Attacq Limited (ATT) Earnings Call Transcript & Summary

Good morning, everyone. Apologies for the technical hiccup on this side. Brenda, if you can help me share the presentation? Can everyone see the presentation?

No, not yet.

Yes, yes.

Great. All right. And we're in your hands, so good morning to everyone.

So I could just say a big welcome to tax pre-close update. We want to thank Jackie and Raj and I can't see who else is there, but I think Peter and Michael for making themselves available. And just a reminder to remain on mute while the presentation is being given and between questions when we get to the Q&A, and to ask questions, either raise your hand or post the question in the meeting chat. So Jackie, over to you. Thank you.

Thank you so much, and good morning, once again to everyone, and thank you for the Avior team for hosting us this morning. It's always quite daunting. I was talking to myself and seeing -- look, staring at a presentation. So you guys cannot see the team around us this morning but I would like to introduce the team. So I'm going to provide an overview of the highlights that we've been up to over the last few months. Raj will give an update on the capital structure. Michael will provide an update on the South African portfolio. And then this morning, it's a new and old face, David Oosthuizen, our new development executive, will take us through Waterfall City and the development. So welcome to David as part of the Attacq Executive Committee meeting. Also, David has been part of the Attacq family for the last 5 years so definitely an old new face for us. And then Pete will give us an update on Africa and a little bit of MAS and then we'll end off with the strategic outlook and we welcome any Q&A post the meeting. If we look at the highlights for the year, maybe it's always important just to stand back. We sometimes look at what we've done and we say it's not enough. But the -- we sit in a situation where the global and local inflation has definitely shocked the world with where the projections is going. We've got an interest rate increasing environment throughout the globe. Our domestic economy is -- I would say, we still see the aftermath of COVID. Definitely, we're seeing the retail starting to come back, but there is still pain and the aftermath of COVID. Electricity load shedding, not helping us, the eroding municipal supplies, battling with water supply. And then you sit with a high rate of unemployment in South Africa. So we'll be definitely up against a lot. And all of this impacts not just the economy but the real estate sector directly. And this, we need to be a company that we look at our clients, we offer our clients a high-quality product. We need to be the master of our own destiny and then create a product that also buffers ourselves from the looming economy, where global markets are going and really offer a product that provides a service of extent and that's why we always turn back to our purpose of Attacq, being a client-focused purpose, being a company that is focused on our environment, deeper values than just building the next building is how do we build the next building, how it's a high-quality product, but then also how do we retain our clients for the long term. We've seen, in the last 12 months, the flight of the quality, the flight to safety and then a new word that we definitely sort of putting a lot in our presentations and what we're seeing our clients are wanting is the flight of stability of running your business in South Africa. And we definitely feel that what we offer, especially in Waterfall, it's safety, it's sustainability for our clients and also a lot of stability. Hence, the reason we're working a lot on the Attacq Energy, and we'll provide today an update on where we are and really venturing a lot into adjacent businesses of providing a quality real estate for our clients. So what have we been up to? We've seen a lot of increased activity within our collaboration hubs. Office market, definitely signing up quite a few leases. Michael will be going through the occupancy. But I think a notable client that we signed over the last month, the last 2 months was Reckitt Pharmaceutical taking just over 4,000 square meters, really Waterfall attracting high-quality office users despite where the economy is sitting. The retail turnover and footfall in our retail experience hubs increasing. Over the last month, we have over 1.2 million feet through Mall of Africa. Michael will go through the detail of the retail behavior analytics that we're seeing. But we're definitely seeing that turnovers are back, and footfall is very much tracking back to pre-COVID levels, which is very encouraging for us to see. We've completed just over 32,000 square meters of development year-to-date, and we've got currently, in the ground, 34,000 square meters under construction. And I think a notable stat to share with everyone today is that for the year, we have introduced 44,000 square meters of new clients into our business through our leasing structures. And that for us is quite remarkable. Having an economy that's not growing, the aftermath of COVID and still able to introduce 44,000 square meters of new business in our portfolio, it's a great accolade for our dealmaking teams. On the capital structure, Raj will go into a bit more detail today but really committing retaining our REIT status. I think in the past, there's been a lot of questions. Where is Attacq sitting? So we can confirm from a Board level point of view that we are committed in retaining our REIT status. Our employees also always a very important component. As I said, building a real estate business of the future, understanding the product and the quality we need to deliver, we cannot do it without a strong team. And hence, we're very proud of our internal promotions. Within Attacq, development executive with David, Head of Sustainability, Infrastructure and Land. So what we did is we basically split the old CDH chief development role in two, really focusing on the sustainability infrastructure and land. It's a massive portfolio to look after, especially in Waterfall and [indiscernible] also a chap that's been with us for 3 years, stepped into that new role. And then also, our Co-Sec Executive, I'm actually looking at her, Ms. Wyna, welcome to the team. She brings a wealth of experience to the team also. [indiscernible] and the legal component of Attacq, and we really welcome [indiscernible] 3 days with us so she's got quite a busy time settling in with Attacq. Then on our ESG front, loss in our interim results, we said we will commit to our carbon-based science based targets. We've committed to a 46.2% carbon emission reduction by 2030. We've completed our first [indiscernible] Primary School, and we now will continue with the clean floor through classrooms that we currently are busy refurbishing with the school, but also a great -- I'm getting some feedback there.

