Attacq Limited (ATT) Earnings Call Transcript & Summary

Good morning, everyone. I don't know if it's a pause, but feels to me such a great gathering of having no masks. We got no COVID regulations, and it's a warm welcome to everyone attending physically here at the Courtyard at Waterfall City. And there's a really big reason I'm calling it Waterfall City, but we'll unveil that all during the presentation today. So a warm welcome to everyone online. Thank you so much for taking time and joining us with our annual results presentation for the year ending June 2022. Today, we're going to quickly go over the performance overview, but I think everyone has read the [ SENS ]. I'm going to not give so much detail of the performance overview. We're going to go back and see, "Are we delivering on our strategy?" I just want to take stock and just keep myself honest with you guys to say, "Are we delivering on what we said we will? What is our ESG and how does ESG integrate into our business?" And that's a very big important point for us, is it's not just about ESG and ticking box. It's about how do we integrate ESG into our business. And then I'm going to hand over to Michael Clampett, our Asset and Property Management Executive, to provide an overview on the SA portfolio. And then David Oosthuizen -- your first results presentation as the Development Executive, so welcome, David -- on the developments at Waterfall. And then Raj Nana, our CFO, that you all know very well, will provide us an update on the results and then also give us a little bit of guidance of what's to come. And then I know you all come for Pete's jokes. So I will cross over a little bit with Pete during my presentation, just to provide an update on MAS and also the rest of Africa. Okay, performance overview. If I think about South Africa and what we've gone through, I don't think we can write it in a book. But we continue with low GDP growth. We continue low business confidence, a rising interest rate, rising inflation, high employment (sic) [ unemployment ] rate. And as I stand back and we look at these results -- and I love these little green marks. It's very specifically we add there. It's all green. We're very proud of the results we've achieved in Attacq over the last year. But the results are only achieved through one of our most important assets. This asset drives strategy, this asset executes strategy, this asset actually cares for Attacq, and that's our staff. So today, I am dedicating the great results of Attacq because of our most important asset being our staff. So well-done team. I'm really proud of you guys. Then if we look at the performance highlight of the year, distributable income has grown by 34.2%. And Raj will go into a detail of what gave rise to the growth and then how did we derive the growth. Our dividends, we've resumed at ZAR 0.50 per share, applying a payout ratio of 80%. And then our gearing, which I think as the bankers sit here this morning, very comfortable to see that we've reduced our gearing to 37.2%. And I think, Raj, we were at an all-time high of 46% in the middle of COVID. And again, a testament of delivering the strategy throughout the year. Why do we put this slide up? Focus. About, I'd say, 4 years ago, as management, we decided we're going to clean up the business, we're going to simplify the business, and we're going to make the business easy to understand. And I think reflecting over the last 4 years -- our business has got 3 business units: it's Waterfall City with the land and the development and the great development we're doing here; it's the SA portfolio throughout South Africa; and other investments, being MAS and the rest of Africa. As we've promised at the interim results, we said we will give clarity to shareholders and to the market of: Will we be a REIT? Will we not be a REIT? And I think we've communicated it quite clearly that our pure intention is to remain a REIT as a company. And also, we need to give more -- a lot of comments were coming from, "What is your earnings profile will look like? What can we put down for Attacq?" We made very difficult decisions as a company over the last 2 years. I don't think we were the most popular kid on the block by retaining dividends for 2 years. But I think it's evident today as the base for Attacq is set well. But we know the task at hand. We know we're coming off a low base. And as management, our very, very big focus is to: How do we continue growing sustainable earnings for our shareholders? And we put a lot of focus on sustainable. We're not here for once-off results or once-off returns. We're here to provide sustainable income, build sustainable buildings and provide a long-term income profile for our clients. Then how do we keep ourselves honest? I promised that I will keep myself honest. And what have we promised and what are we delivering on? And I think, again, it's evident with the results presentation, we're delivering on this strategy. Our precinct in South Africa -- we always sound biased when always saying, "We do have the best portfolio in South Africa." And I can prove it up today. And Michael will go into the detail about the international blue-chip tenants we have signed up in our portfolio. I think it's over 60%. The retail that is bounced back. This morning Denise from business asked us are we scared of the rising interest rates, rising inflations with the consumer. And I said, "Well, our assets have really tested the test of time with lockdown throughout COVID. The rent-to sales ratios are looking incredibly healthy. So yes, I am bullish to say that I think we can stand the test of time. Leasing success. Being a deal maker at heart, it's always good for us to see that the dealmakers in the team achieving new transactions, bringing new clients into our portfolio. Yes, there's a big task at hand of leasing certain of our buildings. But I think one stat to mention is that of the 54,000 square meters, 22,000 square meters was new office clients that we've introduced into our office portfolio, and I think that's quite remarkable. We continue to focus on optimizing our strategy in our SA portfolio by asset disposals. And this hub strategy that we introduced 12 months ago, people were laughing and saying, "What is this hub strategy?" Our collaboration hubs really coming live. The strategy of our retail experience hub and our logistics hubs coming alive. And we're really proud with our staff living the values and the strategy we've set for each and every one of our hubs. Moving to the developments at Waterfall. Today, we will unveil the new Waterfall City brand. In the past, we only refer to Waterfall. And we made a very distinct decision to rebrand Waterfall to Waterfall City. And at the end of the presentation, I'll go into the brand story and we will have a detailed unveiling of the new brand. To keep up with modernization, with urban trends, with behavior, we felt it's prudent with the land owner to really look at what is the urban design? Do we have enough bulk? Is there too much bulk on certain of our site? And that's what David and the team is currently looking at, is what's the modernization and where is the trend moving to? So we have these big projects that the team is currently doing. And then introducing new partners. As Attacq, we won't develop Waterfall City on our own, but we've got a principal 1 and 1 must make 3. And we are incredibly proud with the Vantage partnership of building our first data center with an international renowned data center company. We've got Plumblink building with partners with Bidvest and then also our Equites JV partnership. So really delivering on introducing new partners, strengthening our portfolio and also our client base. And what is building a community without residents? David will go in today a lot about the stats of Ellipse and the success. But also, again, the difficult decisions we keep on talking about. And the mix is quite evident of -- we started sales and marketing with a mix a year ago. And with the headwinds of rising interest rates and inflation, we just felt as management a year in sales, the sales wasn't there. The return profile wasn't there. So it wasn't prudent capital or a resource allocation for the mix. So we made a difficult decision on stopping the mix. The teams re-looking at this site, and then we'll start with a new development. But again, talking to optimization of our balance sheet, that's what we talk about. It's not always the glitz and the glamour. Sometimes it's really difficult decisions we need to make. We retained our REIT status. We've improved and we've delivered with Raj and his team on the improved capital structure. And maybe if I could ask Pete -- I don't know if you've got a joke for us today because you're on the spot. But maybe just provide an update on MAS and the rest of Africa.

