Burstone Group Limited (BTN) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to the interim results presentation for IPF. I can't believe that we're 20 months in, and we keep promising to meet in person. But here we are again virtually. So we won't make any more promises, but certainly, we look forward to, hopefully, come May, sitting down again. Just to -- let's flick through in terms of the FY '22 or half year results and the highlights. Certainly, the total over the last 6 months has been a stabilization of our South African business with Europe performing very solidly and as expected over the course of the last 6 months. Our balance sheet remaining in a very strong position, vacancy reducing nicely across both regions. And we'll get into some of the detail later. Continued focus on recycling of assets, we've got ZAR 1 billion of properties in South Africa identified for sale, and Darryl will take us through that later. We've kicked off on the refurbishment of some of the properties and projects in South Africa, and the development pipeline in Europe is about to start rolling out. We'll get into the dividend piece later, but our payout ratio remains at 95% and is testament to the strength of both the underlying cash flows as well as the balance sheet. And as we provided earlier in our long form, we are providing some short-term guidance to the end of the second half of the financial year, and we'll get on to that shortly. Running through some of the details. Strong performance in terms of the earnings line. Distributable income up 11.8% over the 6 months. And as I mentioned earlier, we'll pay 95% of that out by way of a dividend shortly in December. If you roll through the performance at a high level of each of the regions, strong performance and tick up in South Africa with base NPI up 12.8% off the back of a reduction in vacancy, down to 9.4% of -- so it's about a 200 basis point reduction since March. And a big -- I guess, the single biggest impact in the first 6 months is obviously the impact of no COVID relief over the course of the first half relative to last year. The portfolio itself from a valuation perspective is holding firm and it's in line with what our key message was at our year-end results 6 months ago. In Europe, NPI growing at 8.3%. This is all in euros, so a very strong performance there on the base, and that is translating at an earnings line to being up 3.5% on the bottom line in euros and 5.5% in ZAR on a like-for-like basis. Again, vacancy coming down. I mean, at 4.3%, there was hardly a problem, and at 2.8% we'd expect that number to trend lower as we move into the second half -- and with some of the development activity that might tick up depending on how we look to finance or when we go live with those. Balance sheet, as I mentioned, a very, very robust gearing still sitting at around that 37%, 38% mark. Very limited refinancing risk as we move into the next 6 to 12 months. Majority of that is -- majority of refinancing risk has been dealt with, and we're sitting with around ZAR 2 billion of unutilized committed facilities to manage any potential liquidity risk. And Darryl will chat a little bit later on around design, Design Quarter and Balfour Mall as well as the rollout of the European logistics development pipeline. And in terms of BE, we were very tough early in the 6 months to become the first Level 1 rated property fund. We won't spend too much time on this. I think, it's just important to take a quick snapshot of the business. It hasn't changed dramatically by the way of balance sheet or exposures over the last -- or over the first half. And so you're seeing consistently on a look-through basis. Europe is sitting around 43%, South Africa at 57%, and certainly seeing the benefit of a diversified balance sheet, diversified investment portfolio across the regions as well as across the sectors here in South Africa. If we unpack some of the operational priorities that we set ourselves and communicated to the market earlier in the year, certainly across the board, I think we've made some really good headway in delivering a lot of these key items. And so in South Africa, the focus really has been on active asset management and the derisking of the revenue stream, and particularly around office. Again, we'll unpack that a little bit later. Europe, really looking at the development pipeline, portfolio stability as well as our ability to lease up those last remaining vacancies in the portfolio. And then from a group perspective, as I mentioned earlier, active capital recycling and our ability to continue to further reduce gearing as we move in to the next 6 to 12 months. If we look forward, and this is something that we -- Darryl and I spoke about at the logistics conference that we hosted about 6 weeks ago, and certainly South Africa for us, stabilized. And we remain opportunistic. Our core focus is and will remain in the short term around leasing, active asset management and looking to restore NOI to pre-property cycle downturn or the property cycle downturn as well as preCOVID levels. And in Europe, which right now seems to be our growth focus, will all be around exploring options to maximize value, including the introduction of third-party capital. Over to Zaida to run through the financial results.