Just a reminder to please stay on mute.

Good. So then as we've said in our interim results, we were about to sign a power purchase agreement. We have signed the power purchase agreement for 15 megawatts that will come into effect third quarter next year. So what does it mean is we're exchanging dirty power for clean power at a much reduced rate. So purchasing our electricity of 15 megawatts through a power purchase agreement and then which will be wheeled from the Northern Cape to Attacq and then through an offset agreement with purchasing greener power, also obtaining carbon credits through that for our clients and for ourselves. And then we've also recently launched the second leg to the Attacq Energy story, which is the energy efficiency project. That's in our SA portfolio and really driving the inefficiencies and further more efficiencies within our portfolio in the energy space and really collectively driving our ESG science-based targets, but then also a strong retention strategy and a cost of occupancy strategy for our clients and retaining clients, making sure we keep our eye on the cost but then also driving our science-based targets. So the team has been busy, and I'm going to hand over to Raj and he will give us an update on the capital structure.

Just 2 slides to talk to. The first one is around interest-bearing debt, and I want to provide an update at the end of March as compared to the end of December. So gross interest-bearing debt reduced to about ZAR 8.1 billion when compared to December of ZAR 8.6 billion. That reduction is excess cash that has been placed on core in terms of our access facilities. To note, we still have no European debt or euro-denominated debt. That has all been settled in the prior financial year. Our weighted average loan term is still very healthy at 3.8 years and gearing still recording 38%, gearing percentage. Important to note with that particular percentage, that includes the investment properties as valued as at December, and we haven't updated those valuations. That will next be updated for the year ending 30 June 2022. Hedging, quite a topical subject at the moment. Our hedges as a percentage of our total committed facilities 72% giving us a weighted average term of 2.8 years, which I think is also quite healthy. And our weighted average cost of debt is flat at 9.4%. At the bottom of the slide, depicting our debt and hedge maturity, so quite evident that over the next 12 to 24 months, nothing major coming up for refinancing, ZAR 570 million in the next 12 months and thereafter ZAR 195 million, made up of sort of 3 to 4 facilities. Of the ZAR 570 million, the majority of that will be refinanced before year-end with the remaining done between September and October of this year. What is noticeable, a substantial amount of our hedges roll off within 12 months and then a further 21% rolling off in the next 12 months. This has been a key focus for the team, and we're looking to execute some interest rate caps within the next month to ensure that within our minimum hedge percentage of 70%. On the right of the slide, still a very healthy liquidity position, ZAR 1.8 billion in total, comprising ZAR 310 million of committed facilities, ZAR 377 million of unrestricted cash balances and just over ZAR 1.1 billion of prepaid facilities that are available for redraw. Moving on to the next slide. Jackie alluded to this in her presentation. So really something that we've been chatting about and discussing is the REIT status, and we've communicated that to retain our REIT status definitely will need to be declared on or before the end of October this year. The Board has applied its mind and determined that it is appropriate for Attacq to retain its REIT status. And therefore, we are communicating that strategically, Attacq will be committed to retaining the status. A full year dividend for FY '22 will be considered by the Board and what we communicated with our year-end results in September. And what we also will consider is an appropriate payout ratio going forward. And so that will be either a range of a minimum of 75%, which is obviously a minimum requirement in terms of the REIT legislation, up to a maximum of 100%, and we will communicate that with our results presentation in September. I'm now going to hand over to Mike to give us an update on the South African portfolio.