I think for those of you who want to follow, I wouldn't turn to Page 63 of the deck. It's just before the disclaimer. There's a slide on other investments. So at least it made into the deck. With respect to MAS, we get asked probably every 3 months: Have we sold our shares? "Did you guys just sell," et cetera. For us, it remains a medium-term hold. It's a very transparent piece of our business, a smaller part of our business. It's literally a number of shares, 46 million shares times the prevailing share price at any reporting date. Why do we keep on holding it? Well, it does give us some element of diversification. But more importantly, MAS got a very good return profile. They've got a very set and stated strategy, which we believe in. And the management team has proven themselves very capable in delivering on that strategy. So if you look at their guidance and their longer-term targets they've put out, very ambitious. We know the team well there. We know the environment. So for us, it remains a medium-term hold. Perhaps in a number of years, we will look at recycling that asset and investing it elsewhere. But at the moment, one of the constraints in the South African environment is that it's a more muted investment environment. So it's not like we're turning away tenants every 5 minutes. We're dealing with credible tenants, as Mike will go into later, and we're building our tenants in a very planned and deliberate fashion. So MAS, yes, we were pleased that we returned to getting dividends from MAS during this financial year. I think we'll get another dividend at the end of this month. The numbers that you see, which Raj will go into, are actual cash. So we only account for MAS dividends as received in cash. So that's the most transparent and the best of all assets. And it's got a good, stable and growing dividend profile, which is attractive to us. With respect to Africa, we've got 2 entry points into Africa. The one is into Ikeja City Mall, where we own 25%. There is no real news other than our last SENS, which we put out towards the end of June. We said that we had moved the long stop date for our transaction with Actis, which has been ongoing for some months now. The delay there is just pretty much been capital raising for various issues, not just COVID, global turmoil, lack of dollar liquidity in Nigeria, which still continues. But they are edging towards meeting their fundraising targets. They're still putting in effort, incurring costs. And we've also decided to advance with the competition regulation filing in Nigeria, which means if there is going to be a transaction that can be pulled off, it will be much quicker to execute. We won't have to wait for regulatory filings once fundraising is achieved. Other entry point into Africa is our 3 malls in Ghana, which we invested in. We've been in discussions for some months with a prospective suitor. It is a capable suitor. It's a suitor that has the financial wherewithal to deliver. We've now moved into a formal DD process, due diligence process. And hopefully, in a few months, we can announce it that it has gone successfully. And on the back of binding sale agreements, give the market an update in that respect. But as I always say, things do take longer in Africa. And at least at the moment, it's not costing us money. These assets are washing their face. We still continue to manage them and operate them for the long term, making the longer-term decisions, the tenanting decisions, the maintenance, et cetera. And hopefully, if we can then recycle this capital into our South African debt and portfolio pipeline, there's another ZAR 0.5 billion that can go to work. And the sooner that we can do that, we certainly hope we can pull it off. Thanks very much.

Thanks, Pete. And then the last part of our business segment that I'm probably the most excited about is our business diversification through our ESG strategy. Why do we do this? Firstly, we want to be a bit master's of our destiny in terms of power usage. We want to improve cost of occupancy for our clients. And we also want to monetize our investment throughout our ePlan. So we've signed a 15 MVA PPA, the power purchase agreement, that will come into effect towards the end of next year. And then we'll start to be able to show the monetary impact of what the PPA brings into Attacq. We've greenlit a further 7 MVA rooftop solar plants on our current existing portfolio. And very important is the retrofits of a further ZAR 17 million we are currently installing within our assets, again, driving the efficiencies, driving the business earnings, but also ensuring that we're responsible with nature and our people. Looking at our ESG, our target. We would like to reduce our grid energy consumption by 24.1% over the next years. And all of these initiatives that I've just mentioned will make -- will contribute towards the 24.1% of the off the grid energy consumption. So Lourens, our Head of Infrastructure Sustainability and Land, gave me these little quotes. And I had to go study up these quotes that he worked out here. And I wanted to -- I took an audit of these quotes that -- he had to send me a lot of extra speeches. But our generation of green energy equates to the average of 50 -- annual consumption of 50,000 square meters of office buildings. And if you want to see how much trees have we planted. It's 60,000 square meters of trees we would have planted by the current energy we produce through the PV plant. The transformation. As you can see, it's not a male-dominated real estate company. We're very happy to report that it's a equal spread between ladies and males. Our racial diversity, a great journey that we've been on in Attacq, 68% ACI. We've completed a beautiful community project within Waterfall with the Phuthumani School of 3 classrooms. And that's just the beginning. And again, standing back and looking at what is the purpose of Attacq, is sustainable communities. And it's not just the community that we're standing in. It's the community supporting us. And that's why we are so passionate about enhancing and improving the communities we operate in. And then lastly, bursaries is close to our heart, educating South Africa, contributing towards a further ZAR 2 million of bursaries. And thank you so much to our Social team, our Social Executive, Janine, and her team, for really driving our community and ensuring that we educate and also promote better education throughout our communities. I'm going to hand over to Michael. Some of the team members said they prefer to sit. I can't sit still. So I'm going to hand over to Michael.

