Attacq Limited (ATT) Earnings Call Transcript & Summary

Good morning. If we can quickly ask everyone to take the seat so that we can start. We've got quite a number of people online. Thank you so much. Good morning, and welcome to our Interim Results Presentation. I don't think our results presentation is going to be as interesting as Budget 2.0 tomorrow, but we are very thankful, we close the 11th of March and not the 12th of March. So let us begin a special welcome to everyone and everyone online and also to our Board members and our Chairman online. It's definitely been a busy 6 months with a lot of progress that we've made in Attacq. Despite the challenges we faced, we have continued to demonstrate resilience, adaptability in every situation that we face on a daily basis. As we navigate through a complex time, we all are facing, political, economical, in our own backyard, but also globally, every day that you open up X and you wonder what Twitter is going to say or Trump is going to say on Twitter or on X. It's been quite a busy start to the year. But our focus in Attacq remains steadfast to our shareholders. We foster our sustainable growth in our business, and we contribute positively to our communities that we serve in. So joining me here today is my team, we've got Michael Clampett, our Head of Asset and Property Management Executive, David Oosthuizen, our Development Executive; and Raj Nana, our CFO. And Pete, we're definitely going to miss you here today, but you've sold MAS and Africa. So we were definitely missing the jokes today. If we look at our business and our business alignment, really, our focus areas of Attacq is Waterfall City comprising of all our completed asset in Waterfall, the bulk land and also the developments under construction. Sitting outside Waterfall is our rest of our South African portfolio, and we really love this portfolio. It provides great diversification on a geographical basis and also on a sectorial basis. Most of our capital deployment sits in Waterfall with all the bulk of land that we need to develop. But we also keep a closer on the rest of South Africa with our retail assets always need to be dominant and provide an experience to our shoppers. And Michael today will actually take you through a business case of MooiRivier Mall on capital that we've deployed and return that we are starting to see come through a mall and also the capital we are providing. During this year, we also -- we -- 5 years ago, we said, let's get out of COVID, let's focus on getting the capital structure of the business where we want it to be. And I definitely think that the results today is evident of the work that we've done in our capital structure. So now we look another 5 years into the future. And it's a new project we've launched called Project Horizon 2030. And it's centered around being a purpose-driven business. We're in 2025, yes or thrive year, we were focusing on thriving not just as a business but as people in the organization that we're operating in. And it's a clear vision that is supported by our objectives, being -- having a long-term growth through a sound capital structure and always looking at how do we deploy capital. Our people-centric approach, and you all know that I always say my most important capital in our business is our people, operational excellence through an integrated digital platform. And today, you'll start seeing the evidence of the time and investment that is coming through and Michael will share quite a bit of initiatives that we have done over the few years. Client focus, I always say to our teams, no lease, no money, no income. So our client is at the forefront and always most important part of what our business is and what we provide. And then the positive impact in our communities and our environment to make sure that it's not just a take, but it's a giveback and it's a community that we serve. When we stand still and we look at our performance highlights, it's been a really strong 6 months, where we've had a really great distributable income growth per share of 49.1%, which contributes to ZAR 0.55 comparing to our previous year. Our interim period, we always benefited from the Landmark GEPF transaction, which we implemented in October 2023. So our full year period benefited from the transaction impact compared to only 2 months in the prior interim period. In addition to quite a number of wins, which Raj will go through on the distributable income, I think something to stand still on is we've benefited greatly in our net operating income with the acquisition of the 20% of our Mall of Africa stake. This acquisition was funded in a combination of mass disposal and additional debt. During this period, we've also disposed of our Rest of Africa investment in exchange for 4.3% share in Lango investment. If we stand back and look at the interest cover ratio, it's been a vast improvement of -- from 1.93x to 2.91x. And a few years ago, we stood back, and we had an analyst presentation, one of the analysts ask is [indiscernible] what should our yield to NAV be in the medium term? Where would you be happy? And I would just highlight at the point in 2021, our yield to NAV was around about 2.9%. And I said, you know what, between 6% to 6.5% I'll be happy with, but we need to do a lot of work. There's a lot of capital that we need to fix in our capital structure. And if we look at our revised forecast that we have revised the guidance, we're hoping to end up between 6% to 6.2% yield to NAV, and that's a vast improvement from 2.9%. And that's just making sure that we execute our strategy diligently in these uncertain times that we operate in. When we look at our occupancy, and Michael will give us some update on the occupancy, and we've really started off this year with some excellent inquiries, not just in the logistics, but in the collaboration of the office market is buoyant. We're busy, and our teams are signing amazing leases. The development activity at Waterfall is just under 44,000 square meters of gross lettable area, which is about ZAR 1.6 billion of investment that we're putting into Waterfall, and Dave is -- we're really excited today about our strong pipeline and Dave will take us through the inquiries and the current deals we're currently busy with. Our weighted average annual trading density grew by 4.1%. When we're really encouraged by October, November and December festive and Black Friday trade, we could really see -- feel that the 2-pod system is coming to the retail environment, and Michael will give us a bit of a glimpse of how the January, maybe the February trade have been of 2 cities or to give us some extra information today. We always talk about -- we always report in our net -- cost-to-income ratio in our sense, but really to highlight the improvement in our net cost-to-income ratio from 25.2% to 22.4%. And again, it's evident by all the initiatives, which Michael will talk today about, something that we're very proud of, but I think is our iterating at Mall of Africa. But I think for us, it's the partnership with Nedbank and then Nedbank partnering with us to make this opportunity available. And it's just amazing to see the strength of partnerships of what you can achieve and it's evident with the EDGE rating at Mall of Africa. As I said, our key objective and one of our key objectives in Attacq is operational excellence. And that's really been our focus, great infrastructure investment in water, electricity backup results in top-tier clients wanting our space and it's evident with the leases that we are signing. So we have got a lot of water initiatives underway, backup water, digital water metering and also electricity metering and ending off and before I hand over to Peter de Villiers, we're really focus for us on utilities is what gets measured gets managed. And with evident with the digital journey that we've embarked in our smart utility hub. Mike, you give us an update on the operational side.

