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

Good morning, ladies and gentlemen. Welcome to Equites' interim results for the financial year FY '23 it's obviously, again, a great pleasure to have you guys here. I do believe we made a bit of a so par today and that we are doing this presentation on a religious holiday, which obviously has resulted in our Jewish brother and sisters not being here today. So apologies to them upfront for it. It was an honest mistake and we have put in place measures but we won't do this again. I think we've done this before on a Muslim holiday as well. So we didn't learn from our mistake for this time around, but apologies for that to everybody concerned. And we have put in place measures that we don't do it again kind of thing. But notwithstanding that, I think let's get on with the presentation. Obviously, very pleased to see you all here. And let's start again where we always start. And really, again, it goes down to the equity strategy and what is it that we want to be? I mean we've always prided ourselves. And I think the statement that we put out there is on the left-hand side of the page, and I think it's been in every presentation for, I don't know how many years now. And really, we reiterate it. Equites' wants to be a globally relevant REIT that operates in the logistics sector. And we think that every year that goes by, we become better at it. Every year that we go by that memory bank, that intellectual capital that is being captured and harnessed within the team. As the team has grown, I mean, I think we with 42, I think or maybe even 43 people now in the team. So we have grown, and we've brought in some incredible talent, and that talent is performing remarkably well. I mean I think Laila and I announced that we've employed our first employee in the U.K. as well, we will be starting on the 14th of October. So the opening of the U.K. office is actually a reality now. And from there that team will probably grow to 3 or 4 people probably within the first year to manage what we're doing and what we're trying to achieve in the U.K. And all important stepping stones people can't believe that we run a ZAR 10 billion portfolio in the U.K. from Cape Town and we that's what we've done. And obviously, we've got massive ambitions there. And we will look to grow it, but obviously, do it in a way that is meaningful to shareholders and also that we obviously always remain best-in-class in terms of the assets that we have, but also how we execute to get them. But then most importantly also is how we execute to maintain and run the operation, which is ultimately the most important thing. The pipeline in SA has never been stronger. I mean we listed in 2014. The market was fairly buoyant. There was certainly a lot of money around in 2015 and 2016, if I remember right. We had some memorable capital raises in those years. And the world is very different. And we were in the U.K. a couple of weeks ago and what was sort of came through in the U.K. as well as obviously, there was a momentary sense of panic after that mini budget. But notwithstanding that, we remain fairly confident that things will calm down that the short traders will have made their money and they can go away on Christmas holidays and get their bonuses. And they've taken away the caps on the banking bonuses as well. They try to take away the tax rate, but they put that back and go ahead. So all these sort of temporary blips, obviously, are not good in the short term for our market, but in a weird kind of way, we all knew that it was coming some time. So let's not fool ourselves. And hopefully, the consequence of that is that we, in the next sort of 6 to 12 months that we reach a level of stability, which will afford the markets to continue. I think in SA what we've seen, obviously, is a level of really good fiscal discipline, I think, coupled with that, obviously, our -- the receiver has also been collecting admirably. And the level of activity we've seen in SA really talks to the fact that they've over-collected that tax. And that really does tie in quite well with the level of activity that we're seeing. I mean our new business team are literally running off their feet with a quantum of potential deal flow that may be coming through the system. And I suppose the biggest challenge to the SA business remains probably the availability of land, and we'll talk to that in a little bit. But if we can just, again, reiterate the group strategy. In SA, it's acquiring assets from time to time. It's very difficult to acquire assets because very few people develop assets to the specification and the quality that Equites would expect and want. But from time to time, some stuff does come up invariably, it's priced pretty aggressively. And in that moment in time, we will make decisions. The other point, obviously, which is very important to us has been our development business in SA. We've developed some seriously world-class facilities, and we continue to do so. And obviously, we've created some fantastic relationships with really high-caliber organizations from the TFG to the shop rights, to the super groups to mention some. So obviously, we're very proud of the fact that these organizations that have got the ability to talk to everybody, they keep coming back to us because they believe that what we offer them is best-in-class, and we provide a solution that is very difficult to match and beat. The final element obviously remains that we are very much focused on that A-grade sort of client we've come through 2 years of COVID. I think in pre-close, we spoke to it a little bit. But what we can tell you is that in 2020, I think our book was about ZAR 1.4 billion. And in 2021, our book was about ZAR 1.6 billion. So technically, we collected about ZAR 3 billion over those 2 years in rental. We invoiced ZAR 3 billion in those years. And at the end of COVID , I'd like to think we are at the end of COVID. What I can tell you is that the amount of money that we've written off from our book is less than ZAR 2 million. And I think that really talks to the strength of the