Equites Property Fund Limited (EQU) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to Equites Property Fund's interim results for the period -- for the 6-month period ending in 31st August 2021. Obviously, very disappointed not to be with you all again. We hope by year-end that degree of normality will have come back. And hopefully, we can have a cup of coffee and a biscuit and chat through the results, too. So today's results will start with a little bit of an intro on -- from me, our strategy, just to reiterate where we're at, a little bit of market intel in terms of the U.K., South Africa and then what we've done this year. Riaan will follow up with the operational highlights and major issues that have been conquered and are playing out in our portfolio. Then Laila will touch on the financials, both from a numbers point of view but also from a treasury point of view. And she'll give us a bit of insight in terms of the ESG elements of our business, which are becoming stronger and stronger. We have the pleasure of having our U.K. partners online as well and on Zoom. They will be presenting all the exciting things that are happening in the U.K. in our joint venture. And then following that, a little bit of a résumé from me, an outlook and prospects just to wrap it up. And then we'll have a bit of Q&A at the end of it all. So that's today's proceedings. So let's start, and let's start with our strategy. Our strategy is to remain a globally relevant REIT focused on the logistics sector. I think this has been our strategy now for at least the last 4 or 5 years. We've presented this slide in every single one of our presentations, and we continue to present it because we continue to live by it day by day. So I think very important that we're there. I think the consequences of that has shown that these interim results are a reflection of the defensive nature of our portfolio, of the quality of product that we own, the quality of the covenants that occupy our product and the relationships that we're building with these potential clients and how we've built this business from the humble of ZAR 1 billion on listing in 2014 to in excess of ZAR 21 billion today, something that we're obviously extremely proud of. In terms of our business strategy, I mean, in terms of what we're doing. So within South Africa, obviously, our primary focus is to develop best-in-class warehousing for clients. Now as we've reiterated on many occasions, a lot of older warehousing in South Africa is potentially technically obsolete. And what we're seeing in the U.K., across the globe actually is that the demand drivers are for bigger facilities. And as a consequence of the bigger facilities, higher volumes of vehicular movement, which means massive yards and the like. So the opportunities are coming, and we'll talk to those in a bit more detail. So we predominantly look for pre-let business, and you'll see in our pipeline in terms of the pre-let business that we have done and what we are about to do. We also continue to look to acquire assets that meet our very strict investment criteria. And then we also are very favorable to sale and leasebacks and entering into joint ventures with major retailers where the opportunities arise. In the U.K., very much the same. We have secured, through optionalities predominantly, various tracks of land, which we are looking to unlock with the skill of the Newlands team. And we will talk to some of those unlocks and how they're progressing in a very favorable way later on in the presentation. We -- from an Equites point of view, in terms of the assets that we want to keep in the U.K., we will only execute on a pre-let basis. However, there will be opportunities for us to do turnkey developments in the U.K. and also to do speculative developments on our land for third parties in which we are secured a price and make a profit and we move on. And again, we will talk to that in a bit more detail coming up. So let's just go to, I suppose, what today is all about. And the most important part, obviously, are the metrics that we are looking to unlock. The first one, obviously, the distribution at 5.3% growth period-on-period, which is very much in line with the guidance. And I think we're very comforted by the fact that we are very much in line with all the uncertainty that's been around in the marketplace in the last 18 months for us to continue to deliver in terms of our guidance and be able to achieve what we're achieving. I mean, I must commend my team incredibly for that. In terms of NAV, we see the NAV growth. This number would have potentially been significantly better if it hadn't been for a bit of exchange rate strength from the rand, which is not necessarily a bad thing. But the reality is that from period to period, the rand has played against us in terms of our U.K. portfolio on that. Following the capital raise and the DRIP, our loan-to-value is sitting at 28.6%. Obviously, our WALE, which is something we're very proud of and I think is unbeatable within the South African context anyway, at 14.7 years is fantastic. And with the addition of the Amazon and the Hermes facilities at year-end, the likelihood is that, that number will probably grow as well. As I said earlier, very pleased that our portfolio has also grown. And the growth, though, I must reiterate, is it's not growth for the sake of growth. It's growth with quality, and that is essential. In that, we've also disposed of assets. We disposed of the 2 Stoke assets at the back end of last year, and we continually are looking at opportunities to dispose of assets that have become noncore. We believe every asset in our portfolio is a great asset, but it doesn't necessarily meet the criteria that we currently require of our portfolio. So let's move on to what have we done in this first half. So let's start with -- we've concluded, obviously, a fantastic acquisition of the Attacq portfolio, and we'll go a little bit into detail there on the 50% undivided share on 3 fantastic assets, which we're very pleased to bring into our portfolio. We've concluded a turnkey development on the Hoyland Plot 2 land, and our Newlands team will talk in more detail on that, which has resulted -- or will result in Equites sort of making approximately GBP 6 million of profit, which will go straight to the bottom line. It won't be distributed. We've completed the Sandvik development up on the R21, which obviously was the last of the developments that came in from pre-COVID. And we'll talk to some of the developments which are starting at the moment in a moment. In terms of our debt facility, we issued a note at JIBAR plus 165 on a 3-year basis, and that was placed with a single client. And obviously, the pricing that we achieved was extremely pleasing to us as an organization. It really reflects the appetite that there is for our debt. In that, obviously, we were very pleased obviously with the capital raise in the period as well, which also showed the appetite for our paper in the equity markets. In terms of sustainability, and this is the first time we report on this, very pleased that our solar output has gone from about 89 megawatt hours in the last period to 978 megawatt hours. So you can see the implementation of this ESG strategy is starting to come through, and we would like to think that this number will only go from strength to strength. Probably won't grow at the same percentage base because, obviously, we started from a 0 base. But notwithstanding that, we will invariably see growth of that as more and more buildings come online, and we go through our sustainability audits on our existing portfolio, too. In terms of the balance sheet, obviously, the -- we raised ZAR 1.3 billion, ZAR 300 million through the DRIP and ZAR 1 billion on the accelerated book build. And obviously, very pleased with that, too. This obviously is us sort of being extremely proud of our organizations, and we're really wanting to outline our performance relative to our peers. And it has been very humbling to have had an organization, and we've come out of a recent spate of Board meetings, obviously, to approve these numbers, where we spoke about where we were a year ago and the trauma of the experience of everything that we went through and not really knowing where our business was. And we had spoken a lot to the defensive nature of our portfolio and that it would be able to withstand some shocks. And we certainly were thrown a big shock last year. And I think we not only withstood it, but I think we've come back from it with flying colors. And I think this graph really highlights that. Over and above that, we're pleased that our free float has also increased. As a consequence of that, we've become a bigger percentage of the various indexation -- indexes on the JSE. And as you can see on the last index sort of recalibration done in 17th of September, the quantum of shares that