Thank you, Jackie. Good morning, everybody. I'll stick to this for a few seconds. I'll elaborate that further. So we're collaboration now. That's retail. Let's go through some of the key highlights from the core South African portfolio. So first of all, the net operating income. So the income generated from our properties went up 16.8%. Important to note that included in that is the acquisition of the 20% of Mall of Africa, but certainly, excluding that also fantastic like-for-like growth from our properties. Our non-GLA income grew 38% compared to the same period last year. And we see this as a positive metric that where people are willing to spend some advertising and exhibition money in our properties. Our current occupancy, so that's the occupancy as it fed, we're sitting at 93.9%. Jackie disclosed earlier as of December, it was 91.9% and a bit more on that in a slide after this. Our weighted average annual trading density for the entire portfolio, it grew by 4.1%. We don't talk a lot about the trading entities today in the presentation. There's more detail in the annexures, but just a quick highlight. So Mall of Africa, annual trading density growth of 2.9%, interesting. In that number, we made a very strategic decision to increase our entertainment offering at Mall of Africa. So the Bounce opened in November of 2023. If I exclude so, of course, this is a big footprint with sort of low turnover generation ability. If I just exclude Bounce from the Mall of Africa number, Mall of Africa jumped from 2.9 to 4.3 from a growth perspective. So certainly, we're comfortable with that 4.1 number. As Jackie alluded earlier, we had a strong January. January, our entire portfolio was up 7.1%. Mall of Africa grew at 9.1% in Jan, and although we don't have all the Feb numbers yet. I had a quick look last night and it looks certainly like apparel is going to be well in Feb and also a retailer that had results last week. So really it looks like it's going to have a track effect certainly in our portfolio. Another thing I want to mention on this slide, very important. Cell C has paid the loan that was due on December 2024 and they paid it in full. So certainly, we're very happy with that, once again, remembering that they kept up to date with all the interest payments during this loan. And so we only have 1 loan left that is due in December 2026. At the top left, you'll see an occupancy bridge. So this is the change in occupancy from the last disclosure we did in June 2024. And you will see that there was a net vacancy loss of 7,000 or net occupation loss of 7,600 square meters. That's driven mostly by 1 logistics tenant that Dis-Chem was not renewing in this period. So that's about 8,500 square meters. So you can once again see that excluding that logistics asset, it was actually net absorption in our portfolio. Jackie also mentioned earlier, there was a lot of activity towards the back end of last year, and we're just giving you a bit of a look see after the 31 December period, you'll see that we've actually let 16,500 square meters that will include the Midi warehouse to [indiscernible] size increased their footprint at our Brooklyn Bridge facility by another 2,500 square meters, and we also let another 1,100 square meters in the Allandale building. So if I include the deal-making activity for Jan and Feb, excluding 2 nonrenewals we had for the same period, you will see that we actually let another 16,000 square meters. The graph at the bottom, you'll see that our logistics hub showed a decrease in occupancy to 86.4%. So of course, that will increase once again with the take up of Midi Unit 3. Also important, I just want to highlight that our collaboration has shown a consistent increase in occupancy since December 2021. Some property fundamentals. I just want to highlight that our gross rental continues to show growth. You'll see that on the chart on the left. And from an escalation perspective, you will see that our in-force escalations remain consistent with where they've been in the past. Some more retail trends. I want to highlight that in gross terms, our portfolio generated ZAR 14.4 billion rents worth of turnover from the supporting period. Just to note, this includes the acquisition of the 20% of Mall of Africa. So not really like-for-like if you compare it with the previous graphs. And then a real focus for us over the last few years is introducing more local brands into our portfolio. So we've just done a little snapshot. So at least the 70 leases that we classify as local, and these are sort of stand-alone local brands. And you'll see that for the last 6 months, the average trading density was 9,400 square meters, and that's above the portfolio average for the same period. It's really important to have this localization strategy in place. It creates a lot of loyalty and also return visits from our customers where we trade. Another couple of interesting trends we saw over the last 6 months, Jackie mentioned the 2-Pot system earlier. You can't with a high level of certainty, always say where that money goes, but what we've seen certainly a lot of money in the last 6 months went through travel agencies. So we had a number of travel agencies and made turnover increased between 21% and 67%. We saw a lot of money going to jewelry, specifically watches and cosmetics and perfumery really having a good run. And we see this as consistent