain our 70% hedge ratio, unless for some reason, we decide to float more. But I don't think that's going to be a decision we would take, unfortunately, just given the nature of the volatility and uncertainty in the broader economy. So not floating is -- it seems attractive now when rates have fallen so fast and so quickly. But it seems like there are inflationary pressures building up also in the world, which will translate into imported inflation in SA. So 9.1% to 9.4% weighted average cost of debt. And then just from a covenant perspective below, just to reiterate, we've got a group gearing ratio covenant of 60%. And we've got a minimum NAV of ZAR 7 billion. Those are standardized across all lenders, and we have got no interest cover ratio covenant. Looking at our debt maturity. Just bear in mind, this looks at -- this is bucketed from all 12 months ending December. So it's not a September snapshot. It's already a December viewpoint. There's not that much activity. We've certainly had more refinance activity in prior reporting periods. So within the next 12 months, we've got just under ZAR 1.5 billion to refinance. We're already very far advanced in concluding the refinance of just under ZAR 1 billion of that. If you don't believe me, you can check with some of the bankers in the room. They are available, and please speak to them about our margins as well. Then just liquidity perspective, ZAR 1.6 billion as at September, made up in various forms. I think it was ZAR 1.7 billion as at the end of June. Obviously, it is a fair amount of liquidity. It reflects a lot of the work that's been put in by the team to dispose of assets, to shore up the balance sheet, to reduce debt. And unfortunately, the uncertainty in the world doesn't seem to subside at the moment. So I think we're quite grateful to have a fair amount of liquidity and optionality and some balance sheet strength going into whatever the next cycle brings. I'll then hand over to Mike.

Thank you. Thank you very much, Pete. So if you guys were wondering whether I'm new to this or experienced, the fact that I can't read a single number at the back of the room on the auto board means that I'm new to this. So if I misquote a number, I do apologize. Just quickly running through our occupancy levels. So a quick update on where we are. These occupancy numbers are as at October. In Waterfall, you will see that on the retail experience hubs, there's an increase in the occupancy That's, of course, coming off the Mall of Africa renewal cycle that happened in April. We spoke about that at length in our results presentation. And you can see the uptick there in actual occupancy. Of course, as we move through to the festive season, a lot -- a few more guys are taking occupancy, trying to be ready by the start of the festive season. And we will see that number increase. Let's just stop at collaboration hubs quickly, some numbers that might make you jot a little bit, but let's get behind them. So if you look at collaboration hubs in total, the decrease in GLA are affected by 2 big events. The one is that we don't disclose Deloitte in the new numbers anymore. So if you look at the total occupancy number in terms of square meter each, of course, you have to exclude our 50% Deloitte number that's included in June. And the [indiscernible], which we now call Waterfall Circle, was vacated during September month. That's 24,000 square meters. And that has led to the increase in the -- or the decrease in the occupancy number, specifically for collaboration hubs in Waterfall City. What's happening with the Waterfall Circle building? There's 10,000 square meters that's currently under offer. What does that mean? We're just busy finalizing commercials. So hopefully, very, very soon, there will be a lease agreement signed. We've also got 6,000 square meters of the balance of the space under RF -- request for proposal. So that request for proposal has been submitted. We follow their time lines. It's not ours, but also potentially if we are successful there, that should be 16,000 square meters in total of the 24,000 taken care of. Maybe talking through -- we have to deal with a lot of vacancy. There's a lot of sort of dealmaking at the moment. Where is our focus going to be? Let's talk through the expiry profile. As you can see, our expiry profile really only starts kicking up from 2024. On the retail side, really focused around Brooklyn Mall and MooiRivier Mall. And on the collaboration upside from 2024, really focused kind of on a multi-let Maxwell Office Park, the Allandale building. It's also about 10,000 square meters in Pretoria coming up in 2024. And the intention here is to show you that we have the ability to now focus internally on getting our occupancy levels up as we don't have to focus in the short term on a lot of leases that are falling off the natural expiry profile. On collections, just over ZAR 6 million worth of discounts already provided for this financial period. This all happened in July and August of this year when we went into the third wave. Questions around what's going to happen now in December, I can't tell you. I must say I am heartened by the President's speech last night, sort of very pragmatic approach. Let's look after the economy, let's-wait-and-see approach before we enter into more regulations. But what we'll see later in some of our other data points is the people also self-regulate. We don't need laws to tell us what to do. At certain points in time, we actually changed our own behavior. And potentially, we could see that over the December and January period. Just on collections, if you look at the collaboration apps, the portion for this financial period includes Cell C. So with the current arrangement with Cell C, they don't make full payment on the lease agreement while we are in negotiations with them, but we have included the full amount there. That's why that's not 100%. And in July and August for retail experience hubs, you can clearly see, as we went into the negotiation cycle, potential discounts, et cetera, means a delay in collecting the money. But by September, you can see we are then able to collect those monies once those deals are in place. A slide everyone loves. Just quickly trying to rebase our turnovers and foot count for the entire portfolio back to sort of a 2019 level. What you'll clearly notice in the bars are turnovers, the feet are -- is the line graph. The line graph is consistently below the 100% threshold, which is basing it back to 2019 levels. The bar is coming back really nicely. And if you look at the last 2 red bars for September and October, they were sitting at 102% and 109% of total turnover for the portfolio compared to the same months in 2019. So we were fairly comfortable that a lot of our retail assets were bouncing back quite well from an economic perspective, an economic activity perspective. But let's see what December holds for us. On behavioral analytics, we thought -- we talk a lot about data-driven decision-making. We talk about thinking about our assets differently. And we're going to start to slowly make you used to seeing the kind of data that we see and we look at and help you understand how we look at our assets, peeling back the layers slowly. So generally, you'll have a classification of assets. It might be regional, super regional, convenience. But when we add elements like loyalty and dwell time, all of a sudden, these assets start acting differently. Now just pointing out 2 things that might be of interest to you. If you look at Mall of Africa and you look at Lynnwood Bridge, you will see that the loyalty rate is closer to 60%. What does that loyalty rate mean? It means the same individual mobile device, and that's the way we count this. It's not individuals, it's a mobile device, but it turns within 30 days. Why would that be for a superregional and maybe a place like Lynnwood Bridge? Well, the restaurants, maybe the theater in Lynnwood Bridge. So you can clearly see these assets act differently, and they attract a lot of new visitors. If as an example, you look at Garden Route Mall, and I believe it's MooiRivier Mall if I do recall the data, you will see that the loyalty is very high. It's closer to 80%. So a very, very high frequency of return within the same month. And you will see the dwell time closer to 60 minutes, not closer to sort of the 70, 80 minutes. And what that means is people actually use these assets as a convenience center. They return frequently, and they return for short periods of time. They know what they want. It might be a grocery, it might be a butcher and [ then they leave ]. And these are all elements that we consider really on a daily, weekly, monthly basis when we have our meetings internally with our management teams. We look at these type of data points to identify and execute on new strategies. That's it, Giles.