traded in our stock was substantial. I mean, it was an all-time record ZAR 265 million in 1 day, which is unbelievable. And what we are noticing is that the liquidity of our paper is basically improving month-on-month and certainly year-on-year. So let's talk about the logistics sector, and let's start with the U.K. And I suppose when we entered in the U.K. in 2016, we always thought the U.K. was a good market and that there would be legs and there would be headroom for us to achieve certain goals. The reality is the U.K. market has astounded, I think, even the most optimistic person that has lived this. And our U.K. partners who have been in this industry for a long time, I think, will testify to that in a bit. And what we can say is that, I mean, some numbers have just come out with the quarter 3 numbers having come out with another 15.7 million square foot of take-up in the U.K. That takes the total for the year to 46.9 million. And just to put things in context, last year was the record year with 51.6 million square foot of take-up. And we've still got a quarter to go. But the reality is we will smash through last year's record. Over and above that, we've seen land prices go pretty aggressively on the back of just demand drivers, and the demand drivers are fueled by a lack of supply. The lack of supply and a bit of construction inflation is also driving a process of rental growth, which will obviously benefit the existing base portfolio but also is giving us great opportunity. Over and above that, what we're seeing is we're seeing yield compression come through the market. And that yield compression really is seen by the quantum of transactional activity with the first 3 quarters of this year. Basically, GBP 10.8 billion of transactions have already happened. GBP 10.2 billion was last year for the whole of 2020. It wasn't a record year. 2017 was a record year with GBP 11 billion, and I think we'll smash through the GBP 11 billion number. But we won't smash it as crazily as we might expect, and I think the reason for that is I think there is a supply side issue that there is just not enough stock to buy. I think that will continue to drive pricing. So what is feeding this take-up? What is feeding this demand? I think personally, I think these things are being fed by -- let's start with the disruption of supply chains. And these are a consequence of what's going on in China. China was the production facility of the world. With the energy problems, with the political instability that's potentially coming through and with the marked sort of antagonism between the world and China, we're seeing more and more businesses potentially looking to remove their manufacturing capacity from there. A lot of -- the consequence of that is you're going to see onshoring. But over and above that, you're also going to see massive increase in inventory levels compared to the just-in-time that was there historically. Events like the Suez Canal blockage for 10 days, events like Brexit and the events like the heavy goods vehicle driver, lack of them in the U.K., I mean, I believe this morning's paper in the U.K. said that over the 5,000 visas that they've allowed for foreign drivers, they've only had 27 applications. So it's interesting times. The consequence of that, though, is that the inventory levels have to get bigger. What we're seeing that -- is that obviously, warehousing is becoming bigger. Over and above that, what you're seeing is that more and more retailers are going to what they define as omni-channel distribution. And what that means is holding inventory at warehouse level rather than in store. And even if you're selling through store, though, the inventory only gets moved at the very last minute because the last-mile delivery and the last -- and the delivery platforms have improved so dramatically in the last 5 years. I mean, I had a conversation with one of the directors at Cushman's in the last week, where he's indicated that there isn't a single 300,000 square meter plus warehouse in the U.K. that is not under offer at the moment. I mean, these are just unbelievable stats that defy any sort of semblance of reality, if you like. And that is reflected in this slide where we talk -- and I think we've shown the yield compression that's coming through across the market. And I mean, let's talk to a couple of recent transactions. I mean, there was a multi-let industrial park in London that transacted at 2.6% yield. Now why did it transact at 2.6% yield? The buyer believes that he's going to be able to negotiate in the next 2 years increased rentals that will take him back to between 3.5% and 4%. So that's driving rental growth. And there is the belief that rental growth will be dramatic in the U.K. in the years to come, which all bodes very well for the portfolio that we currently own. You'll have seen in the last couple of days the SEGRO-Schroder swap, with SEGRO wanting the last-mile platform in London and Schroders happy to take 2 quality assets in the Midlands and 2.5% yield, I believe, in London and 3.6% in the Midlands. So I mean, yields for quality assets in the Midlands with the 3 in front of them are becoming standard practice in the U.K. Let's talk to the U.K. -- to the SA market, sorry. So the SA market, I don't think e-commerce is driving decision-making in terms of real estate. But as you can see from the graph on the right-hand side of this that the online sales as a percentage of total sales of the various retailers is definitely growing. We don't foresee that slowing down. We foresee that to continue to grow. Obviously, Takealot is keeping everybody on their toes as well on the side as well, and they continue to grow market share. And what we're seeing is we're seeing a continuous supply chain optimization. And as I said earlier, the omni-channel word is becoming sort of the buzzword, if you like, in the space. And what you can see is the amount of the major retailers are really investing in their supply chain. And you can see this by historic deals that have been done and been built such as the Pep facility up at Hammarsdale in excess of 100,000 square meters. DSV have built 145,000 square meter facility on the R21 here in Johannesburg and a 55,000 square meter facility in Cape Town. I mean, Pick n Pay are building 140,000 square meter facility on the R21. Massmart have built 3 substantial facilities, I believe, up in Riversands in Joburg, 70,000 square meters. Cape Town and Durban are both sort of 50,000 square meter plus. So the quantum of deal flow is definitely there, but the competitive nature of the market obviously has led to all the very high-quality developers in the marketplace to get a piece of the cake in different markets. And there are several significant RFPs that are coming through the system at the moment, which are all sort of 40,000 square meter plus RFPs as well in Cape Town and Johannesburg predominantly and some also for the Natal region. So in a nutshell, we are also fairly optimistic in terms of what's happening in South Africa. And I think our pipeline talks to that. And if we look at what we're doing on the development front, you can see that we obviously completed the Sandvik development earlier in the year. But we've signed up an extension on the TFG building up at Lords View, and that will go to 40,000 square meters on completion. We've done a deal with Cargo Compass, which is a freight forwarding business, which is going from strength to strength. And that's going into our new security estate at Jet Park, less than sort of 2.5 kilometers from the airport and right on the highway. So we're very, very excited about that addition to our opportunities. And really, we continue to want to build best-in-class. And that means the higher sustainability issues but also commensurate yard space, commensurate heights, commensurate floor flatnesses, commensurate suitability for a modern logistics facility for businesses to be able to go for the next 10, 20 years of their businesses sort of unscathed. On that, I'm just going to wrap up now quickly on the Attacq portfolio, which basically became unconditional a few days ago after Competition Commission approval. And that will start going through its transfer process. Obviously, we are well-versed in transactions with the Attacq team and a great team that we've worked really well with over the years. We already own 9 properties in the Waterfall precinct, and the addition of 50% of these 3 properties that are coming on: 2 already built and income producing from day 1; and the third one, a development deal, which we will be assisting the Attacq team in fulfilling, which should be completed in May next year as a 20,000 square meter plus facility for Cotton On in the facility. So on that note, I think I've done what I needed to say. And I'm going to hand over to Riaan, and he's going to take you through the property fundamentals.