Thanks, Raj. Good morning, everyone. I wish I could say it was good to see all of you this morning but I can only see the slide that I'm talking to. So hopefully, next time, we'll be able to see each other. Taking us through of some of the key metrics as we stand at the end of April on the South African portfolio. With a focus on occupancy, the big focus in Waterfall City remains Waterfall Circle, so that 24,000 square meters of collaboration of space still actively doing dealmaking on that. Currently, Attacq is part of a tender of 10,000 square meters. We've submitted there. And there are also 2 early inquiries on this space, both of them close to the 10,000-square-meter market. And over and above that, a lot of smaller inquiries on that building. So a lot of activity, haven't landed the signature yet, but certainly, the deal-making team are doing a great job in making sure that, that building remains very marketable. Also, if we look at the occupancy and maybe we look just beyond the square meters. Just an interesting note, I've got an update from one of our team members this morning. We've got very robust customer experience onboarding process for new clients here at Waterfall City. And over the last 2 weeks, we've actually onboarded 360 different employees. Those are 2 clients that actually took occupation of their space in Waterfall City. Those 360 are new customers to Waterfall City, people that come in and out of the city every day. And certainly, those kind of metrics also are very positive for us. On the retail side, I spent some time with the Mall of Africa team last week, just helping them mark something. And on a whiteboard in the general manager's office, there was 8 BOs currently taking place, so that means 8 teams literally getting occupation of their premises at Mall of Africa in the month of July, and that would include brands like LEGO, Socrati and also Lash, so certainly a lot of activity. If we turn our attention to the bottom table around collections, you will notice, we've said there that, that's the 10 months of the year-to-date number for collections. Retail going pretty well, also the ramping up of this business rescue process and ironing out the final details with the practitioner there should also up the collection on the retail experiences. The rest of the portfolio, so those are our collaboration hubs, industrial hotels, that percentage sitting at 94.2. Just a reminder to everyone in the audience that, that does include the Cell C part payment so that means that we raise the full invoice per lease. There's an agreement on how they repay that. And the balance of that set is a noncollectible currently in this report, and that leads to the number of 94.2%. Jackie mentioned in one of her opening remarks, certainly, we see a lot of positives on the retail side in terms of activity. If you turn your attention to the trading densities as a metric. And after this slide, we'll talk about turnovers. But on a 12-month average basis, you'll see our superregional Mall of Africa doing fantastically well 12-month growth of 80% year-on-year. The region is catching up. I guess that 12% up on a year-on-year basis to the prior year, more up 13%. And then you might find that there's a bit of a lag in the convenience centers. But of course, that is due to the higher pace that we set in 2020 as consumers moved their behavior to shop in smaller retail centers with open parking, that kind of saw us kept a rebasing in the total turnover that those assets do collect. And hence, you will see the smaller growth number. So certainly, from our perspective, a lot of positives when we talk about the trading in our assets and seeing some of these turnover numbers increasing. If you look to the right-hand side of the table, we've once again included some behavioral analytics. And this is just once again to show you the difference in behavior between the different customers, Mall of Africa, of course, being a super-regional mall, you would expect the dwell time to be higher at that asset than some of the other ones. And once again, if we look at something like Lynnwood Bridge, a very large client base that of restaurants around there and one thing you'll see that it influences the total dwell time. Centers like Eikestad and Garden Route, high loyalty, that means a high return per customer in 1 month or a 30-day period with kind of a lower dwell time indicates that consumers in those areas really use our regional malls also as convenience centers. So a lot of frequency, a lot of visits. And maybe the dwell time not as high because they know what they want to make the visit to our stalls there. Probably the most exciting slide in my small little deck is what's happened in our turnovers for the centers over the last 4 months. Certainly, you've seen very, very encouraging signs from a turnover perspective. In the past, we've done a lot of comparisons back to 2019. We kind of saw that number, during 2021, starting to rectify and get closer to 2019 so we don't use 2019 as a base anymore. And what you see here is the 2022 turnover numbers per month compared to the same month in the 2021 period. And certainly, Mall of Africa really benefiting from consumers returning to physical spaces. Just in April alone, turnover up 32% on the 2021 number. Incidentally, in Total Quantum, the new turnover generated just at Mall of Africa was probably the same as one of our regional malls, so effectively, that amount of economic activity returning to Mall of Africa the same as the normal regional mall somewhere else. You'll see something like Eikestad Mall and Waterfall benefiting from -- in those 3 towns. Student occupancy being much higher in 2022 than in 2021. If you do recall, in 2021, there were sort of percentages of students allowed or certain new groups allowed. Currently in those towns, students are allowed back fully. And certainly, we are very much benefiting from that. And also really encouraging to see Brooklyn Mall gaining back some turnover after a really, really tough 2020 and 2021 but also turnover flowing back to that center. And that's kind of a wrap from my side.