Thanks, Michael. Welcome, everybody. From a development perspective, we're looking at the render. That's the aerial render of Cotton On. That's the site we'll be going to later today, going inside the costing slabs on the inside of that. And that's the new -- what we're seeing is the emergence of a hybrid asset class, that we call it a hybrid for use of a better word. And that's where we are seeing the white-collar front office and the blue collar back -- the warehouse and the back office starting to merge in Waterfall. So this is a classic example where Cotton On merged their Rosebank head office with their Pomona warehouse into a single site that drives the culture that the business is trying to achieve for Cotton On. It gives the convenience of being able to walk or drive literally across the bridge into the city with all the convenience of hotels, restaurants, schools, et cetera, exists. So a lot more of these are starting to emerge on our radar, a lot of inquiries in this space. And also from a 2,000 warehouse and a 2,000 office to here, which is a 2,000 office and a 20,000 or 18,000 warehouse. So it works in big and small versions of the same. Just recently updated the master plan for the city. So this is now a reflection of the planning, which is in the colored segments, overlaid with the latest Google Earth satellite imagery. And you can see those that are aware have seen this evolve over the last couple of years. A lot more activity to the right-hand side of the picture. So that's the Munyaka [ coucou ] developments by Baldwin. That's emerging on the eastern side of the N1. We're joining that section now with our first industrial development on that side of the freeway. So along Allandale Road, we're opening up our first JV industrial park this summer. That's going to be called Waterfall Junction. It's got about 186,000, just under 200,000 square meters of new top structure bulk. That land is being serviced and the [ K113 ] road has been built. So that's now bringing onstream, hoping to be able to start perimeter work on that around February, March. And that's, again, dependent on counsel and applications. But the rest of the city evolving pretty much along the trajectory of how it was planned 12 years ago. The central, the green pit in the middle, which is the CBD, which we're sitting in right now. The orange along the N1 is again is a transition zone. We're looking at that as a slight change of use for that space. When this was designed 12 years ago, there was a trajectory in the economy with a certain rollout. We have highs and lows in those rollouts. A lot of you who have been in these audiences with me over the last couple of years, we have good years of 60,000 square meters. We have average years of 40,000, and we have bad years of 20,000. But on a cyclical nature, that's the nature of real estate. So that is where we're going to get to is the orange. As I said, the green is well underway in a proper mixed-use environment. The blues, as Jackie mentioned earlier, we are almost running out or have run out of industrial space in the Attacq sectors. So our 4 parks there. We've got 3 sites left. One can accommodate a 4,000, one can do a 7,000 and one can do a 12,000 square meter box on those. Anything above that, we have to now migrate over to the JV land, which is in the darker green. But as a whole, I think really points a picture that Waterfall is a big ecosystem. It's not Attacq, and it's not just the CBD that we're in it. This is an environment that has a spread over 2,200 hectares. That's 22 square kilometers, 8 schools, heliport, all the way through to up to 22,000 residential units will be built in Waterfall. So the ecosystem supports us and we support the ecosystem. And I think this leads into what we call the sale. So this is essentially the CBD. This is where the bulk of our focus is. This is the pure mixed-use, walkable, safe, secure precinct. Running through the numbers on the left. I think we're pretty consistent in the rollout of what we're doing. I think there's less spec now than we've ever done in Waterfall's history. And I think we don't need to do spec now. We are developed -- we are doing tenant-led developments, primarily in both commercial, which is the logistics space and in the collaboration hubs being the offices. Offices are not dead. They are just different. They are -- there's still a migration to Waterfall. There's that flight to quality, flight to sustainability, that flight to efficiency. We do have a very high percentage of international companies that have their Africa or South African head offices in Waterfall. It's over 70% of our corporates. They are looking for the same sort of thing. That thing is the ability for their staff to be able to walk the 200 meters from their office in a safe, secure precinct to the mall, to a hotel, to their schools wherever their kids are. So that's continuing to be the theme of Waterfall in the CBD perspective. Collaboration hubs just recently completed building 6 in corporate campus. That's our joint venture with Zenprop. That pull is 100% pre-let. So both tenants we were going through the fit out last week, looking ready to trade in January. Both of those will open the doors in January going through the last bits of fit out. They're down to the developments under construction. Cassini Tower, which is Phase 2 of Ellipse, has broken ground. You'll see the 2 cranes up. We'll look down on that building site shortly when we leave after this for the tour. Residential still continuing to be a good performer in Waterfall -- inner city residential. So that's not your normal home, your sectional type of home. This is multi-unit, multi-storage dwellings. And then collaboration hub, as I said, it's not dead. We are still -- we still have inquiries daily for corporates moving to Waterfall. I think the balance for Attacq is to get that fine line right between do we build a new building for an inquiry or do we find that inquiry a home in an existing building? But historically, our low occupancy rate -- sorry, low vacancy rates on those collaboration hubs means that we can't always fit somebody into an existing building, those odd spaces. We have to build new. So that's why we continue to see new cranes up, continue to see offices emerging in Waterfall. Both our Corporate Campus Building 7 and Nexus Building 1, Nexus Building 1 is in the complex we're in now. This is the hotel that sits part of the Nexus complex directly behind us. That's 53% pre-let to an international tech company with now inquiries -- as we're getting closer towards the end, we start to see a rush of inquiries on buildings. I think corporates are leaving it slightly late. They want to move in, in 3 months, and it's -- that doesn't exactly work that way. But we are working on getting those 2 floors let. And then logistics hub has still been a star performer for Waterfall and for Attacq. The Cotton On DC, we'll walk through that, and then we'll be right next door to the Vantage data center. So that is a very, very large data center in the context of African context. That will be the big [indiscernible] on the continent when it finishes all 3 phases. Currently, in Phase 1, we will see -- we took the crane down on Friday on that. So the -- and there's only one crane up. We won't be able to go into that site, but we will be able to see it quite upclose and what's going on at data centers. And on the back of that, we've had a number of inquiries for new data centers into the Waterfall node. Why? Primarily being the center of -- the geographical center of the greatest metropolitan. But most importantly, the direct Eskom power fleet. So we are a direct Eskom client as opposed to City of Joburg. That gives us somewhere between a 12% and a 15% saving on electricity charges. Considering the data centers are the single largest consumers of electricity in the built space, that is a massive, massive benefit for them. So a lot more inquiries and hence, the need to jump across the road or across the car train, so to speak, from an industrial perspective and move into a new precinct called Waterfall Junction, which we'll talk about a little bit later. And that's over to Pete to talk about some other things.

