Attacq Limited (ATT) Earnings Call Transcript & Summary

Good morning, everyone. Certainly wonderful to see so many familiar faces around us this morning and thank you so much for joining us this morning with our interim results. Just to introduce my fellow presenters this morning. So I'm going to start here with Michael Clampett. Michael will go through the South African portfolio. Then we've got David Oosthuizen that will cover Waterfall City development. And then back by popular demand, P. de Villiers will cover other investments as well as the GPF transaction and then Raj Nana, our CFO, will cover the financials. So good morning to everyone, everyone online. Thank you so much for joining us, to our staff, all dialing in from all over the regions. Good morning to everyone. What a busy 6 months it has definitely been. I don't think in my career, we've handled so many situations in 6 months. But I think if you look at our results, it's definitely testament. I just want to get, here we go. I'm looking at that screen. I do apologize. Okay. There we go. But looking at our results, I think it's definitely testament and it demonstrates the resilience and the continuous resilience of our portfolio. The operating conditions is not for the faint-hearted as I said. We've had record periods of load-shedding, impacting our clients' cost of occupation, impacting the maintenance cost of our buildings, impacting our staff being available around the clock to always be on. I didn't realize the impact on our staff of load-shedding until I went and visited and really understood what it took to take fuel bowser, fill up the Janis. And then you need to still get to your daily job and that's just filling up the diesel bowser. So it was an incredible eye opener for us, which we had to provide more staff on our certain sites. Then we sit in a interest rate hiking environment, we've got rising cost inflation. And then we've got a political situation, a new cabinet. I'm not going to give my sentiments on that, but certainly, a real poli-crisis we see ourselves in. However, as I said, we've shown a lot of resilience in our portfolio. Our distributable income up 27.3%. We've declared a dividend of 29% and that's just over an 80% payout ratio. Our interest cover ratio at 1.72% and our medium-term target is at 2%. So I think we're well on our way in achieving the interest cover ratio. Trading density growth. In our retail assets has been remarkable. Michael will go in quite a lot of detail. But I think what stood out for me personally was the Mall of Africa that grew by 22.8% and the portfolio for 14.7%. And then amidst all the crises, we still continue to build at Waterfall. We're currently busy with just over 53,000 square meters of development, which is a further investment of just under ZAR 1 billion of investment. That's total. That's not just the Attacq investment. But it really just shows you the quality of our precinct and the willingness of not just us, our partners to invest into this portfolio. And then lastly, a transaction, which we announced quite recently, which we're very proud of in the making or excess of 2 years is the strategic partnership with the GPF investing 30% in the subsidiary, AWIC, which holds all of the land, infrastructure commitment as well as the buildings in the Waterfall precinct. And I think that is testament to the quality of having the Government Employment Pension Fund putting ZAR 2.8 billion alongside management and in Waterfall City to further develop our Waterfall City. When we look at the focus areas of Attacq and also we've received a lot of questions. Now that you've got -- when you closed the Government Employment Pension Fund transaction, will you be accelerating building, certainly not. For us, it's about our focus, a simplified focus, a precinct strategy and knowing where we need to allocate our capital. So our capital will definitely continue to allocate with further development of Waterfall, potentially looking further at buying back shares. We're currently in a closed period because of this transaction. So we're not allowed to trade and buy back our shares. We'll further enhance our retail precincts outside Waterfall. And we really like the diversity in terms of assets, sectorial diversity and also their geographical diversity. Then we've got Africa, which sits in our other assets and Pete will give an update today on Africa as well as MAS investment, the 6.5%, which, again, it's a medium-term investment. And at this stage, we're not looking at disposing of our MAS shares at this stage. Our strategy certainly been [ drilled ] and tested over the last few months. But I think the result is evident of the continuous dedication that we do have to our strategy. And it's equipped us to address this rapid changing environment that we continuously operate in. How do we do it? I call it the sum of the parts. And this is -- I'm not accountant. But for me, they're some of the parts in delivering our strategy is really about precinct resilience. So I've spoken about record high load-shedding. 2 years ago, we went to our Board and said we really need to get business enhancement. And that's how we started looking at a PPA to sign indoor, but that's -- we're still building the PPA indoor, the power plant. So I am really with precinct resiliencies at scale to deliver an energy solution that deploys a strategy that's far beyond just the energy crisis. It's actually business enhancement, bringing more income into our portfolio. So Michael will unpack how do we curb the cost of the current crisis we're in. But for us, it's really about energy and then also looking at water. The failing infrastructure of South Africa, we feel as a real estate investor, you need to take care of all infrastructure matters to always be on and provide a service to your clients. Operational efficiencies, another one that keeps me awake at night, rising costs that we cannot control. So for us in Attacq, it's about really sweating the detail, understanding what drives the cost, understanding how do we mitigate the cost and also understanding what makes it easier for our clients to enter into a building with Attacq. So for us, operational efficiencies and then also how David designs the buildings, it's learning, what can we do better in the urban design, how can we improve the building efficiencies from a design point of view. Lastly for me, it's about client experience, understand your client, know your client, listen to your client, understand what is the issue so that we can solve for the future. We've seen in the office sector trends of continuous flight to quality, continuous flight to security and safety, but also a option where we can provide our employees with a holistic wellness experience. And lastly, we're still seeing that our office clients are reducing in space. But the office market is not dead. We continuously signed leases, but at a definitely smaller square [ meterage ]. So a great article that PwC put out a month or 2 ago on trends in America, summed it up perfectly the office market. It said, show me quality, show me niche and that's really summing up what where we see the real estate market is moving to. When we look at our ESG and ESG for us is really an integrated process. It's not something that stands on its own. We do like highlighting what we've achieved from an ESG point of view. But it's really ingrained through our purpose and our vision of our company. So on the environmental component, we've concluded a lighting retrofit projects and that's really just helping reducing consumption. And Mike will talk about that. Our EPC certificates have completed and under review. Diesel consumption is record high. So that will have a negative impact on our Scope 1 emissions. We've got currently 8.5 MVA of rooftop solar in the process of further rolling out 2.3 megawatt and that is of a total of 7 megawatt we have committed. And then the Waterfall waste project will soon kick off. Communities, is really our staff. And our communities we operate in. So in Attacq, we really value diversity, gender diversity. We encourage inclusivity to really understand all different views to make sure that we are a company of the future. Another big component for us, it's about education and training. And you cannot send a hungry kid to school and it's the reason we pack every year hundreds of thousands of meals for kids to make sure that when they get to school, they have got a meal to eat. Our bursary students, very proud of our bursary students we've committed. And then, our Level 1 B-BBEE that we've achieved at the end of last year was the first year that we achieved the Level 1 status. On governance, we've appointed 2 Non-Executive Directors, Ms. Fikile De Buck and Dr. Gustav Rohde, really looking at the skill matrix of what our Board needs and also curving for the future of what we need from a skilled matrix point of view. And I don't like bragging about awards. But for me, I said to Brenda, please put the integrated reporting award in and why I've put it under governance. It's -- we love to be transparent. And this award for us is just illustrative of what our culture in Attacq is. We're open, we're honest and we're transparent in our story and in our results, what we report on. So with that, I'm going to hand over to Michael to talk about the South African portfolio.