Thank you very much, Jackie. I'm quickly going to take us through the performance of our 6 smart, safe and sustainable precincts in South Africa and certainly a reference to Jackie's comment earlier about our simplifying our business, having a real focus. And I think distilling it down to 6 precincts only makes it easy for us to manage these precincts. These are the operating metric highlights for the financial period. Once again, echoing Jackie sentiment, none of this is possible with other teams. And I think our property teams have done a magnificent job under really difficult circumstances to achieve some of these metrics. I'm only going to highlight 3 of them. First of all, number one, the like-for-like value change on our assets. So these are per the external valuations performed at year-end. On a like-for-like basis, our property portfolio increased in value by 3.4%. The second one I want to highlight is just the occupancy rate, number 3, at 92.1%. Just to note that, that includes the vacant Waterfall Circle building here in Waterfall. That's about 24,000 square meters. If we exclude that, the occupancy rate is 95.2%. I don't want to exclude it for any other purpose than to highlight the fact that the Attacq team have let more space than has gone vacant, excluding the Waterfall Circle building for this year under review. And it also gives you an indication that it's a quite big lever that we can pull from an attention and a focus point of view. The asset management team has this as a focus item and it's certainly an asset that can contribute positively to us once we do let that building. The last highlight I just want to talk about on this slide before I move on to the next, and we're going to discuss it a couple of times today, is number 6, the reversion rate. Now certainly, there's been a lot of disclosure from a lot of our peers in the last 3 months around this number. And in the past, we've spoken often about the quality assets that we do own. And I think today, the numbers prove that. It's not just talk, but if you are able to, in this environment, sit with a reversion rate of only 3%, it has to be the quality of the assets, both human and physical capital. And in slides further on, we'll delve into where those numbers come from. Just a quick stop on property expenses. As you can see highlighted here, the majority of our property expenses still sit on the municipal side, sitting at 63%. Our other costs are well contained and well maintained. And certainly, we are comfortable that we've got a good handle on those that we do control. Some of our peers refer to this as costs outside of our control, and what we say is, "Well, maybe we do have a hand in them." Jackie has referred earlier to our strategy around energy, the procurement of energy and also the installation of new energy sources. And also in Waterfall City, we have the opportunity to do a lot of things at scale, which other landlords cannot do. You'll see a picture there of the Waterfall City fire brigade, certainly something that we are very proud of. So this is a service available to all the clients in Waterfall, and to be frank, our neighbors outside of Waterfall has also started using the service. So this is an amenity that we can provide at a lower cost because we have the scale. Let's turn our attention to the trade of our retail assets for 2 minutes. What you see here is a very simplified slide. So this takes into consideration all the turnover generated by the clients in our retail experience hubs. And as you can clearly see, the line in the horizontal at 100% is 2019. So that is the base against which we calculate the performance of both foot count and turnover. And you can see since September of last year, all our retail assets or our combined retail assets have generated more turnover than they have in 2019. You can see that significant pickup since Feb once again, and that more relates to our assets in Potchefstroom and Eikestad benefiting from the seasons coming back. Maybe just standing still on a couple of highlights. In the annexure section of the slide deck, you will see that Mall of Africa grew trading densities at 18.7% for the full 12 months, certainly a very significant result for us. Garden Route Mall grew trading densities by 11.9%, MooiRivier Mall more by 11.1%. And then really interesting, and we'll see it on the next slide again, Lynnwood Bridge grew their turnover by 11.1%. Certainly, for us, it's an indicator of people. And of course, maybe let's just remind everyone Lynnwood Bridge overweight on the restaurant sector when it comes to the tenant mix. And so certainly, for us, an indicator that people are out, about and they are visiting these places that provide a place of enjoyment and they want to be out at restaurants again. Turning to this slide, a lot of information that we're trying to convey in just one slide. So let me help you through it. Everything to the right side of the vertical line is good. So what we've plotted here is all our different categories. This is on a portfolio level. It's not just one asset; it's all our assets together. And these are the different categories represented by the size of the bubble. So the size of the bubble is the proportion of turnover that they generate in our total retail portfolio. It all adds up to 100. If you are to the right of the vertical line, it means that, that category grew in the positive territory for the 12 months under review. I just want to highlight 2 of them. Apparel, which constitutes 20.6% of all turnover generated in our retail assets grew at 2.2%. And certainly, that is a very positive indicator for us. The other one I want to highlight is food services that constitutes 9% of our total turnover contributing tenants in our retail portfolio. And foodservices, those are restaurants, grew at 27% if you compare that to the previous year. Once again, a clear indicator of what's happening from a consumer behavior perspective. The next few slides will provide a bit more detail on specific performance metrics. Once again, we've broken it up into Waterfall City as our main precinct and then the rest of South Africa. And I'll only go through a couple of these. I won't go through all of them. I want to highlight the occupancy percentage at retail experience hubs. So this, of course, includes Mall of Africa and Waterfall Corner. Waterfall Corner, we've introduced 3 new restaurants post year-end. So that vacancy sits in this number. And also for Mall of Africa, there's a big space, 1,600 meters, subject to both the retailer's executive and a tax executive signing off the deal. It's a really interesting new concept that's coming to that space pocket of 1,600 meters. And of course, if that is filled, that's quite a significant amount of the remaining vacancy that's taken care of. If you turn your attention to collaboration hubs, occupancy at 80.8%. Maybe just for completeness, excluding the Waterfall Circle number, that's at 92%. Collection rates really great, more than 100% at retail experience hubs. The same for logistics and hotels. Let me explain what we did for collaboration hubs. That includes the Cell C billing. So what we do for financial purposes is we include the 100% of the amount we build as a collectible. They pay a proportion of that, and we provide the balance on that number. Of course, all these numbers are subject to the new recapitalization that should be approved by the 30th of September. But we disclosed the number, including the provision. So that's why it's not at 100%. Reversion rates. And certainly, for, me today, that's the theme and the message that I hope that we can get out there today. If you break down the reversion rate on retail experience hubs -- and let me maybe just explain how we get to that reversion rate further. We take the 12 months. We take all the leases that expire. We've got a number for the guys that remain in place. But then where someone has expired, left and we've replaced them with another tenant, we then also include that rental. And for us, it's through not to just show the renewal number, but also at what rate are you introducing new clients into your space. So if I break down those 2 numbers for you, in Waterfall City, actual renewals, where guys stayed in place, was positive. So the revision rate was a positive 0.3%. And where we've introduced new clients, it was negative 7%. And the reason for the negative 7%, where we've taken 2 boxes combined them to create one box. The new block at Mall at Africa is a good example of that. I think naturally, you introduce that new brand on a bigger footprint at a lower rental. Turning our attention to collaboration hubs in Waterfall. Once again, the reversion rate of minus 10%. Let me maybe say that, that only constituted 3 transactions. So just take that into consideration. It's not a massive sample. But certainly, once again, a very positive result for us, and we were very happy with that, considering where the office market is currently. Just once again, explaining my way through the valuation movements. If you can't read the footnote there, what we've taken is we've taken the number of buildings that we have per category. And if you grew by more than 1%, it's in the positive. If you are between 1% and a negative 1% for the movement in the value per year, you're in stable category. And if the decrease was more than 1%, you are in the declining category. So it just tries to give us a very -- or to demonstrate to you at a high level from a building number perspective how many moved up and how many moved down. You will see all the retail assets moved up in Waterfall. It's about 50-50 for collaboration hubs, not too bad a result there. And in the logistics hubs also a good spread, 2/3 of them moving up. The rest of South Africa, so all our assets outside of Waterfall City. Our occupancy rates -- once again, I just want to highlight both of them -- 97.4% for retail experience, really happy with that; and collaboration hubs, 87%. Maybe just another note for understanding. At our entire Lynnwood Bridge precinct, we only have 1,200 square meters vacant today. So certainly, that's a significant number. The bulk of the vacancy sitting in Brooklyn Bridge currently. Collection rates above 100%. Once again, confirming the quality of income that we are able to collect on the rental notes that we send out once a month. And then on the reversion rates, once again, a very positive story for us: negative 4.5% on retail, 0% on collaborations. Once again, only one lease that was renewed there. So a very small sample, but it came in at 0%. If we look at the 3 leases that were renewed that stayed in occupation for retail, that revision was 3.4%. Once again, for me, a really positive indicator. And although we don't disclose it, it's in this presentation itself. It will be in your annexure. Maybe have a look at our retail trading -- or retail experience hubs' trading densities and rent-to-sales ratio disclosures. You will see that those numbers are really healthy, and those healthy rent-to-sales ratios really assist us now to convert our leases and not take big reversions when we do renew them. If I could choose a favorite slide for today, it would probably be this. So a lot of talk about reversions, and I think the way that our portfolio has stood up. But the reason our portfolio has stood up is because of the quality of the clients that we have in our portfolio. Here, we do a little breakdown of the collaboration hub and logistics hub clients in Waterfall only. Our definition of an international client is a client that has a headquarter company in a jurisdiction outside of South Africa. So it's not a multinational company, just for clarity. So if your head office is in South Africa and you've got offices elsewhere in the world, we count you as a local. So you have to have a headquarter company outside of South Africa. And as you can clearly see there, 65.5% of our clients in Waterfall are internationally quoted. For me, what is the story there that tells -- it's a good covenant. We're able to collect on the quality of these leases. These international clients are showing a tendency to cluster. It's certainly something our deal-making team has zeroed in, understanding the lay of the market, understanding how we communicate to these international clients to make sure that they understand, that they can be with their peers if they come to Waterfall City. And if I'm really bold, I can also say that this is maybe a little bit of a stamp of approval, a little bit of international confidence in Waterfall City itself. A quick update on Cell C. We've provided it in a slide format today, and maybe -- let me say to avoid a couple of questions at the end. So if I don't answer your questions with the slide, I do apologize. So there's the Cell C recapitalization. We are all waiting for that. We have done a -- of course, we are part of that recapitalization and we've signed agreements in that recapitalization. It should be confirmed by the 30th September barring any other further move out of the last communicated date. What have we done as part of this process? We have signed a lease on the warehouse at market-related rentals. So in that way, we've already derisked about 14,000 square meters of that precinct. And then we've also done an agreement with Cell C, of course, subject to the recapitalization. And we will recover a lot of the money that has built up over the period since last year of August. And of course, the current rental dues if that recapitalization is successful. But our intention here is to give you a bit of an idea as to how we've derisked that specific precinct. And let me hand over to Dave.

