Burstone Group Limited ($BTN)

Good afternoon, and welcome to the year-end results for the Burstone Group. We're joined -- well, I'm joined with Myles and Graham in South Africa, and Paul has dialed in from Barcelona in Europe. So, yes, we'll look to run through the presentations, some key highlights, financial results, a deep dive into the operations, and then talk a little bit about the future, and then we'll open it up to Q&A. I think we just take a step back and look at the business as at 31 March, a fully integrated international real estate business. And when we talk about that, we really think about our real estate investments combined with our management capability. So we're invested and have exposure across ZAR 42.9 billion of assets across 9 countries. A large portion of that, obviously, sits in South Africa and Europe and a smaller tranche sitting in Australia. But ultimately looking to create a diversified earnings base of real estate return across a variety of asset classes, geographies, and then with additive fee income as you build out that side of our business. Turning to the FY '26 highlights and certainly a year for us where we saw the transition starting to gain momentum. So headline numbers for the year 2.2% growth in DIPS, which is in line with guidance. We maintained a 90% payout ratio on the dividend. And so that's also at 2.2%. But importantly, we're seeing strong operational momentum across the group, and that has been underpinned by South Africa with the NOI on a like-for-like basis growing by 4.2%. I think it is important that we just reflect on the operating environment that we have had to navigate and traverse over the last 12 months, certainly one of the significant volatility, the recent Middle Eastern conflict that is ongoing, cautious international capital markets, and a much stronger yet on pause SA strong sentiment. From a delivery of our strategic objectives, and we bucket those into 5 key areas for us, it has been a disciplined approach to our entrepreneurial and opportunistic style. First and foremost for us has been driving the underlying real estate performance. And again, we'll cover that off in more detail later on, but a consistent real estate performance across the group, South Africa leading the way and a reminder that, that makes up about 80% of our total income base across the group, a resilient performance from Europe in what has been a very challenging environment and momentum building in Australia, and you'll see that coming through the group earnings shortly. From a growth perspective, and we think about the kind of fast-paced growth, it is really around our funds management limb to our business, where we've secured ZAR 4.4 billion of new third-party equity commitments across Europe and Australia. In Europe, we launched the European light industrial platform towards the back end of the financial year. In Australia, one of our existing partners doubled up their equity commitments alongside us. And on the South African front, we're closing in on finality on SA Core Plus, and we expect that to be out there within the next 3 months. From an integration perspective, and again, this will come through a lot of what Myles probably talks about in a little while, but a fit-for-purpose cost base, and we've seen a significant reduction in group overheads year-over-year. Really, we've reduced our reliance on an outsourced model and found efficiencies by bringing some of those disciplines in-house, additional integration post internalization of legal risk, compliance, and some of those functions, and that's led to a better overall cost base for the group. From a balance sheet perspective, a real focus on building balance sheet capacity. Graham and the team in South Africa have recycled a significant amount of South African assets. Our group LTV sits at just below 40% and is forecast to reduce further. And we've also decreased our all-in cost of funding across the last 12 months. And from an ESG and sustainability perspective, a big rollout of both solar and water projects across the South African business, and we continue to deploy capital into earnings accretive opportunities in the ESG space. Picking up on the underlying real estate performance, which, again, as I said upfront, is largely driven by the South African business. South Africa, where we saw a rebounding performance over the 12 months with like-for-like earnings growth up 4.2% on the back of a reduction in vacancy, which now only sits at 2.7%. That's down from 6.7% in the prior year. Strong performance coming out of retail with an 8.9% growth in NOI. Office showed a positive NOI result, again, off the back of vacancy compression and industrial, the smallest of the 3 sectors, a negative like-for-like NOI result, really driven by an isolated tenant failure. If that hadn't occurred, we would have been up 4% for the year. I think also important to note that the South African portfolio was revalued upwards by ZAR 600 million or 5%, which is -- which again shows a sign of some positive momentum in that business. In Europe, a resilient performance, and I mentioned a challenging market, certainly a market with a softening occupier environment. Like-for-like NOI was down by 3%, that was driven by increased vacancies, offset by surrender premiums. The earnings base down 12.5%, but the reversionary upside potential within that business still intact with 10% ERV potential in the portfolio. I think importantly, Europe at the moment makes up 6% of our total income relative to South Africa, of 80% today. Australia, scaling contribution. So really nice to see ZAR 27 million of earnings coming through for the group over the course of the last 12 months. We -- that reflects an equity yield of around 7% on our capital deployed. And the industrial portfolios that we're invested in there have significant upside potential. They're currently around about 20% under-rented relative to market, and that represents a significant potential value unlock for the group over time. And you see that coming through the valuation uplifts that we recognize of 6% on our investment in Australia. The fund and asset management side of the business, certainly, it's a year that we look forward to FY '27, where the momentum is building. But for the last 12 months, EUM or equity under management is up 6% and the fee revenue contribution to earnings now reflects around 15.5%. In Europe, little to no activity with Blackstone over the course of 12 months, and we'll touch on the first loss position later as we come into conclusion thereon. But I think excitingly for the group, the launch of the ELI mandate alongside Hines, where they committed ZAR 2.5 billion of external third-party capital. Once that is deployed, that would lead to an increase in group AUM of around 23%. The investment strategy there is to target assets yielding somewhere between 6.5% and 7.5% with reversionary potential across both Germany and the Netherlands. And from a delivery perspective, the first tranche of acquisitions is nearing completion. It's around ZAR 30 million to ZAR 40 million, and we have a strong pipeline under DD right now that we hope to bring to fruition in the near term. Just to give a sense of what that capital commitment will enable the group to do over time is to acquire the better part of EUR 400 million or ZAR 8 billion of assets across those 2 regions. So not only will that enhance our overall real estate exposure and return, but also drive fee revenue over the near and medium term. Australia, a slightly slower year given the strong start or strong end to FY '25. Markets there have certainly tightened up a little bit from a competition perspective and a slightly -- or rising interest rate environment. So certainly, the return hurdles are increasing. But we did see some additional capital deployment into 2 industrial assets earlier in the year, TPG Angelo Gordon doubling their commitment to us or alongside us, so we can deploy a further $200 million of equity there. And that would again, enable us to buy the better part of ZAR 5 billion to ZAR 6 billion of assets alongside TPG Angelo Gordon into those industrial platforms. So significant opportunities remain in Australia. In ITAP, the development fund that we are invested in and manage, we do expect liquidity on roughly half of that capital within the next 12 months. So again, nice to see the capital being recycled there. South Africa, SA Core Plus, as I mentioned earlier, expected finality within 3 months. It will capitalize our SA fund management strategy, expected to be earnings enhancing, and create a significant amount of capital for the group at or around NAV. And from a REIT ratio perspective, would have limited to no impact on that going forward. Myles, I'm sure, will touch on some of those key stats shortly. So as we think about momentum and going forward, and there are 5 key indicators that we look at, at the moment, certainly no particular order. But from a funds management perspective, ZAR 4.4 billion of new third-party equity commitments, as I mentioned, significant firepower to go and drive acquisition activity in our offshore markets. If that's -- once that's all deployed, it's -- would reflect a 32% increase in total AUM. But that is added to the strong underlying growth coming out of South Africa and our retail -- our portfolio here with growth in FY '26 of 4.2%, and we'll touch on a little bit later on. But as we look at FY '27, we expect an even stronger result there. Continued focus on our cost base, fit-for-purpose, 17.3% reduction in the current year. And then as we look to scale our ESG and solar rollout, and I'm sure Graham can touch on it later on, but a 55% increase in the rollout of solar across South Africa. If you look across those 5 key areas, it really does underpin a stable, sustainable real estate earnings base with growing and additive fee income. At that point, I'll hand over to Myles, who will take you through the financial results.