Good morning, everyone, both present here and also those that have joined us online. I will take us through the operating performance for the 6 smart, safe and sustainable precincts at South Africa that Attacq own in South Africa. Before I start with the rest of the presentation, maybe just a quick acknowledgment to our property management and operations teams for a fantastic job over the last 6 months. None of these results would have been possible without them, their dedication. I can safely say that the light is always on -- in any of Attacq assets. And it's due to those teams that have done the hard work over the last 6 months. At a high level, this is the summary of the operating performance. I'll just touch on a number of these stats. First of all, on a like-for-like basis, a 0.4% decrease in the fair value of our properties, mainly driven by the collaboration hubs and just an extension of the long-term vacancy assumptions on some of those collaboration hubs. So once again, nothing to do with the actual leases, the actual rentals obtained, but just a longer-term view, softening a little bit and that led to that total decrease or overall decrease in fair value. Occupancies, it's at 92% as at the end, 92% at the end of December, reflecting on the number at the end of June at 92.1%. I want to point out that in this period we added the walk-in clients' center at Cell C of 4,900 square meters to the vacancy. So effectively, what that means is that our team were able to fill about 5,000 square meters in other parts of our portfolio to end up with the same number at the end of December. And I think that's a really good job, well done. If I move on to the client retention rate, so that's number 5 to the left, at 61.8%, slightly below our target of 75%. If you break that down into the different categories, there were 11 leases that expired in our collaboration hubs. We were able to renew 48% of those leases. And in the retail experience [ abstention ], there were 139 leases that expired for the 6 months and we were able to renew 69% of those leases. Turning our attention to the reversion rate, collaboration hubs, once again, only 11 leases that expired, so really a small sample. The reversion rate there was negative 24% and that contained 2 large leases, one in Waterfall and one outside in our Lynnwood precinct. So the resets on there led to that 24% decrease. And on the retail side, a negative 1% on the reversion rate. Maybe just another quick mention to I guess that Mall team, they were able to grow rentals by 14% at expiry for the 6-month period. So congratulations and well done to them. From a trading density perspective, total portfolio, 14.7% growth on a year-on-year basis for the last 6 months. Just pointing out some exceptional performances, Mall of Africa grew by 22.8% over the last 6 months and they also achieved a total turnover of ZAR 760 million for the month of December. So that's quite a significant amount of economic activity that flew through Mall of Africa in the month of December. In total, our regionals grew by 10.9%, with Lynnwood Bridge and Waterfall Corner growing at 17.3% and 15.7%, respectively. Once again, that sort of overexposure to restaurants is something we'll see a bit later. So food services and restaurants in our portfolio doing really, really well over the last 6 months. That's a quick nexus to this slide. So what do the bubbles represent on this slide? The bubbles represent the size of total turnover in our portfolio. So all the bubbles should add up to 100%. And then what we do is we show you by what percentage those specific categories grew over the last 6 months. Foodservices, like I mentioned before, in our portfolio grew by 29.9%, really see people back at restaurants and enjoying their time. Apparel in our portfolio also grew at 24.5%, a significant driver of turnover in our portfolio, totaling about 21% of the total turnover generated, really growing healthily. But I also want to point out sportswear and outdoor maybe once again being an indicator of what people prefer to spend their money on and that grew at 22.4% in our portfolio. The next 2 slides will just take us through some more detailed performance metrics. So we focus on Waterfall City usually. And then we focus on all our precincts outside of Waterfall on the next slide. I want to point out just a number of things. So first of all, at the bottom, you will see in aggregate what happened to the valuations for our properties. Maybe just reiterating again on the specific market, rentals not a lot of movement, slight softening on some of the assumptions for long-term vacancy, specifically on the collaboration assets and that led to the different increases and decreases in the valuations per category. I want to just to highlight there that the retail assets increased by 0.9%. If we flip to the next slide, you will see that outside of South Africa, they decreased slightly. The reason for that would have been the increased exposure to diesel expenses and that is certainly playing a part in some of the valuations. But the significant performance at Mall of Africa helped to shield us from some of the impact of the decrease in valuations due to increased load-shedding. On the collaboration hubs, the occupancy rate of 79.7%, once again, just pointing out that still includes 24,300 square meters of Waterfall Circle. I want to share with you that David's team has assisted my team greatly. Over the last 6 months, they've looked at various uses and they did in-depth studies. That would include medical education, storage, even hotels. We've also spoken to some operators in those categories. And at the end, we've also realized that the first and best use remains an office, a collaboration hub. So our deal team has consistently been busy with some deals there. There are 2 tenders, which are being adjudicated in April. One is for 6,500 square meters. The other one is for the entire building. So by the end of April, we should have more clarity on where we landed on those 2 tenders. And outside of that, our deal team are running with a number of direct deals. One of them for 9,000 square meters, another one for them for the entire building. And we also had a very successful broker day last week where we hosted brokers specifically on that building, showed them more about, told them more about the building and hoping to reap some rewards from that strategy. If we look at the precincts outside of Waterfall City, what I want to highlight here is just the decrease in value for the hotel. That is our City Lodge Hotel in Lynnwood Bridge, that hotel doing really well from a occupancy perspective. We also shared that information with you in our last results presentation in September. But just to highlight that what happened here specifically was that the valuer just took a view on the longer-term market rental that could be achieved on that hotel, just highlighting that, that expiry is 7 years out. So it doesn't really affect us in the immediate future. But because of that change in assumption of the long-term market rental, it led to that specific decrease on one asset only, so just to give you context on to that. Collections, still very strong, above 100%. And I think that shows that the quality of the tenants that we have in our portfolio after 2020 has led to this good result. We've added this slide just to try and relay the message slightly about the operating performance of our retail assets, considering the load-shedding that we started having in the last quarter of 2022 calendar year. And what you will see here in the line, it represents the growth numbers for turnover in our entire retail portfolio. You will see that it's always above sort of 14% or 114%. So our retail assets showing significant retail growth. But to achieve that growth, we had to burn big amounts of diesel. So what you'll see in the bars is you will see the navy blue bar line represents the liters of diesel that we went through in that specific month for 2022. And the gray bar represents the amount of diesel we went through in the preceding year in the same month. So you can see the navy bars increasing significantly. But we were able to keep the lights on, keep the customers in our retail assets and that, in turn, led to the good turnover performance. You will see that our operating cost mix has changed slightly. I want to highlight a couple of things here. First of all, what I want to highlight is that our recovery ratio decreased from 89.4% to 84.8%. There's a number of reasons for that. We did not recover the same amount of -- from our tenants on our diesel-generated kilowatt hours as we do from grid or solar. So that led to a decrease. And another reason for the decrease, which I'll explain on the next slide, is that in instances where your solar installations are not tied to either the grid or a generator when there's load shedding, you lose that production on the solar. So of course, we then also lose the opportunity to recover that total energy from the tenants, because it's not being generated. So those 2 factors led to the decrease in the recovery ratio. Also, if I look at the expense ratio, you will see that diesel has increased significantly. We've indicated that in the blue section of the doughnut chart. But what I also want to highlight is that we've definitely seen an increase in the utilization of our buildings. So that's sort of a human utilization, more people in the hotels, more people in the collaboration hubs. And that has led to an increase in some of expenses, which are sort of consumption expenses related to the prior year simply because there are more people in the buildings and that has increased some of our operating costs. So if all of us in this room are South African and we own homes in South Africa, I presume that you're all energy experts by today. So I'm not going to lecture you on how batteries, inverters and solar panels work. But what I want to show you is what the tax strategy is with regard to reducing our reliance on diesel. Simply put, our view is that in the longer term, it is not sustainable to run all our assets, although we do today. It's not long-term sustainable to run all our assets on diesel generators. And we've got a strategy to wean ourselves off that over time. So first of all, just to confirm, today, we've got 82 generators installed in the Attacq portfolio. And that's got the ability to deliver a peak low demand of 34 megawatts in our assets. If we look at the energy sources from June last year versus sort of where we ended up in the last 6 months ended December, you will see a significant increase in the diesel or the proportion of energy generated by diesel. So that climbed from 2% to about 12% roughly. You will also see a decrease in the amount of energy that came from our PV systems. As I explained earlier, the reason for this is that some of our installations are not tied to generators. So in the event of load shedding, they are not able to produce their energy. They need a base-load to deliver to and that's how the installations are set up. So you'll see that there was a reduction in the amount of energy that came from solar panels. And then, of course, the grid, we received 91% of our power in 2022 financial period ended June from the grid. And we've only received 83% of our energy from the grid for the last 6 months in December. So what are we going to do? If you look at the graph, this represents and it's just for illustrative purposes. So if there's any engineers, you can chat with me afterwards about the accuracy of the graph. But to illustrate this is, let's say, an assumed load profile during the day. So during the day, hot hours we use more energy because of air cons, et cetera. And if we have load-shedding at 12:00 p.m., the diesel generators will have to deliver that peak amount of energy at that moment to keep that asset running. So what we've done is our first step is we've done a lot of retrofits in our portfolio over the last 8 months, specifically focusing on large common areas, that would include basement parking lots, et cetera, making sure that when those lights burn, they burn with the least amount of energy possible. And that has reduced the immediate load that we need to generate when the tower does go off. And that step is largely complete in our entire portfolio. The next step is installing controllers. And what these controllers do is they understand when the load from the grid disappears. And if we set certain parameters, they will -- well, let me start by saying all generators are set to automatically start up when there's no energy delivered from the grid. What the controllers do will understand whether it's still necessary to actually switch on the generator. And so what we are looking at is we're looking at noncore hours whether this be for collaboration hubs or retail experience hubs. We've run very successful pilots at Garden Route Mall by not switching on the generators at 2 a.m. and running all emergency services like security and all other elements that need to be up and running off batteries. So we're looking to expand that to our entire portfolio. But once again, I want to reiterate case-by-case basis. It doesn't mean that no generator start at 2:00 a.m. It means that on a case-by-case basis by building, we will make those decisions and program the controllers accordingly. The third step is by lowering your total demand at any one period. And the easiest way to achieve that is to increase our power that comes from PV and solar panel installations. And that we've communicated a number of times, the 2.3 megawatts you've seen our presentation today, those have already gained approval from the local authorities. We're in the tender process now. So the turnaround in that is really quick. And all the megawatts we refer after that that's still in the planning process. And we just need to tie up all the approvals from the local authorities and then we will go over into execution mode. So the 2.3 I think is more than committed, we intend to phase and we should have that up pretty soon. And then lastly, so you will see on the left-hand side of the graph, sort of step 1, 2. We're trying to reduce our total requirement to burn diesel through generators. The final step would be to look at augmenting those 82 gen-set units with some battery backup. So when it starts to make economic sense, we will start replacing the diesel base-load with battery base-load. And in that instance, we'll be able to run certain properties without running diesel generators in future. So I hope that's clear. And I certainly expect to have some more questions on that after the presentation is done.