Some other investments. Thanks, Giles. Investments in MAS, we've still got 46.2 million shares. As I mentioned earlier, all of our euro debt, which was previously associated with this investment, has been settled. So it's totally ungeared. At the moment, we are looking to hold the share. We had the opportunity to meet with MAS management, as I'm sure a number of you had last week as well. So we get asked often what's our plan with our remaining MAS shares, seeing as they're ungeared. And MAS has returned to paying distributions. We're very happy to sit on it for the foreseeable future. Very capable management team. They've executed well on their strategy. And they got a number of exciting opportunities in Romania and the rest of CEE on both the commercial and the residential side. So the fact that it's also returned to paying distributions, as I mentioned, is hugely accretive to our DIPS. So very happy to sit on it for the foreseeable future. Rest of Africa, ourselves and Hyprop had previously announced the Ikeja disposal. We're still parking that disposal. At the moment, it's on hold just given the current status of the worldwide economy as well as the dollar liquidity issues in Nigeria. So we do reevaluate it on a regular basis with ourselves and the purchaser. But there's no meaningful news there, and we'll just have to see if economic conditions improve, and we can get that transaction closed. Other than that, we've got exposure to 3 commercial malls or 3 malls in Ghana via AttAfrica. There is some interest in those assets to take them all. It's very early days. So there's nothing formal to announce yet, and we are progressing that between ourselves, Hyprop and the prospective purchaser. And hopefully, we'll have something more meaningful to announce to the market in the next few months. But I also caveat it is Africa, so it does take very long. And our prior experience has shown that from where we are now to closing a transaction takes anywhere between 6 to 9 months if things go well. Thank you.

Thank you so much, team. I hope that there's a little bit of insight of what transpired over the last 3 to 4 months in Attacq. We're going to open up for Q&A now.

Giles, I was just wondering, we signed a big lease last week. Are we allowed to announce it?

Not yet.