Perfect. Thanks, Andrew. Good afternoon, everyone, and thank you for joining for Burstone's financial results for the 12 months ending 31 March, 2026. Just as a reminder, for those of you I haven't met before, my name is Myles Kritzinger, the Group CFO. And I'm proud to say that I've made it through to round 2 of results presentations, although I'm probably a little bit greyer for it. Now before I jump into the actual results, I'd just like to say a huge well-done to the team for a really, really great job. Firstly, to the finance team in preparing a well-packaged and concise set of results, but also to the various operational teams in delivering consistent and stable performance across the business. So now as Andrew mentioned, the 2026 financial year has really been one of consolidation post the implementation of the Blackstone transaction in FY '25. focus has really gone into ensuring that the little disciplines have been maintained throughout the reporting period, and that philosophy has really extended across the group in various businesses and regions. In terms of the year's results, the performance has been indicative of strong real estate earnings, increased fee income, and the benefits of a well-diversified earnings and capital base. As asset management, we really believe that -- as management, we really believe that the current year has set a solid foundation for sustainable future growth. Now from a reporting perspective, the current year has continued to be business as usual, and we've seen the impact of the Blackstone transaction starting to work its way out of the numbers. At the end of the year, our income statement is definitely more reflective and representative of the underlying business and real estate investments as well as the fee income earned through our funds management business. And in terms of the balance sheet, there's definitely more stability in terms of the year-on-year movements and the reported balances. So when looking at the highlights, FY '26 has delivered in line with guidance. And as Andrew mentioned, there was a 2.2% increase in distributable income per share or DIPS for the period. In maintaining a payout ratio of 90%, earnings has delivered a cash dividend of ZAR 94.24cps per share. In understanding and also simplifying how we think about our business, we can effectively split our results into 4 different and distinct buckets or categories. Firstly, real estate investment earnings, which largely consists of South African direct real estate holdings as well as our co-investment positions in both Europe and Australia. Secondly, funds management, which generates fee income; thirdly, costs, which includes operating and finance costs and effectively makes up the rest of our income statement or our P&L; and lastly, our balance sheet, which is an important tool for capital recycling and a source of capital for future deployment opportunities. So in drawing these back to the current year's results, from a real estate perspective, we really have seen consistent and stable performance across the group. As Andrew mentioned, SA contributes to about 80% of our group's earning base and it delivered 4.2% like-for-like NOI growth at a much reduced vacancy of 2.7% across the portfolio. In terms of Europe and specifically PEL, like-for-like NOI was marginally down by about 3% year-on-year with an effective earnings of about ZAR 115 million, taking into account the benefit derived from the PEL swap. It must be noted that the absolute year-on-year earnings from PEL has dropped significantly, though, due to the Blackstone transaction and that Burstone holding only an effective 20% stake in the portfolio throughout the reporting period. Over the last 12 months, Australia has also become a real contributor to the group, delivering ZAR 27 million of cashback earnings throughout the financial period. From a funds management perspective, we have seen fee income increase to close -- by close to 50%, landing at about ZAR 131 million for the period or for the year and now making up over 15% of our earnings base. However, despite the increase in fee income, our REIT ratio currently remains at over 95%, sitting at 96.3% at the reporting date. In terms of the third bucket or category, we have significantly reduced our current operating cost base. And from a finance cost standpoint, the group has achieved significant net saving of around ZAR 140 million-odd, mainly due to the settlement of debt from proceeds received from the Blackstone transaction, coupled with a reduction in weighted average cost of funding, and a large focus on cash management across the group. From a balance sheet standpoint, we continue to build capacity through efficient asset recycling at in and around NAV. And during the year, we sold close to ZAR 1 billion worth of assets with about ZAR 300 million of those properties still pending transfer at 31 March. Over the past 6 to 9 months, LTV has remained stable at around 39%, whilst NAV has remained flat year-on-year. Now when looking at the individual bridges and starting with the DIPS bridge, we've effectively grouped the impact of each of these categories on the current year's performance. In moving from a prior year distributable earnings number of ZAR 825 million, the regional real estate earnings of the respective geographies has had an overall net positive impact on a like-for-like basis. As mentioned, fee income has increased by about ZAR 43 million-odd, whilst overheads has significantly reduced by about 17.3% or ZAR 46 million for the period under review, spread across both people and general operating costs, demonstrating the group's operational leverage and cost flexibility. The impact of the Blackstone transaction has obviously been significant in terms of reducing absolute investment income during the period. But on the contrary, it has contributed to a pickup in net positive benefit seen in reduced finance costs, landing full year distributable earnings at about ZAR 843 million for the FY '26 period. From a NAV position, and as mentioned, NAV has remained relatively flat year-on-year, although there hasn't been much net relative increase in NAV, there has, however, been a 5% or ZAR 643 million fair value gain in relation to the South African real estate assets, partially offset by losses on asset disposals made during the year. This net fair value gain was further offset by fair value losses of about ZAR 344 million, largely driven by an increase in the first loss asset provision of about ZAR 173 million for the period, a write-down of the PEL investment by circa 3% or ZAR 58 million-odd as well as ZAR 160 million of amortization and impairment losses on intangible assets relating to the Blackstone management contract. In terms of LTV and already mentioned, LTV has landed at about 39.6% and will further reduce to nearly 39% post the transfer of about ZAR 300 million worth of properties classified as held for sale at year-end. These properties are effectively unconditional and are merely awaiting transfer and should be off our books in the short-term. When considering the change in LTV, however, the following components under each of the asset and liability legs have had effect during the financial year. Firstly, in terms of the asset base, impact includes the fair value gain on the SA portfolio of ZAR 643 million, as already mentioned. CapEx, including solar expenditure of about ZAR 233 million, SA asset sales reducing the SA asset base by about ZAR 550-odd million, and the amortization and impairment of intangible assets of about ZAR 160-odd million. In terms of liabilities, there are some corresponding or consistent items across both legs, including CapEx spend and the impact of the asset sales on reducing our net debt position. However, additional movements in liabilities also include the deferred settlement in relation to the internalization, Burstone's deployment into offshore co-investments, largely in relation to the Australian acquisitions in industrial platforms as well as FX, net working capital movements, and the acquisition of treasury shares during the period. Then from a treasury standpoint, the group has a net debt position of ZAR 6.6 billion after deducting cash of about ZAR 322 million. As mentioned, we have managed to reduce our overall total cost of funding during the period to about 6.5%, where we took advantage of a rate dropping cycle in South Africa by floating on a portion of our book during the year as well as gaining margin benefit through the refinancing of about ZAR 800 million-odd of bank debt and ZAR 520 million of commercial paper. In terms of the various regions, our ZAR, our South African all-in cost of debt is currently 8%. Europe and Australia sits at about 4.3% and 4.1%, respectively, with a 150 basis point margin across the book. From a debt maturity perspective, our group debt maturity sits around 2.2 years with a matched interest rate swap maturity of 2.2 years as well. In terms of hedging, we remain to be well-hedged amidst extremely -- an extremely volatile environment and continue to take necessary steps to ensure that we mitigate against both interest rate and currency risk to the business. From an interest rate risk standpoint, our overall group interest rate hedging ratio was above the policy minimum of 75%, landing at a blended 78% at 31 March, 2026. And post the transfer of the assets held for sale, this ratio will obviously increase immediately to above 80%, showing that we are very, very much well-hedged in terms of interest rate risk. In terms of our capital hedges and as discussed at the interim results, the group maintains that it hedges 100% of its offshore exposure through cross-currency interest rate swaps and will continue to do so into the future. Then in terms of our group debt expiry profile from a liquidity perspective, we currently have about ZAR 1.7 billion worth of committed and undrawn facilities and cash to cover any short-term redemptions or funding obligations. And this is before the impact of realizing any cash from the asset sales, which are held for sale at year-end. In respect of our swaps and as already mentioned in the pre-close, we have entered into a series of blend and extend contracts to extend our overall swap maturity with only one cross-currency swap coming up for expiry towards the end of this financial year as we look forward over the next 12 months. So in closing, I'd just like to say well-done again to the team on a really, really great set of results and ensuring that we're well-positioned as a business in terms of delivering on our strategy and our growth targets for the 2027 financial year. I'd like to now hand back over to Andrew, and he'll talk us through the operational review. Thank you.