with some of the international trends around wellness and spending on wellness. This is a really nice case study we just want to highlight. So in MooiRivier Mall, we embarked on a bit of a rejuvenation journey. And to start that period, we just want to highlight what the trading density and the valuation numbers were for December 2021. So that starts on the top left. Then we had a number of asset management and property management initiatives. Firstly, we started with an internal refurbishment for about ZAR 26 million in Feb of 2021. So this is ceilings, light beads, upgrade the bathrooms, did the tiling in mall and really, that's allowed us to have a different conversation with our retailers because we spent a lot of money on the asset itself. So it was easier to get some of them over the line with upgrades or potentially attracting new tenants to our asset. After the internal refurbishment, we focus on the outside of the building, we embarked on that refurbishment in May 2023, repainting the mall, but not just redoing it, gave it a new set of colors and certainly making an impact with what it looked like. We then added another 1.8 megawatts to the existing 1-megawatt PV plant. After that, we had a water redundancy project that kicked off in June 2024. We added 544 kiloliters of backup. So that backup system now can last 4.5 days at MooiRivier mall. And then more recently, we completed a parking equipment upgrade more CX initiative, allowing the customers in purchase through the -- to use all kinds of tender and they allow them to pay in any way they want to for their parking. Now with all these initiatives, what we have seen over the last 2.5 to 3 years is that trading density has increased by 7.5% on a compounded annual growth basis. And similarly, our valuation has grown at 6.1% on a compounded annual growth rate. And certainly, a big congratulations to our operations team, the MooiRivier Mall team and also the sustainability team for all the efforts over the last 2.5 years. From a net property or net operating income perspective, you'll see that we had positive operating income growth, excluding utilities. So that grew at 6%. Effectively, that means all our in-force rental agreements minus property cost increased by 6%. And if we add utilities to that, you'll see that our net income actually grew at 9.2%. Now there are a couple of reasons for this. On the left-hand side, you'll see that our utility recovery ratio increased from 88.6% to 94.6%. And on the right, we've contained a number of our property expenses. There were a few outliers that I just wanted to highlight. So insurance grew at 51%. This was the first financial period that we could buy SASRIA insurance again. So in the previous periods, it wasn't possible to do it. And of course, it came at -- not a reasonable price at a fair amount of money, but we feel it's prudent to be insured with SASRIA again. And then utility management, although from a quantum perspective, he spend is small, you'll see a significant increase. And that's because we've implemented the smart utility hub. That means that we have access to a lot of our meter data in time with electricity or water or some waste metrics and certainly, that increase in spend on a small relative growth basis allows us to control about ZAR 380 million rents worth of expense in our income statement. Our repairs and maintenance was up 13% on a comparable period not too much concern there. That really is timing because we're looking at a 6-month versus 6-month period, and there were a couple of timing repairs that happens. So I'm not too concerned about that. And then the levy increase. Once again, David, keeps rolling out new developments at Waterfall City, and we have more developments, the Midi units, Emerald expansion. And so that levy number is increasing because we're actually adding GLA footprint that attract levy's in Waterfall City. From an operational sustainability perspective, once again, a big thank you to our sustainability and our ops teams pushing us really hard. They saw this coming about 3 years ago, and I feel that we were a little bit ahead of the wave here. So we started installing backup water 2 years ago at a number of our assets. So at the end of this financial period, we'll have 6,700 kilometers of backup water across all the properties of Attacq. That ranges between 1 day to 5-day backup. And over the next 18 months, we plan to install up to 12,500 kiloliters of backup, getting most of our assets to a 5-day water backup period. We're also installing 749 water smart meters. This will once again connect to a smart utility hub allowing us to track any water wastage in time and being able to react to that. And as Jackie mentioned earlier, we are incredibly proud of the collaboration with Nedbank and Mall of Africa's EDGE rating. Just incidentally, I know there's been a lot of media on this, but it's the biggest retail asset in the world that's got an EDGE rating currently and also the biggest property in the Southern Hemisphere, that's got an EDGE rating. And it's not just about the certificate. This -- during this process, we were able to save 28% of our water, we've cut our carbon emissions by 10,000 tonnes. And certainly, we've learned a lot of management skills through this process, and that can be applied going forward to maintain this level of efficiency at Mall of Africa. David?