Okay. I can -- look, it's a 50,000 industrial logistics warehouse we have signed. So I'm not allowed to announce the tenant. It will be a JV, that I can say. So hold me back.

Thank you very much to Jackie and the team and to Brenda for putting together the presentation. I know a lot of effort goes into these presentations. So I know extremely useful for the investor communities. So thank you very much for that.

Pleasure.

So just -- we're drawing questions from 3 sources. The first source is from the webinar where you can type in your questions, and you receive these from myself [indiscernible]. The second source is from -- we have a small [ card here ] so raise your hand if you have any questions. And the third source, Raj, Yesh and myself prepared a few questions that we can ask. So moving to the first question from the webinar itself from [ Justin Cousins ] at [ Berdin ] and it's probably directed at Raj. The interest cost at Attacq is slightly higher than what we see across the rest of the sector. Could you please tell us what's driving that? And also how you see that potentially normalizing back to what you see across the rest of the sector?

Great. Can you guys hear me? Yes. Can you guys hear me?

Raj.

Raj, are you...

Can you guys hear me?

Yes.

Good. Yes, I think we've got a separate but similar question from -- I think it was Nazeem on the chat box. Just -- so maybe let's spend a couple of minutes on debt. I think Nazeem specifically wanted to understand the debt slide, where we projected what the cost of debt could look like over the next sort of 2 years and a bit. And his question was based on the [Technical Difficulty]

Raj.

7%, which means... [Technical Difficulty]

Raj, we can't hear you.

And then you add a margin on that... [Technical Difficulty]

Raj, we can't hear you.

We can't hear you. Should we redirect that to Peter?

Yes, just don't compare the answer later. Okay. Let me try and channel Raj. Let's see if he comes back. But a good question, Justin. I think what Raj may be saying or what I'm going to say anyway is I think we -- obviously, we come from a capital growth, capital structure. So if you look back in time, we had an approach of gearing very highly. Sometimes all we had to put in was our land, and then the rest of the property was geared. So a very highly geared model, which does impact your cost of debt. On top of that, especially for some of the tenant-led developments in the early days, we took the view of then putting in debt for the entire life of the tenants as well as hedging for the over debt life as well. So it is expensive debt. But we also didn't have a tolerance for risk appetite at that stage. At that stage, a tax interest cover ratio from a group perspective would have been a little bit over 1. So a very different environment, very different market. And I think just given where interest rates have gone so quickly and dropped now below, it looks like a fantastic opportunity to somehow access cheaper funding rates. But the reality is to unwind hedges is costly. The curve at the moment isn't very favorable to do so. And we could take the approach of using up some of our liquidity now to settle hedges and then float more. But then essentially all we're doing is trading balance sheet for profit and loss at the moment. So that's probably not the most -- best use of our capital, just given the uncertainty at this time. So yes, noted that our cost of debt are higher than some of our competitors in the market, but very different business models from which we stem from. And unfortunately, something we're going to have to ride out and fix over time. The only quick fix is going to be for our bankers, for some reason, let us off all of our hedges at no cost and drop our margins significantly. But no pressure.

There's a question for Giles. Maybe Giles, maybe give us a status update on progress in terms of updating the composition of mall price to allow for change in the use of -- change in use to alternatives.

Thanks for that, Yesh. Yes. So Waterfall 12 years ago rolled out a theoretical city layout with a theoretical allocation of rights. So that's hotel, residential, commercial and a theoretical amount of those products, 20,000, 30,000, 50,000 square meters. But it was put into primarily a basket of rights. So the rights exist at a high level, and we can then pull those rights down, the city -- working with the city. And we can allocate those rights to a particular piece of land. That also came with a height restriction. So at that point in time, the city was a low-rise environment. That was sort of 6 to 8 floors. I think as we've evolved and as we filled in the way the cities started to evolve and build, we started with the mall in the middle. We sort of jumped to the western side, which is the side we're on at the moment. We sort of anchored the corner with Maxwell Office Park and the hospital, which was done by the landowners. We jumped across to the western -- to the eastern side and built Deloitte. I think the focus has been in the last 4 years is to us to fill on the western side, to the site we're on now, the ring between the city -- the outer developments and the mall, which is that space we're in at the moment. We also moved a lot from the mixed use where there was multiple users per site, where we then -- an example is this, the particular piece of land we're on at the moment. This was designed with the hotel, offices and residential. And the Ellipse site next door was designed with offices and residential. When we relooked at those sites and we saw that we could fill the bulk up but not in that particular order, we moved the bulk rights across each other. So we took the residential rights that were on this site, and we allocated them to the Ellipse side. And we took their commercial and brought it back over here. And what we ended up with is 2 complementary precincts. Mixed-use doesn't have to have everything in it. Mixed-use has to have a degree of functionality. And so the answer is we've got multiple rights that we can allocate to various sites. The bulking factor we've looked at, bulking comes with a massive premium of parking, a consequence of that. So we've worked very hard in the last couple of years with the City of Joburg. We've been identified as one of the 4 growth nodes for the city of Joburg as a whole. As a result of that, we've had a discount applied to us from a parking, so sort of a blanket parking relaxation. So in doing that, a lot of the sites, which had a disproportionate higher number of parking ratios, have been able to be brought back to reality. So city council has design standards and a parking. It was designed in the '60s and '70s. A lot of these design guidelines or bulking factors haven't been updated over the years. So what we've got now is we've got -- the heights have been increased around the inner core, hence, this hotel above us is now 10 stories. We're going to 18 stories on the residential blocks next door. So the height has gone up. What has that done is it keeps the bulk the same, but it's a taller building. It's a smaller building, gives more area of the ground plane to the human. So a lot more interesting spaces, parks, [indiscernible], pause points. And then we are able to move the bulk around sort of within reason as we see fit. So where the opportunity arises, we can move the bulk to that particular location. We spoke earlier about the hybrid model. So the hybrid model is where we're seeing a lot of interest in this office meets warehouse, small warehouse. To a degree, we've run out of space. So good examples of that are [ Hilti, Westcon ], et cetera, across [ Zimmer ] sites, a couple of you -- the audience have been to over the years. There's quite a lot of interest in that, but we've run out of space for that. That doesn't work 10 kilometers away from the CBD. It works adjacent to the CBD. So there's an opportunity to reengineer and rezone certain parts of land within the fringe of the CBD to attract more of these clean green operations. But as a whole, I think the long and the short of the answer is it's a continual process of rebalancing the bulk, the rights and where we park them. It's a chessboard relative to where the market is. We would never turn down a deal. Deloitte was -- wanted to be on the freeway. They wanted visibility. Yet the focus of the city was on the western side, we're right now. We didn't turn the deal down. We built on that side. So again, of course, some tenants want to be visible on the freeway. Some courses tenants like [ essentially ] wanted to be peripheral city, but just 1 step away. So we've got that opportunity to give all to everybody.