Thanks, Mike. Good morning, everybody. So starting off with a snapshot on the development space at Attacq. As Jackie alluded to a little earlier, we currently have built 32,000 squares in the last 12 months, with another 34,000 squares under construction. I'm going to dive into a couple of these developments on the individual slides. But I think what this slide really shows and I think what's important to reiterate is the diversification and the product that we are building here. And I think it really talks to Waterfall being a world-class mixed-use facility, attracting a variety of developments. If we look at from data centers through to collaboration hubs through to logistics precincts, I think it's really an exciting space that Waterfall is currently sitting in. So if we start on some of the completed developments. The first one is the Cotton On Head Office and Distribution Center. This is a 50% JV with Equitus, roughly about 20,000 squares in GLA and is based at LP North, where the Vantage Development is currently as well as the Cummins facility. It is a combination or a consolidation of office space as well as warehousing space, which is quite a common theme for our logistics developments here at Waterfall. Cotton owner taken occupation of the office space as of March and will be going live on their warehouse in mid-July. If we carry on and further developments that we've completed, this is the Nexus Precinct. In total, it's roughly 32,000 squares and consists of the 4-star Courtyard Hotel as well as 3 office buildings. We have completed the first building, roughly 7,500 squares and has got a pre-let of 51%. The tenant actually took occupation as of yesterday. And something that we're very proud of is that this is our first net zero Level 1 building and it's certainly going to be a strategy going forward in the future. Waterfall Corporate Campus is a collaboration hub precinct that we've been developing over a course of a few years. 50% JV with Zenprop. When completed, it's going to consist of 7 buildings. We have just completed the sixth building. I think what's really exciting on this precinct is that we are sitting at a 98% let, and we are 55% let on Building 7. I think this really talks to the fact that if you're building the right product at the right price in the right location, there's still definitely a market for commercial buildings. And I think this precinct really does show that. We have achieved 4-star GBCS rating on most of the buildings and the intention is to do that on all the buildings when completed. A development that's quite close to my heart and I think something that our development team is especially proud of is the new Vantage Data Center based at LP 9 North. As I said earlier, it's where the Cotton On facility is as well as the Cummins facility and bought us on to the N1 highway. Although data centers are measured on a GLA basis, this data center, once all 3 phases are complete, it's going to total roughly 60,000 squares. It's a 50% JV on the basis with Vantage and will be a 3-phase development. We are finalizing completion of phase 1, which is totaling just under 12,000 squares as of the first of July. Phase 1 has gone live on the power. We've provided a temporary feed for 16 MVA while we finalize the development of the substation that will be based on site. The first phase of the 11,000 is going to consist of 4 data walls with the first 2 already being kitted out. The data center and the substation will be developed with 50 MVA in mind but does have the ability to go to 120 MVA. And I think what's also really exciting is that from Vantage's point of view, with all the EMEA developments that they're currently developing, this is the only one in their portfolio currently that is under budget and on time. So you have to take our hats off to our local team in presenting this development. And then finally, a development we kicked off in January of this year. This is a 50% JV with Bidvest Properties. This will be the new Plumblink distribution and head office, again a consolidation of an office space as well as a logistics space. This development is located at Land Parcel 22 and on completion of this will complete LP 22. It's going to be a 4-star GBCS Green building. We've also provided 240 kilowatts of PV on the roof and estimated practical completion will be February of next year. And with that, I'll hand over to Pete.

Thanks, David. Other investments, which comprise MAS in our rest of Africa retail investments. With respect to MAS, no real change since we last reported. We still got 46.2 million shares. Our percentage has declined slightly due to small issues related to, I think, MAS staff incentives. As Raj mentioned earlier, we don't have any euro debt against this asset anymore so totally debt-free, totally unencumbered. From our perspective at the moment, our remaining stake is a strategic hold for income and capital growth. I think MAS has returned to paying distributions obviously makes a decision a lot easier and as well as just given the fairly attractive earnings and distribution guidance and targets put out to 2026, which will obviously help our own income profile. With respect to our rest of Africa retail investments, the Ikeja disposal is still ongoing. It's edging forward slowly. We're still hampered by, in particular, U.S. dollar liquidity within Nigeria, ourselves and our fellow shareholders, formally reassessed progress prior to our financial year on 30 June, and we'll update the market accordingly at that stage. The balance of our African assets are housed in AttAfrica, that's 3 investments into Ghana malls. That is -- that transaction is -- or the proposed transaction is still ongoing. It's approaching term sheet execution stage. And should we reach that stage, we can obviously formally update the market as to the terms and conditions and conditions -- or terms and conditions and all the CPs related to that and timing. With that, I'll hand it back to Jackie.

Thanks, Pete. Thank you to everyone. We made a joke, on David. He's not only building Waterfall but he's building a city so he and his family, so his little one is due in the next few days. So good luck, David, on the new family and their first-born to arrive. All right. Our strategic outlook within our precincts. In South African portfolio, just a brief update on Cell C. We're finalizing -- we finalized term sheets in terms of the recap so that has been signed. And I think all of the other lease providers have signed term sheets. We're now currently finalizing the long-form agreements. The long stop date for that is June but we've penciled in July. And that will give certainty on the Cell C recap, from a business point of view. So accordingly everything is going to plan at this stage. And then our team is also looking at alternative uses, David and his team looking at some really great ideas in how do we convert that precinct, potential part of the precinct into alternative uses. The precinct definitely lends itself to some wonderful opportunities so we're almost there with Cell C. The recap with the business, our planning certainty there. We're finalizing at least for the warehouse and then we're looking at the balance of the precinct and how we can redevelop the balance of the precinct. Waterfall Circle, Michael has spoken about the potential suitors that we've got there. But really, the major focus for us is leasing the building and it has got a material impact, we've worked on a noncore asset disposal process. It's a combination of certain of our retail as well as certain of our noncore office buildings that the team is currently looking at disposing. In Waterfall, we continue with our bulk reallocation plan. It's underway. The logistics development rollout, as you've seen, quite a lot happening in this space, and we're definitely seeing quite a bit of inquiries coming through with more logistics players needing space and Attacq having Waterfall, great land, great infrastructure needing to -- able to build the pipeline out. Then we'll continue with the residential rollout. We've completed phase 1 of the Ellipse. Currently busy with phase 2 of Ellipse, just under 25 units left in phase 2 of Ellipse and we're evaluating phase 3 now, which is the last phase of the development, which we will hopefully launch towards the latter part of this year. Then on the capital structure, as Raj just mentioned and ourself, we remain a REIT. MAS remains a medium-term hold for us. Very focused on the strategy of the rest of our Africa investment in collaboration with Hyprop. And our distributable income per share guidance remains, as we've communicated in our interim results, ZAR 0.46 to ZAR 0.481 per share. In our business diversification, as I said, this is a new division that links the write-back throughout every division in Attacq. We continue with our tech energy program, with a lot of excitement driving our return in Attacq through clever energy initiatives. And then we'll continue to build our digital transformation journey with our modern data platform phase 1 completed. We're finalizing the testing. And really it all comes down to driving efficiencies in our business and also driving scalability of our business through different avenues to ensure that we distribute and manage the best optimal capital structure for our shareholders. And that brings us to the close of our presentation, and I'm going to open up the floor for Q&A.