actual portfolio. It talks to the strength of the underlying clients that pay us rent, and it also talks to the quality and caliber of real estate that we offer these clients that are able, even in very difficult times to run very successful operations. So that's the first part. In the U.K., obviously, when we entered that market, we entered it for a rand hedge but we were acquisitory, the market became obviously too expensive for us. And we've sort of gone up the food chain eventually creating a relationship with the Newlands team, a highly successful team of developers that have -- in different crises have been in the market for many, many years and have brought a level of experience and quality of entrepreneurship that really marries extremely well with the Equites' culture in the Equites way. And in the U.K., we effectively control switching tracks of land, and we'll get into more detail with that later in the presentation. But the opportunity for us, obviously, is to unlock that land. And when we unlock that land, we are going to do 3 things with it. We can either sell it if we get a good enough price for it. We can do 2 key developments for owner occupiers or for owners of property that are happy to take vacancy risk and are wanting us to build units for them speculatively. Where we give them a fixed price and we make our margin and we move on. Or we have the final element, which is obviously the one which is probably closest to our heart is the one where the right client, the right building, the right location, the right type of lease that Equites decides to maintain ownership of it to continue to build this wonderful portfolio that we've created in the U.K. So those really are our 2 prongs of attack. We often get asked. Are you looking at other countries in Europe are you going elsewhere. As things stand at the moment, we believe that the opportunities afforded us with the available capital that we have, I think we are well placed to execute and deliver on that. So there's no point spreading yourself thin, ultimately opening up in another jurisdiction, comes with complexity. It's not every country has got its own quirks, its own tax regimes, it's own laws, its own ways of operating, and it takes time to understand those things, get on top of them and understand how to deliver and provide on those things. So the answer to that question at the moment is no, but in the future, it could happen. Absolutely, it could, but certainly not in the short term. Obviously, why are we here is effectively encapsulated in this slide. From a South African shareholder point of view, obviously, very important is that DPS is 4.1% up on the same period last year, which we're obviously very pleased with. The market in the period with interest rate fluctuations and the uncertainty around processes in both U.K. and SA. As I explained earlier, we will remain in place for the time being. And we are pretty confident that we're going to give guidance also that we will stay within that 4% to 6% band for the year. The NAV narrative is one which is obviously very important to Equites, it's the one that really speaks to the underlying business at the end of the day. And the positive side here is that for the first time in sort of -- since before COVID, we've actually seen the South African portfolio improve value, which is obviously very pleasing and is a function of some other things that will be spoken about a bit later in the presentation. And then in the U.K., we've seen the completion of the Hermes facility up in Barnsley and some of you would have been on the trip in the U.K. in June would have actually physically seen that property. The uplift in value on that was obviously very meaningful and mitigated a lot of the loss in value that the U.K. portfolio has seen in the period. What I would like to talk to on U.K. valuations, obviously, we'll be challenged while we discussed just now. Loan-to-value remains obviously really good, 33.3%. The balance sheet remains strong. Portfolio is getting bigger. It's more income-producing property coming through the system and then obviously, that married with a 13.9 years of lease expiry profile. We'll talk to the development pipeline a bit later on in the presentation. and the consequence of that development pipeline coming through in the next sort of, let's say, 18 months to completion, some of those leases are 20-year leases and there's some 10- and 12-year leases in there. Once those properties come through the system, we'll probably see that 13.9 year sort of probably go back closer to 15 again. But at the moment, it's still really powerful at 13.9 years. And then obviously, the portfolio from period so this is compared to sort of August last year, obviously substantially up to ZAR 26.3 billion. Key things that sort of we're fairly proud of. Obviously, the Canelands and the Wells Estate acquisitions with Shoprite are fairly important. I think they will also afford the opportunity to extend them. So the Canelands facility it's currently about 55,000 square meters and will become 90,000. And then the Wells Estate facility is currently about 15,000 square meters, and that would also become about 90,000 square meters. So great development pipeline coming through the system there. But also, I think it really talks to what I spoke about earlier, Shoprite, really believing in our relationship, believing in our partnership and those 2 properties, obviously, will go into the Retail Logistics Fund, which is our joint venture with Shoprite. From a treasury point of view, obviously, we run really well held treasury function within Equites. And we managed to close out a substantial refinancing position with AVIVA. On the back of Hermes being completed and we got a 10-year fix on that at a sub-4% interest rate, which obviously is very pleasing, and it underpins the U.K. debt profile, which is great. In terms of leases, as I said, this really talks back to the valuations as well. We've been driving extremely hard. I mean, as we stand at the moment, equities has no vacancy in its portfolio. Well, it does have a small vacancy actually in