Thanks, Myles. All right. So running or diving into the detail from an operating perspective, South Africa, and I know we've covered a lot of this already. So just to touch on some other key points. It has been a year of really strong performance with continued improvement across all key metrics. Like-for-like growth, up 4.2%, cost-to-income ratio improvement there of almost 200 basis points, stable and improving arrears position, vacancy better by 400 basis points. Reversions, if we unpack that, and you'll see it coming through the different sectors, when you strip out some of those longer-dated leases in office, the remainder of the leases, so effectively, everything kind of less than 5 years, we would have shown or reflected reversionary upside of 3.3% for the year. And then WALE sitting across the portfolio of 3.1 years, so pretty stable relative to the prior year. I think Myles has touched on the asset recycling and the South African piece, so we won't cover that again. Diving into retail, which really did deliver strongly for the year. Like-for-like growth up 8.9%. And again, all key metrics pointing in the right direction with vacancy now sitting at only 0.6%, so almost 400 basis point improvement on the prior year. Reversionary growth, 5.2% across the leasing cycle, average turnover growth and trading density growth up 5%, and cost of occupation sitting really nicely and sustainably at 6.2%. So certainly a portfolio that makes up 45% of the SA investment base, roughly ZAR 6 billion, performing nicely and has strong outlook going into the next 12 to 24 months. In terms of office, again, some really strong results coming out of that portfolio. We've seen positive like-for-like growth for the portfolio of 2.6%, very strong tenant retention. I've spoken a little bit to the reversions, but they look hairy at negative 20% on the whole. But if you look at those long-dated leases that make up pretty much all of that and you look at what's happening on the more recent reversionary basis, it is starting to illustrate some encouraging signs of underlying market rental growth across the markets in which we operate. Vacancy, again, a really key factor for us, sitting at 5%. That's better off by 270 basis points year-over-year, improved WALE by 0.5 years and again, an improved cost-to-income ratio across the portfolio. Again, so strong signs for us in a portfolio that we think has been well-managed and is well-positioned as we come out of the previous cycle. Industrial, which is the smallest of the 3 South African portfolios, roughly ZAR 3 billion of value. So hard to read through on an annual basis, but more over a kind of 2- to 3-year basis. So showing a negative 1.8% like-for-like growth number. As I mentioned upfront, if you strip out the tenant default, that would have been up by 4%. It just gives you a sense of how sensitive that number can be given the scale. A market and sector that still shows some very positive supply-demand dynamics, and you are seeing market rental growth coming through the broader market. Operationally, comfortable with where the rest of the KPIs or key indicators are leading to, 2.5% vacancy, again, an improvement relative to prior year, an improvement on WALE to 3.8 years, strong positive reversions of almost 6% and an improved cost-to-income ratio of 13.4%, playing 18% in the prior year. Again, very strong momentum building across that portfolio. Moving across to offshore investments in Europe, Myles mentioned, it make our European co-investment of around ZAR 1.7 billion makes up approximately 6% of our total income across the group, softer NOI because of the vacancy. We don't expect that to sit around forever, but certainly, it is where the market is today, softer occupier market. But the operational metrics on a look-forward basis certainly remains strong, and we have continued to capture positive reversions across that portfolio of 10%. The WALE is pretty stable and improved at 4.6 years, and we still continue to capture indexations of 2.5% across the portfolio. Myles did allude to the first loss earlier in the provision. So just some broader context, that is the first loss assets where we had a valuation gap on the Blackstone transaction almost 2 years ago. And we effectively carry a provision across that today of almost ZAR 570 million, that's up from ZAR 400 million in the prior year and reflects the current market conditions in Europe. That portfolio today is yielding at an NOI level approximately 6.1%. From a market context perspective, real estate transactions across the kind of mid-box and big box market have certainly been subdued, and there are widening spreads between buyer and seller expectations, and that has led to limited transactions in that space. And it's just one of those markets that we're trying to navigate cautiously. As we think about our path to resolution here, we are actively engaged in several negotiations across the first loss assets, and that includes the exercise of our step-in rights. We are looking at creating balance sheet capacity through our ongoing effective capital recycling, and we do expect conclusion on this by November 2026 with minimal impact from an NAV perspective. The Australian co-invest, as I mentioned upfront, nice to see some strong earnings coming through that business and, really, taking effect or a culmination of the asset management initiatives that have been run over the course of the last 12 to 18 months. The portfolio there is fully occupied, in line with the prior year, and has got significant reversionary potential for us, both from an income perspective as well as future value unlock as we think about a 20% to 25% increase in value over time. And that is reflective in the investment revaluation of 6%. On the ITAP side, as I mentioned, a key focus for us is the realization of some of those assets and positions, and we do expect up to 50% of the capital to come back to the group over the course of the next 12 months. The