Thank you very much, Andrea. Andrea alluded to it, but the essence of our business is the development and ownership of modern logistics facilities and proven logistic nodes led to A-grade blue-chip tenants on long-dated triple net leases. And it's these property fundamentals then translate into the numbers that we ultimately achieve. We've, over the past 7 years, continuously sought to improve our property fundamentals, and we've done that through the diligent application of our very stringent investment criteria. And this is what causes our sustainable, predictable and growing income streams. Now when you look at the fundamentals as they stood at 31 August 2021, you will see that we've increased our property portfolio size to just over ZAR 21 billion. And I looked at the number at August 2020, and it was ZAR 16.2 billion, which means that we've grown our portfolio over the past 12 months by more than 30%. And we've done that by increasing our WALE, which was 10 years at the end of August 2020 to 14.7 years at the end of the current period. And we've also increased our exposure to A-grade tenants from 95% to 97%. You will see that our vacancy levels are really insignificant, and our in-contract escalations of 6.8% gives us the continuous growth in our income streams. The split between our U.K. and SA exposure has been interesting over the last couple of years. You will note that at the end of February, the split was 66-34, SA-U.K. And our exposure to the U.K. has increased over the past 6 months, and it's now 38% of our total assets. You would have noted from the result that was released this morning that we've got a U.K. pipeline over the next 3 to 5 years of -- in excess of GBP 800 million. We've also got, over the next 12 months, opportunities in SA and the U.K. of ZAR 4.2 billion, of which ZAR 2 billion is already contracted, which means that over the next 2 to 3 years, our exposure to the U.K. market would probably reach about 50%. And after that, the sheer weight of opportunities through our land holdings in the U.K. will probably take our exposure to the U.K. over 50%. You would also see that we've got a good exposure to land, and our development capability is ultimately what creates outperformance. And it's extremely important for us in both South Africa and the U.K. to have land available in key logistics areas so that we can participate in RFPs and also take some of our existing tenants to service their expansion requirements. Looking at the lease expiry profile of our portfolio, we've continuously focused to enhance sustainability and longevity of our income streams. And you can see that currently, about 66% of our income in terms of our leaseholds -- lease terms are expiring beyond 5 years. We've only got 8% of our lease income expiring within the next 2 years, which means that we've got all the time to sit down with our tenants and look at their requirements, seeing whether the current facilities meet the requirement and also, through our sustainability and other initiatives, looking to enhance these facilities for them. 97% of our income, as I mentioned earlier, is now coming from A-grade tenants. And I think the nature of our business is that we've only got 64 properties, 54 of them in SA. So we're not in a situation where there is hundreds of properties in property retail centers, which make -- which makes management of them very difficult. So we're in the fortunate position where we can really spend the time on these properties to make sure that we drive maximum benefit from them. The next slide refers to the period that Andrea referred to earlier. I mean, COVID about 1 year, 1.5 years ago, 27 March, the first lockdown started, and we remember making our first calls to tenants. And we didn't really know what to expect. As we previously reported, we approached the situation with our tenants with a very open mind, and we granted significant rental deferrals to them. And we have worked with them over the past 12 to 18 months to help them through this very difficult period. And you will see that our SA collections stands at 96 -- 99.6%. And in the U.K., we collected 100% of our rentals. We've given additional relief to 2 tenants during the first half of 2022 in an amount of ZAR 1.5 million, which, in the bigger scheme of things, is insignificant. And long-term relief that still needs to be recovered in SA is about ZAR 6 million. We've not had any defaults on these deferrals. So we're very pleased that we've been able to come out of this very difficult period unscathed. The riots in July was also big news in South Africa. We were fortunate in that only one of our properties were affected, and we had damage of under ZAR 1 million. We have already put in a team of contractors to the property, and we are hoping that the property will be fully remediated by the end of the month. The tenant was fortunately able to continue operating from the facility, and all the costs that we're incurring will be recovered under the Sasria policies. This slide refers to our innovation and our property management, and there are 3 things that we are doing. Firstly, we've partnered with a company called Ecolution that has received significant support from the IMF. And we have conducted sustainability audits on all -- every one of our 54 properties in South Africa with a view to improving our sustainabilities on these -- sustainability elements on these properties. We've received the results back from the audits in respect of most of the properties, and the feedback from our tenants has been very, very positive. Many of our multinational tenants have got funds available to further improve the properties. And we're looking to really make a huge impact for them because ultimately, the greener the building, the less the operational cost for these tenants. And there certainly is a big focus from our teams to also improve the ESG capacity and capabilities of our company. We've also implemented assisted maintenance programs with our tenants through cost-cutting. In a difficult economic climate, many of our tenants doesn't have big maintenance teams anymore, and we have provided that service to them. And we've also received very, very positive feedback from our tenant questionnaires. We've got a happy tenant base. And we're looking to create further business from them because, as Andreas always said, the cheapest and best business you'll ever do is the repeat business. That, in short, is a summary of our fundamentals, which we're really very proud of and continue to be the cornerstone of our business. Thank you, Andrea.