If I may, just a quick follow on, Giles. You just mentioned your relationship with City of Joburg, you guys have been doing a lot of work last few years [indiscernible]. So just give us an idea of your relationship to the city of Joberg, counsel, costs, sort of opportunities, how's that relationship going to be able to understand where are we with that?

Yes. I mean...

So particularly thinking about lockdown in the last few...

Look, the lockdowns -- yes, last year was a tough year, admittedly, from a counsel perspective. So I mean the City of Joburg has its own headaches. I think we have been respectful of that. So we understand. I mean, we deal with City of Joburg at so many different levels, Joburg roads, Joburg water, pick it up from an operational perspective, the City of Joburg from getting STPs, building plan approvals, occupation. So we engage with them at multiple tiers. And the system does work. It just takes longer than we would like. We're impatient developers, but it does work. I think we have had breakdowns over the years where City of Joburg, where they've had a case in the offices, and they've had to decontaminate. And that takes time, and that just adds a delay to the system. But we've never missed the deadline from our side, from a development perspective. We've never missed occupation certificates. We've never missed or never lost a potential tenant because we can't get into the ground on time. The city does have mechanisms to allow you to get a Section 76 to be able to start early while your plans are being approved. So there are mechanisms to derisk that. But the working relationship is a good relationship. We have a good relationship with Eskom. We have a good relationship with [ Cartranse ], with [ Sanral ]. So all of those bodies, even Department of Water and Energy. To get a data center as big as we've got here took a lot of relationships at very high levels to make it work. I mean, that's a -- you've seen in the press, that's a ZAR 15 billion Phase 1 development. It's big. And then when things get big, people start paying a lot more attention. So as a whole, we've never stopped building in the last 4 years. Even during lockdown, we still had permission to run certain sites that were part of the Greater Joburg network, so water and power. We had exemptions to run 24 hours a day during the worst of lockdowns, which was last year. So it is a partnership. It continues to be a partnership, and that's the way we see it.

We got another question from the webinar from [ [ Codel ] at [ Coronation ]. He asked 2 questions. The first one is, can you please give an update on any activity around supporting tenants in the current environment? And also, can you give some sense of the health of the [ turning phase ] in the retail portfolio at the moment?

You want to take that?

Just in time. Sorry about that. So the support is an interesting question. I think we said this a lot when we did our annual results in September in our road show there. I think after 18 to 20 months, we've learned a lot of lessons. So we understand our clients react to regulations to understand the businesses better. So to a certain degree, the assistance becomes less, right? Because we figured out what the sort of new level is and where you should [ try it out ] and what's going to happen when the next lockdown comes, as an example. So to a degree, the number we disclosed earlier, the ZAR 6.5 million of assistance provided, if you compare that to the assistance provided in the previous financial period, you will notice it's a significant reduction. And I think that could be a trend going forward. The second question on the health of the retail portfolio or the tenants trading in them. We've mentioned this before, so I'm going to sound like a broken record, but the recent renewal cycle, specifically at Garden Route Mall and Mall of Africa has allowed us to take a deeper look at some of the strength of our clients and our tenants. And we use that opportunity to potentially not continue a relationship with those that were potentially not economically sustainable in our environment. And that gave us the opportunity to get someone that could trade in that environment and could give us comfort that they could pay their rent at the end of the day. So once again, I think it's very cyclical, but we've used the cycle to kind of make sure both of those metrics are going in the right way.