Good morning, everybody. So starting on the development of Waterfall City. This is a summary slide. I will unpack each development individually on future slides. But in summary, we currently got just under 54,000 squares under development. That's made up of 5 schemes and 7 buildings. One of the schemes is made up of 3 buildings. Total development cost at completion is a shade over ZAR 900 million and ZAR 915 million. I think it's important to look at these 2 metrics in line with the pie chart in the bottom right corner. So as Jacqs has mentioned, we've got quite a definite strategy that we're looking at, especially in the dev space around spec build. We're trying to be very prudent in that space. So if you look at the 68.4%, that's making up of the 53,000 squares that we're currently building. So there's not a lot of spec that's being built. This is trying to manage our dev risk is obviously trying to keep the integrity of our yields that we are building. In relation to that as well, on the logistics side, that's obviously where we see most of the demand at the moment. So it's 61%. That's where our major focus is. Obviously, on the office or what we call the collaboration hub at 9.8%, we are very careful on what transactions we're looking to do at the moment. And then obviously, at the 28% is our current risk envelopes. If we look at the bulk at Waterfall City, shade over 1.8 million squares of bulk, 40% still the goes, that's 730,000 squares. As mentioned before and I'll unpack it a little bit later, we are busy executing on the Sanlam transaction on Waterfall Junction, buying up a further 26.4%, which will give us 50% on a total bulk of 600,000 squares at Sanlam. This is pure logistics bulk. So once that is executed, we'll have a little over 1 million squares of bulk to roll-out Waterfall. Res units, so the only res development we're doing is Ellipse, which is our first one. Bankable sales are down from December 2021, not -- we aren't that concerned about it. It's obviously expected with the higher interest rate cycle. But we've seen quite a big uptake in sales in the last 6 to 8 weeks. But again, I'll unpack that on the Ellipse slide. So if we look at the dev strategy, we represented this in our June results last year. This is essentially a summary of our strategy. It's a matrix made up of 3 sectors: your residential, collaboration and then obviously, your logistics hubs. And then we've got 4 principles that are essentially interconnected. So you're looking at your operations sustainability, your infrastructure focus, your development design and then obviously, your transaction focus. I'm not going to go through each box. But I think there's 2 items I want to focus on a lot, obviously, around sustainability. It's the big buzzword at the moment. We tend to look at it more from a point of view of resilience. So we're trying to create a product here that's resilient to obviously, the energy and water issues that we're currently having in South Africa. So that's how we're designing buildings, obviously also trying to retrofit buildings. So from a micro level, looking at the buildings, we're obviously installing prepaid water meters, electrical meters, PV systems, as Mike has alluded to, we've obviously got the PPA on a macro level. And then if you look at the Amazon building and Nexus 1 where we achieved net zero 1, there, we've got PV systems, ventilated facades, water resilience landscaping as well as double glazing. A lot of people talk about Waterfall's location being our big advantage. I always think it's the infrastructure. So if you look at the entire farm, it's about 2,200 hectares. Attacq obviously aren't developing it at all, but we're developing the majority of it. And with that, we get to control the majority of the infrastructure. And I think you're going to struggle to find a bigger pocket in South Africa with the quality of infrastructure that we currently have here at Waterfall. If you look at on the development design point of view, I think from a collaboration hub perspective or the office space, as other people refer it to, we are very focused on creating flexible and efficient floor plates. As Jacqs alluded to, still a big focus on P-grade office. However, they are wanting smaller space. And we obviously need to design our buildings accordingly. Supply chain and cost management has been a real bugbear of ours for the last 12 months. So we've seen costs normalizing. However, obviously, with the load-shedding increasing, we've had quite a number of challenges on-site as well as from a point of view in getting actual supplies from subcontractors. If they don't have their buildings resilient in their manufacturing, it obviously affects us down the road. If we go into some of the developments individually, so this is Ellipse. So the 2 buildings on the left of the picture is Phase 1, made up of 270 units. That is obviously transferred. We have 96.7% of those units are transferred already, 259 bankable sales. It's a 50% JV with Tricolt, a big residential developer here based in Johannesburg. We're currently completing Phase 2, which is 185 units, of which 168 are bankable. We are looking to transfer the first batch in May. And we launched Phase 3, which is going to be a further 145 units in November. Sales were a bit slow in the beginning, probably by the -- because of when we launched it. However, in the last 8 weeks, I mentioned, sales have picked up a lot more. We're obviously showing 41 sales here. It's gone up even further than that in the last few weeks. Obviously, the focus is to create those as being bankable. And we are still trying to aim at breaking ground on that development mid this year. If you look at our collaboration hubs and hotel, so this is the Nexus precinct, which we are currently sitting in. That is the Courtyard Hotel, which we are currently sitting, obviously and in the building in the front is Nexus Building 1, which is a net zero 1 carbon building, where AWS are based, taking up 52% of that. The whole precinct is made up of the hotel and in 3 collaboration hubs. We are currently looking at Phase 3 to create 2 buildings there of smaller space. So originally, it was designed for about 11,000 squares. We're looking at breaking it up into 5,000 and 4,000, obviously, as allows easier letting. And then the building in the front, so that is the new DP World head office that we are doing a turnkey solution for. We are looking at delivering that by the end of the year. A GBCSA 5 Star, a number of the sustainability elements that we've put in this building are similar to the one where AWS is. So even though it's not a net zero 1 building, the client has not gone for the accreditation. It's very similar in its performance from an energy point of view. Water has become a big focus. So obviously, with the load-shedding, the pumps don't work regularly, so it creates water problem. So we are creating, obviously, water resilience. So we're increasing our backup waters as well. We're also looking at rainwater harvesting and other products. And obviously, we've got our water-wise landscaping here as well. Plumblink, so Plumblink is a JV with Bidvest Properties based at LP22 where the Amrod facility is. Once this building is complete, it will complete LP22. We handed beneficial occupation in December last year so the client could start their racking, which is now complete. And they've started bringing in their product as in from last week. We are hoping to hand PC or practical completion of the entire building by mid this month. We are busy just finalizing the office kit-out ever the client is also really bringing in their product. It's our first warehouse where we have got a 4-star GBCSA Star rating, also created a provision for solar. And on the floor, we've done a 24x24 meter floor panel. So historically, 4 panels are smaller than that. The challenge with creating bigger panels is obviously to create them flat. But if you can do that, it saves a lot of maintenance costs because you've obviously got less, joints. So we've put that into this facility. And yes, besides that the development has been a real success. In LP22 as well, we've got Amrod. It's probably our flagship logistics development, built a few years ago, 37,000 squares. We are now doing the expansion to the warehouse of 3,500 squares. This transaction was actually approved just before COVID. And then COVID happened and between ourselves and the client, we decided to take a step back. The client now due to the growth of their business has looked to expand. We've also extended the lease out by a couple of years and is now a 50% JV with Equites as it was part -- Amrod was part of a greater transaction we did with Amrod -- I mean, with Equites last year. So this is our only spec development that we're currently undergoing. This is at a precinct called LP9 South. So this is where serviced and -- based, very close to the N1. It's 3 what we call middle units. So they vary between 4,500, up to 5,300 squares. We rolled out a development very similar to this, 4 years ago in LP8 North, which was very successful. We've got a very big mining company in the one. We've also got the Superga brand in the other. The reason we build 3, for the site, it makes sense, but also from an economies of scale point of view, if you could build closer to 15,000 rather than 5,000 squares, you can obviously save on PNGs and other items and can bring the rental down so it makes it more competitive. Obviously, sustainability, an extremely important factor in these developments. So our standard obviously, with LED lights, performance lighting, low-flow sanitaryware. We've also included provision for rainwater harvesting. So we're not putting the product in at this stage. But what we do is we put in the piping now, which is the most expensive part. And then depending if the tenant would require it, we'll obviously install it at a later point. In addition to that, we also have a 4-day backup water. So that obviously fills up when the energy -- where there is electricity in the building. Historically, 12 months ago, that was more of a 48-hour backup. So we've essentially doubled it. Practical completion will be at the back end of this year, December-January. We are currently undergoing civils and are going to tender on the main contractor in the next week. So this is Waterfall junction. So between the Cotton on Vantage and Plumblink transactions, we essentially ran out of what I call Phase 1 of our logistics precinct. This is essentially our next logistics offering at Waterfall. It's a JV with Sanlam across the -- alongside Allendale on the eastern side of the N1. In total, it's about 600,000 squares of bulk. It's got a gross area of about 1.6 million squares or 1.2 million squares of usable. So on a bulk ratio, you're trying to work that out on the usable. So essentially, it's at 50%. That's generally the number you want from a circulation point of view on logistics. We have reworked the entire scheme. We have created 6 phases. We are busy looking at unlocking Phase 1 probably in the next 2 to 3 months. So we started installing infrastructure at the back end of 2018, probably our biggest infrastructure installation since Waterfall was launched. If you look at the scale of the land, the infrastructure cost is about ZAR 960 million for all 6 phases. To unlock Phase 1 is about ZAR 190 million and we've done about ZAR 145 million of that. What comes with that is a water pipeline from Lords View. So that's a 5,000 water pipeline that we had to do in order to proclaim the site as well as we've installed the first phase of the K113. The K113 is a massive road from a logistics point of view as it's going to join Allendale with the current Long Meadow. So we view it as being the new logistics arterial route from north to south. As mentioned, we executed on our option in June last year and we're currently going through the process. We have finalized the actual purchase price of that option recently. And now we're just formalizing the legalities. So hopefully, in the next 2 to 3 months, we'll be 50% shareholders in this development. And with that, I'll hand over to Pete.