Thanks, Andrew. Call is a bit easier when your results are good news. So looking at our summarized income statement at SA NPI level, up 9%. If we just look at the straight-line rental adjustment, it talks to some of the leasing activity in the underlying portfolio. So that's reduced given the improvement in some of the leases and improvement in underlying WALEs. Other operating expenses, slightly up year-on-year, 6% and that's contribute to some of the share price devaluation and recovery. In terms of income from investments, this is a testament to some of the strategic items in terms of derisking the balance sheet and looking at a most focused approach. So as a result, we disinvested from Australia as well as the PEL portfolio. So the underlying performance is really related to the strong performance from the PEL investment platform. Fair value adjustments stabilized significantly over the last 6 months relative to the prior period. This is as a result of the exchange rate, which has stabilized as well as our interest rate swaps. And then on a net finance cost, some good news because of that active balance sheet management, ZAR 64 million savings, bringing our overall performance to ZAR 443 million on a profit after tax basis. If we look at our distributable earnings reconciliation, taking into account all the IFRS adjustments and excluding capital gains and losses, a distributable income of ZAR 422 million, We have declared a dividend of 49.77, which is a dividend payout ratio of 95%. Again, testament to the strong underlying performance of the fund and overall balance sheet strength. Just looking at the distributable earnings bridge, this really gives you a great snapshot of the strategic initiatives over the last 6 months. As I mentioned, the offshore divestments bringing a more focused approach in Europe, resulting in reduced earnings from the offshore portfolio, but that's seen an uptick in the savings in finance costs and in the recovery in the SA base NPI, resulting in at ZAR 422 million distributable earnings for the 6 months. At a balance sheet position, South Africa, really some level of impairment on your underlying property portfolio of ZAR 110 million. But that does take into account stabilization or at least it reflects the stabilization of the underlying portfolio. In terms of our PEL portfolio, again, just a reminder to shareholders that the 6.7% is EUR 75%. So you have to net that off against the ZAR 940 million reflected in Note 8. Overall, that's a ZAR 5.8 billion investment in Europe, a slight uptick in the underlying portfolio of 1.9%. Again, derivative financial instruments stabilized at ZAR 269 million looking at -- compared to prior year, which was ZAR 312 million. Strong cash flow generation, up by 4% of ZAR 236 million. And then a key initiative, which was the degearing of the portfolio, resulting in long-term borrowings reducing to ZAR 8.7 billion. That resulted in your adjusted LTV of 37.9% at the end of September. I'll now hand over to Darryl.

Thank you, Zaida. I think the last time I spoke to a blank slide for about 15 minutes, Andrew said he's never seen somebody speak to a blank side for that long. So I'll try and get through the presentation quite -- relatively quickly. Not detracting anything from the performance of an unbelievably strong European management team where there's always been our philosophy of investing in-country with in-country expertise, with hands-on experience in those countries. And that team has delivered a stellar performance. But I think in light of the environment we operated in South Africa, certainly with Level 4 lockdown as well as the civil unrest, the performance of the South African business has been exemplary, having achieved, I think, great results in a very, very challenging market. And just to break it down by sector -- and I would like to highlight, I think the important thing for us is the office sector is the most spoken about sector in the industry right now. It's a sector that we know our risk very well. We understand the risks very well. And we are trying to kind of emphasize to the market that we're talking about 4 assets in the portfolio that have really been hammered as a result of either the oversupply or the environment that we've just had to -- negative growth environment that we've had to operate in. So for us, our office sector does remain relatively stable. The demand for space certainly was impacted by a work-from-home scenario, but we actually -- and we were definitely very positive about a return to work, and that's what we're actually seeing in the market right now. And the portfolio is largely defensive. So we saw vacancies tick up to around 13.9% because of 1 vacancy, 1 tenant moving out of premises in Randburg. That's -- we call it -- it's in Bram Fischer. That was 15,500 square meters