fund and asset management side of our business really is building into FY '27. Earnings are becoming increasingly significant on an additive basis. In Europe, as I mentioned upfront, the key driver here will be the launch of that light industrial platform. I've covered a lot of what is on that slide already upfront, but really excited about the potential of that platform. We're seeing some really exciting opportunities. There's a significant pipeline under DD currently, and we are hoping to secure a significant portion or deploy a significant portion of the third-party AUM alongside our 20% investment in the very near-term. That obviously will drive both fees from an asset management and fund management perspective, but also deliver enhanced real estate earnings for the group. We're also constantly considering and exploring new European markets as we seek to leverage our team and infrastructure alongside quality international capital partners. So always remaining alert to opportunities. And in Australia, a key focus, deploying the equity commitments we've got alongside our capital partners there and the ability to acquire up to ZAR 400 million to ZAR 500 million of gross asset value. Stepping back, and this really is just illustrative. I know we've shown something similar before, certainly not a forecast. But as we think about our business, our group earnings underpinned by robust real estate with fund management revenue being additive to that overall return. And so the gray blocks on this slide highlight effectively the growth -- consistent growth, consistent returns that we would expect out of our real estate portfolio, whether that's through direct investments and will come through as NOI, or through our investment income through our co-investment model across our markets. And then as we add new mandates, platform strategies like ELI or SA Core Plus, and we start to add to that real estate return fund management revenues in terms of base fees, acquisition fees, performance fees, et cetera, et cetera. And the impact on total revenue, total income over time certainly looked -- is not linear, and we shouldn't expect it to be linear, but it certainly shows the ability or the option value that sits within that business. And when you couple that with the cost discipline across the group, it we believe will lead to some significant value unlock for the business. So to close out and really starting with FY '26, a year of positioning the business for growth. Any transition can get a bit messy, but it certainly gets clearer and cleaner as we -- as time passes, and I think that's where we are today. So stable operating results that were led by South African real estate that delivered 4.2% like-for-like NOI growth. The fund and asset management business gaining momentum, and we see that through the current year numbers as well as through the ZAR 4.4 billion of third-party equity that we've secured going forward. Further operational synergies and a fit-for-purpose flexible cost base are key as we look to grow our broader framework and infrastructure and a balance sheet that's well-positioned to take advantage of opportunities. Looking forward at FY '27, it really is about sustainable forward momentum, a diversified business model, resilient in extremely volatile global environments. And we do have a robust real estate base diversified across asset classes, geographies, fee income, and a variety of capital sources. Earnings will be underpinned and the forward trajectory of those earnings underpinned by South Africa and the delivery from a like-for-like perspective, and we're guiding that, that will outperform the FY '26 growth number and performance coming out of the funds management business as we look to deploy the ZAR 4.4 billion of third-party capital. I think it is important to note that we're not guiding and assuming that all of that gets deployed in the next 12 months, but it does give you a sense of what the near or medium term may look like. Operational and balance sheet flexibility remain key for us, a fit-for-purpose cost base, potential for further debt funding margin compression, as Myles mentioned earlier, and a continued focus on creating capacity from a balance sheet perspective from asset recycling and the SA Core Plus platform with ESG really bringing through some significant returns over the course of the next 12 to 24 months as we continue our rollout of solar capacity across the group. That allows us to set guidance for the current -- for the next 12 months at a dividend per share level of 7% to 9%. It's off the back of DIPS growth of 4% to 6% and an increased payout ratio to 92.5%, and that increase reflects the forward momentum of the business. We certainly do see challenges. We're not immune to the broader macroeconomic headwinds, interest rate volatility, and we do have risk related to the execution and pace of capital deployment alongside our partners, but we are excited about the opportunities that sit in front of us, and we're looking to execute against over the course of the next 12 months, deploying capital on a disciplined basis into new opportunities, accretive capital recycling, executing the SA Core Plus platform, new growth strategies across capital or alongside capital partners, and the broader potential that sits on the balance sheet. So that's us. And I guess before we go to Q&A, just a quick round of thanks. I mean Myles has pretty much thanked everyone already. But to the broader team that sit within the Burstone stable across the globe, it really has been a tremendous year, a huge amount of work. And I know it hasn't always been easy and to the Board that has continued to show its support constantly on call. I think it's been a calmer year with less transaction activity, so hopefully, they've had a little bit more time off. But yes, good to get through FY '26 and looking forward to the next 12 months. So we'll pause there and then bring in Myles, Graham, and Paul for Q&A.