I think I'm going to hand over to Laila now, and I think she's going to take you through the numbers.

Yes. Thank you very much. Thanks, Andrea and Riaan. I guess to start, let's look at the financial highlights once again. Andrea alluded to the 5.3% growth in distribution per share. And just to echo the sentiments of Riaan where we really do focus on stable, predictable rental income. And that's why the 5.3% is a very strong 5.3% growth, underpinned by very strong like-for-like rental growth, which we'll touch on a little bit later when we work through the distribution statement. The NAV per share growth of 2.2%, supported predominantly by fair value uplifts in the U.K. portfolio and slightly pulled down by the strong exchange rate at period end, but nonetheless, a strong growth in net asset value per share. Our loan-to-value is 28.6% at 31 August. And again, it's just representative of a very conservative approach to our balance sheet management. Our weighted average debt maturity is 3 years. And in our efforts to renegotiate with banks, we've really focused on extending the tenure but also on securing the best pricing on these facilities. And then at 31 August, we had ZAR 1.6 billion of cash and available facilities, which we will use to really implement our pipeline in the second half and beyond. If we move on to the distribution statement, which really is a breakdown of how we achieved our growth in the distribution per share, I think the first line to look at is the property-related income. And this was largely driven through strong like-for-like rental growth in the underlying South African portfolio. That amounted to 7.5%. And compared to the prior comparable period, this was also further supported by new developments which came online, including Altron, Digistics, Imperial and the U.K. development. Admin costs. There's a notable increase in the admin costs as an absolute value. But if you look at our admin cost ratio, in line with the growth in our property portfolio, this is actually fairly consistent. It's actually come down from the prior year. But it is worth noting that as our business is growing and expanding in the U.K., there has been an increase in these expansion costs associated with the U.K. operation as well as an increase in head count. If we look at the noncontrolling interest, the obvious increase is that Shoprite came online. And it was in for the full period this year, which resulted in a notable increase attributable to the noncontrolling interest. And then just if we look at the antecedent dividend and the number of shares in issue, that's as a result of the accelerated book build, which was well subscribed in July, and the dividend reinvestment program relating to our May dividend. We love these bridges, and I think it paints a nice picture of what contributed to the growth but really just echoing a lot of what has been said already in the distribution statement. I think the first line to point out, that 4.7% is driven by like-for-like rental growth. And again, that's the cornerstone of our portfolio. We constantly want to see rental growth from the underlying portfolio strong, and we're confident that the contribution to distribution per share is fairly robust for this period. The Shoprite acquisition contributed 1%. This Shoprite acquisition was funded largely through debt. And as a result, it was accretive in this period. The developments contributed 1.3% in this period due to the fact that they came online in an accretive manner, but also the fact that there was no cessation of capitalization for this period under review. And then if we look at the detractors, the ZAR was a lot stronger in this period than it was in the prior comparable period, and this detracted 1.1% from the DPS growth. The LTV ratio, the cost of decreasing the LTV is obviously the associated cash drag and the fact that we had to invest some of those proceeds in investments which weren't particularly accretive, shall we say. But we understand fully that this is the cost of maintaining a robust balance sheet. And when Andrea talks about the pipeline, it's evident as to why we had to maintain a very low LTV. And then lastly, Riaan touched on the additional rental relief which we provided, and that detracted 0.3% from our DPS growth. And that's really the buildup of how we arrived at the 5.3%. If we move on to the financial position. We look -- I'm just going to highlight a couple of line items. The fair value of investment property, Riaan's already spoken about the movement in investment property. And this was largely as a result of developments which were completed during the period, but also significant fair value movements on the U.K. portfolio. And I think we're very confident that the growth in investment portfolio is supported by strong fundamentals. There's a line item, trading properties, which was highlighted by a number of analysts and investors at the last reporting date. That number has increased, and that's as a result of land parcels in the U.K. which are marked for sale. You'd recall that we released the SENS a couple of -- a month ago, which refers to the sale of land at Hoyland's Plot 2. And this one -- so this includes the Basingstoke land as well as Hoyland's Plot 2 and 1 further parcel of land, which are all going to be incorporated in transactions which are available for sale. Then the held-for-sale properties. That's also increased from the prior period. And the increase largely relates to 6 properties which are earmarked as part of a Statement 102 disposal. And then if we just look at the equity attributable to shareholders, again, the increase is predominantly related to the accelerated book build as well as the dividend reinvestment program. If we look at the NAV bridge and we just look at how we move from ZAR 17.25 to ZAR 17.63. The ZAR 0.53 relates to the uplifts on Hermes and Amazon. Those are the 2 developments which are obviously underway at the moment, and we recognized some fair value uplift on a percentage of completion method. We haven't taken all the uplift now. The majority of it will be recognized on completion. But just in line with our policy, we were mandated to take a percentage at this reporting date. Then our core U.K. portfolio increased by 5.1% on a like-for-like basis. Andrea has spoken to the trends in the U.K. logistics market, and you can see that this is supportive of that compression. If you look at our results, we speak a little bit more in detail just about the actual compression on our portfolio. There was about a 30 bp compression from Feb to August, and I think this is just in line with what we're seeing in the U.K. logistics market. Then unfortunately, there was a ZAR 0.27 decline as a result of the ZAR strength, and we went from ZAR 21.03 at Feb to ZAR 19.97 at August. So that was about a 5% ZAR appreciation, and that reflects in a dilution in the net asset value. And then ZAR 0.08 as a result of the capital which we raised in accelerated book build. This was obviously raised at a premium to our net asset value. Then there's ZAR 0.26 dilution or reduction in the NAV, and that's as a result of recognizing deferred tax assets relating to the fair value movements in the U.K. In the prior period, we spoke about the reason for recognizing these deferred tax assets as we are now subject to corporation income tax rules. This is not a cash flow. This is an accounting recognition or an accounting adjustment, which we have to recognize. So you will see that this is recognized on the balance sheet and on the income statement but not for the purposes of distribution. And all of those movements result in the NAV of ZAR 17.63 at 31 August. If we just move on to the loan to value bridge. Again, a couple of movements. This one's fairly simple to explain. But if you look at -- we started at 31.2%. We raised capital both through the accelerated book build and the DRIP, and that was a 6.4% reduction to the loan to value. And then we spent about ZAR 1.2 billion between South Africa and the U.K., which then increased the loan to value. The fact that there was some ZAR strength further increased the loan to value. And then the U.K. valuation uplifts reduced that loan to value by 0.8%, which takes us to the final loan to value of 28.6%, which is incredibly conservative. But we definitely have plans to spend the money in the second half of the year. If we touch on property valuations. We like to explain our property valuations and to split them out by different property types. Just a couple of elements which we'd like to draw your attention to. 100% of the U.K. portfolio was externally valued at this reporting date. Given where yields have compressed to, we felt that it was prudent to recognize or to have these -- all of these externally valued. So they were split between 2 different valuation firms, and 100% of them were externally valued at this reporting date. That resulted in the 5.1% increase in the like-for-like property portfolio in pound terms. Then we valued 74% of the South African portfolio externally, and this -- the South African portfolio valuations were relatively flat over the period. Again, if you look at the average values per square meter, they're fairly consistent with the prior reporting period in South Africa. But in the U.K., we've seen a slight increase in the rand -- or in the pound per square meter. I think if we just move on to treasury management. I think we've touched on the loan to value. But again, just to reiterate, the loan to value has come down fairly significantly from 31.2% at Feb to 28.6% at August. If we look at our debt maturity, it's 3 years. And just to give you some color, over the last 6 months, we focused on renegotiating our South African debt facilities. We've renegotiated 2 of these, both to incorporate sustainability elements. And in the second 6 half of the year -- second 6 months of the year, we'll focus on renegotiating the U.K. facilities. If we then look at our all-in cost of debt, in line with where global yields are or global interest rates are. Our all-in cost of debt has continued to decrease. However, we are of the opinion that the interest rates will probably be subject to some increases next year or in the next couple of years. And that's why we've adopted a fairly stringent hedging policy, which I'll touch on in the next couple of slides. We have ZAR 1.6 billion in undrawn facilities, again, as previously mentioned. And this is really to support our strong pipeline, which we'll implement in the next 6 to 12 months. If we just touch on our approach to debt funding. We've really focused on diversifying our sources of debt funding. And as you can see in the graph, we now bank with most of the major banks in South Africa, with 2 major banks in the U.K. And we also have a very well-established debt capital markets program. We listed a ZAR 300 million note earlier in this year at a very keen price. So we listed at JIBAR plus 165, which is definitely market-leading. We also had an upgrade from GCR, which upgraded us a notch. And we are now rated as AA-. I think what's important is just to note that all of our renegotiations at the moment are incorporating sustainability elements, which does help from a pricing perspective. But more importantly, it's not the sole reason as to why we're doing it. We want to ensure the sustainability of our entire portfolio, and incorporating those elements helps us to be innovative in the way that we're renewing our debt facilities. If we just touch on our interest rate hedging. As we discussed, we do believe that we had a fairly low place in the interest rate cycle. And therefore, we have hedged 98.8% of our term loans and 81.6% of our term loans plus capital commitments. The CCIRS, we always get a lot of questions about these. As we have previously discussed, as we grow our U.K. portfolio, we will look to fund more of our U.K. portfolio in-country. And this is evident in the rate of CCIRS utilization. So this has come down from 25.2% at Feb to 23.2% at August. And again, as we grow our U.K. portfolio, we're constantly evaluating new ways to utilize in-country pound funding to fund our expansion. Just on a foreign exchange -- from a foreign exchange risk perspective, we adopt a progressive hedging policy. And the policy is well documented. I think most investors and analysts understand it quite well. We have made sure that we are hedged in line with our treasury policy. And we've hedged 80% of our income for the next 6 months, which means that, that's fairly predictable at the levels which are illustrated on the table. Okay. So I'm just going to move on to ESG, which dovetails quite nicely from finance. But at the same time, I do want to make the point that this is much more than just an effort which we look at from a finance perspective. ESG has really become ingrained in our very DNA. We look at it holistically. So we wanted to just touch on 3 elements. For the E, our objective is really to contribute to improvements from an environmental and sustainability point of view. So what have we done in the last 6 months? All our new developments are either EDGE-certified or BREEAM-certified in the U.K. We've conducted sustainability audits across our portfolio to ensure that all our existing developments can be brought up to scratch. And if there are improvements which can be done, we are engaging with tenants to see how that may be done effectively. We've engaged in a carbon emission baseline exercise, which will help us to fully understand our carbon footprint as well as to set our net 0 goal. And then as Andrea alluded to, we're almost at the 1 gigawatt per hour mark in our portfolio, and we'll look to improve this going forward. From a social perspective, our objective is really to promote the development of our communities and our people. What have we done? Diversity has always been front of mind in all of our employment decisions. We support our staff in terms of further education and tertiary studies where possible. We've also supported social upliftment projects through partnerships with nonprofit organizations through our foundation, The Michel Lanfranchi Foundation. And then from a governance point of view, we want to make sure that governance is front of mind because we understand that we need to adopt best-in-class governance practices if we want to ensure sustained value creation for all stakeholders. What have we done? We've revised all of our Board charters. We've also made sure that all of our committees are functioning optimally. We've appointed -- as most of you would have seen on SENS yesterday, we've appointed 2 new independent nonexecutive directors, which means that the composition of our Board is far more favorable in terms of best practice. And then lastly, we formed an internal audit department, which will function specifically to identify how we may improve our internal control processes. So I think that pretty much sums up E, S and G. I'm going to hand back over to Andrea now.