Thanks, Mike. So just focusing on some highlights for the year. Development activity just under 44,000 or ZAR 1.6 billion sort of covered between 3 developments on the construction of The Ingress, which is a collaboration hub, Ellipse, Vantage data center, which is 12.1, which is half of Phase 2 and then a development has been approved through IC that we are hoping to launch in May, which is Aspire, which is a new residential development with Tricolt. I think the highlight that I want to focus on here is really and Jackie touched on a little earlier, is the deal flow that we've seen over the course of probably the last 6 to 9 months and the time it's taking to execute these transactions. If you look in the logistics space, it's remained resilient, albeit that battle to perform in a number of inquiries, and that's really just on the back of not having proclaimed logistics land at waterfall junction, which I've alluded to multiple times in results. I'm really proud to say that in our last results, I said we were aiming for April to proclaim of this year. We are still on track to do that and that will unlock Phase 1, which gives us 150,000 squares of bulk. And then I'll talk to a couple of the transactions we're looking at there at the moment. And then the second space is obviously a residential space. Remained extremely resilient here within waterfall. We're down to almost 20 units left at Ellipse. I'll unpack that in a little bit more detail. But we -- I think everybody thought interest rates would be coming down over the last 6 months. It hasn't, but yet, we're still doing sales. And I think what's really exciting is we're converting those sales into bankable, which is really good. And I think that gives us a lot of motivation and encouragement obviously, for the new residential development Aspire. And then Collaboration hubs, and I'm going to touch on this a little bit. So we've -- as a sector come out of probably 5 years of a strange office market globally on the back of COVID, a lot of debate on where is that sector going. A lot of questions directed to myself and Jackie and Raj, and are we going to change the zoning at waterfall because we've got 34% of our bulk is Collaboration hub. And I think the feedback we've always provided is you can't have knee-jerk reactions in the sector. We basically have waterfall for 30 years; the landowner is extremely proud of we've got here. We believe in the product. We believe in our infrastructure. We've come out of a year of urban design with the landowner. Yes, we've tweaked things and that naturally needs to happen. But the core of what we're trying to do here is stay the same. And you can see by the inquiries now in the Collaboration hub that we have made the right decision here, and that's now promoting that we're going to be also trying to launch a new spec collaboration hub, which I'll unpack on the next slide. So just some of the potential development opportunities we're looking at. I mean in total, these total roughly ZAR 2.75 billion. That's all in. On the left is a new data warehouse that we're in planning stages 4, we would like to break ground in around about August, September of this year. I think the development we're really excited about is the second image, which is Gateway East. So those of you that are very familiar with the waterfall. Gateway West has been built. This is a very different design. The reason we are looking at doing this, and it's attached to the mall is for a few points. I think the 1 is we made a decision as a management team and as a development team to start really focusing from the west of the city moving east. So we've obviously developed half of Nexus, we are halfway through Ingress with the third building going up there at the moment. And now that we have 20% -- when we took up the further 20% on the mall, it makes sense to develop on the mall. We've also got a ZAR 70 million basement there that we built on the -- when we completed the mall, which we're going to be using almost 2/3 of that for this development. So it's wasted capital. It makes sense to develop the site. So we're going to be doing about 11,000 square here, adding a bit of retail of about 1,500 squares of retail. It's going to be an iconic site, a prominent site. I think what the mall sites give us is flexibility of bulk. So I could do anything up to 20,000 hearing, we're doing here 11,000 because we think that's where the demand is, it doesn't mean we're losing bulk, I can shift that to different sites. The third image is a hotel and conference. I think something we're really, really excited about if we pull this off. So this is on the eastern side of the mall, very close to PwC of Lisbon Road. The reason we're putting it on this site because we own Lisbon Road is a private road, which allows us to create a porte-cochere, which you obviously need for hotels and conference centers. It's a 150 key hotel and obviously, conference centers are extremely demanding and parking. The mall is designed to cater for this. So we are able to build this development a lot cheaper than if we have to go build it on a separate site somewhere. The fourth image is a 90,000 square tenant-driven warehouse. So this, we're obviously looking to put at Waterfall junction. I think the real thing that I want to focus on here is just the sheer size of this would take up close to 200,000 squares of land. There are not a lot of developers out there that can offer something this big, Waterfall junction in total is 1.2 million squares of usable. It's