Great. Thanks so much, Jackie, and to the whole Attacq team. We've got quite a few questions in the chart. So I'll read them out for you and then Jackie, you can also allocate to however you think is best. So first one is from Nazeem. Can you provide more data on interest rate caps? What's the anticipated average all-in cap rate? How much interest rate cap premium will be amortized per annum?

It's Raj here. So a 3-year cap is currently tracking at about 7.5%, and your average amort in terms of the fee is about 85 basis points per annum.

Great, thanks. Next question is from Sandile. Regarding energy-efficient projects across the South African portfolio, how much cost savings are you looking at once the project is complete and live? Secondly, will you pay dividends purely from cash earnings? Or do you have the option to tap in, given ongoing de-gearing and developments? So that's the second one. And then lastly, how much is Attacq looking to spend going forward on initiatives focusing on good customer experience across its portfolio? Is this important to Attacq?

Yes. So let's start -- I'm going to start with the environmental question, then you can go over and then I will go back to customer experience. So from a return point of view, we generally look at our PV plant. It's generally a payback period of between 2 to 3 years from a CapEx point of view, our energy efficiency projects. The PPA is a bit of a different project. We signed up for a cheaper rate of electricity. We're not at liberty to disclose those rates as yet to the market, but there's definitely a big delta between what we acquired electricity to what the bylaws require us to which we can sell it off at. We also see that as part of a customer experience for our clients, whereby we could offer a client a percentage of cheaper electricity and not the full premium of where Eskom is charging because we do have that variability. So we don't want to say it's going to have a 10% or a 15% premium for us from an earnings point of view. We might want to retain a client where we provide them the saving, but we retain them for a longer lease period. So we're really looking at the environmental, our energy projects to not just drive the efficiencies in our NOI, but also drive a whale and a client retention strategy, which we've seen good customer experience starts with what is the cost of line to be in Waterfall. And what are we doing as a landlord to create that stickiness, that efficiency for our clients as well as driving the costs for our clients.

Thanks, Jackie. In terms of the dividend question, I think dividends will always be underpinned by our distributable income, and distributable income obviously is based on earnings for that particular year, and we reconcile that back to our cash generated from operations. So it's 100% backed by cash generated from earnings and not from capital events. So the short answer to your question is any dividends will reflect the earnings for that particular financial year, will not include any sort of cash generated from capital events like de-gearing or developments or sales of assets, et cetera. Like I mentioned, going forward, we will apply a payout ratio, which will then be applied to the distributable income calculation to arrive at a dividend per share. Jackie, the third question was, how much is Attacq looking to spend going forward on initiatives focusing on good customer experience across its portfolio.

Yes. I always -- I'm always with customer experience. I always say not enough but it's not the amount of millions we spend. It's about quality buildings. It's about efficient buildings, it's about quality staff that understand our clients, listen to our clients. And that's one of the reasons we're spending quite a lot of time and effort in designing a modern data platform for our property and asset management business so that our asset managers and our property managers can be with the clients, understand the clients' needs. So it's a whole industry combination of from where do we start building a building all the way through to managing our buildings and our clients. So it's not so much in one big project of capital that is spent, but through everything we do, we've got the client front and center in the way we design and the way we manage our buildings.

Great. The next question is from Rizwan. Are you seeing an impact on development yields previously budgeted on the back of higher inflation? If so, what is the impact?

Yes, I can maybe answer that. So with the developments that we currently have under construction, the majority of those costs have been fixed if we can call it. So we've tendered and those costs are coming within the feasibilities. I said anything going forward inflation will play a significant role in terms of the overall cost of development. We've seen significant increases in the steel price, for example, this year, I think going up roughly 30% in the last couple of months and prior to that, sort of 45% increase in steel. And so on your industrial developments, I think it will have a substantial impact on total cost of development. Having said that, I think quality logistics assets have the ability of passing on some of that inflation in the rentals. And certainly, there's a generally speaking, a shortage of good quality logistics assets. We're still seeing a lot of RFPs come in the market, looking for facilities at 50,000 square meter-plus. And I think there you have the ability of still targeting a yield, i.e., making -- obtaining a rental that translates into a positive yield and a development surplus. I think on the office side, a bit more of a challenge there. I think the general oversupply of office space is putting pressure on rentals and the fact that cost of development are going up, it's difficult to pass that on through a higher rental. And certainly, the way we're looking at it is on a case-by-case basis, trying to mitigate the risk of inflation on the feasibilities and then making sure that if we do develop, we've got -- it's on the back of a tenant signed lease and hence, we lock in the rental and make a good development yield.