Okay. So we -- all Q&A is posted online. So we'll try and run through the questions, and I'll bring in people from the business. I think I've done enough talking, so we'll try and get everyone else to speak. So I guess the first one from [ Nazeem ], maybe Myles, this is for you. Can you provide asset management fees in Europe and Australia and income from co-investments from Europe and Australia?

So in terms of the fee percentages, remember that we look at it as a function of GAV, depending on the suite of fees that we obviously offer under those different regions and through funds management, they can be anywhere from 0.5% to over 4% on gross asset value. In terms of the results presented itself, so there is a slight difference between the IFRS presented numbers versus the way that we look at fees and also real estate or investment income from co-investments from management account or from an ExCo level and a reconciliation that we will obviously provide the market when we go through roadshows and sit on our face -- and sit during our face-to-face meetings. In terms of fee income, we've landed at ZAR 131 million for the period, and that includes obviously the European investment, the Australia or the European business and U.K. Manco, the Australian asset management company, and then also a small sliver of fees based in SA. And then in terms of our investment earnings, also an adjustment to that of the financials, which obviously include the earnings from PEL and from Australia. PEL effectively landing at about ZAR 80 million on an ExCo earnings basis.

Okay. Graham, the next few are for you. [ Mweisho ] asking just around reversions. So what reversions are you expecting for this year given the expected weakening of disposable income? And I'm assuming that's probably in the retail space. So kind of linking that to our guidance that we're putting out there.