that went vacant. There's 3,000 squares that have been replaced with 4,000 under review. So what we're doing is taking around 10,000 square meters of risk in Randburg in the portfolio. The remaining risk in the portfolio is spread around 3 assets, 2 in Sandton and 1 in Rosebank. So that contributes around 10,000 square meters to the remaining vacancy in the portfolio. And Rosebank, certainly, the first is an asset that we strongly we believe in. We believe that it's going to -- it will come right as soon as the return to work and the Hyatt reopens. So what you're really looking at is a risk in an oversupplied Sandton market of 6,000 square meters in our office portfolio. So I just -- There was a song. I don't know who wrote it. It said that if I can make you love me, I'm going -- ultimately, this is something that we want to try and emphasize to the market. We're talking about 6,000 square meters of risk in Sandton somewhere between 7,000 and 10,000 square meters of risk in Randburg. Both of those areas will be severely impacted as one would expect during this crisis. The industrial portfolio for us is a stellar performer. It's very solid. We've seen mild diversions of around 5% on some of the regears. Again, we've got 3 assets in this portfolio comprising around 48,000 square meters of the vacancies in the portfolio. So 50% of our vacant space in the entire portfolio resides in 3 assets in industrial. And these are in established industrial modes where as soon as market activity picks up, these are assets that there's always interest and we are in the throes of discussions on 20,000 of that already. So we're very confident that, that vacancy, which was 17% last year, it's down at 10.5% now, will get to single digits by March '22. Again, a very positive message for us around that portfolio and our retail has been exemplary. So we've got 2 assets which we're going to be redeveloping. The rest of the portfolio has had a stellar performance, there's almost been no change in vacancy from 4.3% to 4.4%. It's not significant. But all the -- as Will Ridge says, all the rooms are facing -- are sea-facing. It's -- the NPI is up 28%. Costs are well controlled. We're seeing positive metrics in footfall, turnover and basket size growth. So that, for us, has been an unbelievable asset class. And I think in terms of our capital recycling, these kind of retail assets and industrial assets that we have is certainly the areas where we would look to redeploy. So overall, a base 12.8% growth in the NPI -- in the base NPI. And that was really driven by a significant saving. Well, when I say saving, it was -- we offered much less concessions in the last 6 months than we did during the COVID, the full year of COVID. So ZAR 9 million against ZAR 55 million in September '20. The bad debt provision is reduced by ZAR 14 million. And -- yes, I think overall, a good performance. The most important thing for us here. We've always been a very -- we're very much on it in terms of costs and there's a strong containment in costs. So the only time we see cost leakage is when you've really got vacancies and you've got unrecovered -- it's unrecovered rates or municipal charges that you pick up in those vacancies. Bad debt is at 13.7 -- I said, ZAR 14 million, and our vacancy is down from double digits to 9.4%, and we are on track for what we told the market last year is single digits, probably around 5% to 6% by March '22. This gives you a snapshot just of the kind of where our reversions, where our incentives are lying and the kind of activity that took place in the sector. The offices -- the reversion of 30.1%, it's a big number, but it really was over an insignificant amount of space of 3,700 square meters in Rivonia. Very defensive play there because we had a tenant that went into business rescue. So we've managed to recover some of the -- from other -- there's renewed interest in the sector in that area. And obviously, it comes at a cost. So on the one hand, you're getting income at some income preservation or protection for a while. And strategically, we took a decision to do that. So you got a 30% reversion there. We wouldn't believe it's something that's going to impact our sector broadly now because our assets in Bryanston, in the Cape, have really held up well and they are nowhere near those kind of revision. And certainly, we don't believe we're taking risk in that. Industrial vacancies, you'll see -- sorry, the percentage incentive in office, obviously, was higher obviously because there's a lot of -- there is pressure on landlords right now to kind of do leases. So some rent freeze, some -- you've got to offer them something to motivate them to move. Our industrial at 5.1%, it's really not -- it's not significant in this market and our retail reversions were positive by 4.1%, which is testimony to the