the U.K., but we -- it's like 1,000 square meters in the U.K. But in South Africa, we have literally no vacancy. What we're seeing is also where product has come vacant we've normally got 2 or 3 people that are wanting it even before it's become vacant. So the ability to negotiate sort of and hold your ground in terms achieving rentals has been, for the first time in quite a few years, and I think Riaan will talk to that in a bit more detail later, has been really positive. Obviously, we're really pleased with the empowerment transaction with Mabel, and we've got the Nedbank team here as well that we're instrumental in providing the funding to Mabel as well to undertake that transaction. So the fact that the Nedbank took a positive view on us working with the team and empowering a team, obviously, I think, gives us obviously a good feeling as well because Nedbank wouldn't have undertaken that piece of business if they thought it was a bad business. So I'm sure that the black entrepreneurs that will be driving that process and driving that business are going to be massively successful over time, which is obviously very important to Equites' position as, I suppose, a big brother within the property sector. ESG remains -- it's completely ingrained in our culture. I mean, we've been on this journey for probably about 3 or 4 years. We've employed a full-time ESG officer from the beginning of this calendar year. Quality of work that's coming through the system is just going from strength over and above that. Obviously, the freeing up of the 1 megawatt that went to 10 megawatts, which has become a 100-megawatt on the power supply. We currently sit with about 1.4 million square meters of roof space inside the urban age. And all things being equal within the next 3, 4 years, that will probably be north of 2 million square meters to cover those roofs with PV panels and create electricity inside the Urban Edge is a game changer. And the pleasing thing is that the city of Cape Town has obviously take a note of us and they've chosen us as one of their Guinea pigs in terms of the new energy weaning exercise that they will be undertaking. And that will open up, we believe, a whole new avenue of thinking, a whole new avenue of potentially revenue. Whilst we use the energy to provide energy for our clients as part of a carat to attract quality caliber clients, we believe that the quantum of energy used in our DCs is not massive, but our rooms are big. So the opportunity to over create energy is there and that, I think, in the next sort of 18 months, 2 years, is going to spill over into a new source of revenue for us, which I think could be very, very interesting. And then obviously, the development side of our business remains absolutely integral to our business in SA. We did 2 split buildings in the previous financial year, which were both let pre-completion. We're currently doing 3 developments. One of them has already been let, and 2 of them are basically under offer term sheets legally binding term sheets with all the commercial are sitting with our counter parties lawyers, waiting for signature effectively. So we hope by the end of October to have those closed out and once those are closed out, then we are already preparing the next round of speculative stuff that we will bring on to market. But our speculative business is always quite a muted amount of business. We do it because we feel that there are certain clients that do leave it to the last minute and we don't want to lose out on that business. But ultimately, our primary business does remain the pre-let business. And we will be undertaking over the next sort of 18 months in excess of 400,000 square meters of developments sort of if you add everything that we've basically included. On that note, I'm going to hand over to [ Van and Van ] is going to give you a little bit of an overview in terms of the research and the data coming out of both SA and the U.K.

Good morning, everyone. I'm going to start off with more of a global picture of supply chains and globalization. We're going back quite far in time to 1970. I think what's very interesting is how globalization have increased since then. But the pendulum is kind of swinging back and there's been a bit of stabilization that's around 2009 when the GFC came through the system. There's many reasons for that, including labor arbitrage, we had China opening their economy, other factors like -- that supported their production, manufacturing and exports. So there's various factors really driving that trend of globalization. But I think the world become a very interconnected place. And I think one thing that's very evident from the pandemic is that it's also -- there's also some issues with being this interconnected. And I think it's well documented at the moment that the textbook model of supply chains being low cost, lean just in time has really collapsed. It's all moved now to diversified supply chains, inventory levels really to kind of mitigate against any supply chain issues. Three common strategies that we're seeing from occupiers and businesses is really to shorten the supply chain, reduce its reliance on imports and to increase inventory levels. And I think on that last one, inventory it was also very evident in the [ JC ] listed retailers that released the results of the last month, how they increased inventory levels to kind of hedge against the global term well. And then we just expect this whole trend of near-shoring diversified supply chains and high inventory levels to really support demand for warehousing space. Okay. I'm going to just touch on 2 things in the U.K. logistics market. Graham actually is dialing in. They're obviously very plugged into the market on a daily basis in discussions with occupiers and agents. But I think 2 points that I want to really highlight is how broad the occupier market is in the U.K. I think a lot of market participants were very surprised how strong the takeup were is that red bar through essentially non-online retailers that's taking up space that increased by more than 50% in the first half of this year, where