a large piece of land with 600,000 squares of bulk. And all the work that Laurence and his team have done, we're actually now getting to the point where we're hoping to proclaim Phase 2 and 3 of Waterfall junctions at back end of this year in addition to obviously Phase 1, which we're going to be preaiming in April. So very excited about that if we pull that off. The second last one, this is a tenant-driven development on Phase 1 at Junction. We have received the signed heads of terms on this, 16,000 squares. Just shows you how popular we think this site is going to be, it's on the K113, the new North/South arterial -- logistics arterial. And to have a heads of terms sign before you even proclaimed is really saying something that this client really does believe in that pocket. And then the last image is a spec warehouse at 20,000 square. So we're going to do this in conjunction with a client-driven transaction of the 16,000 squares. Makes sense from an economies of scale. It adds traction to the precinct, and it also provides us an option out there in the market for short lead-term client-driven inquiries. Touched on this a lot. I think the main focus areas I just want to focus on here is the blue and the red. So those are obviously where we are predominantly focusing on our development. On the blue, it's going to be north of Simlac. So that's the road just south of the mall. All those sites you see there barring 1 is proclaimed. And obviously, a number that is seating on the mall, which then talks to what our focus is going to be a lot of development on the mall and then obviously on Ingress and on Nexus. And in the red is the whole of Waterfall Junction, which is going to be our future logistics. So just touching on a couple of the developments individually. So this is Ingress Building 3. We decided to pull the trigger on this as a spec mid last year 48% pre-let. We would have thought that we would be saying that 3, 4 years ago. So for that reason, we essentially are looking at pulling the trigger on gateway from a spec if we get it through IC, a number of inquiries on the remaining 2,000 squares and the tenants that we have signed here of the nominal clients and really excited to introduce them to Waterfall. This is Ellipse. So you'll see there the building the last phase, Phase 3, which is Building 4. Again, we decided last year as a management team to launch this before we even reach presales, which we didn't do, obviously, on the first 2 phases. It's been extremely successful up to 200 sales in Phase 3 of 220 and 175 million of those are bankable. So you'll see there at the top, total bankable sales and the whole scheme is at 92% and total sold, we are at 96.5%. So extremely successful. This photo is actually taken from the site where Aspire is going to be to give you a bit of an idea of where it's going to be located. So this is the proposed new residential scheme. This is going to be attached to the mall. We are doing this with Tricolt to our JV partner on Ellipse. We are pro JVs here at Waterfall as long as the client has the same aspirations and is as proud about Waterfall as we are, and we really do feel like we have found a developer here that feels the same way about it. We were hoping to launch a little earlier than May. We've had delays in counsel on STP. STP is now in, and we are hoping that, that STP is going to be approved this month. If that is the case, we are going to launch in May. 217 units, so roughly the same size as Phase 3 of Ellipse. We're a 25% shareholder in this. It is going to add retail. So we're going to have retail at the bottom, and then we're going to have a lifestyle center. You'll see where the pool is there, very similar to Ellipse, where others and places. So this is going to add extra retail space and Mike, and it has been in the rest of the Mall of Africa team that I think it is crying out for some extra restaurant space. The development that I'm very proud of, and it's quite an iconic development for Waterfall is Vantage data centers. So you'll see there in the front there, that's Vantage Phase 1 that's on the corner of Allandale and N1, we currently building half of Phase 2, so that's 12.1%. That's going to be finished around August. And this roughly is about 50 MVA for the entire site, but it is scalable to 120 MVA. And then this is Waterfall Junction. So we've never really shown the angle from the N1, looking east, but you'll see Waterford Junction, there just on the other side of Massbuild and BMW to give you a bit of an idea of the location and how close it is to LP8. The Phase 1 is the closest point or the most western point of that site. That is what is going to be opening up in April, giving us 150,000 squares of bulk. And then Phase 2 and 3 is moving east and we're hoping that we are going to be retaining that at the back end of the year. Phase 2, we've secured a further 150 MVA. So if we do get further data center inquiries, we can service this. I think it's very important. And then we, obviously, as I mentioned earlier our planning of further 20,000 spec on Phase 1. This is just a blowup of Phase 1. So this is really a detailed design covering all the inquiries that we're currently focusing on. Obviously, this change is weekly. But the 10-driven inquiry that we are running on, and we've got a heads of turn signed is the one closest to the guardhouse. And then the spec is on the Allandale Road there. And then we've got a 40,000 inquiry, which is above the tenant inquiry. And with that, I'll hand over to Raj.