Great. I have a question for Raj if he's online. What are some of the levers or what drivers you can explore to reach that target of ICR of 2x? Maybe if you can give some color on those drivers, what it is you are looking for.

Yes. Thanks, Yesh. I think there's a couple of drivers that we -- or levers rather that we've pulled in the last sort of 18 months. The biggest one was recycling of capital where we dispose of assets of just under ZAR 2.8 billion, put all of that back into our debt, most of that back into our debt and reduced our interest-bearing debt. And we've seen some relief come through already. And that will certainly go a long way. We'll also see that what's featured in our distributable earnings in the last 2 years also -- rather the last 2 reporting periods has been a significant amount of relief for tenants, specifically in the retail sector, more specifically around restaurants and gymnasiums, et cetera, et cetera. And we're certainly seeing some of that come off significantly. So last reporting period was a lot less than the 2020 financial year. And Michael touched on it now, and it's in the slide deck, we provided some relief in July on the back of the lockdown that was imposed at the end of June. And that will also help us from an earnings perspective, which will then improve our interest cover ratio. We're also again exploring how we hedge our interest rate risk. Historically, we've done that with interest rate swaps. And it's given us the protection that we need when you've got such a low interest cover ratio as a starting point. But certainly, we -- going forward, we'll look at other types of instruments, other types of derivatives that can assist us. Nothing exotic, but potentially give us a range that we can enjoy some variable interest rates, both up and down, but at least in cap and flow the interest rate risk and the benefit as interest rates fall. So those are the 2 major kind of levers that we are busy with. And then, Yesh, we've still got a stake in MAS, and they have resumed the dividends. And that will feature in our distributable earnings and our interest cover ratio going forward. And so that will also provide us with some benefit. The 2x interest cover ratio was a pre-COVID target for us, and we expected to achieve that in the short to medium term. I think in the current headwinds from portfolio perspective, not really a portfolio perspective, but from an [ interdependency ] perspective, we've pushed that out a little bit, certainly not a short-term target, but certainly a target that we, as management, are still focusing on, but it's going to take us a little while longer to get there.

More questions?

Yes. Sure. Raj, just to follow up, as -- [ Ravi ] here. Just you talked about sort of debt on the balance sheet expectation, just recently seen [ how some ] of the property players are resuming the dividends have got the market quite excited. Just kind of talk us through the way you're thinking about [indiscernible]? And is it kind of temptation to maybe -- you're actually building just to get the market excited [indiscernible]. Where you guys think about right now because the people that I speak to are looking to that as potential [ pessimists ].

Yes. Yes. It's a good question. Certainly, it sounds like you're getting excited about the potential [ deluge ] what we like. I think for us, I think our message has been very consistent over the last 12 months when it comes to distributions and dividends. When we were in the peak of the pandemic, we prioritized balance sheet strength and liquidity over paying out the distribution. And we managed to do that by at that stage, it's paying out an interim distribution for the prior period. But then for the full year, we did not pay out the distribution, and we still maintained all of our REIT requirements, both from a tax and regulatory perspective. And then in the last reporting period, again, a big discussion, a big topic between ourselves, the Board, analysts and investors around not paying an interim dividend. And I think our considerations are similar in that we still think balance sheet strength and liquidity are important, but we've done a lot of what we call self-help in the last sort of 12 months, disposing of those assets like I said, ZAR 2.8 billion paying down debt. Our interest cover ratio is still on the light side at around 1.4, potentially on a pro forma basis like we reported the last time 1.5x. And then we've also got to balance with that development pipeline. And the fact that if you've got good tenants with good leases, good escalation rates, good yields, those are the sort of transactions that we want to do, developments that we want to pursue. And it will require some capital, a combination of debt, a combination of potentially some equity and potentially equity in the form of retaining distributions. Having said all of that, we've also said that in FY '22, we will need to pay out a distribution to maintain our REIT status. So without giving you a sort of a firm steer or guidance around what -- when a dividend could resume and what it could look like, those are the considerations. We've also signaled to the market and once again now integrated report that while Street status is important, it's certainly something that we will consider on a frequent basis, whether it makes sense for a company like Attacq with a significant development pipeline that's certainly going to give us growth in the long term and having to balance that with a need by REIT investors looking for the distribution. And like Jackie always says, the property industry is a long-term cycle. And we must be looking at this from a long-term perspective and not necessarily making short-term decisions at the expense of long-term growth. So I'm not going to give you a clear answer on that, but certainly, those are all of the key factors that we, as a Board, discuss on a fairly frequent basis in determining whether the distribution and the REIT status is appropriate for Attacq.

Maybe to summarize, it's taking your regulatory compliance, but also overlaying it with the business in a long-term fashion. And I think that for us is a nonnegotiable. So now getting excited about announcing a dividend if we had the ability to keep it back, to retain capital for investing in a better business, improving at the health of our business in a short period, but preserving the long-term value for our shareholders, that is the decision we're going to make. So it's balancing, but we're a REIT today as we sit here. We continue to have the discussions. And to obtain a REIT, we will need to pay out dividends at appointed time. So -- but it's for us the long-term sustainability of your value.

Great. Our next question is from Nazeem Samsodien at Investec. He asks, is it -- are you able to provide further updates on the Cell C lease and all of that?