Fantastic. Thank you, Laila. We're going to hand over now to our colleagues in the U.K. Simon Williams will start the presentation, where he'll take us through some of the exciting things that are happening. And then Graham will talk to the pipeline, which is the future. So over to you guys. Simon?

Thank you, Andrea, and good morning to everybody in South Africa. First slide relates to Equites Park in Hoyland. The site at Hoyland in total is 80 acres and is located at junction 36 of the M1 motorway in South Yorkshire. The pre-let to Hermes totals 31,500 square meters and sits on a development plot of 54 acres. Construction of the unit remains on program, on budget and is scheduled for practical completion in February of 2022, early part of next year. And all of the early access criteria that Hermes has setup has all been successfully met. At practical completion, Hermes will enter into a 20-year FRI lease with fixed uplifts throughout the term at the 5-yearly rent reviews. The facility at Hermes is the largest facility in the U.K. and once operational will process over 1 million parcels per day. The development received strong support both politically and from the local planning authority, principally due to the 800 to 1,000 jobs that will be created once the facility is fully operational. Just moving on to the second slide, which is the Amazon development at Peterborough. The 17-acre site forms part of the well-established Peterborough Gateway development and is located on the A1(M), approximately 50 miles north of the London M25 motorway. The last-mile delivery facility totals 13,200 square meters and reached PC recently on the 15th of September. Amazon have now entered into a 15-year lease with fixed uplifts throughout the term at 5-yearly rent reviews. Amazon are now well progressed with rolling out this design of last-mile logistics facility across a number of locations throughout the U.K. And as a result, they are becoming an established asset class within the investor market. We also understand that a number of the parcel delivery operators in the U.K. such as Hermes and DPD are looking to incorporate a number of the actual design elements within the Amazon logistics buildings for their own future developments. Just moving on to the next slide, which is -- which relates to the second plot up at Hoyland. As part of the Hermes development we just mentioned, we're also constructing all of the site infrastructure and services to serve Plot 2, which is the remaining 26 acres at the wider Hoyland site. We've recently transacted on the development of 2 speculative units for Arrow Capital Management totaling 41,500 square meters. The development is on a freehold turnkey basis with initial land sale, which provides profits at day 1 to fund the construction. There is then a balancing payment at PC. The required planning applications have now been submitted and are expected to be determined towards the back end of this year. This will then enable the site sale in Q1 of next year with practical completion of both buildings towards the end of Q3 next year. And then moving on to Basingstoke gateway. The site is located in junction 7 of the M3 motorway, 25 miles west of the M25. The site in total is 68 acres. And in April of this year, we received planning commission for a 2.4 square -- for a 2.4 million square foot on 42 acres of the site for a market-leading online retailer. That facility is identified as a plot 1 on the master plan. Some specific tenant enhancements and alterations with the scheme have subsequently been required. And as a result, the application goes back to committee on Wednesday, the 27th of October. And this application has been recommended for approval. This application will incorporate all the site infrastructure and services to serve the total 68 acres. A further planning application for a pre-let to a single occupier will be submitted in early 2022. This application will cover the remaining 26 acres of the scheme. I'll just hand over to my colleague, Graham, who's going to chat through the future pipeline.