Thanks, David. Thanks to everyone joining us this morning. I think the team shared with everyone a very strong operational performance. NOI growing on the back of higher market rentals, lower load shedding and improved recovery of property expenses, and higher than expected turnover rentals. That combined with us managing, I think our over really well this 6-month period as well as active debt management resulted in exceptionally strong DIPS growth 49.1% period-on-period, and that has led to a substantial increase in our declared dividend growing to ZAR 0.44, representing a 46.7% growth. I think if you look at the overall results, very strong. Must keep in mind that this 6-month period was impacted for the full period by the GBF transaction, and we're comparing it to the previous 6-month period where that transaction only impacted 2 out of the 6 months. If we look at the balance sheet, just at a high level, an extremely strong balance sheet, probably one of the strongest in the sector, helping debit to develop is a growing pipeline and for us as a management team to consider some strategic acquisitions. If you look at distributable income per focus area, Waterfall City contributing about 48% of the group's DI, growing 9.5% year-on-year, strong NOI performance boosted by the 20% acquisition of Mall of Africa. Turnover rentals at Mall of Africa, new solar PV systems. We had 2 systems being commissioned in the Waterfall portfolio during the 6-month period. All helped grow the overall DI. If you look at the Rest of South Africa contributing approximately 54% of the groups DI, growing by 123%. A substantial amount of that is attributable to interest savings. So you'll recall, we paid down a significant amount of debt in October '23, so the period-on-period growth on that is substantial. We also exited our mass shareholding in March '24 and reinvested that into debt and deposits, and that also then boosted up some of our returns. The income that we earn on co-owned assets and managing those co-owned assets rather asset and property management fees is also mapped to this particular focus area, and that's contributing to the 123% growth. If you look at our other investments, showing a cost or a loss rather of ZAR 7.1 million that's attributable to one-off disposal costs related to the Rest of Africa retail investments. We disposed that in exchange for our Lango shares. That transaction closed in September and do not contribute to any of our distributable income for the period. Sectional title units that Dave shared that the Ellipse sales have been going phenomenally well, but we have had no transfers within this particular period. Our accounting policy is fairly conservative. We will only recognize the sale on transfer. So we're expecting that to take place in FY '26. And therefore, our distributable income is actually equal to our total income for this period. Look at our distributable income bridge from December '23 to December '24, some major movements, including the NOI increase of ZAR 69 million, higher turnover rentals, as I mentioned, higher municipal recoveries on the back of no-load shedding, some PV income and our overall municipal recovery ratio improving from 88.6% to 94.6%. The NOI increase from Mall of Africa, as you can see, substantial 20% -- the acquisition of 20% contributing a further ZAR 46 million in terms of our distributable income. And then the finance costs, as I mentioned, on the back of the repayment of debt, contributing ZAR 66.8 million period-on-period growth. Looking at our overall expenditure growth, only growing by ZAR 9.1 million. So I think a lot of discipline in how we're managing our cost base and then the minority adjustment of ZAR 51 million is just reflective of the GPF share in Waterfall City and the 30% that we carve out in respect of them. So total distributable income for the period, ZAR 385 million. 80% of that will be paid out as a distribution being ZAR 307.9 million, leaving ZAR 77 million that we reinvest in the portfolio. If you look at our balance sheet, a total asset base of just shy of ZAR 24 billion, 90% of that is in investment property, and I'll unpack that in the next slide. If we look at Waterfall City, growing by 2.2%, contributing 65.7% of the total asset base. Rest of South Africa growing by 2%, contributing roughly 29.1% of our total asset base, both really growing with the fair value adjustments in the underlying portfolios. Head Office South Africa, that is really made up of cash balances and the cash increase there is reflective of our DMTN proceeds from October last year. Other investments now comprises 4.3% shareholding in Lango, and that reflects a discount that we've applied for our small minority share as well as illiquidity in the share. Total assets growing by 4% period-on-period. Total liabilities growing by 9.3%, and that's almost only the DMTN raising that we did in October, giving us a total equity base of just shy of ZAR 15.9 billion and a growth of 1.5% on a NAV per share basis, that's ZAR 18.23 and a growth of 1.7%. If you look at our investment property movement bridge period-on-period, if you look at the major movements, additions of ZAR 162 million, ZAR 86 million of that was spent in the existing portfolio and ZAR 69 million was spent on the 2 developments that we have under construction. Completed buildings, fair value adjustments of ZAR 385 million, almost completely led by the retail portfolio performing really well, say for Brooklyn Mall. Mall of Africa, in particular, growing by 3.8% for the 6 months and adding ZAR 225 million in the fair value adjustments. Developments under construction and leasehold land showing small negative movements of ZAR 5 million and ZAR 8 million, respectively. Important to note that cap rates and discount rates have remained relatively flat and the increase in the retail portfolio is really on the back of higher market rentals, increasing NOI and lower vacancies. So at the end of the period, our total investment property is just shy of ZAR 20.5 billion. Turning to interest-bearing borrowings. Gross borrowings increased and again, really by the proceeds of our DMTN issuance. If you look at all of our credit metrics, I think really, really strong as our bank covenants, miles of headroom between the covenant levels and the actuals. Very, very strong liquidity, over ZAR 1.7 billion in liquidity. About ZAR 1.1 billion of that is in cash and about ZAR 600 million of that is in prepaid facilities and/or access facilities. This is an interesting slide. So it's something that we have put up before, but just tracking the progress that we've made in terms of managing our debt actively over the last 4 to 5 years, we've reduced our weighted average margin by about 50 basis points. We're down to 1.58% post our inaugural DMTN issuance. At the same time, we've improved our interest cover ratio to just under 3x and our gearing ratio remains well below 30%. So I think kind of industry-leading in terms of that. The DMTN program was a huge success for us in October last year, raising ZAR 760 million at about 30 basis points lower than our traditional cost of debt in terms of our traditional facilities. We completed the last of our sort of legacy refinancings of loans, refinancing the PwC head office, ZAR 1.3 billion there, reducing that by 40 basis points. And then we've also repaid some expensive bilateral loan funding and refinanced that with the DMTN, reflecting about a 30 basis points improvement. I think if you look at the donut on the right, really just showing for the first time, the DMTN noteholders featuring in our overall mix at 11.3%, and we look to grow that in the short to medium term to between 25% and 30%. So potentially a further reduction in our debt costs over time. So my final slide, just showing our debt and hedge maturity. If you look at the debt maturity in the next 12 months, it's really just our short-term revolving credit facilities, which we will refinance before year-end. If you look at the 24-month bucket, a substantial amount of debt coming up there. That is the 3-year tranche of the funding that we refinanced in October 2023, provided by 4 lenders underpinned by a very strong portfolio in terms of security. So we're very confident that we'll refinance that in due course. And then if you look at hedging, some hedges falling off in the next 12 months, about ZAR 800 million, ZAR 600 million thereafter and then a substantial amount coming up in the 25- to 36-month bucket. That's on the back of ZAR 1.5 billion of hedges that we did between August and December last year at very attractive rates, 7.09% to 7.14%. We've seen that the swap curve has moved substantially up by 30 basis points in the last sort of 2 months. So I think we're quite comfortable with where we are with our hedging at the moment within policy, and we continue to monitor swap rates as we head into the next 6 months of the financial year. Jackie?