Great. The next question is from Nazeem. Your ex-transmit lease, what are you marketing the asset at returns -- in respect of base rentals?

So we're marketing at between ZAR 110 and ZAR 120 at base rentals and the exit rentals was about between ZAR 150, ZAR 160. ZAR 160, I'm looking at Michael, so that gives you the reversion rate plus where we're marketing it at the moment.

Great. A question from Kirsten. What is the trading density growth April '22 versus April 2019 in percent?

Michael if you can pick that up.

I've done a quick calculation looking at our previous presentation. If my numbers are right, our weighted average trading density for that period as 3 0 7 4 and that equates to a 9.4% growth from 2019, that was March 2019. So not exactly the same but certainly was in the ballpark of 9.4% growth.

Great. Another question from Rizwan. Your rent to turnover at Brooklyn Mall seems elevated relative to your other assets. Can you explain why and do you see a rebase in rentals?

Definitely, yes. So you're 100% right. The rentals are still a bit higher there than where the -- from the other malls looking at the turnover and the rent-to-sales ratio. So the team there has gone on a leasing strategy that I think that is excellent over the last 12 months coming out of COVID, a big leasing strategy with growth point. The team absolutely sticks to that leasing strategy. And through the leasing strategy, we've definitely seen reversions in rentals, and we expect more reversions of rentals just to bring the health of the rent-to-sales ratios back to where the other malls are trading. So it is a journey. We've budgeted accordingly to that. So we understand where the higher rentals are and what the impact would be on the building. So that's definitely a rebase of rentals.

Great. The next question is from Yesh. With regards to Cell C, should we still expect a similar ECL seen in your first half in the second half? And what are your thoughts on selling the MAS stake and buying back shares at current levels?

Yes. So Cell C, absolutely, Jackie did it briefly. We're in the final stages of the recapitalization program. What we are doing is we are currently recognizing the full contractual rental and then providing for that by an ECL provision for the amounts that we're not receiving in cash. So for this period, unless the Cell C deal is signed and applied retrospectively, which is what we're expecting, you can expect us to raise a similar provision that we did for the first 6 months for the second 6 months. On the second question, what are our thoughts around selling in the MAS stake and buying back shares at the current levels. I think David did chat to it, MAS is still sort of medium term hold for us. We're looking to derive income and capital growth from it. We believe that the growth profile signaled by the management team is quite attractive, and we'd look to hold those shares to earn those dividends. And so certainly selling the shares to do a share buyback is currently not on the table.

And also where we see liquidity and the liquidity that we've got in our company for further development rollout, we definitely would want to reinvest our liquidity into Waterfall and make sure that we return those yields back into our income statement. So not at this stage and would be selling MAS, what is rest of the question for you.

Anil, so I think the first part of Anil's question has been answered. But maybe just on the cost of debt, relatively lower percentage of committed facilities hedged. Are you considering increasing this hedge?

So our hedging policy is a through-the-cycle hedging policy. It is set at 70% of committed facilities. And I think what's potentially not coming through in the slide that we've presented is that whilst the percentage head of total committed facilities is just over 72%, based on utilization, we're currently hedged at about 82%. And so I think we're very comfortable with the hedging policy currently. The fact that we've got 82% of our utilized debt are currently hedged very comfortable. And going forward, we look to maintain a 70% of committed facilities, which will always translate into a little bit more from a utilization perspective. And so I think that answers that question there.

Yes, great. Nazeem asked, what is Vantage's total capital outlay? What's the tax portion? And what is the timing of phase 1, 2 and 3?

Total capital outlay for phase 1, 2 and 3 for Attacq, so we own 50% of the premise of the JV. It's ZAR 1.5 billion. Timing, difficult to say because we -- it's a hyperscale model, so they need to sign up the hyperscale clients that take up the early data center leasing within the data center. We definitely see that they've got an accelerated need for rolling out these data centers. But I think the focus now is finishing up the phase 1. And then we hope to start in the next financial year with phase 2 commenced with construction. But were we going to these set time dates that we've agreed with Vantage on when do they have to start with us the second phase.

Great. Lockman asks April trading stats look very good. Do you have any details on May?

Details on May trading?

Only for May.

Yes. So no, we don't have the final numbers yet. They will come in at the 11th or the 12th of the month, we give the final turnover numbers. But we would definitely see, especially in Waterfall, the occupancy levels in the offices have got a higher take-up. The trading weekly footfall starting to increase back to pre-COVID level. So we'll be hoping that, that May would reflect similar numbers to April, but let's wait and see and get the numbers in, and then we'll communicate those numbers.

Great. Anil asks, are there any updates on rental reversions on the South African portfolio compared to prior year?

I can give you a year-to-date number. Maybe you can just translate the collaboration of roughly 12% and most of it sits outside of Waterfall that we build minus 4 in year-to-date number.

So collaboration of minus 12% and retail experience is minus 4% year-to-date.