Thank you, Simon. Good morning, everybody. So I'm just going to talk a little bit about the rest of the U.K. portfolio that we've been working on for a number of years. It's perhaps important before I sort of run through some of the specific schemes just to sort of touch on the market, which Andrea sort of highlighted earlier, but it's important just to reemphasize that the U.K. continues to be constrained by supply. And that isn't just the supply of buildings and investment stock that's available to buy. But importantly, it's the supply of land in the U.K. that has a planning permission. And that's primarily down to the planning system in the U.K. being quite protracted. Not everybody has the skill set to unlock opportunities. They might have the capital, but you need the skill set and the team to unlock opportunities. So we've been working really hard as a team over the last sort of 2 to 3 years to sort of build a portfolio to feed the machine. And Simon's highlighted some of the schemes that we're on site with or in Basingstoke hopefully about to go on site with shortly. But there's a whole portfolio that sort of sits behind this that the team had been working incredibly hard at the last 2 to 3 years. And we're now starting to get really close to a number of planning applications being submitted. So there's a lot of work that goes in behind that in terms of working with the local planning authority, unlocking problems, consulting with local sort of interested parties and the general public. So we're super excited by the portfolio that the team that has been working on over the last few years. And hopefully, over the next couple of years, we can really start to bring these forward. And there's a lot of occupier interest in these sites already. Andrea touched earlier on the sort of level of demand in the U.K., and we're seeing record interests in our schemes. We've started to put a lot of information about our portfolio on our website, and that's attracted a lot of interest. So a lot of schemes that we haven't actually got planning on yet, and we're about to submit the planning, we're already getting significant amount of occupier interest, which is really exciting. So if we just chat through a number of those opportunities that we're working on. Hopefully, you can see the slide with a map of the U.K. in front of you. So the first one I'll talk about is Rugby. That's a 23,000 square meter scheme. We already have an outline planning commission in place for this development. This is located on the M6, junction 1 of the M6. So it's a great location. It's next to an existing established logistics park, and we're working for a detailed application for a specific building. We have 2 occupiers interested in the scheme at the moment. So we're now pushing ahead with a detailed application, which we hope to submit in the last quarter of this year. And that would enable us to be on site in 2022. The next scheme to touch on is that Nottingham junction 24 of the M1, pretty close to SEGRO's East Midlands gateway scheme. Another great location, very close to East Midlands Airport, which is the second largest freight hub in the U.K. after Heathrow. We received outline planning on that scheme probably in the last month, and we're already in legals with a third-party funder who wants to develop 4 units speculatively. So we're about to submit what we call a reserved matters application for those 4 buildings in the last quarter of this year. That will be for 75,000 square meters, which will then hopefully be on site with next year. And that would deliver a profit to Equites in excess of GBP 10 million. The next scheme to talk about is at Newport Pagnell, which is Milton Keynes. That's #4 on the map here, if you look at the U.K. map on the right there. Great location. This sort of sits midway between London and Birmingham. So it has the ability to serve both the Midlands market but also the Southeast, sits immediately adjacent to the M1 motorway, the main motorway that runs north, south from London to the north. We're into planning with an outline application of about 80,000 square meters, hoping to have planning commission in Q1 of next year and be on site next year. We have a lot of occupier interest in that site already. We could probably let that twice over as we sit here today. So we will continue to work that through planning and talk to occupiers through next year. Then at Thrapston. Thrapston is a site that sits on the A14. The A14 is the main east/west link between the ports on the East Coast and the Midlands and Birmingham. So we've got a site there that the team have been working hard on and taking that through the planning process. We've done a lot of sort of public consultation and working with offices and members, and we're now very close to submitting an application of about 200,000 square meters. So we're looking to submit that in November. So next month, that should be in planning and hopefully go through planning in Q1, Q2 next year. And this is another site where we have a lot of occupier interest. And again, we could probably let that sort of twice over as well. We're getting significant interest in that site. So those are the sort of key sites that we're either in planning or very close to submitting planning. There's a number of other sites in the portfolio there that you can see that the team are working hard to sort of prep for submission of planning, and that has the ability to deliver in excess of 1.5 million square meters of floor space. We'll talk in a bit on the next slide about the next 12 months. But just in terms of the next 24 months, very broad brush that the team are very focused on concluding the deals at Hoyland and Barnsley that Simon talked about. The spec deal at junction 24 is another key deal that we wanted to get over the line. Basingstoke, which Simon touched on, we hope to announce the occupier in the last quarter of this year. And then Newport Pagnell, which I've just touched on as well, we also hope to announce shortly. Through looking beyond that, in 2023, we would then hope to be on site at Thrapston, Peterborough and Cambridge. They'll all sort of come in behind those schemes in 2023, but then there are other schemes as well that the team continue to work on. So with the supply and demand dynamics in the U.K. and the slow planning process that we have, we're constantly looking at feeding the machine. So it's very exciting we've got these sites coming through the portfolio at the moment, but we continue to look at other opportunities where we see value and opportunity so that we can continue feeding the machine sort of beyond 2023. So perhaps if we then go to the next slide. So this is just looking ahead specifically over the next sort of 12 months and what we anticipate through 2022 sort of doing and achieving. So really, just to finish off the sort of last quarter of this year, Simon mentioned earlier that we're going to Committee at the end of this month on Basingstoke with a recommendation for approval. We're also looking then at drawing down the land on junction 24 for the speculative deal that we talked about earlier. Potentially going to Committee at the back end of this year on Newport Pagnell but also making the second payment on Newport Pagnell. I think just touching and pausing on Newport Pagnell specifically with that second payment. We sort of acquired that site off market. And Andrea touched earlier on land values and rental growth in the U.K., which has been incredibly strong over the last 12 months. And we've been able to lock into a land value on Newport Pagnell that's significantly below market value. Now we believe that our land holding in Newport Pagnell is probably now worth double what we paid for it. So there's a significant amount of inherent land profit in that site before we even get into potential development profit that would come out of occupier deals. So that is really exciting as far as Newport Pagnell is concerned. But actually, generally, to the rest of the portfolio, we have bought well. We have sites that are held at discount to market. So with that sort of growth in land values and rental growth and the sharpening of yields, it's really put a lot of inherent profit into the land portfolio before we then even get into development portfolio. So it's just important, I think, to pause specifically on Newport Pagnell at that point. So then moving into 2022. We would then see ourselves starting on site in junction 24, putting in the infrastructure for the spec scheme that we talked about, drawing down the land at Basingstoke as well. And as we get into March and the spring, we're then starting to put in land acquisition at Coton Park in infrastructure, hopefully concluding the planning of the 106 agreements at Newport Pagnell. Moving into May, putting in the infrastructure for Basingstoke for the whole site, starting on site with the buildings, the speculative buildings for junction 24 for the third-party funder. And then as we get into main of summer, we would anticipate securing planning consent at Thrapston. I would be extremely disappointed if we're not announcing at that stage pre-lets as well, given the interest that we have at that site. And then we would hope as well by then we're starting to move into some of the other schemes such as A1 West, which is our land on the west side of the A1 at Peterborough. So it's on the other side of the dual carriageway from the scheme where we just completed Amazon, and we would hope to be into planning by the summer of next year. Putting in infrastructure at the Newport Pagnell. And then as we move into the sort of the autumn and the sort of last quarter of 2022, we're then really looking at sort of Hoyland infrastructure, completing potentially the A1 West, the Peterborough land acquisition, the construction of Hoyland ending and then the sort of final bits of the jigsaw for next year. Hopefully, we'll be drawing down the land at Thrapston and potentially starting infrastructure at Peterborough and then PC of Hoyland. So there's a lot of milestones there through 2022 that the team are focused on and then beyond, in '23, delivering the sort of planning commissions to the wider portfolio. So yes, the team are really excited and have been working incredibly hard. And we've got a fantastic portfolio now that's really starting to come to fruition. So it's -- yes, it's a very exciting time. So that, Andrea, concludes the U.K. presentation.