Yes, sure. I think, look, the important thing when you're looking at the retail numbers is really the cost of occupation and the trade densities. I mean, we've seen really nice growth coming out of that portfolio. So 5.2% turnover growth year-on-year. And we're very comfortable with where the cost of occupation is sitting at just north of 6%, very similar to where it was sitting at this time last year, almost identical actually. And off the back of those numbers, you did see the positive reversions coming through of just north of 5%. We certainly aren't blind to the fact of the SA consumer being under pressure. But as we say -- as we've said a few times, we continue to see growth out of our niche and dominant retail malls where we are relatively immune to the shocks that have been anticipated in the system. So as I say, we believe it is going to be sustainable in the medium term. And I suppose outside of retail, again, in the industrial and office space, as Andrew alluded to earlier, we're starting to see some very nice signs of underlying market rental growth there. So we do believe the numbers that you have seen coming through on the shorter-dated leases in the current financial period are relatively sustainable over the medium term.

From Nazeem, again for you, Graham, just around Newcastle Mall. So any concerns over Newcastle mall given the closure of ArcelorMittal facility in the area? How big is the asset in terms of total retail portfolio?

Yes. So I mean, the ArcelorMittal issue certainly is an issue to Newcastle as a node. The mall has seen -- it has effectively gone flat year-on-year in terms of turnover growth, so 0.4% growth. So there has certainly been an impact. There has also been some additional competition entering the broader market. I think important to look at Newcastle slightly wider than just the node itself. There is obviously a large amount of income that flows into that node that is generated outside of Newcastle. It is a large asset at circa 40,000 squares and north of ZAR 1 billion in terms of our book. So it is a sizable asset. We're still very dominant within the market in which we operate and have a very large catchment area. So we believe that over the medium term that, that asset will continue to perform reasonably in line with the rest of the retail portfolio. We are doing a lot of work around repositioning and ensuring that we continue to offer interesting and new tenancies for our catchment area. A good example of that is the recent installation of Dis-Chem into that mall where we've already seen some very positive impact, and we're working with a number of our retail clients to upgrade a number of their malls to ensure that we have the latest offerings and thereby retain the dominance in the node.

So maybe a continuation, Graham, from [ Alistair ], just again, thinking about retail. So our new retail tenants, what kind of stores are driving the improvement in trade at our centers, pets, restaurants, gambling, our SA consumers getting richer?

Sure. So I think the last part of that question is a tough one, and I don't think I'm going to try to answer it as an economist. But I think as we touched on earlier, we believe the SA consumer must be under pressure, if you look at the broader macro trends. But fortunately, we're not seeing it come through our portfolio. In terms of the real drivers of growth, so specialty has been interesting and health and beauty has been a real driver of growth. I think broader apparel has been under a little bit of pressure. Again, our anchors continue to perform really, really well across all of our malls. So I think it's not that we are shifting tenant mixes materially. It's, as I touched on in the last answer, really just making sure we have the best and newest offerings. Retail is -- or sorry, lifestyle, sorry, and restaurants, we don't have massive exposure in terms of that across our malls, and it is more fast food and takeouts, which continues to perform relatively well. And fortunately, we don't have gambling exposure in our malls. Certainly, we think it does have an impact in terms of our broader consumer base. But I think something that we equally track very closely is obviously the increasing transport costs on our consumers, and we're actively working with a number of our retailers and our marketing partners as to how we can work together to effectively get more feet into that mall on a sustainable basis.

Maybe before we carry on, just a reminder that we do have Paul Rodger sitting with us from Europe. So if there are any questions for Paul specifically either to PEL, the market or the ELI strategy, feel free to send those through. Myles, maybe for you from a financing perspective, so this is from [ Wershaw ]. Is Burstone currently trying to mitigate the finance cost risk against rate hikes in SA?

Yes. So I think in terms of our SA and our ZAR-based hedges, I mean, it is very much dynamic looking at the book relative to the asset base and hedging that risk and that exposure. Obviously, in the context of capital recycling, it is something that we have to be aware of in terms of how quickly that debt exposure moves up the curve in terms of, obviously, covering the relative assets that get sold through the business. So at period end, we landed at about a 71% hedge ratio in terms of South African interest rates. Obviously, the disposals which will be made post year-end, so the transfer of the ZAR 318-odd million will go straight back into debt in the short-term to settle local debt, that will then bump up that number to closer to a 75%-plus hedging ratio. So constantly aware of where we're landing and how much we've hedged ZAR-based risk, but also trying to take advantage of -- and historically, over the last 12 months, of a rate dropping cycle. So when looking forward into the next year, I think we are acutely aware of the interest rate environment at the moment and that, that is relatively volatile and it has shifted from 3, 4, 5 months ago. And the outlook does look slightly different, but I think it is more than well-compensated in terms of the asset disposals that are being made and that recycling of properties and settlement of debt in the group.

I think the final point there is as we think about some of the potential margin compression opportunities across the broader debt book, Myles mentioned earlier some of the refinancing activity that we undertook this year. And we certainly see opportunities in the next 12 months. And if we're able to take some of that, crystallize some of that upside, and opportunity set relative to maybe some of the rising base rates on the unhedged portion of our book more than likely be neutral, if not positive. Yes. Maybe it's a follow-on, Myles, from Wershaw guidance. So does guidance assume interest rates remain at current levels? And does guidance include the completion of SA Core Plus?