Thanks, David. I'll also remain seated because if I walk up and down then it will -- that will double my appearance time. So see other investments. Looking at MAS, I get the easy accounting rise gets the hard accounting. So MAS is held in our books at market value of closing share price. So it's quite a simple exercise. 31 December closing price times our 46 million shares. That gets us to just under ZAR 1 billion in value as an asset on the books. From an income perspective, we account for dividends as and when received in cash. So we don't accrue. So for our '23 financial year, the MAS income is now baked at ZAR 69.6 million is the total of the final dividend for last year from MAS in the current interim dividend, which we paid on the 3rd of next month. Other than that, MAS put out a pleasing set of results and they stuck to their long-term growth target. What we've done is just interpolated from now until our financial year '26. What does that mean for us? Because we do get asked quite often is this a medium, short, long-term hold. That's why we're quite clear in communicating. It's at least a medium-term hold. We're getting quite a nice attractive growing dividend profile out of it as well as a bit of a hedge geographically and from a currency perspective. Moving on to Africa. It's -- just looking at the numbers there. We've still got 2 entry points into Africa. One is at Africa Limited, which is our entry point into 3 retail malls in Ghana. The numbers there, ZAR 316 million, up from ZAR 257 million last year, that's not because of better performance. We did invest a further ZAR 80 million in Ghana over the period. That money went straight into the reducing external debt as part of refi. So if you look at a high-level roll-forward, the ZAR 257 million with some currency would have gone to ZAR 267 million plus ZAR 80 million with a new investment and then less ZAR 30 million takes you back to about ZAR 360 million and the ZAR 30 million being our share of underlying losses in associate. And those were driven by a softening in investment property values in the underlying entities. We had announced last year this time that we were looking at a transaction with suite to take out the whole at Africa stake. At pre-close, we said that those discussions had been terminated. That remains the case. We are exploring another suite for some more part of the portfolio, but it's very early days. So those assets will not be classified as held for sale soon. And maybe we'll still an investment classification of without maturity, depending on that. Ikeja City Mall, we are still pursuing a transaction with Actis, notwithstanding that for those proper accountants. You'll notice we have moved it from the ultra-sale classification. And that's not because of intent. That's just simply because if you haven't consummated the transaction and the events as causing that out of our control, which they indeed are, then, it's -- you can't keep on classifying the asset under a held for sale. So the intent is still there. The move from one part of the balance sheet to another part is as per IFRS, but ourselves and Actis are still working to consummate that transaction. The reasons for the delay remain dollar liquidity and we want to step to see how things play out in Nigeria now that the elections are done. And hopefully, we can start seeing some dollar liquidity into that market. The movement there is some FX and also reflects the underlying buildup of cash in that entity because you can't get your money out. Other than that, not much asked to say on those assets. My other slide, which is probably the only reason we're doing this transaction. So I get to present on another slide. From just -- we're not giving any new information in this slide. This is essentially what we've put out in our existing SENS. We will provide further updates as and when appropriate files to the entire market at the same time. I think just to make sure that everyone understands the transaction, it is a disposal of 30% of AWIC, as Jackie mentioned earlier, in her introduction. AWIC owns everything you see around all of our Waterfall assets. The total transaction value is estimated at ZAR 2.8 billion. That includes ZAR 300 million of new shareholder funding coming in from the GPF. We will match that with ZAR 700 million. And that ZAR 700 million will come out of our purchase price. So it's not -- it's essentially a way of reinvesting part of our -- a significant part of our disposal price back into the transaction, which means that the vast majority of the cash that is raised by this transaction goes into AWIC. And that will go towards achieving the rationales on the right-hand side, which I'll touch on later. As mentioned, there is a purchase price adjustment. So how that works is it goes either way, depending on how events play out in 2 years' time after the transaction closes. If we do purely, i.e., we lose money for the GEPF measured on a simple total return basis, then we will compensate them rand for rand up until 5% of the purchase price. So at ZAR 2.8 billion, 5% is ZAR 140 million. So there's potentially ZAR 140 million, which we will refund to them in 2 years' time. If we, however, deliver a 20% or more total return, then we stand to get a further ZAR 140 million. So we'll have to see how that goes. But it's -- I think it's a simple mechanism. It provides the GPF with some downside risk. And it gives us a chance of perhaps reducing the initial discount of 10% on the equity component of the transaction. From a regulatory perspective, from our side, our approval prices are very much back ended. From the GPF side, the fuel price has been very much front ended. So we have all GPF approvals in hand to proceed with this transaction. Now it's a matter of implementing. That's why we came out with a detailed cautionary because we haven't signed long-form binding agreements to negotiate those and settle and does take some time. However, we do have the benefit of a very detailed term sheets to be that done. So from our side, the longer stated CP is likely to be the -- our shareholder approval, which is a simple majority vote. And in order to call that meeting, we now need to produce to our shareholders a Category 1 circular with a related party aspect because technically, the GPF owns 10% of Attacq, albeit from the listed side. Also included in that circular will be a fairness opinion by an independent expert. From a rationale perspective, we've got all the rationale laid out there, so I won't go through them all. I think just to really jump that this does create a lot of investment Attacq if an investment capacity within Attacq and within the -- specifically within AWIC as well. And I think it's also a nice external validation of the quality of the node as well as the promise that it holds. So yes, please look out for SENS. We will provide more detailed updates as and when appropriate. I'll now hand over to Raj.