quality of those assets. The team had an unbelievably active 6 months, 95 new leases -- 95 leases concluded. And 30 of those leases were in the office sector, which is quite surprising. And 23 of those 30, so nearly 65% of the leases in office were to new tenants. And it just goes to the nature of the kind of the -- we've always mentioned guerrilla tactics in our leasing. I think we put an unbelievable show to tenants when they arrive in our space. We wrap it in great service, great customer service, and we're making a difference. And I think wherever we spent money on some minor improvements in those assets, we've seen a commensurate uptick in activity and leasing there. So we -- I think we -- the market should start understanding that we have a very much hands-on asset management approach to the physical assets, and that is a strategic differentiator for us. And we'll start work now at Balfour Mall and Design Quarter, which has really been on the agenda for a long time. It was certainly retarded as a result of lockdown. We were ready in March, April last year, and so it has been delayed. In fact, Design Quarter has commenced and Balfour will commence in February. To distill the offer strategy, if I didn't emphasize it enough, we work with a strategic matrix. It's our strategic thoughts of how we look at stuff. And it certainly gives us a sense of where you apply your minds and your energy and your creativity because obviously, sometimes it's a bit like flogging a dead horse in some cases. But when you really look at this, we've got between the ZAR 1.4 billion on the left -- top left matrix and the ZAR 2.9 billion of our office portfolio, certainly a significant amount of assets for us that are -- certainly have got strong property fundamentals. The big challenge for us as a business is to move the ZAR 1.4 billion into the ZAR 2.9 billion and that's where you get active hands-on management. And of the ZAR 1.4 billion, which is 24% of our office portfolio, 25% of our NOI, and it really contributes a significant amount of the vacancy in office. It's like about 80% of our vacancy sits in ZAR 1.4 billion worth of our space. Again, it's the asset in Randburg, 2 in Sandton, and the 1 asset in Rosebank. If you really stripped all that out of it and you divided that by the remaining 27 assets, you're really talking about 400 square meters of vacancy per asset. If you were to do it like that, if it has any meaning. But I think it just -- It's not a significant risk that we're taking on the remainder of the portfolio. And that's an area where we're likely to see if there was certainly opportunity to trade, we would. I guess you apply you lock in good fundamentals and then get it ready for the market. I think it's just -- it could be a bit of a wish list right now in the office sector, but certainly, those are assets that we would look to trade. And where we were to reinvest in office, certainly, we've seen massive uptick and interest in the -- we might describe it as 2- to 3-story walk-ups, but it's really those multi-tenanted smaller buildings in the regional nodes closer to amenities like retail, closer to home, closer to the schools. And we've seen a very strong uptick in that that's largely driven by COVID. It's largely driven by the pressure or call it the uncertainty of SA corporates, not sure of their return to work policies, if they're going to use more space or less space, and what hybrid really means to them. So I think for us, the advantage where we have exposure in that sector, we've worked it well. We understand it well, and it's been a great performer for us. So the long-term outlook for SA -- I'm not sure we should talk long term. What is long term? But I think if we say for the next 2 to 3 -- 2 to 5 years, retail continues to be the prize to be for us. If you own these malls, these -- all these convenience centers, which are either dominant in their sector or they're very niched certainly, where you don't suffer the same consequences of this mass competition of the metropolitan nodes. That certainly becomes a focus for us, and we would look to redeploy into that. In industrial, we do anticipate still low but positive rental growth in those sectors. And the structural oversupply in office is likely going to -- it will remain for a while. I mean there's a significant amount of space available in our primary metropolitan nodes. So that is likely to continue, and that's why we would potentially look to exit where we can and redeploy into the 2 to -- call it multi-tenanted 2 to 4 stories or 2- to 3-story kind of walk-up buildings. So the -- but we do anticipate our vacancy in that sector to trend down. And again, I'd highlight just to say we are not representative of the office sector. We're a business that very much understands the risk that we're taking in the sector. Andrew?