Great. Question from Paolo. Has there been any change in a tax interest in Waterfall junction or is it still 23.5%?

Yes. So Paolo that's still the same, still 23.5%. But certainly, our intention is to exercise our option to take that up to 50%.

Great. Denise asks, can you please provide specifics on the disposals? And I think the question came around when you were talking about Africa, but Denise, if you want to just clarify.

If we -- we've provided an update on Africa. So we still got the agreement with the counterparty, similarly with the Rest of Africa. We said we were currently busy with finalizing term sheets. On the recent disposal program, our team is running. I would not like to give the details. In the past, if we've given details, the next day, I would be flooded with people wanting to price tension. So we're currently busy running. We've signed NDAs and we're running some disposal numbers with other REIT counterparties. So I would not want to disclose certain of those assets as yet, just because purely from a pricing tension point of view. But I can't confirm it's certain of our retail as well as our some office tenants and Michael, it's about ZAR 1.5 billion worth of assets that we got actively marketing with certain counterparties in South Africa.

Great. I know we're running out of time, but luckily, the next hour is lunch. So Jackie, if you guys are...

We've got time. We've got time.

Okay. Perfect. Paolo asks, could you give us an indication on sales levels for the mix?

Sales levels for the mix is around about 35%. We've definitely seen the rising interest rates having a material impact on the sales. So as fast as we sell, we're definitely seeing certain sales drop off definitely impacting the segment of the market. So we -- as I've said, in interims, we're currently looking at redesigning the development and looking at the viability of the development, but definitely not at the sales velocity that we see, that we're achieving at the mix, the mix being very, very much linked to interest rate increases, and we have seen some sales drop off over the last 3 months.

I think Julian's question is related to that. What is the residential strategy for the group? What is your target market? And who are your main competitors?

Yes. So if we look at what is an Attacq residential strategy, and certainly, let's start with, we do not sit with the scale of the expertise within our business. I think the success of Ellipse and we -- our strategy was to partner. We -- phase 1, we took a 50% stake. Phase 2, we took a 20% stake and I think that's definitely the model we will follow. Partner with a credible residential developer, take a 20% stake, not too much equity tied up in the residential developer, but bring the best of the best residential developers within Waterfall to develop alongside us, but also take the lead in the development. Our focus now is completing the Ellipse development phase 1, 2 and 3. We currently are looking at other types of residential developments for the likes of a further new tower. We're looking at residential in the vertical retirement as well as evaluating the mix development to see is the viability working. Or do we convert the residential development potentially into a more of a hospitality business. What we have definitely seen is the residential is a vital key component of the success of Waterfall City, and that the 2 cannot go without each other and what we've also learned is what is the Attacq involvement. And I think that model we have settled and it's now to partner with those repeatable developers that got the ability, the balance sheet to develop the residential developments alongside us.

Great. Chris really asks, can you take us through your thinking on remaining a REIT versus possibly de-REIT-ing to fund the development pipeline or buybacks? He's keen to understand what alternatives you have that maximize returns when allocating equity.

Sure. Yes, I think we spent a lot of time over the last 6 months looking at various options in terms of REIT, de-REIT modeling out what that does to the balance sheet as well as distributable income. And I think what we must be cognizant of is that once we've got a development pipeline, I think in the short term, certainly, the development activity around collaboration hubs is going to be slightly muted. We are dealing with the substantial oversupply of office space and rentals are under pressure. And so from a collaboration hub perspective, will only be developing on a term driven basis. And so the amount of capital required that I think is fairly limited. We have a couple of business office parks that have already been kickstarted, and a lot of the infrastructure around that, including basements has been developed. So we can bring on additional GLA with relative to small amounts of capital to do so. Obviously, from a industrial perspective, we think the market is still fairly buoyant. Dave and the team have been kept very busy with inquiries and RFPs in the last couple of months. And I think that still remains a market that will require some allocation of capital, I think, largely driven by online retail and the logistics required to support that. And so that's where we need to allocate capital. And we're seeing rentals expanding in that space and will certainly drive good yields and profitability. On the resi side, Jackie just chatted to it. I think our resi strategy is to partner up with specialists in those particular target markets and those products. And for us take small positions, roughly 20% of those developments, and that 20% can largely be made up of the land component of that development plus the 80% sale of the land to the JV pipe and all of a sudden, you don't need any cash equity to hold a 20% stake. In any event, those development sort of take 12 to 18 months and another sort of further 12 to 18 months to exit through the sales and you recycle the new capital and bring it back. In addition to that, we've communicated today that payout ratio is certainly on the cards in terms of the dividend strategy going forward. And by applying a payout ratio, we'll be able to retain some of the capital that we think will require in terms of investment in development pipeline. And so like I said, taking all of this into account, modeling the various scenarios obviously de-REIT-ing, you no longer can take advantage of the tax dispensation afforded to REITs and you then have sort of tax liabilities coming up every year. And so taking that into consideration, we believe that certainly retaining our REIT status is appropriate for the time being.

Rizwan asks, would you consider your MAS stake as noncore?

No, it's core. Yes. It delivers great returns for us so we consider it still as core, but a great guarantee for the future.