Fantastic. Graham, thank you so much. Simon, thank you. Thank you, guys, for the participation. We don't have a lot of time left, so we're just going to quickly touch on our prospects. I mean, I think a lot of this has come through. But if I could just reiterate a few things. First, we do expect 3 pre-let deals in SA in the next 12 months, over and above what is currently on this list. We do believe that there are some buying opportunities that are going to come to fruition in SA in the next 12 months. We do believe, and this has put Graham and his team under pressure, that they will deliver at least 2 pre-lets in the U.K. in the next 12 months. And we do believe that there will probably also be 2 turnkey developments in the U.K. over the next 12 months. So the prospects for Equites as an organization in terms of what's contracted and what's potentially coming is massive. We are very excited as an organization. As they say, we must make hay while the sun shines. And it's certainly the logistics sector's moment in the sun. And we are trying our best to continue to deliver on our promise of best-in-class quality product. Just to close out, obviously, where we're at in terms of the various structures. Obviously, the list of the offshore business, the dual listing or the sale of the minority stake, these were all a function of the work that we're currently doing. But they are a function of cost of capital, and they are effective availability of capital. In terms of our JV with the SA pension fund, we are fairly confident that we will announce something before the financial year is out in terms of that JV. And we are very pleased with the outcome of that process. We continue to evaluate our existing portfolio in the U.K., and there are potential opportunities for potentially taking advantage of some of the exuberant pricing at the moment there. We continue to look to the South African capital markets, and accelerated book builds and DRIPs will remain a feature of our business as long as the cost of that capital is such that it makes sense for us to take advantage of it. And I think a really interesting addition to our business is what Graham alluded to and Simon have alluded to is the turnkey development for speculative funders or owner-occupiers in the U.K., where we basically execute, we make a land profit, we make a development profit, and we recycle that money back into our existing portfolio to the benefit of the balance sheet. So in a nutshell, I think that's where it's at. We continue to confirm our guidance of 5% to 6% for the financial year. We're obviously looking to target NAV growth per share also in the second half of the year and expect to be able to give double-digit total return for the financial year. So I think that's us in terms of our presentation done. I'm going to hand over to Riaan now. I believe he does have a couple of questions, and we'll try and answer them. I know we don't have much time, but we will try as best can. And obviously, we're very happy to engage with people off-line post the presentation, too.

Thank you, Andrea. Graham and your team, I think the first one is for you. It's, "Given the current truck driver shortage in the U.K., what could be the potential impact on your portfolio from a financial and operational point of view?"

Sorry, could you just repeat that question, guys?

Given the current driver shortage in the U.K., what could be the potential impact on your portfolio from a financial and operational perspective?

Yes. I think the supply and demand dynamics, there's a number of other factors that we haven't talked about that are having an impact on the U.K., and that's construction price increases. We're seeing quite a lot of inflation that's now hitting construction prices. So the land bank value growth has been driven by partly sort of yield progression but also by construction price inflation. So we really see a lot of rental growth potential through the U.K. over the next sort of 12 months. If you look at operators, historically, the rents in the U.K. are actually still quite low. It's only in the last year or so that we started to see strong rental growth. So we still think there's a lot of headroom potential for rental growth in the U.K. portfolio. So I think that's probably going to be one of the most interesting supply and demand dynamics that we'll see over the next 12 months.

Fantastic. Thank you.

Thank you. The second question for Andrea, from [ Daniel ]. Will you undertake any turnkey developers in South Africa?

We have indicated that we will on the specific pieces of land that we are very happy to do turnkey on. We won't do it on every piece of land. More importantly, also, apart from turnkey, on propositions of value of greater than ZAR 200 million, we're also very happy to go into joint ventures with the owner-occupier, for want of a better word. So yes, in a nutshell.

Thank you, Andrea. Then one for Laila. Do you think the valuations of your SA and U.K. portfolios are conservative?

I mean, I think -- I'll start with the U.K. because there's just so much evidence coming out of the U.K. portfolio. If you look at the compression in our portfolio from last year August until this year August, our portfolio values have probably compressed by about 60 basis points overall, whereas the overwhelming evidence out of the U.K. is that prime logistics yields have compressed by more than 75 basis points. So I think there's still room for further compression. What's also still to come are the Amazon and Hermes valuations, and those are brand-new products on 15- and 20-year leases. And there, we're still valuing them quite conservatively. So I think from a U.K. perspective, there's -- we've definitely been conservative. On the South African side, what we have seen is that we're definitely still emerging from this period of uncertainty. So our South African portfolio values all held fairly stable from Feb. There were some ups and some downs. But I think that as we emerge and we have stronger evidence that, that's coming out of the space, we have some more transactions and GDP growth starts picking up, we hope, I think that those will also start to increase again. So we're definitely a little bit on the conservative side right now, and we're very comfortable with where we are.

If I may add, construction inflation will play a part in South Africa as well. So on the new builds, we see a bit of pricing pressure coming through the market as well.

Thank you, Laila and Andrea. I want to thank everybody that submitted questions. We unfortunately only have time for one more, and I'm going to ask Andrea, if we are seeing any increase in demand for pre-lets in SA given the civil -- recent civil unrest and muted economic growth.