Yes. So I can give updates on that. So just also respecting the Cell C business and the Blue Label business, we -- it is confidential, the transaction, which will be made public once both of our Boards have accepted it. But in essence, the idea with Cell C is we've actually stood back and said, "It's just a phenomenal campus." I mean, being on this road, the visibility is just fantastic. So we actually turned it around and said, "Why don't we look at cutting up the precinct?" You know a warehouse, you've got offices, and you've got the walk-in contact center. Plus, we sit with bulk and potentially that [ gas ] can do a filling station on that side. So why don't we turn this thing upside down? And we've also -- that's how we've approached the valuations. The last run is -- we've actually broken it down into separate valuations. We've been engaging with Cell C to say, "What space do they need? And then what can we take back and what can we release but on a practical way?" Don't tell me, "I want half of a warehouse," because I can't lease half of a warehouse. So can we take the warehouse back? Can we take certain elements back? And can we repackage only? So that is the strategy that we've got currently undergoing with them. As Michael had said, they haven't paid all of the rent for the last few months. They are paying the right -- operating right cost and a certain portion of the lease component, which we will collect hopefully in beginning of next year. But by then, we would have a much smaller footprint with Cell C and then hopefully other tenants on that precinct as well. We also looked at subleasing options. It doesn't work. We have to restructure the lease, but it's done. It unfortunately takes time because we have to consider it's a big asset for us. We have to consider all of the elements, Cell C's business plus our business and come up with a win-win situation. So I think we're almost there. Like I said, we're going with Phase 1 to our investment committee this week, and then we'll start implementing Phase 2 with Cell C as well. But it's preserving both values of the businesses.

Can you give us a sense of your disposal profile, maybe a mix of assets?

Yes.

Maybe a sense of who the buyers are. Are you comfortable that you'll be able to dispose of them at top value? Is there any bulk in those assets? So just to set [indiscernible].

Yes. So Cell C is not part of the disposal list. So what is on the disposal list is Brooklyn Bridge Office Park, and it's been for a long while on the asset list. But I think one co-fundamental asset management function that we got right is we got [indiscernible] renewed for 5 years. So we tried to sell an asset that had a short-term big [ slash ] lease so now, Michael and Debbie and the team, now that we've renewed the lease, we've got a long list of suitors. We're currently doing due diligence. So we first have to asset manage some buildings before you can sell it at proper values. Then it's our share in Brooklyn Bridge mall -- can't remember which Brooklyn Bridge mall, Brooklyn mall. And also, we're very comfortable with the suitors. They have currently -- they previously executed a big retail transaction also in Pretoria. So we're very comfortable with the process that we're running there. We've got a [indiscernible], which is a sectional title office box at 2 of the 4 buildings we've sold till now -- the other 2 buildings we are going to sell. So for now, that is on the list for disposal. And then we potentially would have 1 or 2 other buildings that we currently consider. But I don't want to make that public because it is quite sensitive what buildings were we looking at selling. But it's more centered outside Waterfall than inside Waterfall that we're looking to dispose of. So it's a mix between retail and also office buildings that we're disposing.

Are you selling bulk?.

No. We potentially could be selling bulk. Yes, we could.

Could that affect your [indiscernible]?

Yes. That's -- yes, I think it would not have that big impact, but there is a small component of nonstrategic bulk that we would look to dispose of, but to further enhance Waterfall City.

Just a first question on retail. Where is the demand for new retail space coming from? So if you look at like maybe a Waterfall that's traditionally been quite heavy with food and apparel, is it existing tenants looking for additional GLA? Or are you seeing maybe new tenants into that market being affected because you've got vacancies [ at 4 ]. You probably got a plan for that. So that was the retail question. The second was on distribution. I mean, it seems like a reluctance to maybe pin something or put a flag in the stand in terms of distribution visibility guidance. If you look at the risk on [indiscernible] is obviously, and you're well documented. But there's still, I guess, a significant turnaround opportunities there. [ Massive amount of ] [indiscernible] investment. You're getting dividend, footfall is improving. And you look at it relative to 2019, certainly, you're over the half. I mean, where is the reluctance maybe or maybe the rest in terms of hurdles you see into 2022 for you to maybe give a firmer guidance on distribution visibility? Or is there something we need to push out for 2023 and then maybe see 2022 as still the year where you paid down [indiscernible]?

Are we -- start with retail and then I'll...

Yes, I'll kick off the retail question. So if we maybe wind the clock back 5 years, I think there was a big reliance in the retail property segment on guys with international licenses coming to our shores, taking up some GLA. A couple of those examples, some of them worked, some of them didn't work. I think what's happened recently, we've got to commend our local retailers in South Africa. If you look at examples like Shoprite Checkers, the Pepkor Group, Clicks Group, even Mr Price, they're very active in either acquiring new segments or creating their own new segments. [ Woody's ] have now got a liquor store. Checkers have got a pet store. Clicks now run stand-alone baby stores. So Mr Price, obviously, with the acquisition of Yuppiechef going into homeware and kitchenware. So I think a lot of the demand that we are seeing is coming from the local retail segment. And I'm certainly very comfortable with the energy I'm seeing and kind of the engagements we've got with some of our local South African retailers in terms of taking up new space. And that might also include expanding existing brands. It's not just bringing in new brands, but it's really looking, rethinking what existing brands can do and what existing brands footprints could be. So I think it's definitely going to be sustained or sustain us in the short term.