Thanks, Mike. So I'm going to dive into each development individually during the course of my presentation, but I think it's prudent to start with a broad overview of some of our key metrics for the last 12 months. So from a completed GLA that we've done, just under 50,000 squares, up from the 33,000 from the previous year. 5 buildings are making up that space, 3 collaboration hubs, one logistics development as well as a data center. Total value of those developments is a shade under ZAR 1 billion at ZAR 997 million. I think what's quite exciting, and as Mike alluded to, is that most of that GLA that we've rolled out is let by large multinationals, which I think is a great story. But what's more important is that if you look at the variety of developments we've done over the course of the 12 months. And I think it really speaks to Waterfall as a world-class mixed-use precinct, being able to attract a multitude of different clients, but being able to deliver on these alternative options. If you want to dive into 3 examples of this out of that 50,000, you're looking at Vantage Data Center, who required 80 MVA, which is going to grow up to 120 MVA; you look at Cotton On, who required a facility in an environment where there's good logistic arterial routes; and then you've got Amazon Web Services, who wanted an office development or a collaboration hub in an environment that is secure and sustainable and is a precinct which uniquely offers opportunities to their staff. If you look at GLA under construction, we've got about 30,000 squares currently under construction at year-end. That's made up of Ellipse Phase 2 as well as Plumblink at LP22. Looking at pipeline developments. So we're very excited. We are going to launch Phase 3 of Ellipse in October on the back of the success of the first 2 phases. And we're also very excited about -- well, we're very far down the line on securing its transaction agreements with a new collaboration hub development of 5,200 squares at Nexus, which we'll be Building 2. We are planning on breaking ground mid-October. On residential units, we're talking about total bankable sales. This is up from 70 units from last year to 82 units. This is made up of sales in Phase 1 and Phase 2. And I think that's a testament to the product that we've developed here that in a rising interest rate environment, we are up on our bankable sales. To the right of the sheet, we're looking at 2 pie charts. The top one essentially is a background of Waterfall City and the total bulk. We break it down to completed - held, completed - sold, bulk - sold, under construction and total remaining bulk. The 41% of the total remaining bulk totals roughly 750,000 squares. As Jackie alluded to earlier in the presentation, we have begun a 6-month process on looking at our bulk optimization for the city. And we've already initiated a reduction of bulk of 44,000 squares, which is represented there in the slide. We've made it quite public over the last 6 to 12 months that we planned on buying up in Waterfall Junction from our 23% to take ourselves up to 50%. We have executed on that option and are currently into CP performance stage. We are planning on fulfilling those within the next 2 to 3 months. If we look at the Waterfall City development strategy. Waterfall in its entirety is 2,200 hectares. It is a sizable chunk of land to roll out. And to do this, you need a clear strategy. So we've broken our strategy down into the 3 hubs. If you look at logistics hub, in the last 18 months with the rollout of over 200,000 squares of logistics land, that essentially resulted in LP9, LP9 and LP22, our 3 predominant logistics parks being full. That's obviously taking into account all the expansion land for Vantage. So we have unlocked Waterfall Junction. We started infrastructure back end of 2018 and are coming to completion at the end of this year to early quarter next year, first quarter next year. We've already started engaging in client-led transactions there and have over 200,000 inquiries. If we look at the collaboration hub, we are continuing looking at client-led developments. We are not operating on a spec strategy at this stage. So we are focusing on our Nexus Waterfall development, which I've already touched on. We have another development up and running probably in October next year for Building 2 and then also the Ingress hubs. So between the 2 of those, we have about 22,000 squares of bulk available, and it's prudent for us to roll those out with the infrastructure that we've already put in place. From a residential hub perspective, we are continually looking at various partnerships with other residential developers to create alternative residential offerings. We are focusing quite a lot on the rental product, where interest rates are now going up. We think there is definitely an option for a rental product going forward in Waterfall. And we're also looking at packaging land sales potentially to sell on to other residential developers. In addition to this, we've got a few focus areas that we focused on in the last 12 months. I'm not going to touch on the urban design and bulk. I think we've touched on that already. I think another factor that we're looking at with where the office market is currently is we are very prudent on the way we're designing offices to make sure the floor plates are flexible and efficient to allow more flexibility for our deal makers in negotiations. A huge focus for the last 12 months, and one that I'm very proud of, is our risk management around our costs. As we all know, the world has got extremely expensive in the last 12 months and building costs have also gone up. We are focused on a number of ways to manage this. A few options are around the procurement strategies that we've run around steel predominantly, long lead items. We've looked at CapEx-linked transactions as well or CapEx linking certain construction items that have a high risk, very similar to the steel. And we've also obviously gone back into our [indiscernible] and looked at our pre and contract escalations quite aggressively. There's a big focus on infrastructure and the parallel focus on infrastructure and how it reduces tenant cost of occupancy. Jackie has already touched on it. Part of this is your PPAs, rooftop solar. And also water resilience is becoming more and more important. And another item that I'm quite excited on, on the back of, obviously, the Vantage transaction that we completed this year is we have got preliminary approval from Eskom for a further 80 MVA here at Waterfall. We are currently in the final stages of designing with Eskom, and hopefully, we'll see the cost estimate within the next couple of months. So if we go into completed developments, this is a snapshot of the 5 buildings that we've completed over the course of the year, referring to the 47,000 squares that we've rolled out. I think what's quite exciting is with Corporate Campus, with building 6 and 7 we have now completed that node. And then with the Vantage and Cotton On developments, we've also completed that node. So that's quite exciting. From a collaboration hub perspective, we moved from west to east. So now that Corporate Campus is completed, we're obviously fully focused on Nexus and Ingress. And as I've mentioned, that is our strategy going forward for the next 12 months. I think some other items to focus on here is that all of these developments were delivered on time and within budget. So that talks to our effective risk management process. And I have to take my hat off not only to my team, but obviously the professionals behind them. I think that's a hell of an achievement in this current environment. We've also done all of these deals on the back of tenant-driven transactions. So you can see there the occupancy percentage is at 86%. So we've had a very, very limited to no spec strategy for the last 12 months. So I think 47,000 squares generated at that occupancy level is a hell of an achievement. So if we dive into developments individually. This is the Nexus Waterfall development. On completion, this is going to total close to 32,000 squares. It consists of a hotel as well as 3 collaboration hubs. The hotel we have completed. That is the 4-star City Lodge Hotel, which we are very proud of. And this year, we've completed Nexus 1, which is a net 0 building within the carbon framework. That is 52% let by Amazon Web Services, which was a fantastic deal that our asset management business did. As mentioned, we are currently looking at Building 2 for a multinational to take up 5,200 squares, and that building is also going to be a net 0 1 level building. Going on to another collaboration hub. This is Corporate Campus. We completed this out this year with the completion of building 6 and 7, totaling roughly 35,000 squares. I think this is a fantastic story in that it's 97% let. And it shows you if you build the right product in the right place, in the right location, there is still a demand for good office space. This is a JV with Zenprop and all the buildings have a focused 4-star GBCSA rating, and we've obviously achieved some of that already. Cotton On. This is based at the LP9 North precinct. This was a combination of Cotton On's head office based in Rosebank in their warehouse facility in Pomona. That's a big focus for us here at Waterfall. I think it's something that's unique that we've got in that we have the ability to provide these combinations of consolidations with our clients. They wanted a facility in a good logistics area. But because of having a blue collar and white collar staff, it was very important to be around immunities that are obviously suitable for their white collar staff. This is a cross-stock facility. We've got DM2 flooring here as well, allowing for very narrow racking. I think what's exciting about this facility and to show that it's been designed correctly is Cotton On's efficiencies have gone up by 80% since moving into this. Although it doesn't have a 4-star GBCSA rating, we've done a number of green initiatives, including rainwater harvesting and as well as solar PV on the roof. The development that I'm extremely proud of was Vantage data centers. This is the Phase 1 that we rolled out this year. I think we as a team in the development space always wanted to do a development on the corner of Allendale and N1 on the LP9 North precinct, which gives credit to our best piece of logistics land. I think we've been able to achieve this with this transaction. A fantastic JV partner in Vantage. We have a 50% share on the [ dark shell ] with them. There will be a substation on the site, which will have 50 MVA and will be able to go up to 120 MVA. Phase 1 is complete, aligned for 16 MVA, although not measured on GLA. It's 11,500 squares. And we're already in planning stage for Phase 2. The bulk earthworks for Phase 2 and 3 are already completed. So hopefully, we will be able to kick start that with IC approvals during the course of first or second quarter next year. Development under construction. I'm not going to spend too much time on this. But as I've mentioned, Ellipse Waterfall Phase 2, a gross sellable area of 15,500 squares. We are nearing -- well, we're nearing completion. So we are now looking at launching Phase 3. And we're also currently under construction with the Plumblink head office, which is a JV with Bidvest Properties. We will be rolling that out and completion in quarter 1 of next year. So this is Ellipse. Once completed, it will total roughly 44,000 squares of gross sellable area. We have completed Phase 1, which totals 270 units. Over 90% of these have been sold, which I think is a great result. 50% with Tricolt, also received a 4-star GBCSA rating. We are currently building Phase 2, Cassini Tower, which is 185 units. And we achieved about 87% of bankable presales already, totaling a shade under ZAR 490 million. What's exciting is we've really got heads of terms for some amenities, which we don't have at Ellipse currently. The one is Olives & Plates and the other one is Life Day Spa. We're also in negotiations with 2 other tenants for 2 other boxes within Phase 2. And as mentioned, Phase 3 is in our pipeline. We're looking to launch next year, which we have taken a 20% stake in Tricolt and we are going to be launching in October, and hopefully, that will all go according to plan. This is the Plumblink facility, LP22. On completion of this, that will be the completion of LP22. As mentioned, this is a JV with Bidvest Properties. So as Jackie mentioned, the big focus for us this year was to bring in new JV partners. I think Bidvest Properties are certainly a partner that has got a lot of legs, and I think we're going to do a lot of transactions with going forward. This, again, consolidation of a head office as well as a warehouse, and we will be completing this in quarter 1 of next year. Also has a number of sustainability initiatives. We will be getting a 4-star GBCSA rating on this, and we've also got rooftop solar. On our pipeline developments: Ellipse, Galileo. This is Phase 3, as I mentioned. It will be a gross sellable area of roughly 12,000 squares, 145 units, launching next month. And then building 2 at Nexus, which I already discussed. This is for a blue-chip multinational corporate. We've already gone to tender and on final stages on transaction agreements and are hoping to break ground early next month. And then finally, I thought it was a good slide to add considering we have executed on our option on Waterfall Junction. So on the back of the success of our first phases of logistics, which is LP8, 9 and 22, we started infrastructure to unlock Phase 1 at Waterfall Junction at the back end of 2018, unlocking 150,000-odd squares. Part of that infrastructure was to bring a water pipeline in from Lords View as well as to start installation of the K113. I think the K113 is a very exciting addition to Waterfall. It's going to be one of the major new arterial routes within Johannesburg once completed and will start from Allendale, as you see there, all the way through to Longmeadow, which is currently already built. We are buying up to 50%. Sanlam will be the other 50% JV partner in this. And I think what's exciting is we've already had a soft launch to market, and we've already got over 200,000 squares of pretty strong inquiries on Phase 1. And with that, I'll hand over to Raj.