All right. Thanks, Darryl. I think ordinarily, we would have asked Paul Roger to come and present this, but we are short on time. We also don't have a Scottish translator. So we'll try our best to get through it. I know we spent a fair bit of time on this at the -- towards the end of September, and I hope a lot of you managed to join us in discussing this together with some of the industry experts from the U.K. and Europe. But just to reiterate or recap some of the key themes flowing through the pan-European logistic page right now, it is an exciting place to be. There are unprecedented levels of demand. Very, very strong tailwinds across the sector, largely driven by the shift towards e-commerce. You're seeing record take-up in terms of space by occupiers. You're seeing record investment volumes and that doesn't look like it is going to stop anytime soon. Demand certainly is outstripping supply. And there's no doubt in our mind that supply will start to come on. But if you look at the graphs and you look at what's coming on over the next 12 to 24 months, it's certainly not a short-term equilibrium that's going to take place. As I mentioned, demand outstripping supply. And as a result of that, if you look at what's happening to vacancy, that is trending to all-time lows. And you're starting to see much more progressive rental growth coming through the European markets, albeit in pockets of space. It's not -- it certainly shouldn't be misconstrued as a generalization of rental growth across the entire region. You still have to capture that. And from our perspective, you'll see that coming through in our numbers in terms of the positive reversions. And all of this is ultimately being driven or yield -- is driving yield compression or cap rate compression. That is now sitting at almost record levels. There's a weight of capital coming in globally into this market, and it's driving yields down further and further every month. If we look back over probably the last 12 months, relative -- on a relative basis, cap rates have probably moved around 100 basis points in that time. And that's on a -- that's getting tighter and tighter to a point where prime yields across Europe are now in the 3s and portfolio type transactions are taking place in the mid to high 3s. In terms of underlying property performance or portfolio performance, as I mentioned upfront, a very strong growth coming through the NOI line that is testament to both the revenue growth in terms of leasing activity as well as some benefit. Last year, we had 2 tenants that went bankrupt right at the start of COVID, and we haven't had the same impact. This year, we've had the benefit of that dropping down to the bottom line, the 3.5% growth in earnings per share or income per share, which -- and that's in euros, you could translate that to ZAR, that's 5.5%. And the leakage there has been a shift in how we accrue or provide for tax or tax leakage on a quarterly basis as opposed to on an annual basis as well as some additional corporate restructuring costs incurred during the period. Vacancy, as I mentioned upfront, is sitting now at 2.8%. And that sits largely in 2 assets, one of which is undergoing a bit of a refurbishment and will be ready Q1 next year, and other piece sitting in March, and we think that's a short-term short-term issue. Valuation ticking up nicely. I think we've been fairly conservative there, and we would expect that to trend upwards over the next 6 months. Again, a testament to the fundamentals of the sector. I think I've mentioned all the points in terms of the income statement. Otherwise, I'd need Zaida to go through this for you, but a nice simple set of numbers coming through and you see the impact from a leasing perspective and the leakage that I mentioned earlier in terms of -- from a top line to bottom line in relation to both the tax and the corporate cost piece.