Thank you so much, team. As you can hear, we've accomplished a lot. We've been busy in Attacq, and we've got exciting prospects for the future ahead of us in Attacq. Reflecting on our journey, we love putting this little bar chart on our guidance and prospects and just again, a bit of a reflection of our distributable income per share CAGR from financial year '21 to financial year '25, including our revised guidance, we've showed a 23.7% CAGR since '21, which I just think is a remarkable achievement what the team has achieved, and it talks to sensible deployment of capital, managing our cost with a lot of discipline and care. And that also gave rise to our revised guidance for the year on our DIPS full year guidance of between 24% and 25%. As we look into the future, we're going to embrace the spirity of Attacq unity. We're going to embrace Project Horizon 2030. We're going to take on the challenges head on, and we are going to build a brighter and most prosperous Attacq. And I believe that doing that, we're also building a more prosperous South Africa. Thank you very much for your time. Thank you, team Attacq for all of the hard work, and I'm going to open up the floor now for questions.

Okay. Pete, is there any questions online?

We have 3 questions. First one from Nazeem at Investec. Okay. For Mike, effort ratios were up year-on-year. At what point do you get concerned that would increase risk on renewals? And then do you think Mall of Africa can run higher effort ratios due to higher absolute trading densities?

Yes. So we're starting with the easy questions. So I'm going to do my best to explain. And if it's not sufficient, then Nazeem, you're more than welcome to come back to me afterwards. So the first statement I want to make is that the effort ratio is a lot more volatile than the normal rent-to-sales ratio. And the reason for that is that you've got utility charges and other externalities in that number. So if you look at Slide 51, where we disclosed all our rent ratios and our effort ratios, you'll see that consistency and inconsistency between effort and rent to sales. The main reason for that is, if I just take diesel as an example, you will see that Eikestad Mall actually, the effort ratio became better and similarly, limit bridge. Now Eikestad Mall being an old asset, really complicated generator installation. So that asset was more impacted by load shedding in the previous financial period. And now all of a sudden, the effort ratio looks better because of the saving in diesel. So we have to also consider that sometimes there could be accruals or back charges that come from the municipality, and that can create a distortion when you compare only 12 months to only 12 months because there might be a 3-year back charge from council, et cetera. So certainly, it's important to track the effort ratio, but you must expect the volatility, I think, is what I want to say. Considering Mall of Africa and is it a concern? I don't think so. So once again, on a net basis, including everything I've just said earlier, the Mall of Africa effort ratio grew at 6.2%. That is less than the electricity increase per [indiscernible]. So once again, you can see that through good trade, generating turnover, that asset is able to contain some of the growth in through rental or complete rental. And it doesn't just escalate by whatever other costs might be going up, i.e., rates and taxes, electricity, utilities, et cetera. So I've tried my best to explain that. And if it's not sufficient, Nazeem, you can ask me later.

But maybe like to add to that is that we've always felt that Mall of Africa, talking about Mall of Africa, that interest ratio might be on the lower side comparing to other super regionals as we might have some growth in our rental.

Yes. Maybe I can quote an example. There's a lot of work and fantastic work that the new asset and property managers are doing at [indiscernible] Mall. So we go visit there every now and again. Now just comparably, you can imagine that for that GLA footprint, they still need to run aircons, they need to pay some taxes, et cetera, et cetera. Now in December, Mall of Africa did ZAR 930 million worth of turnover. And in December, [indiscernible] did ZAR 500 million worth of turnover. So comparably, you can understand that the affordability level from a tenant perspective at Mall of Africa certainly has to be a lot cheaper than [indiscernible] Mall as a competitor. So we're fairly comfortable that we had a base that's low enough that we can get payments going forward.

Okay. Next question. No questions from the floor. Nazeem from Investec. Slide 16. This is for Dave. I assume CapEx at ZAR 2.75 billion is for 100%, but this would effectively be for 70%, given the GPF shareholding. Do you intend to include other partners, tenants to reduce CapEx requirements further? And what is the average net initial yield on these developments?

So on the logistics, I think it's important to bear in mind that Waterfall junction, we have 50% undivided share with Sanlam. So that obviously caters for that. Other transactions, we will look at JVs. Obviously, Joris, we're doing a JV with Tricolt on that. And then on a yield basis, if you look at where is, I would say you're probably looking at around between 8% to 8.5%, I would say, as an initial yield net.

Okay. Further question from Nazeem. What -- for Mike, what was the contribution of turnover rentals to top line revenue?

For the 6-month reporting period ZAR 18.1 million.