Thanks, Dave. Good morning, everyone, and welcome. Thanks for joining us here or joining us virtually. I think standing back -- we've got a good set of results this year for the full year ending 30 June, 2022. Most notably in line with the Board's decision for Attacq to retain its REIT status, we have declared a dividend of ZAR 0.50 per share, being 8% of our distributable income per share. And this is in line with our trading statement that we issued last week with a dividend policy payout of between 75% and 85%. I think today, the team has provided a lot of operational performance background and context to the numbers. And so I'm going to touch -- give you an overview of our financial results. Our distributable income per share increased by 34.2%, up to ZAR 0.628 per share. The guidance that we provided with our interim results about 6 months ago was significantly lower than that. The upper end of that guidance was ZAR 0.481 per share. The difference between the guidance and the actual, a number of factors contributed to that. But most notably, I think due to better trading conditions, we had higher NOI, a higher collection rate and our arrears in ECL provisions were significantly lower than we initially expected. Because our distributable income per share is all cash backed, i.e., if any of the rental income isn't received in cash, we don't include it in our distributable income. The change in collections or, call it, client payment behavior had a material impact on our actual distributable income and had a very positive impact. Another large variance between our guidance versus our actual was the cost associated with amending our investment holding company's structure offshore, which was largely influenced by exchange rate differences between the rand, the euro and the dollar. And we benefited from favorable exchange rates at the time of us implementing that particular change. The DI of ZAR 0.628 per share excludes ZAR 0.097 per share of trading profits from the sale of sectional title units. And our decision to pay out ZAR 0.50 per share is aligned with, I think, good asset management practices as well as good capital management, i.e., we'll be retaining a significant portion to fund our internal CapEx and rather than using debt to fund those CapEx initiatives. A key objective for management during this last financial year was focusing on our debt and reducing our debt. And I know Jackie mentioned that the banks were happy to see our gearing reduced, but I think they were actually disappointed that we repaid ZAR 1.9 billion worth of debt over the last 12 months. On the back of that, our interest cover ratio improved from 1.41x to 1.58x. And like I said, overall debt reduction of about 18.7%. And like Jackie mentioned, this peaked in December 2022 at 46.6%. So I think we've achieved our objective of reducing our gearing. And I think we're very comfortable with how we've optimized the overall capital structure, and I think we're much better positioned going forward. If you look at our distributable income per focus area. Just to remind you, all of our Waterfall distributable income is consolidated into the Waterfall City reporting segment. All of our assets outside of Waterfall City, but in South Africa are included in the rest of SA. And then other investments include our investment in MAS and rest of Africa investments. The decrease that you see in Waterfall City of 2.9% is really as a result of some key disposals that we made during the year: the 50% undivided share in Deloitte head office, the Massbuild 50% undivided share as well as the Amrod 50% undivided share. But also, we saw a slight increase in expected credit losses largely due to the Cell C lease and the increase in the vacancy as a result of Transnet vacating the Waterfall Circle building. This was offset by significantly lower rental discounts offered this year as well as a significantly lower interest expense as a result of us paying a lot of our interest-bearing debt during the financial year. The rest of South Africa, a similar story. However, it increased 23.2% year-on-year, mainly due to lower discounts offered to our restaurants, gyms and entertainment offerings as well as lower interest expense on the back of paying back debt. Other investments, Pete touched on this. Last year was a negative as a result of not receiving a dividend from MAS, but also us servicing euro interest on our euro-denominated borrowings. This year, at the beginning of the year, we had settled all of our foreign-denominated debt and we received a dividend of about ZAR 68.5 million from MAS, which gave us a significant increase from the prior year. That gives us distributable income of ZAR 442.6 million, an increase of 34.1%. And like I mentioned, that excludes our profit on sectional title units, approximately 236 Ellipse units transferring to end users during this financial year and a further 3 Waterfall Point units transferring, giving us a total income of ZAR 510.7 million, an increase year-on-year of 51.8%. Moving on to the next slide. This is a distributable income bridge showing the movements from last year's distributable income of ZAR 330.1 million to this year's distributable income of ZAR 442.6 million. I'm not going to go through all the movements, but to highlight some of the key ones. The sale of those 3 assets that I mentioned having a material impact on the net operating income. Increase in vacancy on the Waterfall Circle building, increasing that particular contribution to ZAR 58.5 million. Expected credit losses increasing, like I mentioned, on the back of sales income not received in cash. An increase in some of our operating expenses, largely ones -- operating expenses increasing, professional fees relating to our purchasing power agreement as well as a number of other once-off prepayment balances related to the settlement of debt. And then looking at the positive contributors to the growth in distributable income, ZAR 172.6 million saving in terms of interest expense, lower discounts of ZAR 44.8 million, the reversal of a share-based payment expense that we had previously accounted for of ZAR 36 million. This is on the back of lower vestings with regards to our long-term incentive plan. And then the MAS dividend of ZAR 68.5 million, giving us the distributable income of ZAR 442.6 million. As communicated, our payout ratio of 80% gives us a total dividend of ZAR 352.6 million, meaning that we are retaining ZAR 158 million of cash earnings. And like I said, that's really on the back of a payout policy that we are implementing, and it tracks very well with the sort of CapEx plan that we have for the next 12 months. If we look at the balance sheet. Total assets declining by 4.3%, again, as a result of those disposals of properties that I mentioned and giving us a total asset base of ZAR 21.6 billion. Total liabilities reducing by 2 factors: one, the reduction in debt of ZAR 1.9 billion, but also a positive movement in the mark-to-market of our interest rate derivatives. And that gave us a total reduction in our total liabilities of 19%, giving us a total equity base of ZAR 12.3 billion, an increase year-on-year of 11%, which equates to a NAV per share of ZAR 17.49. Interest-bearing borrowings. Like I mentioned, a significant reduction in interest-bearing borrowings, settling all of our foreign-denominated debt. Total debt reduction of about ZAR 1.9 billion. Gearing reducing to 37.2%. I think we're quite prudent in how we manage interest rate risk. At year-end, 83% of our interest-bearing debt was hedged through either interest rate swaps or interest rate caps. And that's significantly higher than our minimum hedging policy of about 70%. Total weighted average cost of debt on a ZAR-denominated basis moved from 9.1% to 9.4%. The increase really relating to the debt that we settled, which was slightly cheaper or lower in terms of costs relative to the weighted average cost of the total group's debt. And we were obviously obliged to settle some of those loan facilities on the back of those disposals. What we have managed to achieve in the last 6 months is refinance about ZAR 0.5 billion worth of debt at 47 basis points lower than the maturing debt, and we're looking to potentially refinance between ZAR 500 million and ZAR 800 million over the next 2 to 3 months and are hoping to target roughly 50 basis points lower than the refinanced debt. Overall, I think group level bank governance, we've got significant headroom in that. Our minimum gearing covenant of 60% came in at an actual of 38.6% and our minimum net asset value covenant of ZAR 7 billion measured 12.3%. So I'm very comfortable with where our bank covenants are. Gearing. There's a bridge there just for you to understand how the gearing declined from last year's 43.3% to 37.2%, largely on the back of the disposals that I've mentioned, but also positive fair value adjustments as well as the cash that we've generated over the last 12 months contributing to that lower gearing. If you look at our debt and hedge maturity, not much in terms of debt maturity for the next 12 months. But we are proactively looking to refinance some of the debt that extends to the next 24 months. But from a hedging perspective, significant hedges fall off in the next 12 months and then the 12 months thereafter. We are significantly hedged on a utilization basis, a lot higher than the 83% on committed facilities. And so we don't need to replace all of the hedges that are falling off, but certainly the team is looking at replacing some of the swaps as and when they fall due. I think from a prospect's perspective, turning from the results to a forward-looking view. The group's balance sheet in a very strong position. I think the asset portfolio or the property portfolio proving the resilience in the last 12 months. And I think despite the expected headwinds of rising inflation and rising interest rates, we think we're in a very good position to be able to grow our dividend per share next year. We're providing guidance of 8% to 10% growth on this year's dividend per share, and that's on the back of a similar payout ratio of this year of 80%.