Just in terms of balance sheet and treasury, we manage it pretty much in a similar fashion to how we manage our underlying asset base that is on a risk-adjusted basis. A question that we often get asked is in terms of our LTV, of course, with the degearing flight path that took place over the last couple of months, that LTV has improved to 37.9%. As Andrew mentioned at the outset, limited refinanced this, and we also do have ZAR 2 billion of unutilized facilities in place to meet any obligations over the next 6 to 12 months. Our covenants are well managed, sufficient headroom both in Europe and in South Africa. And if we look at what level of incumbencies we have about just over 50% of our balance sheet is encumbered with a secured debt of 48%, close to 49%. Limited interest rate risk because most or 100% of our interest rates are capped in Europe, and we do have a swap book in place, which covers 85% of our risk in South Africa. All-in cost in SA, 8.5%, and in Europe, just over 2%, so a really well-managed balance sheet. Another question that we often get asked about is our level of look-through gearing, which is sitting at 52%, and it's a very considered and measured approach in how we manage that look-through gearing. So I draw your attention to Slide 25 to the right of the slide. In SA, 30% level of gearing in Europe, higher at 53%. Being stood at overall 37.9%. And why are we comfortable with that level of gearing, especially in Europe, is because of our diversified balance sheet. Of course, we look at the level of risk in country, and based on the property fundamentals are happy to increase the risk in Europe, just given the various tailwinds that we're facing, especially in the logistics sector. In terms of efficient capital management, the lower interest rates in Europe allows us to improve our overall earnings. As I mentioned, we do enter into cap rates. And so there's no risk over the short to medium term in terms of any blow out in interest rates. This will result in higher returns to shareholders and, again, sufficient headroom, both in SA and Europe in terms of our covenants. From a security perspective, each balance sheet, both in SA and Europe [indiscernible], so there's no risk that either performance will impact the overall security of the underlying regions. Just to hand over to Daryl on the capability cycling.

Thank you. So we had identified ZAR 1 billion worth of assets, which had actually been approved for sale, obviously. We've got -- during the course of the year, we sold 2 assets to the value of around ZAR 36 million, very close to book value. We've now subsequently got -- a total of ZAR 116 million worth of assets sold and awaiting transfer, ZAR 200-odd million under negotiation and a very strong likelihood of a further ZAR 400 million worth of assets. So of the ZAR 1 billion, you've got nearly ZAR 700 million of that has been expedited. As I said earlier, the intention would be to deploy it either to increase our investment in the pan-European logistics or to the kind of opportunities that we identify in South Africa, which kind of meets the requirements of our strategic matrix in terms of how we hold assets. In Europe, again, we do remain opportunistic and one would always look to trade out of sectors where we feel that we can't gain any more any more upside where there's limited potential to extract value, and that's kind of very much on the focus. It's a focus of Paul and his team. That would be definitely recycled into the core markets there, as well as our development pipeline, which I'll get to shortly, and to also look at opportunities as we did before on the Schiphol Logistics Court, where we do forward funding deals as a takeoff. So you're not really taking the development risk, but you're bicompleted, you fund the development for a takeoff at the end, where we saw a 55% capital uptick there. So that was a good deal for us. As far as the projects go, so Design Quarter, as I said, we commenced on the first of November. I would -- it's very difficult now, but I'd say just watch the space. There's going to be a lot of marketing and branding around here, but we've certainly reinvigorated this and there's massive tenant interest. So we've got supermarkets in terms of checkers, we've got Clicks coming, we've got Track coming and a number of restaurants. So this is -- It's a CapEx spend of ZAR 144 million with a significant amount of NOI uplift. The idea there is to really reestablish and recapture what Design Quarter has lost over the years as a destination. A lot of the factors of I guess the COVID environment has played into our hands because open mall certainly have got a serious excitement around them now. And it's certainly an asset that we fundamentally believe in. It's not just the retail that works, but actually the offices that surround the Design Quarter function very well with a well-functioning convenience lifestyle home wares and design offering. So that has started. And -- yes, I'd say, just watch the space because there's going to be a lot of marketing around that. Balfour Mall and Highlands Mall will talk to you together as the demolition will commence in January with Highlands Mall. That would really open up the -- that entire corridor to Balfour. I mean unfortunately, the corridor, the re birth of corridor remains in massive flux. We're still waiting to see what happens with the BRT as well as the movement of the taxi -- sorry, I've got a fly kind of landing on me. There's a BRT and we've got to just monitor that. So