Serine asks how much does Cell C owe Attacq in terms of rental debt on its headquarters in Waterfall? And has any of this been written off?

So we've written off no debts, so maybe I'm not at liberty to disclose the details of our term sheet that we've agreed with Cell C. But certainly, what I can confirm is that every month owed or what Cell C has not paid and they have part paid, we have agreed with Cell C in a term sheet that they will repay us back. The arrears also attract a certain interest rate that they need to pay us back. So Raj and his team has done the prudent thing to provide an ECL for the Cell C debt, we think that's a prudent conservative way to account for the arrears, but we have not written anything off and we've agreed with Cell C the dates and the interest of when they will pay us back the outstanding months.

Great. Ville says, can you give color or break down the 44,000-square-meter occupation from first-time clients? Is it spread out equally across the portfolio or more in 1 sector?

So the 44,000 is excluding the retail experience hub. So this is more the development focus within our collaboration hubs, which is our offices as well as our logistics hubs. So to give you just a flavor of the type of leases that we've signed, Wood, Accenture, AbbVie actually Cisco, Cotton On, Vantage. So really big, big corporate clients that we've signed and most of them make up the 44,000 square meters. The split is 32,000 logistics and 11,800 collaboration hubs.

Great. Carla asks, have you been able to get cash out of Africa?

No.

No.

Not today. But the team is working on getting cash out, continues with that, we can get some cases...

But hard currency is difficult, but we're exploring various options with in-country banks and international banks as well. And we're hopeful that we will find a solution.

Okay, great. Jared asks, in light of your previous response about not doing buybacks. Is there an Attacq share price at which buybacks would make sense over the development pipeline?

It's a difficult one. We sit with the development pipeline, and we've got over 1 million square meters of development rollout. We've actually got not time pressures but these time commitments within the DRA to proclaimed setting of the land. The land cost us a lot of money. I think it's about ZAR 35 million to ZAR 40 million per annum just the raise in taxes on the land. So our first priority now is to rationalize the land, potentially port with certain developers on the land and really make sure that we apply the capital into the land development. As it sits today, it costs us quite a lot of income on our -- in our income statement. So it's always a balance. I can 100% assure you, share buybacks, we have run these models. It is part of the plan of -- I don't want to say fixing the income statement but improving our yields and our return. But there's an order of priority that we need to follow. And the priority now is definitely debt need to be cheaper. We're focusing on our yield of our income generating assets, the leasing activity, the low-hanging fruit in terms of the development, the bulk reallocation, looking at the bulk and then seeing, okay, what is the type of share buybacks that we would like to introduce? It is part of the pipeline from a capital allocation point of view, but there's a lot that needs to happen before then.

Rizwan asks what would the cost be to exercise the Waterfall junction option?

ZAR 140 million.

ZAR 140 million.

Thank you. Julian asks, who are the residential development partners?

Quite a lot. We've got Tricolt. There is currently a development partner. We've got DTE. There's a lot of reputable clients and developers in the market. I don't want to mention a few and then others, a few left out. So we're definitely talking to a lot of residential partners in the market, really seeing will their product fit Waterfall? Is it a partnership that we can work together and then -- so there's a lot of investigation. There's a lot of talk, a lot of movement in the market, but I don't want to mention a few and then I'll leave out others that there might be if we don't mention all of their names. So I would not mention who we're talking to at this stage.

Okay, great. Lockman says, can you confirm that the 7.5% cap rate is the all-in rate or is that just the base rate? And is it 3 or 5 years? And he just makes a comment that, that seems quite attractive, given that the 3-year swap curve sitting around 6.8% pace.

So it's a 3-year rate linked to the base rate. It doesn't include margin. and it excludes the annual premium of about 84 basis points in terms of the fee.

Thanks for the clarification. Then another question from Yesh. Would you look at doing a DRIP?

Yes, potentially. We will certainly consider it, and it's one of the options that we have available.

Great. And then another question from Chris Redie. Are there still opportunities to increase your stake in certain JV assets?

Yes, yes, but it's all about the right pricing for us. So we keep -- we do hold preference over our JV stakes. We manage our assets so we know and understand the assets very well, but it's all about the right pricing and the timing is right and then also balancing up on development activity that we've got in all Waterfall as well.

Thanks very much. We've made it through the list of questions. So with that, I'd just like to say a big thank you to Jackie and the whole Attacq team. Oh one more question. What percentage of GLA is supplied by renewable installations? And how will this grow over the next couple of years?

7% of our electricity is generated. Currently, it's 7%. The 15-megawatt PPA would bring that up to about 30%, 40% and will be converted into green power and then a further 7 megawatts, which is around about, Michael, I'm looking at you, as another about 6%, 7% of electricity. So our aim is to get to 40% of our electricity via PPA or PV installation.

Okay. Great. Yes. So just a big thank you to the Attacq team for the informative update and answering all the questions. We look forward to your year-end results, and thank you to all the investors for joining this session. And enjoy your lunch, and we'll see you afterwards for the rest of the summit.

Thank you so much. Bye-bye.