Thank you to everyone that has contributed. We've promised you the Waterfall rebrand as well. So you are the first public to see the Waterfall City rebrand. So why reposition the brand? Why do we call ourselves a Waterfall City and not just waterfall? If you think about a city, it's where we bring people together. We bring urbanization. We bring vibrance. We bring a community together there at -- when we sit back -- and this is a process that the Attacq management and the marketing team is with the landowner as jointly. We said, "But hang on, this is a city we're talking about." It's evident with the blue chip corporates. With the residential developers, it's evident. And let's give ourselves a fresh new look. And our cornerstones of our city is really it's a city of care. We really care about our communities. We uplift the communities that works with us and our people and our planet. We're a city of commerce, as you can see. We keep on pushing the boundaries. We keep on letting space, building buildings, building beautiful residential components. We're a city of connection. You've come here to do business. We connect through a beautiful infrastructure and a private fiber infrastructure that has also put in. But everything is connected, and we look after the city of connection. And then we're a city of community. We bring communities together through the caring, through the connection and through the commerce. And before I'm going to play the video, I'd just like to pause and say thank you to our Board for the year of advice, guidance, sticking by the team. To my fellow ex-co members and my ex-co members sitting in the -- here today, to our shareholders, to the analysts, to the media, thank you for your support, thank you for your advice. We're always here to listen. But I think as you can hear today, the future of Attacq is bright. We understand our business. We know the task at hand. It's not always easy. I know we make it look easy, but it's not easy. We razor sharpen our focus. We understand our strategy and watch this space. The future is bright, and we will continue to push the boundary. So I hope you enjoy the rebrand. [Presentation]

So we're going to open up the floor for questions and answers. So I think, Manisha, let's open the floor to the people attending and then we'll go to the online Q&A.

I have 2 questions. The first question is for Michael. Michael, are you comfortable that you can pass higher costs to tenants in the current environment of high interest rates and inflation? Maybe just your sense on that.

In general?

Yes, currently.

And are you specific to a type of client? Or are you saying in general all our clients?

Let's start -- yes, in general.

So that's an interesting question, and I don't think there's a really quick short answer to that. So if we split them up, I think we're in a beneficial position in our retail experience hubs that, the turnover they generate outside of the cost pressure, will give us the ability to pass on rental. So let's say the retailer looks at it slightly different from an office inhabitant and in logistics hubs. So I know it doesn't satisfy you, but I think from a -- also our interventions when it comes to the energy focus also sits largely on the retail side. So if we consider for one moment that our ZAR 70 million refurbishment or retrofitting exercise impacts the common area lighting, common area air conditioning charges, a lot of those charges are passed on to our tenants. Now if we reduce those self-generated charges, then of course that makes the amount that we can pass in rental higher because they're not paying prior costs. So there's a couple of initiatives on the way on the retail side. Collaboration hubs, in my opinion, it's much more a case of understanding where the macro rental market is. And as Dave alluded to earlier, there's a lot of sort of cost pressure on the development side. So what does that allow us to do on the existing stock side? A lot of interaction with our clients themselves. So unlike in retail, on the collaboration upside, it's an interaction between client and landlord that generates cost saving opportunities, and we might embark on them together. Now if we are able to prove some of these savings in a lot of the cases -- and I've got a couple of examples I might be able to quote -- it does enable us to then extend the WALE or the weighted average length of the lease. So we implement a couple of measures now, but it's agreed upon with our collaboration hub client, and in return, they might give us a 2-year extension on the lease. So those are the type of things that we do. Now what does it mean for the client? Well, we try and control the costs we can control, i.e., energy, et cetera. And once they fix them, then they give us a tenure which is good for us. It's going to sound like a little bit of a repeat, but maybe the position we are in that other peers of ours are not in is, once again, our precinct focus. So once again, we are able to do things at scale. That scale means that potentially some of the costs that we are faced with, we can mitigate much better than if you have one office building stuck somewhere.