Thanks, Pete. So I think just a high-level financial overview, generally a pleasing set of results. If you look at our key matrices all either improving or still very healthy, distributable income per share up 27.3%, that's been led by our Waterfall City focus area and assisted by some one-off cost savings. The Board approving a dividend declaration of ZAR 0.29 per share. You'll recall in the previous -- or rather the comparative period, we didn't declare an interim dividend, but rather declared and paid out a full dividend with our June results. An ongoing focus area for us as a management team and as a debt financing team, looking at our cost of debt, we refinanced ZAR 1.1 billion by the end of December last year at a weighted average reduction in margin of 64 basis points continues to be a big focus area for us. Interest cover ratio improving from 1.5x to 1.72x, a significant increase, something that's also been a big focus of ours over the last couple of years. We've been paying down debt, reducing both gearing and net interest -- our interest cover ratio has been a net beneficiary of that. NAV per share, slightly down from ZAR 17.49 to ZAR 17.35 from the June reporting period, that's mainly due to the fact that we paid out a full year distribution in October, not a 6-month distribution. As a result, effectively paying out all of those 12 months' worth of retained earnings in one go. Finance cost decrease of roughly 6.4%. As I mentioned, the big focus area for us. This is as a result of an average lower quantum of debt in this period versus the previous period. Also some swaps rolling off and giving us some reprieve in terms of our total interest costs. Gearing, very healthy at 38%, slightly up from the previous reporting period, again, because we paid out the 12-month distribution in October rather than a 6-month distribution, but still very healthy at 38%, we're very comfortable with that level and then available liquidity also still very healthy at ZAR 1.4 billion. And that's a combination of cash facilities as well as prepaid facilities as well as committed facilities. If you look at our distributable income per focus area, Waterfall City contributing roughly 58% of our total distributable income growing by almost 50% period-on-period. That's attributable to a higher net operating income from this focus area, lower finance costs, a small settlement by Cell C in terms of arrears that we carried forward from the previous financial reporting period. That's also been offset by a higher share-based payment expense. It feels like a lifetime away. But in our previous reporting period, we still are providing or rather reporting on rental discounts and that's completely been removed from this reporting period. And so we're benefiting from that reduction in costs as well as in the previous period, we had the once-off debt prepayment cost related to the Deloitte building that we sold. If you look at rest of South Africa, that's roughly 30% of the group's total DI growing by 38% period-on-period, very much similar in terms of the reasons for that growth, a higher NOI, lower finance costs, offset by a higher share-based payment expense. And if you look at other investments, Peter has said that comprises of the AttAfrica and Ikeja investments as well as MAS. MAS is the only contributing investment in this segment, providing us roughly ZAR 30.4 million worth of distributable income that is down from the previous reporting period. And that really is just because in the previous reporting period, we included a dividend that we received from MAS, which was for a full 12-month operating period, whereas the dividend that we've included now was just for 6 months. As Pete mentioned, we'll be receiving the second 6-month dividend that we would include for our full year reporting in April. And by the time we report our full year results, you see this as a positive variance. That gives us a total distributable income of ZAR 253 million or growth of 27.2%. What we do exclude from distributable income is our profit and sale of sectional title units. During this period, we transferred 14 of our Ellipse units. In the prior comparative period, I think we transferred about 221 units plus 2 Waterfall point units, hence explaining the reduction in period-on-period profit from sale of sectional title units. That gives us a total income of ZAR 257 million versus ZAR 264 million in the previous period. On a per share basis, our DIPS is 35.9% versus 28.2%. So I think a pleasing result from a distributable income perspective. If you look at our distributable income bridge and then going into total income and the dividend declared, this is a variance analysis between last year's distributable income for the period ending December '21 versus this period ending December 2022. And we're just highlighting the difference in the key categories. You'll recall that we disposed of 3 properties during the previous period. That has contributed to a lower NOI of ZAR 27.4 million. Mike charted a length around costs around diesel and that's weighed on our results by roughly ZAR 8.3 million, bringing that down. Our lower MAS dividend, which I've already chatted to reduce the distributable income by ZAR 15.6 million. And then the aggregate of a number of small items contributed to a positive variance of ZAR 5.9 million. If you look at our like-for-like NOI increase, so that's across both Waterfall and rest of South Africa portfolios that increased by ZAR 49 million, which included the Cell C adjustment and then bringing new buildings online, including Vantage and the Corporate Campus buildings that contributed to an additional ZAR 25.2 million of net operating income. And then like I said, the overall reduction in debt, giving us ZAR 25.2 million in additional interest savings. If you look at total distributable income versus total income, the difference there between being the additional units that we transferred from the Ellipse development, the Board declaring roughly an 80.8% payout ratio, resulting in a ZAR 205 million total dividend with roughly ZAR 53 million being available for us to reinvest in the portfolio. If you look at the balance sheet, total assets largely unchanged, growing slightly by 0.5%, weighed slightly down by lower valuations, marginally lower valuations and a slightly higher trade and other receivables balance. Total asset base of ZAR 21.7 billion, total liabilities up to ZAR 9.5 billion, slightly up, a combination of a few factors, but largely drawing on our RCFs to settle the full year distribution that we paid out in October and that's contributing to a 2.2% increase in total liabilities. Our total equity base roughly static at about ZAR 12.2 billion and a net asset value per share, like I previously mentioned, ZAR 17.35 versus ZAR 17.49. Our gross interest-bearing debt up by about ZAR 180 million to ZAR 8.5 billion approximately. And like I said, we draw on some RCF facilities to fund the distribution in October, our weighted average loan term reducing to 3.3 years. And a number of our interest-bearing metrics will change. As Pete mentioned, we're reinvesting most of the proceeds to pay down debt in the AWIC portfolio or the Waterfall portfolio. But the remaining proceeds also being used to reduce our debt in our other portfolios. So most of these metrics will change with the conclusion and implementation of the GPF transaction. Most notably, if you look at our hedge percentage reducing significantly from 83% to 60.9%, we sought an approval from our lenders as well as our Board, reduced below a covenanted level of about 70% as well as an internal policy of 70% anticipation of the GPF transaction. So when we do pay down the debt, we'll be significantly reducing our total debt. Hence, our nominal requirement for hedges will reduce significantly. And it didn't make sense for us to replace it is now only to unwind those hedges when we implement the GPF transaction. So nothing to be uncomfortable about. We're expecting to still be adequately hedged post the implementation of that transaction. If you look at the profile of the debt and hedge maturity at the bottom, currently contractually nothing falling due in the next 12 months from a debt perspective, roughly ZAR 1.4 billion worth of hedges rolling off. And then, in the next 24 months, roughly ZAR 2.5 billion worth of debt rolling off with a further ZAR 1.2 billion worth of hedge. So as we refinance the entire portfolio, this will change significantly and we'll sort of rinse the repayment profile adequately. I'm going to now hand over to Jackie for the prospects.