I think sort of -- I alluded to in the presentation a little bit with some of the significant pre-lets that have been undertaken in SA in the last sort of 18 months, 2 years from the major retailers. We foresee more of the same. We foresee that all the retailers are going to be investing heavily. And as I said, the buzzword at the moment, especially in the clothing retailing world, is omni-channel. And it's about being able to get product to the client, but the client could be anywhere in the country. So it's holding the stock in warehouses. Sizes of warehouses have definitely got bigger, and the consequence of that is, I think, going to be good for our business.

Maybe just to add, of the ZAR 4.2 billion of opportunities we spoke to earlier, a significant portion is from South Africa.

20 minutes Okay. Okay. Sorry.

We do have a bit more time.

Okay. Apologies. I thought we were running out of time. I've just been advised by the producer that we do have a little bit more time. So...

The next question is, were there any renewals during the period? And if any, what sort of reversions did you see on these deals? And maybe I'll take that one. As we alluded to, we've got 8 renewals coming up in the next 2 years. In the period under review, we had 2 renewals, and we didn't see any significant reversions on those 2. They stayed mostly flat. We've been fortunate up to now that the facilities that we do have are high-quality facilities where our tenants are happy with them. And we continue to improve them and look at improvements that our tenants need to be able to extend their tenure. So thus far, we're approaching the next 2 years with the new leases with an open mind, but we are confident that our portfolio is of a nature that it would withstand any request for reversions.

Yes. I mean, there's another question just asking about, did Equites receive any non-GLA income for the period? Or is it insignificant? If it's okay, I'm going to answer this one. But where we typically see other counters receiving non-GLA income, it's everything from potentially on selling solar energy to their tenants. And there's a couple of other innovations, particularly in the retail space. but what we've decided to do is not to unsell any of the solar. In fact, when a tenant signs a lease with us, any solar that's generated at that premises is given to them for free. We believe that it's part of our commitment to ongoing sustainability and also as to assist the tenant in reducing their operational costs. Andrea, I mean...

I think I agree, Laila. I mean, we've used it as a carrot to attract the best-quality tenants. And I think as tenants move into our buildings and live the experience of, a, a properly designed and built facility; and secondly, one which also affords material operational efficiencies and savings, is to create a relationship which I think will deliver for Equites for many years to come.

There's one further question maybe for Graham and his team. The question is, "You've spoken through a lot of landholding parcels. Are you confident that you'll attract the type of tenants required that will fit in easily in the Equites portfolio over the next 12 to 18 months?

Did you get that, Graham?

Yes. I think it was about how we're confident we'll be able to attract the sort of type of tenants that Equites is looking to retain on its balance sheet. Perhaps I'll pass it over to Simon to answer.

Yes. I think in summary, I think the occupational demand in the U.K. is in a position that we've never seen before. But as Graham and Andrea both touched on, the take-up of buildings capabilities is virtually -- is unprecedented. And most of those big requirements are coming from online retailing platforms or third-party logistics operators and also last-mile delivery operators. So yes, the sectors that we're targeting, the demand is unprecedented. But we don't see that slowing down in the short, medium or long term. So in summary, we see the demand continuing. And therefore, we see the potential for us securing those type of operators on the schemes that Graham has highlighted as likely. And that's absolutely what we're targeting.

Look, just to add to that, we're talking to a number of multinational companies who have got vast portfolios globally but also in the U.K. And a lot of these companies now have mandates that have said that they've got to get rid of the portfolio on buildings where they don't meet sort of green sustainability targets. So they're under massive pressure, a number of these companies, to offload historic, sort of old buildings and then replace them with more modern, energy-efficient, sustainable buildings. And with the supply and demand dynamics, it's very difficult for them just to sort of go and replace that stock. So yes, we are -- and those companies are major multinational companies that have made those statements. So we're very confident that we can sort of bring some of those multinational companies into our portfolio and then obviously on to Equites' balance sheet.

Thank you, Graham. The next question is, "Please quote the ICR for first half '22."

Okay. So our ICR is around 3.3. And where we forecast our balance sheet to go, we are forecasting around 3.5. I mean, you would understand that our portfolio has a significant development component, and that obviously reduces the ICR slightly. But in comparison, our strictest covenant is 2. So we're very comfortable with where that ICR is. And obviously, as our portfolio grows and evolves and that income-producing component becomes bigger, that ICR will improve. So that's the number, and we're very comfortable with it.

I think we've got one last question there, yes?

[ Bunde ] is asking, "What's your view of demand/supply dynamics for industrial property in general in SA given the pipeline in the system? Do you have any concerns?"

Okay. I mean, I think that the demand side on the large 40,000 square meter plus facilities, I think, is going to be positive over the next 18 months, 2 years. I think the supply side will always be a challenge because a 40,000 square meter plus development will invariably require 1 10-hectare site as a minimum due to the yards and all the other ancillary requirements of these big users. And the reality of it is that who controls service land in one track, that can facilitate all of these potential opportunities. And the reality is, certainly in KZN, I can only think of one significant park that potentially could house these bigger requirements. In Cape Town at the moment, I could only think of 2. And in Joburg, probably only 4 or 5. So in the 10,000 to 15,000 square meter, obviously, there's ample land to meet those requirements. But once you start breaking the 40,000 and going to some of the bigger global players and bigger retailers, then I think the stakes are much more constrained and will allow for, I suppose, better negotiations, should we say.

Thank you. Awesome.

Okay. Well -- everybody, well, thank you so much for having joined us today. We obviously will engage with our primary shareholders in the next couple of days with the view if there are any further questions that need to be asked. But notwithstanding us not contacting you or contacting you, if there are any questions that you would like to refer to the management team, please feel free to e-mail us or give us a call. And we're always available and happy to engage to the best of our ability. But -- yes. And in conclusion, firstly, I would like to obviously thank our Board for the -- what they've afforded us in the last 12, 18 months. We've also gone through some natural change and introduced some new parties to our Board, and we're very excited with the additions. But equally, also very grateful to the gentlemen that did step down earlier in the year. Over and above that, obviously, my primary massive, massive, massive thank you and total respect goes to my co-executives who have done unbelievable work in the last period or in the last 12 months. I think we were really challenged by the COVID situation. And I think how we've responded as a team, how they've responded with their teams and the leadership that they've shown has really made my job probably extremely, I hate to say it, but a hell of a lot easier than it could have been. Obviously, extremely proud of everybody in the organization, and thank you to the whole team. I'm not going to mention names because last time, I completely made a matzo pudding of it. So I won't do it this time. But again, thank you to the whole Equites team but, in particular, to my 2 co-executives. Cheers. Bye-bye.

Thank you.