Great. And the costs recoverable from tenants currently, is that -- do you find that manageable?

Just repeat that? The cost of...

Recoverable from tenants.

Yes. So at the moment still very much able to recover. I think what's interesting, and if I maybe delve a little bit deeper -- and you wouldn't see the detail anywhere -- but we do track our cost-to-income ratio thoroughly. And we want to make sure that, of course, we contain costs because those costs we have to pass that we can't contain. Now stuff like them -- the security, the cleaning, stuff like that, I think we've done a fantastic job. And certainly, if you look at the longer-term trend, well looked after. It's some of the other costs that are troublesome. Our expenditure on diesel, as an example, has increased by ZAR 3.6 million over the last year. That's an expense we didn't have a year ago. Now for us as a business, that's more a business decision. Can we pass all of that diesel cost? No, we can't. But we need some of that to be open in trading.

And my second question is for Raj, maybe quickly. Do you still see developments as more accretive than share buybacks?

No. So I think where we are at the moment in the development cycle is we're faced with a unique scenario, where I think 18 months ago, everyone knew rentals were under pressure and everyone asked what type of development yields can you achieve given that rentals are under pressure. But I think David alluded to it a little bit earlier, in the last 12 months, the construction inflation has actually also increased the cost of construction. And so you've got a double whammy in terms of not being able to achieve significant growth in rentals, but also your costs are coming under a lot of pressure. And so we're very, very specific around the types of developments that we will pursue. And I think David also mentioned it in his presentation, a lot of the developments that we will do will be client-led. It will be specifically developing in respect of client's requiring specific -- either it's an office in or a collaboration hub in Waterfall. It will be a logistics hub in Waterfall. Speculative developments, I don't think make a lot of sense in the current market. But we are seeing interest both in the collaboration space. I mean Corporate Campus is a great testament to achieving the right type of rentals, giving us the right type of yields. And on the logistics side, I think we're perhaps in a more favorable position, where we think we can certainly push on some of those costs in terms of higher rentals given the locality and the supply-demand dynamic around logistics. Obviously, the share buyback is quite interesting at the moment. It comes down to capital allocation. But when you're trading at a significant discount, there's certainly a view of pursuing share buybacks as sort of allocation of capital rather than pursuing developments.

Manisha, do you want to...

A question for David. With the mix now being discontinued, which was a micro apartment sort of model. And then you mentioned in your presentation that you potentially could be looking at a rental residential model. Would that be a vertical type of development such as the mix was going to be? And what kind of resi would you be looking at for the rental model?

So yes. So we're in early stages on it. I think we're looking at various options. I think the site where the mix was going to be located is a fantastic resi site. It does have a couple of challenges. Maybe to unpack that to explain why maybe the mix was a bit of a struggle. First of all, it was -- I think the timing, unfortunately, just didn't work out, and that's obviously out of our hands. I think the major reason is we tried to -- because of the nature of the site, you cannot phase the development. So it's one building, where you look at Ellipse is going to be 4 buildings. So we had to bring on roughly 360 units onto the market. And then because it's one building, you've got to put the amenities in that one phase. So you're loading a lot of costs upfront. Where, if you look at Ellipse Phase 1 and Phase 2, total 270. And now we're only starting to look at the amenities. And now for Phase 3, we're unlocking 145. So the site dictated quite a bit on that. On the resi, we're looking at vertical. We're also looking at 3 or 4 -- also 3, 4 stacking. We're not sure which route we want to go. I think, obviously, we are trying to direct our efforts to the sites that are reclaimed and costing us money. Hence, why that mix site is obviously a focus. But if it is going to end up on that mix side, it will definitely be a vertical unit option, yes. We may even do a hybrid, where we do rental and sales. It just really depends where we come out on the marketing.

Yes. But would the micro partner...

It will vary. Yes, it will vary. Yes, it won't just be micro partners.

Because the Ellipse is a lot more expensive than that. It's more a prestigious project, which has done very well. So it will be quite an interesting balance to see what -- on the rental side, what sort of model it actual is.

Yes.

Yes. Okay. And then just another one. The urban redesign that's under way, maybe you can just talk a little bit about that?

Yes. Sure. So we're doing an urban redesign. It's going to take us about 6 months. We will probably be about 2 months into it. We are running that with our land owners. So there's a couple of facets to that. There's obviously the urban design. We haven't looked at it since we launched Waterfall. So I think it's time to do it, especially where we're coming out in the last 24 months. It's a complete change in the property environment, a change in the world. And I think it's prudent to do that. And then we're obviously looking at our bulk optimization. So there's 2 ways you look at that. One is, do we have too much bulk or enough bulk on certain sites? And then secondly, do we have the right bulk on those sites? So we have reduced our commercial bulk by about 44,000 squares very recently, which I alluded to. And now, we're looking further down the line and we're going to probably make calls on that probably early in the new year once the full master planning is done. But I think it's a very important exercise to do. We're going to probably look at trying to convert some of the commercial collaboration hub space into rear space to obviously create more of that city environment and walkable field. And it also helps from an infrastructure point of view and also from a costing point of view. If we reduce bulk, our rates and taxes come down accordingly. So there will be upside, yes.

And do you see that as a lengthy process to redesign now what you potentially have got now in the precinct?

It's going to take probably 6 to 7 months, yes. So it's reasonably long, yes. I think it's very important to get it right, because it's easier to debulk rather than to have to rebulk again later. So we must get it right, yes.

Any other questions? No? Shall I go online? All right. So the first one from Charles from Titanium Capital says would Attacq be interested in increasing its holding in Mall of Africa? Does Attacq have the financial capacity, balance sheet to do this? Does the strategy of Atterbury Property Holdings make this a viable possibility?

Yes. I think it's our largest asset on the books. We really back Mall of Africa. So at the right time and always at the right price, we would definitely always look at Mall of Africa. I think Raj and Pete have certainly also looked at can we financially buy into a further stake further up in Mall of Africa. Yes, we can. But it's all timing and the pricing discussions. But we -- it's definitely an asset that we back and that we certainly see opportunity to further buy up in the future.

Another one from Charles is, can you comment on how hotels are trading? Is travel sufficient to make the hotels profitable and viable?

I'll field that one, Manisha. So in general, we've got 3 leases in place with City Lodge. They're also a listed company. So they do not -- although we ask, they do not disclose occupancy numbers because, of course, they don't want us to front-run any information in the market that might affect them. What I can however say is that all the hotels trade really well. Lynnwood Bridge specifically has got a high occupancy. And maybe if I can answer it in a different way. The Courtyard Hotel, which opened -- Dave, maybe help me. Was it October or April? April 21 or October -- it was April, right? So it was just after the sort of second, third waves. And they were very circumspect in opening that product in Waterfall City. And they have made a decision to open the remaining floors. And certainly, I think that's a positive indicator enough that I think their hotels are going well.

And I think City Lodge results are due later this week. So watch the space on the occupancy levels.

Michael, let's stay on you. There's a couple of questions on Cell C. Does the amended lease -- and this is from [ Yan Familan ] from [ Broadband ] -- does the amended lease agreement with Cell C cover the whole collaboration hub space? Or will Cell C take a portion of the facility?

So the answer to that question is yes. So the collaboration hub center, which totals 24,900 square meters, the new agreement is in the total space, yes.

Awesome. I'm going to stay with [ Yan ]. Has Cell C already vacated the walk-in center? When has -- or when will Cell C vacate the premises?