So there was obviously a refresh and a relook in terms of budgeted numbers. We obviously do look at budgets at the start of the calendar year. We then take a relook at budgets a few months afterwards and leading up to the presentation of these results. We have catered for the current interest environment in that budget outlook and in that guidance outlook for the FY '27 year. I think it comes back to, again, being appropriately hedged and adequately covered in terms of interest rate risk, and not running significant or huge risk and material financial exposure on our book at any given point in time. I obviously referenced the 75% minimum hedge policy. I think we're well north of that as a collective across the book.

Okay. Maybe Paul, you finally get a chance here, but just thinking about -- this is from [ Anton ], how much of a headwind will the surrender premiums within PEL from '26 give us in 2027. So do we expect to almost recover that through new leasing activity? Or is that a hole that comes through the income in '27?

Yes. Thanks, Andrew, and good afternoon, everybody. Yes, I mean, I think in terms of the surrender premiums that were taken, it was largely down to 2 tenants, one in Carpiano, which was one of our largest sites in the portfolio, about 46,000 square meters where Geodis exited the building and paid a fairly significant penalty there to exit following the sort of termination of their Amazon contract. And the second one was Toolstation in Toussieu, where essentially they wound up their operations in the south of Lyon site. I mean I think largely speaking, those surrender premiums have been absorbed and taken into account in the financials, and it's a relatively small proportion that we will see coming into this financial year of those surrenders. So I mean, essentially, that's largely been accounted for in these results. I think the important point around occupancy, we're obviously -- well, it's no surprise or secret that the Eurozone is facing a fairly tough occupier market and no portfolio or investor is immune. We've obviously gone backwards in terms of occupancy, from sort of 94% to 86% in the period. We were beginning to see some green shoots of positivity at the turn of the year, and we were quite hopeful of some of that coming through. Obviously, with the pressures that have been created at the tenant base from Iran, and additional spikes in utility and energy costs plus labor supply costs, and essentially rental and real estate increasing costs. Tenants are under pressure, and we have been working quite hard to try and back solve for that vacancy. I mean just in the last sort of 3 weeks, it's been quite interesting to see there's been a marked change in some of the inquiries that we've had. So in the last 3 weeks, for example, we've signed up 11,000 square meters of that Carpiano building I mentioned earlier. We've got 2 tenants -- 2 separate tenants interested in the full vacancy that we've got in our Poznan and our Lodz sites, which is about 19,000 square meters in totality. And quite excitingly, we have now let 8,000 square meters in Hanover, which was a building that sat vacant for the best part of 2 years. So it is tough out there. It's not easy, and the teams on the ground are working unbelievably hard to try and back solve these. And it feels like the wind is certainly changing slightly because our take on it is that tenants still have to operate the business. They still need to look at market share, and we're benefiting from that in certain locations. So yes, I think the point is we're out there and the teams are working hard to try and back solve that void.

Thanks, Paul. Maybe sticking with Europe and one for you, Myles, from Nazeem. So in relation to Blackstone, how long does the Blackstone fund management agreement have before it matures? Have they indicated the intention to cancel? If not, is there -- what is their notice period?

So the initial term of contract is obviously a 4.5-year contract. with Blackstone. There is a 2-year notice period upon which they can give termination notice to the group. However, provided the management company and the team hits their business performance and the underwrite plan, there are obviously potential termination fees, which attached to that, which can be, I suppose, anywhere between 1 to 2 years' worth of fee earnings or acceleration that would be due to the group. So those are definitely provisions that are included in that contract. And it is something that we obviously consider in the bigger Blackstone strategy and relationship as to what that potentially looks like at a point in time, given the intention to, potentially, roll PEL up into Proxity and list it later on down the road.

And I guess a follow-on from Nazeem is around First-Loss and the value of those assets at 100%. Maybe, Paul, you want to jump in and give some -- I know we don't disclose exactly which assets they are, but sitting from memory, at about EUR 232 million as 100%. Is there anything you just want to add around the broader context to that market, Paul, in terms of transaction activity and the environment in which we're looking to navigate that?

Yes. Yes, certainly, Andrew. So I mean, obviously, when you look at the transaction volumes across Europe, I mean, we're probably down 20%, 22% transaction volumes across the Eurozone for logistics investment. And that's, really, as a result of the sort of headwinds in the occupier market plus what we've seen in the geopolitical stage. And I think that has certainly not added to the opportunity of addressing the First-Loss properties until this point. The positive news is we're actually getting quite good traction on a couple of those assets or potential discussions for looking at repositioning them through either joint venture transactions or indeed an exit. So there is certainly opportunities there, and it's just about how we sort of drive those discussions forward and land them. But it's not an easy market. And yes, we are fighting as hard as we can to optimize those positions. I mean at the heart, they're good assets. We know the real estate very well. We've managed them since 2018, and we believe in the long-term potential of those buildings. So we're pretty confident we'll find a solution to them over the next 6 to 9 months.

I think there's a question here from [ Madeline ], but also [ Trinity ] that I think doubles up. So Myles, again, for you, just in terms of guidance. So kind of linked, how many interest rate hikes have we modeled into our guidance number? I think you touched on some of that earlier just in relation to our hedge book as well as some of the potential upside from margin compression. But also what gives you the confidence that FY '27 can deliver a 7% to 9% number at the dividend level when compared to FY '26 at 2.2%? And what would have to go wrong for that guidance to be missed? So I guess it's really thinking about the risk items within there and some of the non-contractual income that I guess we always carry going into a new year. And obviously, we've got some acquisition activity or deployment activity built in there, but yes, maybe just some context.