Thank you. Firstly, thank you to my fellow presenters, my fellow Ex-Co members. This certainly looks easy, but it's 6 months of a lot of work to get through this -- and to everyone in Attacq, to all our staff, thank you very much. I think we've said quite a bit. So guidance for this year remains unchanged, where the distributable income remains at a guidance of between 8% and 10%. I've seen some of the questions already that's been asked. And so your run rate is ahead of where guidance is at this stage. I also need to remind you that for the 6 months we had, we had a stage between average sage load-shedding of between 4% and 6%. The prediction we're saying is between 6% and 8%. And we are really concerned about the diesel and the amount of diesel we will be utilizing over the next 6 months. And hence, the reason -- the major factor of the reason is why we've kept our guidance unchanged at an 80% payout ratio. My parting words for today is, I think from a strategic point of view, we're well-placed to -- and resilient for the challenging conditions we operate in. We definitely think the GPF transaction will significantly strengthen our capital structure and assist us in mitigating the future headwinds that we face. And with all our stakeholders here today, I would like to say thank you and it got me thinking last night about a word of ubuntu. And I know [ Tom Krause ] used it also somewhere in some respect speech, but it wasn't Tom Krause. I read it actually somewhere else in the ubuntu, I am because we are. And so many times in Attacq, we feel we're on this island. We're facing all these challenges alone. But we would like to say thank you for being ubuntu. Thank you for being our stakeholders. And I remind ourselves that we are not alone, we're in this together and collectively, we can make South Africa and Attacq right. So thank you for your time. Okay, we've got some questions.

We move to Q&A. I'm your host for this round. Kicking off with Nazeem's questions, mention was made of asset disposals outside of Waterfall in previous results. Is this still on the cards?

I'll take that one, Pete. So yes, there is some assets that is still up for disposal. And we will communicate when there is material movement on those assets.

Then moving on to [ Trikes ] from Daily Investor. He's got 3 questions, largely relating to Cell C. So I was going to read them out one by one and we can hit them one by one. As per previous results presentation, you stated that Cell C would pay 2 bullet payments to Attacq in '24 and 2026 for outstanding rent. Now stated that Cell C has settled, it's -- resin cash. Please explain how cash received now differs from the bullet payments?

Yes. Pete, I'll take that. We've contractually agreed with Cell C for an amount to be repaid in December 2024 as well as an amount to be paid in December 2026. The amount that will be settled in December 2024 is for amounts relating to rentals that were not serviced as prior to the recapitalization that attracts 6% interest. The amounts that will be paid in December 2026 are for amounts that are not cash serviced post the recapitalization. So there's roughly a 70%-30% split. 70% of the rental is cash service, 30% is then rolling up into the bullet. The amount that I refer to as the arrears is the amount that was not contractually agreed to be repaid later, i.e., it was in a month that was outstanding. But there was not -- there was already due for payment. And as soon as the recapitalization was finalized, that amount was settled.

So that ties in with the next question, what is Cell C Attacq in total, including all loans and outstanding rents?

The amount currently is about ZAR 64 million worth of rentals that we've contractually agreed that will be repaid, like I said in December '24 and December '26. And we've provided an expected credit loss of roughly 50% of that. It's largely driven by interest requirement.

Okay. And that deals with the last question. What -- why was it necessary to increase Cell C's expected credit losses from ZAR 800,000 to ZAR 32.9 million, which is you've just talked to that?

Yes. So we haven't -- the increase in the expected credit loss isn't that big. We must make a differentiation between the amounts that were due to us before the recap versus post the recap. Before recap, there was a trade receivable that's supposed to be due within 12 months and expect the credit loss was taken to property expenses. After the recap, this became a long-term loan. So the ECL gets reversed out of property expenses and gets pushed to other expenses. So that delta isn't as big if you compare the total ECLs pre and post the recapitalization.

Thank you. Moving on to [ Anas ] from [ Yaga ]. Why would you indicate a reduced payout ratio and simultaneous indicate you intend to buy back shares?

I think the payout ratio hasn't reduced. We communicated an 80% payout ratio with the guidance that was communicated at the end of the previous financial year's results. So that was set at 80%. The payout ratio for the interim works out to roughly 80.8%. We rounded up the distribution to a full number. So the payout ratio is really indicative of being able to reinvest in the existing portfolio. So I think it's unsustainable to pay out 100% of your earnings and not reinvest in your existing portfolio. The portfolio needs upgrades, repairs, maintenance, et cetera. And we need to keep the offering fresh. So I think that's -- I think it's prudent to retain some of those earnings. And I think the share buyback, which was announced and I mean, just to put it on record, we haven't affected any of the share buybacks to-date. We've been in a prohibited trading period, given the GPF transaction that's been -- that we've been negotiating for some -- quite some time now. Only when a full detailed announcement comes out will we be able to buy back shares and we certainly will do so. And I think the share buyback is just really an allocation of capital decision and that we'll be effectively investing in ourselves. We understand the portfolio very well. We understand the trajectory of the earnings growth as well as the capital growth and we're effectively allocating capital to that.

Thanks, Raj. Another question from Nazeem of Investec. Office renewals, what was new rental in rand per square meter versus expiring? Was this mostly in Waterfall precinct or Lynnwood? And then a second question to that, have you changed asking rentals to full Waterfall Circle and what are these?

Thanks, Pete. So I'll take that question. So due to our client base, I'm going to try and not give too many specifics. So there's not a lot of information, of course, that we want to put out there and fix them. So I'm going to try and give you enough information to put the pieces of the puzzle together. So on the collaboration hubs, we said there were 11 leases that were expiring. Let's focus on outside of Waterfall first. 5 of these leases set outside of Waterfall. One of them failed in this renewal cycle. And then 3 we renewed and one of them, we added a replacement tenant in. So that was a new tenant. The general expiry rental on that was ZAR 234.77 and the reversion there was 32%, specifically outside of Waterfall. Inside waterfall, fixed leases expired in the period. 2 of them failed. We failed to renew them. 3 of them will be retained. And then we added a replacement tenant. Once again, the exit rental there, gross ZAR 233.26. So hopefully, that's enough information to guide and have put together the picture without naming the clients that would reflect it. The second question was rental on Waterfall Circle specifically. I want to reiterate that -- moving a client of 6,500, 10,000, 24,000 square meters is not only a rental discussion. So certainly, we take a lot of cognizance of where market rentals are for those types of buildings in some of our competing nodes in Johannesburg. But moving IT and digital infrastructure, there's a whole host of things, the timing of the move, the unit, then premises. There's a whole lot of other costs that are related to a big move like this. And certainly, it's not a head-on competition just on the rental and sort of right to the bottom in that case. So fairly comfortable that where the rentals are pitched, they are in line with what they could expect in other notes and we're not mispricing either the building or pricing ourselves out of a competitive sort of bidding process.

Thanks, Mike. I just want to check, [ Menasha ], do you want to take questions from the floor as well just to -- we do have other questions online. We will get back to them and so do give everyone a fair chance.

Thanks for the presentation, 2 questions from me. Maybe I'll start with Peter. Regarding the GEPF deal, what do you think could be the key risk around that deal in terms of closing in the next few months? And what do you expect the closing date to be?

I'll speculate on the closing date, but there's a lot of moving parts in between. Ideally, we'd like to get the transaction fully bedded done and implemented pre-June results. It just makes life from Rajesh's perspective a lot easier from an accounting perspective. But obviously, we are working ourselves in the GEPF to implement as soon as possible. I think the key risk is just getting our full length legal signed. But the reality is, as you've seen from the nature of the conditions precedent announced, it's not a complicated deal. There's a lot of regulatory work that needs to get done. But there's not -- it's not complicated and exotic. It's just a work stream that we need to get done. So I think the main thing is getting legal signed, long-form signed. Once we enter the next phase, which we'll be executing on CPs, it's largely regulatory requirements, getting our shareholders to vote, et cetera. And the shareholders that we've seen certainly been positive and are excited as well for what this means for the company going forward.