So they have vacated the walk-in center, but they've not handed it back to us. Once again, we're just waiting for the recapitalization decision to be confirmed. So they've vacated in practice, but not hand it back yet.

Okay. And then what are the plans for the bulk land portion of Cell C...

Yes. I think David's team has helped us as has asset management a lot. There's a couple of options, not just one. And that does include the walk-in center -- potentially, repurposement of the walk-in center in a couple of different forms. And the team has also looked at opportunities when it comes to electricity supply to that site. But I mean, there's a lot of options on the table when it comes to the bulk land.

Okay. Then the last one from -- no. Okay. [ Yan's ] got 2 more in Cell C. Who is Cell C's warehouse space relet to?

It's a company called Global Mobile, and they provide handheld devices and other such devices, not only to Cell C, but also to other networks in South Africa.

Okay. And then the last question is, your statement mentioned a ZAR 10 million loss for rental not received. How much of its rent has Cell C been paying? How far behind is Cell C on its rent?

So yes. So that specific ZAR 10 million is an IFRS adjustment. Raj, I'm sure...

Yes, an IFRS adjustment.

Yes. So you can educate us on...

It's perhaps a little bit confusing. I think everyone is referring to perhaps Slide 59, where we reconcile the cash to the distributable income. And so from an IFRS perspective, we created an expected credit loss on the amount not received from Cell C. But from a distributable income, we top that up to 100% provision, i.e., whatever was not received, we then created a provision to make sure that the distributable income is completely cash backed. So the ZAR 10.9 million is only the top-up provision and not a 100% provision.

I just want to round off that question. So just for awareness. So the question is what happens with this unpaid amount. Also on the new collaboration hub, what happens to that deal. In the recapitalization agreements that have been signed, there will be 2 bullet payments due to Attacq: the first one in December 2024, the second one in December 2026. And that encompasses the amounts that has been due to Attacq since August of last year.

All right. And then another one from Charles is just on Ellipse. Can you provide some insight why Ellipse seems to have been successful whereas the mix did not get traction?

I think I answered a bit of it in a different question, but I'll go through it again. So it's a lot to do, obviously, with the site configuration. So Ellipse, we're obviously running it over 4 buildings, 3 phases. So you're only bringing a certain amount of units onto the market. And then you can obviously stagger when you bring your amenities on. With the mix, it was one site, bringing on 360 units at once and then putting the amenities obviously into that building, which loads your cost. I think what was quite interesting with the mix is that even when we decided to discontinue, we were still doing quite a number of sales. The challenge we were having is they would drop off. So there's definitely still a demand for rents at Waterfall.

Okay. Then [ Anas Mardi ] from [ Migo ] has said, how has construction costs impacted targeted development yields or profits on resi in the last 6 months? I think we've kind of answered it, but totality...

Yes. I think maybe one point I'll just add is the 47,000 squares that we've rolled out this year, that was obviously all pre-let, no spec there. We have achieved all our targeted yields that we got through and that was required through IC. So the developments that we've rolled out this year, we've achieved the yields that we would like to.

Okay. Then Jarred Houston from All Weather says, can you give us an update on progress with disposals?

Let me give -- it's difficult giving an update on disposals as we're currently -- certain disposals are under offer. We're currently are resolving preemptives with certain of our clients. And it's also sensitive information at the moment. So there is offers on the table on certain of the assets we're likely to dispose of. The type of assets is outside Waterfall and sometimes it will be inside Waterfall. So it's a broad spectrum of assets that we're currently looking at disposing of at this stage.

Okay. And then Chris Reddy from All Weather Capital says, related to the buyback comment, assume that you would seek that approval at the next AGM, any sense of the possible size it could go up to?

Chris, we'll definitely seek an authority at the next AGM. We'll probably seek the standard sort of 5% to 10%. But that's not necessarily a guidance of how many shares we'll buy back in the market, if we do choose to do so.

Okay. Then finally from [ Luando ] at Anchor Stockbrokers. Let's go with the easy question first. Attacq share price is trading at significant discount to NAV and the market value is -- Attacq property is at 50% of book. Any chance for share buybacks at current market price?

As Raj has just said, we need the authority at the next AGM to authorize us to do the share buybacks. It's definitely one of the part of self-help measurements that we as management always consider as good prudent capital management.

This is a very interesting question. So maybe both of you can have a look at it and -- maybe read it rather.

Yes. Attacq sold most of the held-for-sale assets above book value: the Deloitte Building to the GBF, the 2 logistics assets to Equites, positive and accretive disposals for Attacq. Any disposal plan for Eikestad Mall in Stellenbosch given that it's outside of the Waterfall area and given that the market is willing to pay premiums for Attacq assets?

I can put it in record, the Eikestad asset currently is not in the market for sale. We've actually seen an asset that went into COVID with a question mark. Came out of COVID quite strong. And I must give Michael and his team a lot of credit. A lot of work we've done throughout COVID. And that asset, we feel has got a lot of growth potential still left. But we are considering selling assets. As I've just said, we've got offers on certain of the assets outside and inside Waterfall. So it's always a big asset management decision. And the asset management decision lies on when do we achieve top form from a valuation point of view? Is it downside risk from a municipality point of view? What are the factors we cannot control in managing those assets? So there's a lot of asset management decisions that go in. And how do we select an asset for sale in the current market? And also the assets we keep is we feel that there's still some growth potential in earnings and further value that we can unlock in certain of the assets we keep. So on Eikestad, we feel that there's still growth and some earnings that we can unlock. And that is the reason it's not for sale at this stage.

Is that all the questions?

Just a question to you, Raj. I can see you resumed dividends, but at the same time, this ongoing development. How are you planning to maintain current dividend policies without increasing your gearing? Is this possible? If you can perhaps provide details on how are you planning to balance your gearing level and also the current dividend policy? Actually, I find it difficult that you can maintain the current dividend policy without increasing your gearing at this current level. And I don't see the -- I mean, the absolute debt figure coming down substantially without impacting the current dividend policy as well, I don't know if you can provide details on that.

Yes. I think it's a good question. I think maybe just to confirm, I don't think we're uncomfortable with the current gearing level. So if you look at our current level of debt, we're not planning to reduce it further. And when Jackie refers to disposals, those are really derived from good asset management, i.e., assets that we believe are at the right stage to be recycled, but not for the purposes of reducing debt further. I think we're very comfortable with the sort of 37.2% level of gearing that we're currently at. I think going forward, clearly, we've got development opportunities within Dave's team. And we're fortunate in that we've got a couple of, call it, access to capital. One is we are retaining a portion of our earnings, so we're not paying out 100% of our earnings in dividends. So we're retaining 20%, which gives us those retained earnings that we can reallocate in the business. Secondly, a lot of our developments, our joint venture partners -- and what does that mean? It means that we immediately sell a portion of the land to the JV partner and that realizes a significant unlock of capital, which then helps fund our portion of the development going forward. I think we can quite easily fund a portion of the development with a conservative level of debt without increasing our overall debt levels. And I think we also -- where we are in the cycle, I think we're a lot more comfortable that valuations are a lot more stable than they were sort of 12, 18 months ago, where we saw potentially valuations declining over an extended period. Now values are indicating to us that there's a lot less uncertainty in the market. And I think as a result, valuations will stay a little bit more stable and they will also contribute to a gearing level within sort of the parameters that we're comfortable with.

Thanks. Is that everyone?

Yes. There's lunch up at the Highline Bar.

Okay. So -- well, there's lunch. Thank you. If you would mind joining us for a coffee and something to eat in the Highline upstairs. Thank you very much once again for attending and to everyone online. Thank you. Bye.