Okay. ZAR 18.1 million. [ Sandile ] from Timber Wealth, then asking what net initial yield would you be looking for in respective strategic acquisitions? Secondly, regarding CapEx and that's the ZAR 2.75 billion that David has chatted to. Does that include a partnership? That's correct. It does. So we won't touch on that question. And the third part of the question, can you grow DIPS at 20% CAGR for the next 5 years with this balance sheet? I think that's quite a long period, and I don't think we'll be answering that one, [ Sandile ]. So your net initial yield for strategic acquisitions?

No, it must make sense for us. Mall of Africa, we did around about 8.1%, 8.2% net initial yield, super-regional shopping centers, minority stake. So depending on what the asset needs, if it's a redevelopment, do your case for a higher yield, if it's already a fully built, well operating real estate you'll pay a bit more of a handsome yield. So it all depends on what the asset is and the opportunity that we can unlock.

Okay. Then we've got Louie from 361. Your guidance implies actually DIPS below H1. Can you flag why you expect H2 to below H1? Perhaps Raj can do that.

0.5% is the difference between the first half and the second half, it was material and some seasonality in our results, so your turnover rentals are typically in the first 6 months, and we have less of that in the second 6 months. But -- and similarly, with some of our expenses, they're front-loaded in terms of the first 6 months versus the first 6 months, but there's not a lot in it and for all intents and purposes, it's about 50-50.

Anas Maaiti from Miogo. Have there been any share buybacks during the period?

[indiscernible]

Okay. And then Nazeem from Investec, you mentioned a potential for strategic acquisitions is offshore a consideration?

This morning, we have got the same question with the media. We're always curious, but I think with 1.4 million square meters, that's on a gross total in our backyard Mall of Africa -- Waterfall city. Our real focus is, yes, it's paid for land on our balance sheet. We've got phenomenal opportunities to unlock the piece of land. We will be primarily focused on Waterfall City. And then acquisitions must make sense for us. It must fit the purpose of our business. Is it a precise? Is it retail? Is it mixed use? Do we have partners in country or in South Africa, as you know, that can support what we want to do and that can actually make a one-on-one equals 3 partnerships. So we were always curious. We're always looking out, but our balance sheet now is working the best currently in Waterfall City, unlocking -- there's a land. And then also, as Michael has illustrated on what we're doing in our retail experience up throughout the country, it's phenomenal the stats that we've achieved in Waterfall Mall, and we're hoping to do that in our other retail precincts as well.

Thanks, Jackie. And we've got [ Colafelo ] from [ Camisa ]. I think we've dealt that that's also just on yields. Then last question at the moment online from [ Meschke ] from [indiscernible]. You mentioned adding more local retailers to SA Retail. How much higher are these trading densities versus the current average? Are any global brands showing softer numbers in the portfolio? And then the second part of the question, looking at trading density growth uplift, has 2-part spend not created an artificially high base in some numbers? Do you expect further uplift from the 2-part system?

Okay. So I'll handle the local question first. I don't think it's softer international. I don't think -- I know it's not software international. These local brands are really performing exceptionally well. If I quote 2 examples at Mall of Africa [indiscernible] trading at a trading density above ZAR 20,000 a square meter consistently every month. I mean Zara would never get close to that. Beauty on Top is a local healthy and beauty retailer. It was an online business. You opened a first store with us here at Mall of Africa once again, [indiscernible] is above the averages of schemes in some well-recognized international brands. So there's something about localization. If I move around the country in Stellenbosch, we've got 2 apparel brands, the one [indiscernible] and the other one called [ Stelis ] and they trade next to each other in Eikestad Mall. Now what we are saying is that there's a local following or there's attachment to some of these brands. And people will go there and buy that product using the [indiscernible] example because they might have some affinity to it, or I don't know, they're buying it for a cousin or a niece. So we believe that we want to introduce a lot more of these local retailers because they have their own stories, they have people following them, and that really creates a vibrant sort of retail environment in our retail experience up. So definitely, it's the fantastic performance of local retail that's not softening international. Secondly, the question on 2 parts. I'm always very circumspect when I answer this. So once again, I apologize if you don't get the answer you want from me. But our portfolio is really small. So I want to give some bias because we're seeing things in a small set of numbers that don't apply to the rest of the country. Certainly, in October, November, we did see homeware grow by quite a chunk, but also from an active asset management perspective, we kind of anchors we introduced at the home living space in Garden Route Mall, I don't know how much that has impacted it. But in general, definitely, we saw homeware and furniture have a kick on sort of October, November. We definitely saw a lot more money going into wellness, as I said earlier, in health and beauty and in the travel agency example I quoted earlier. So the big thing we watch out for are like major categories like apparel. I think in the prior reporting period, some apparel guys had the challenges where it might be stock levels. Certainly, we saw that in December. So after a fantastic November trade, some of the guys might have been caught a little bit short on stock in December. But certainly, if I look at the Jan-Feb numbers, the big category like apparel seems to be doing really well. And once again, that gives me a lot of confidence. I can't really say it's coming from 2 part or where that money is coming from, but certainly, there is some trade in the right categories.

Any questions from the room. Nothing. Thank you very much once again. If there's any further questions, you know where to reach us. Have a wonderful rest of your week. Thank you.