Yes. I mean there's obvious operational risks and then there's macroeconomic risks, which can impact, I suppose, all the various regions depending on what that potentially manifests in. I think when looking -- and again, back to my point earlier around interest rates and being appropriately hedged. But when looking at the budgeting process, we obviously do a refresh and take a look at updated curves in terms of relooking budget and then coming out with a guidance forecast for the FY '27 financial year. Previously, there was in the South African context, very much rate reductions built into that forward look. Australia, we know that at the beginning of this year, there was obviously a rate increase. And I think they were obviously on the upswing in terms of that. And then Europe relatively flat, but I think that all got turned on its head a few months back. So I think from an interest rate perspective, we are obviously conservative and prudent and make sure that we are appropriately covered. I think when looking at the bigger guidance number and where it lands back on and coming back to, effectively, the different pillars or categories in terms of our earnings base is that SA real estate underpins that guidance number and that growth number in terms of the 7-plus percent outlook. As we've referenced a few times today, it obviously makes up 80% of our earnings base. And I think we're starting to see, obviously, really strong and good growth in that portfolio. And just in terms of, I suppose, risk around hitting guidance for the year, it feels like every 6 months, something could go wrong and does go wrong. But I think where we take heart and, obviously, where we take confidence is you look at the business and in terms of our earnings base, how diversified we are, not in terms of the different sources of income and earnings, but obviously in terms of the different asset classes like you mentioned earlier and the different geographies. So in terms of potential to deliver as much as we're confident to hit those numbers, I think we are also quite defensive in terms of being able to deliver on growth into the next financial year. Hutchinson, I don't know if you want to touch a little bit on the SA real estate performance for next year and outlook?

Yes, sure. I mean, as we touched on earlier, I think Andrew mentioned it, we are anticipating to deliver better than what we've delivered this year. If you look at each portfolio in isolation, I mean, the vacancy number sitting in the office portfolio as a starting point at 5%. And based on recent activity, that number is actually trending even lower. So that's a very stable portfolio with a nicely extended WALE. As we said, there's very positive signs in terms of the rental reversions there and underlying market rental growth. If you strip out that longer dated -- those 2 longer-dated leases, which again, we spoke to at interim and we fully anticipated to actually flat in terms of reversions. So I think that's a really stable portfolio, and we're very comfortable with the level of leasing required and risk to hit the guidance numbers. Industrial, relatively small portfolio, and we've touched on a few times and continue to. I don't think one should read into too many of the metrics in isolation. That, again, is a very stable portfolio and all assets have continued to illustrate their re-let-ability. And I think the broader macro environment certainly lends itself to positive growth coming out of that industrial business over the medium term. And I did spend some time on the retail sector and where we see the trade levels currently and how comfortable we are with that. So you put that all together, coupled with the work that the team has done on an ESG perspective and rollout of additional solar, which we will continue to add to at very attractive returns. I think that gives us a very high level of confidence in terms of delivering on that guidance number.

And maybe as a closing point, Andrew, it's obviously, again, looking at the opportunities, but also the challenges behind it, and the ZAR 4.4 billion-odd of equity commitments, which the group has, and our ability to accelerate that and deploy that third-party capital will become a noticeable enhancement to the business. But on the contrary, there is always a challenge around deployment of capital and appropriately over the short term. So that is something that is very much, again, forefront of mind, is how we get that money out the door during this next year.

Yes. I think maybe we're going to close off because we are running out of time. But Paul, you're linked to that, obviously, from an ELI perspective, deploying into that market, you were telling or highlighting earlier the transaction volumes across Europe are lower, yet we're looking to expand into the light industrial space. So maybe just a bit of color around what we're seeing there, the pipeline that we're looking at as we look to deploy into that platform, and then we'll wrap it up after that.

Yes. Thank you, Andrew. Yes, I mean, it's obviously been slightly disappointing on a PEL basis where we haven't been deploying as much as we had hoped at the early part of that joint venture. But what has been very encouraging and positive is the traction and the engagement we've had with the Hines Group, where we have been -- had a fairly successful few months on deploying for their value-add series, their fund -- the third fund and the value-add series, where we have now got EUR 40 million or so acquired, and we've got a pipeline of around EUR 120 million in exclusivity with a pretty strong pipeline of additional assets that we're reviewing and appraising beyond that. So very good traction there. I mean it's not easy because I think you mentioned earlier, Andrew, the spread between buyers and sellers is there and it's widening to some extent. And just trying to manage that in terms of where true value sits is important, but it's tricky. The positive piece on that is on the first tranche, albeit sort of the smallest chunk, we're sitting around 7.6% net initial rising to 8.3% on a sort of blended reversion. And we hope that by the time we get to scale, we'll be sitting around sort of 7% to 7.5% net initial, but with some pretty compelling reversions across that portfolio. So we are seeing opportunities to add value and to unlock value. And look, this is going back to the knitting as it were for the team here in Europe. We've done this a couple of times now, and we're quite excited to be doing it with Hines . So yes, I think watch this space.

Yes. Thanks, Paul. I realize we have run over time, so I do apologize. There are some questions that do remain unanswered. We'll get back to you guys directly. And I know we're on the road for the next week, seeing a lot of the shareholder base, either one-on-one or as a group. But as always, we remain open to e-mails calls, whatever it might be. If there are any questions, please feel free to get in touch with us. Otherwise, yes, we'll see -- hopefully see the majority of you guys on the road over the next few weeks. Thanks, everyone.