I'm definitely seeing a baby boom happening with Checkers also opening up a new baby store. I don't know if it's a lot of COVID babies that they [indiscernible] more. And return to [indiscernible], what's the future? And I think maybe as investor community [ centers, ] we want to understand what is this ever going to look like from a return profile point of view. And you rightly said we're starting to work out all of those uncertainties. We definitely feel the same, as I said. We're starting to feel that there's a stability in the valuation outlook. I don't like to give -- I need to caveat there is still a lot of uncertainty. But I would hope to say that I don't want to put my -- a firm date on this, but deadline on this. But within the next 6 months, we would hope to have a lot more certainty and also communicate to the market what is the return profile from an Attacq point of view, what is the type of guidance we will be giving to you guys. Because we're feeling that we've got a handle on where's our capital structure. We know what the last bit of sales we want to do. We know where the pitfalls are in our portfolio like the [ transit ] in the Cell C. We've got a plan for each and every one of those buildings. We know what [indiscernible] is from a development point of view. So within the next 6 months, we would have a much more firmer what is the Attacq return profile would be. Because of the uncertainties, that's [indiscernible] pushing out of the future. So I don't think there's been -- there has been a reluctance from our side, but also the level of uncertainty played a lot on the reluctance, promising something and delivering X. But I think those uncertainties are washing through. We understand how to handle the COVID. We know what a COVID lockdown will cost us to -- from an assistance point of view to our tenants. We know how to handle it. So we are definitely being more, I think, from a stability point of view, we're seeing stability. And now we are definitely working on the return profile. And we'll start communicating that to the market and give you guys more certainty of what is the Attacq return profile of the future will be. Where are we from a -- what will we pay out from a dividend point of view, percentage ratio? That is also currently been embedded down from our point of view. As you can see, we are ambitious in the investment in our portfolio from a renewable energy point of view. But once again, it's a capital allocation. We need to be able to invest the capital better than returning it to shareholders. And that all we will be able to communicate within the next 6 to 8 months to shareholders. Sorry, Raj. I put you under pressure here.

I have a quick question for Jackie. So with regards to tax results from the AGM meeting, any comments or thoughts on the remuneration policy? It was receiving 66% -- almost 67% of the vote and the implementation of policy, 75% of the vote.

Yes. Yes, thank you so much. I think it is -- we would have hoped that -- we've tried to reach out to a lot of shareholders pre- that. We think there's maybe some uncertainty, especially with my appointment, having a once-off allocation that the Board has provided me. But we've opened a by special [indiscernible] that goes to [indiscernible] directly. So please open engagement. That is my biggest request. And please contact me, Johan van der Merwe, Raj or our Chair, Pierre Tredoux if there's any uncertainty. We've tried to eliminate most of the uncertainty. But having said that, we will need to engage and understand. We have engaged with certain shareholders and analysts. We understand where their uneasiness felt. It was part of the retention component of the shares that I've received as a once-off. We can definitely say that it is not the ratio of retention versus performance shares that is [ envisioned ]. It is in our policy. It is a much smaller component. We are listening, we're understanding, and then we will definitely see how we adjust the new year policy going forward. So please, I welcome open engagement with all shareholders on that matter as well.

Sorry, I think we'll just take -- should we make this the last question?

A lot of -- great.

Can you talk to us about your gearing levels, given that you have a large development pipeline? Are you seeing 40% as sustainable level? Are you planning to do anything about that? And then secondly, on your disposals, are you achieving anything close to book values or a premium?

Yes. So on the disposals, I think what's evident over the last year, just over the ZAR 2 billion worth of disposals we've done including the MAS shares, we are able to achieve close to book value, and we drive a hard bargain. It's -- you have to pay what are -- our value's worth of our assets. So yes, we are. Good question on our gearing levels and the development activity and the balancing act that we always need to maintain. So we would hope to keep our gearing levels below 40%. We also have got a very ambitious target of over the medium to long term achieve a higher ICR. So what is the levers we can pull to still continue to develop and then also return lower gearing levels? It sits in the disposal of the noncore assets and also with clever partnerships that we bring on board. For instance, the equities partnership. We sold 50% of our industrial assets at book value. And it's a partnership we love with them because they've also got reach into the market with other potential tenants. So potentially in the future, we could do more developments on a 50-50 basis with them. And as the portfolio starts growing, we would definitely see more income coming out and then also, what will our payout ratios be. We will also retain certain of our funds to further enhance and develop our development. So various levels of levers that we can pull. Certainly not raising capital. If you can see where the Attacq share price is, it is a Black Friday special I've come to realize. But at various levels, we would like to pull, but our big aim is not to increase the debt levels over 40%. I think that we worked very hard to get it where it is now.

Thank you very much, Jackie, Brenda, for hosting us again today.

Thank you.

There's been a lot of information, and we really appreciate this, the investor community. So thank you very much.

Thank you.