Okay. Perfect. And then second question is for Raj. How should we think about the sharing of the costs with the GEPF coming in now, particularly land costs and the holding costs and especially development costs?

Yes. This is actually quite an easy question to answer. So the GEPF is effectively acquiring 30% in Waterfall, Attacq Waterfall Investment Company. That company owns all of the assets currently Attacq owns in Waterfall. So they'll be effectively getting a 30% vertical slice of everything, including completed holdings, developments under construction and lease of land. So the lease and land holding cost that you're referring to, so that's the rates and taxes, the POA levies, et cetera, are actually incurred by that legal entity. So by only 30%, you're effectively your share of the post-tax income, which is equal to the pretax income because it's an understood REIT, we'll take into account all of the expense directly incurred by AWIC, including the holding costs. If you think about some of the development costs or the way the Attacq group is currently structured, is that we've got a management company and all of us are employees of the management company. That's the tech management services. And so what we have agreed with them is that because the development function is solely focused on Waterfall. So we don't provide development expertise and resources to outside of Waterfall that, that cost will be done on a pure cost recoupment basis. So we're not providing a margin on it in any respect. Effectively, those costs will be picked up. In terms of asset and property management, like I said, the asset and property management teams are employees of tech management services. So for those functions, they will be charging a market-related asset and property management fee to recover those salaries and those costs and sort of the, call it, the corporate overhead in relation to property and asset management.

Okay. Perfect. And then, maybe just staying with you, just the last question. Would there be any penalties in terms of reducing the debt in AWIC?

You could ask the banks. They're all here today, big numbers. I think the good banks will probably not charge us anything and those are that want to -- I'll probably ask us to settle them something.

Maybe I will just have to prioritize maybe the first -- just to follow up on that discussion of the GEPF. It is maybe the idea of that deal behind GEPF to say we improve on the cost of capital and the risk premium which would then be asked by the investors.

I think it's a good question. It's a good way of looking at the transaction. I think what we're certainly wanting to achieve and I think we will achieve is to reduce the overall cost of debt. So if you think about the cost of capital, it's the weighted average cost between the cost of debt and the cost of equity. By reducing the debt, we're significantly improving our credit metrics. And the initial discussions that we've had with some of our lenders is that they certainly will be able to hold less capital against the funds that they provide to us, meaning that they can pass on a benefit in terms of our cost of debt. If you think about the cost of equity, that's effectively a function of a number of items, but effectively your share price as well. And if the capital markets perceive this to be a good transaction for a tax shareholders in addition to the GEPF, we can see that potentially the cost of equity will also reduce. So I think to answer your question, yes, it can reduce the overall cost of capital for the group.

Okay. And maybe just the next one, I just have 3 questions. The next one maybe for you, David. I mean at some point, Waterfall City was posting about being the leading construction project in terms of the square meters that are delivered per year or something. Is that still the case? Or has that image changed?

Look, I don't think the image has changed. But as I said, we have -- we are very prudent in our spec strategy. So you can go roll out spec and say we've produced 100,000 square. But if you're not achieving the returns that we want and allocating our capital correctly, we're not going to do it. So I think the management point of view, we made the decision at the moment that we are going to be very stringent on where we put our capital in developments. The returns need to make sense. And obviously, if you're doing tenant-specific stuff, you can obviously -- you can control that a little bit more. Obviously, you're building spec, you could have a holding period and then obviously your returns are diluted. Obviously, on the collaboration hub space, we've slowed down a lot. We don't want to make knee-jerk reactions on reducing commercial bulk all over the place. However, in saying that we obviously are looking at urban design of the whole city, reducing our bulk to help them on the holding costs and obviously converting that somewhere to res and obviously, we've got a big focus on logistics space.

Okay. Yes. Maybe just the last one, Jackie, is a bit of history. You'll keep me honest, if I'm wrong. I remember it's important. It was either during the time of [indiscernible] or [ Melt ] that there was a discussion, I mean, around connecting with the Revana road, which I think the idea was to drive the traffic towards the Waterfall. And I mean, one would be curious because that is something that those of us that have been with Attacq for quite some time where we're quite excited. And I mean you could see, I mean, that the share even was a super ZAR 20. And I mean we see now the share is sitting at sub-ZAR 10. So maybe what's the update around that or maybe what happened? Is it a change of strategy or something?

Yes. Okay, 60. So you're referring to the case 60. So we work on the K 60 -- or head of land and infrastructure works on that on a daily basis. So it is a provincial road. So it must be built by provincial. There was a tender awarded. And now there is an interject on the thing that process. So unfortunately, we are held up by legal process at the moment with ourselves, the landowner and also the contract providers at this stage. So we are very much on your page. We want to get the route. But unfortunately, we can only go as fast as what the government can allocate capital and as well as clear up the interdict that was served on it.

Where our generators operational, has been covered by Attacq or by tenant?

So initially a while ago, so I can tell you that on average, a kilowatt generated by a generator is about 940 to [indiscernible] kilowatt, it's a lot of. In our res portfolio, we recover 64% of the collaboration, in our portfolio, we recover, I believe, 84%, 85% last. So a significant portion thereof, we do recover. The leakage amount sits in the common area. So for retail property, the common area amount is much larger. If you think about it, we spent ZAR 27 million on diesel in the last 6 months, led by the recovery ratio, let's say, roughly 65%, 70%. I don't think it's sustainable from a dealer perspective. And that's why we're working hard. I don't think we're working on just for our own pockets. We're working hard to make sure that those guys at least from us are in a position to stay with us for the next 5 to 10 years.

And then looking at, going forward, would it be easier for Attacq to implement solar panels, for example, on its end or to tenants then to implement or to install rather?

I can maybe stand from a building perspective. So what's really important in the scenario is potentially just control of where the energy comes from, from a metering perspective to use an example. I could probably cause the generation of energy to someone and give them the ability to get through from Mall of Africa. There's a water leak. There's going to be a lot of finger-pointing, whose contractor was at all in the roof. So for us to control the comments within our properties, it makes a lot of sense to also control whatever energy we generate on these specific properties. I think there's vast amounts and we've demonstrated it. I think a lot of other demonstrated it. There's lots of opportunities outside of your meter or your property boundary, whether that be with billing box agreements, that types of things. And we've indicated that we signed an agreement last year already. So I think it's going to be a mix of energy sources. But we wouldn't necessarily on multi-let buildings let tenants run wild and sort of implement them, I think. Yes, it doesn't make sense.

Holistic energy solution, we're trying to provide. Yes. Interesting that you said that, but unfortunately, with Eskom, you need willing agreements. You also look at the regency levels, there's a lot of factors we look at. So with everything you do, you always need Eskom as a key stakeholder to implement. So it's not that we own all of the land. It's all indifferent idle the title or the land leases. So you can just put solar there and put it in a -- because you put it into the Eskom grid basically. And we don't own the grid outside our land boundaries. There's always possibilities, but it's just how you set it up and how do you structure potential -- we're looking at ground-mounted solar at Garden Route Mall now. There's a lot of land. And that's one of the first ground mounted solar panel installations we'll be doing.

I've got a few more on the online platform, [ Lukeman ] from [ 91 ]. Given the strong performance in the face of significant headwinds in the interim period, could you highlight what additional headwinds are expected to detract from full year guidance just given that the current run rate implies guidance of closer to 20% growth?

Certainly no expectation I think from us that we're going to be overshooting our guidance by double. So that, like I mentioned, there are some once-off cost savings sitting in the first 6 months, which will not repeat in the second 6 months. So it is a little bit more heavily weighted in terms of the first 6 months variance in terms to the second. In terms of headwinds, we're certainly not expecting it to get significantly worse, but load-shedding is definitely here to stay. And I quoted a number of ZAR 27 million of gross diesel costs for the first 6 months. That's going to be more than that for the second 6 months, given that the average load-shedding schedule is obviously significantly more than it was for the first 5 months of this financial year. And barring that, we're not expecting anything. But certainly, I just want to reiterate that the guidance will -- is definitely between 8% and 10% growth. And it's unlikely it's going to be significantly higher than that.