I think what it is, it's like we're going to do this in bite-size chunks. We're doing a lot of work with the tenants now, minor upgrades to the mall, demolishing Highlands, which will get better access for our tenants or our consumers. And then we'll gauge it as it goes. I think it's a market in such flux and there are barriers to kind of just convenient barriers to kind of making it work right now with the unproductive network of the BRT on rebate. And the first has got a minor upgrade. Again, we're going to give the tenants just a chance to recover post COVID, so we'll get through the December trade, that will start in around late January, early February, which is minor upgrades, but certainly something that we believe would enhance the overall offering of the offices. And we have it on authority that the owners of the Hyatt plan to open in Q1 '22, which certainly bodes well for the tenants in that region. The European development pipeline. So the one asset that's pretty much ready to go is the Polish asset. We are just waiting for some planning approvals, and we would anticipate breaking ground in February next year. That is -- it's a significant uplift in terms of income. If you price it with or without land, depending, I think I did mention it, I think at our European conference, actually, it's important just to keep you honest because if you can get more value for the land, I think it's something that one would look at. But ultimately, we price it with the yield on land and a yield ex-land because the land was effectively included in the original pan-European listed logistics deal so it's kind of in the books for free. So you're looking at a -- close to 31,000 square meter spec development in Poland, but it's on an established estate. So if you took the spec development and combined it with the other tenants in our park, you'd be close to 80% in the park. We've never had a vacancy in that park. So certainly, it makes a lot of sense for us to take risk. It's strategic risk, and we'll be doing that commencing around February next year. The remaining 2 assets, we would not -- these are not spec developments. These are assets that we have a Board approval now to proceed provided we get the certain pre-let status. So we've got around 50% pre-let. One is -- I think one is about 33% or 34% pre-let in the precinct because we've got demand from 1 of the tenants. If that happens, we will start [Audio Gap].

... Over the next 6 to 12 months. I think we're very well-positioned and certainly from a hedge perspective, both here and offshore, that risk is fairly limited. So yes, we look forward to the second half, continued performance and standing up here again in May '22 to deliver what will hopefully be a strong set of results. So that's it from our side. I think we're over to questions.

Just seeing if there's anything that's come through the online platform.

One needs to understand that the impact that this has had in areas like Rosebank, where I think [ Cecil ] moved out of Rosebank because of the high municipal charges. And Rosebanks got to fight harder than Sandton now. So -- It's something that -- I wish I could say we could deal with. Apart from lobbying and being a good corporate citizen, I don't think there's much else you can do in that space.

Thanks, Daryl. I think a question from Lee at 361. How much COVID relief did you extend in H2 last year? Says that if you break out or strip out COVID relief, there's no growth and he's trying to work out how we get to 10% to 12% full year growth. And how given the compression in cap rates across Europe, yes, I think it's only we're thinking about daily. There's certain markets that maybe we're a little bit more nervous about in terms of fundamentals or rental growth. And there's some assets like we have done in South Africa that you've you'd look to exit or recycle as you've hit the top of its return cycle. So we don't have any immediate plans right now. We are assessing all options. As I mentioned earlier, it is around trying to maximize the value of that platform and how we do that. But that -- the conversation -- certainly, we like that European market. We have a team on the ground that has traversed that for years, and has certainly been very, very successful, both with us and in their previous tenors with Hansteen and others. And so like we had in Australia and elsewhere there's a real benefit of having people on the ground. And so I think we're well positioned to continue to deploy capital into those markets. Coming back to the first piece, which are around -- is the market expensive, yield compression, where we're seeing opportunities. It's going to be very difficult for us to play in the big portfolio transactions in Europe, buying at 3.5% is expensive, but there is still the ability to pick up in the 1s and 2s in the local markets. And again, that comes down to having people on the ground, boots on the ground, talking to local agents, flying under the radar of some of that institutional capital. And so yes, we would expect to still be able to unlock some value-add opportunities as we look to grow that business. So I think that's it on the formal questions. I don't know if there are any questions coming from the lines.

[Operator Instructions] We have no questions on the telephone line. Thank you very much.

Okay. Great. So I think that brings us to the end of the half year presentation. Thank you all for joining us. And -- yes, look forward to -- hope you guys all have a good break going into December. Thank you.