Thanks, Raj. I'm going to move to [ Sandile ] from [ Tambo Wealth ]. There's 4 questions. The first one, on developments, 10% of development, GLA accounted for by office. Why is office sill an attractive destination to invest for Attacq despite the inferior long-term fundamentals?

So I think maybe I answer the question. I think it's important to understand that there's still quite a lot of commercial transactions out there. It's certainly been a big uptick in the last 24 months. And I mean, Mike, you can jump in here. As Jackie mentioned earlier, guys are looking for smaller space. So that obviously creates an oversupply. We also here at Waterfall, have got a 20 to 25-year rollout. So we're not going to do knee-jerk reactions and change things and change our strategy just because we're coming out of a very unique crisis. And obviously, you have now gone into a bit more of a different crisis. But in saying that, I think we have acknowledged that we've probably got a bit too much commercial or collaboration bulk here at Waterfall. So that's why we're looking at the urban design of the city and looking at converting some of it to res and obviously debulk into help with the holding costs.

Maybe just to add to that, that 10% developments under construction is largely related to Nexus Building 2, which is a turnkey transaction whereby the owner-occupier will be acquiring -- has acquired the asset from Attacq. We're not developing it on balance sheet.

Thanks, Raj. Second part of the question, Waterfall Hotel valuations are only up 0.3% despite solid -- a solid and strong recovery in activity. What is hindering recovery in the valuation?

I think Mike has touched on this in his presentation. So we've got 3 hotels in the portfolio. I think the specific question is maybe around the 2 hotels in Waterfall. They are performing well. Occupancy rates are quite good. I think [ City Large ] came up with the results about 2 weeks ago. So if you want to understand maybe more about the hotel sector as a whole, you can refer to those results. But really, we have rotated valuers and the assumptions around long-term rentals has changed for a number of reporting periods. As a management we want to use the word over-road the external valuation to be a bit more conservative. And in the last reporting period, we saw a significant amount of positive trade, occupancy levels recovering. And so we reverted back to the external value here. We'll need to rotate the valuers and for them to be -- the new valuers to be as conservative as we were prior to that. So there's nothing untoward. It's really just the valuers' view of long-term rentals in the hospitality industry.

Thanks, Raj. Third question, Attacq has been responding to ESG demands quite impressively of late. What is the next big thing to achieve from a governance point of view?

I can answer that, comply. It's easiest that for us governance is just a nonnegotiable for us. The company, we always need to be too transparent and ethical in the way we operate and that for us is a nonnegotiable.

Last question, probably for Mike. Reversions have doubled within the SA retail hubs. Do you see a similar trend going forward at given the current lease expiry profile?

Not necessarily. The reason for that is it's always dependent on your sample, how you calculate that reversion, is it 10 leases or 100 leases. Specifically in this calculation, there was a very big renewal done in the Glen Fair Center. And there was a big reversion on that lease at the rent for 10 years. So once again, if you make that part of the numbers you calculate for these 6 months, it actually has quite an outsized impact on that reversion. As mentioned earlier, I guess that we're able to grow the expiry leases by 14%. The number at Mall of Africa was 1%. So on the leases that expired in the last 6 months at Mall of Africa, they grew that by 1%. So certainly, in an overall, yes, it was negative, a bit more than it was in June. But I could also probably argue that sometimes one of these big, big leases that reset in your calculation maybe creates a bit of a distortion. So we try and focus on an asset-by-asset basis and understand whether there's some trends that we need to be concerned about them. At the moment, not too concerned.

Thanks, Mike. And [ Deway ] from News24 perhaps also for you, Mike, how much of the decrease in valuations would you attribute directly to load-shedding?

Yes. So we did a calculation on this on our logistics and collaboration hubs, not that significant, as mentioned earlier, not that reliant on backup energy. Also, the landlord component of the cost to carry is not significant. So maybe I should say, negligible for those 2 asset classes. On the retail experience hubs, the landlord component is much higher because the recovery ratio is lower. And we worked out that the impact of load-shedding is about 1% of total value. So if you've got ZAR 1 billion asset, it impacted us negatively by about ZAR 10 million and on a pro rata basis, the bigger the asset, the bigger the impact, so roughly 1% of total value.

Thanks, Mike. Nazeem again, can you provide a timing -- or can you provide a time in the publication, the circular. As mentioned earlier, there won't be specific timing at this stage and keep an eye on SENS. [ Yako ] from [ Rana Investments ]. What will the LTV within a week after implementing the GP FTL? And do you pay income tax anywhere within the group? And if so what is that amount more or less?

AWIC LTV will reduce to roughly 30% post transaction on a pro forma basis. And from a tax perspective, most of the group entities do not pay tax because they do benefit from the re-tax regime. To the extent that there are some subsidiaries that have got assessed losses, that's where we wouldn't declare a full 100% distribution, utilized some of those assessed losses and thereby achieving a sort of 80% payout ratio without incurring tax. Having said that, there is one legal entity, which is used for the development of our Ellipse residential units. That obviously isn't a grid-friendly type of development given that you're not generating rental income from immovable property. You're selling on a trading basis. And so there is some small tax leakage there. But it's relatively insignificant relative to the group.

Jonathan from Oyster Catcher. Congrats on good set of results. All the net proceeds from the GEPF transaction be used to pay down debt. And the answer is yes. I think it's about ZAR 2.2 billion that we earmarking within that and the balance outside of the group. Nazeem again, okay. Following up on -- question on costs in respect to the transaction. Will the GPF cover 30% of operating expense of AWIC, i.e., ZAR 53 million on Slide 57 and pay on that fee? I'll take a stab with that. I'm not going to look at the numbers on Slide 57. I don't know how you got that all done in the deck. But in principle, they'll obviously come in for 30% of the income as well and 30% of the cost. And yes, there will be a anchor fee just because our staff are housed in a separate entity within the group. So -- but full details of that will be given in the circular. Last almost last question, Paulo from Clearance Capital. Can you provide some thoughts on resi going forward, given the mix not getting off the ground and Ellipse additional phases being slow? Is this something you're hesitant on?

Maybe Ellipse is not slow. So I think sales have actually gone way what we expected. I was the one saying, oh, we're doing residential in a market like this. And my expectations have completely been overshot. So Ellipse has been a phenomenal transaction. If I compare it to any other residential estate that has launched similar size of rate per square meter similar concept, I think we have done far the best in Johannesburg region. The reason why the mixing work is multiple factors that didn't work. So I don't think that is a precedent that needs to set. We've also just come out of COVID. We've seen the interest rates rising. So we've got a lot of like-minded partners that's busy working with alternative schemes. When we launch it, we also control the supply and the demand in Waterfall. So that's why it's very, very important. So it goes to when are we launching the next product. We'll be soon. It's about our partnerships and it's about the timing of when we get it right. And also just knowing what is the ability of the executability of our clients with the rising interest rates. And where will that top off? And then you go from a sell market to potential rent market and that's just what we are evaluating at this stage as well. Dave, do you want to add something?

No, you covered it all.

Final question [ Fayaz ] from Sanlam. Would you look to buy out the partner in Mall of Africa?

Again, I think I said it at the pre-close, right time, right price. Now we've got a big transaction to execute on our side. We've got a lot of developments. Our focus is definitely more from a share buyback point of view. I think that's better allocation of capital. But at the right time and the right price, it potentially would be an attractive transaction for us.

Yes. Thank you. That is the last of the questions, which we'll probably cut off 9:00 in case we did some more.

I think we've run out of time also. Once again, thank you very much. Thank you to the team for arranging everything. I would love to have a cup of coffee and then see you afterwards. So thank you very much.