the portion of online related retailers really to actually the take-up has reduced by about 50% in the first half this year. So just really demonstrate our broad, the occupier base is in the U.K. It's not just e-commerce. And obviously, it streams like I said in the previous slide about near shoring, on-shoring and then also supply chain optimization as well as Brexit. Then my second point I want to focus on is property valuations versus rental growth. It's well documented. Yields have moved up about 50 basis points over this period. Assuming a static rent that equates to about a 10% reduction in your properties value. And it's very interesting that 50 basis point has also been applied to our U.K. portfolio valuation on a like-for-like basis. But we didn't lose 10% because of rental growth. So on a net basis, we've been down 2.9%. And we still expect very strong rental growth to come through the occupier market, lack of supply. And I think another new thing that's kind of emerging in the U.K. market that Graham and Ashley will touch on this, that speculative developments are starting to taper down. I think developers realize that they might not be compensated enough for taking on that risk due to increase in funding costs and the kind of turmoil in the market. So as a consequence, by next year, the new supply that will come into the market might be reduced compared to expectations. Then in the SA logistic market, I think the main theme really is the huge requirement from occupiers for modern DC space it's all driven by supply chain optimization, e-commerce really has a small impact on others mostly driven by Takealot. The national vacancy rate has been reported at less than 1%. Our portfolio is fully occupied, as Andrea alluded to, I mean it's 1.3 million square meters of space. That's really a lot of space. And I think it just, again, demonstrates the importance of a DC in supply chain optimization. And I think over the last 2 years, we had construction cost inflation between 30% and 40% on a combined basis over the 2-year period. And that has been passed into higher rentals. And I think that was a mix of a lack of available A-grade space in South Africa, it's really, really assisted rental growth this year. It's really essentially surged by between 15% and 20%. We signed 3 new leases over the last period that we're all at rentals between ZAR 80 and ZAR 90 a square meter. And that's all single-face buildings. And it just demonstrates again the level of demand in the market out there. And then the last point is just especially on the sustainability elements of these types of DCs. And it's exactly that kind of feel that we're playing with our national and multinational tenants. Thanks Andrea.

I -- we put this into the presentation. We had this in pretty close so some of you will have already seen it. And so I'm not going to labor on it too much. I want to go through it very quickly. But I think the points that we're trying to sort of get across when we talk to the market and the market [ size ], but is ZAR 80 or ZAR 85 or ZAR 90, is that a sustainable rent. And to be totally frank, it is and the reason it is, is that, ultimately, an occupier looks at what does he look at. He looks at his total cost of operation, and that's not just rent. There's a whole other range of functions that need to be included in that. The process of being in an equity specified building is that would a 15.5 meter clear. I'm going to go on to the next slide because obviously, it's sort of in a chart form, it's probably a little bit easier. And I won't go in order, I think the 15.5 meter is probably one of the most important metrics is most of our competitors will only go to 15.5 meters if the client specifies it upfront, and there would be a premium associated to that rental. From Equites point of view, that's our standard spec. We go to 15.5 meters. If you take a 15.5-meter building and you compare it to a building, which most of our competitors will build, we're probably between 12 and 13 meters, we get 2 extra racking positions into that warehouse as opposed to our competitors. The consequence of that is that ZAR 65 a square meter building will be more expensive to operate than a 15.5 meter building at ZAR 80 square meter, so that's the first point that needs to be taken into consideration. The second point, which is obviously quite important is that we took a view when the 1-megawatt process came into play a few years ago in terms of PV on the roof that we weren't going to monetize that at the time. We were going to actually use it as a carrot to attract customers. And that's worked extremely well, especially in an environment where you've got Eskom applying for 30% increases in electricity, all of a sudden, you've got clients that a, benefit from daytime sunlight and the reduction of the cost of electricity as a consequence. But also because we've put the PV panel, we've been forced to also put generators into our buildings. And the reason you do that is if you need to have for PV to work, you need to have a ring. If you don't have a ring, the PV basically switches off. So the consequence of that is that we're in situations now where even with load shedding, the generator comes on, but it's only idle. So it's not using massive amounts of diesel. And then the PV then is providing electricity for the building. So there's been massive mitigation in cost for a lot of our customers as a consequence of that. And the sustainability element is something and Riaan will allude to it probably in his presentation a bit further on is something that he's been using a lot in terms of what can we do to renegotiate a lease and extend. So a very, very key part of our business. Other key part is, obviously, the top one, 50-meter, 60-meter yards. So if you want to build something for Shoprite, reality is they need 60-meters yard because they're just the volume of trucks. I mean, stand to be corrected, but the Centurion facility, it's 165,000 square meters. I think it's got basically 2 trucks going in and out of that facility every minute. So you can imagine the volume of flow of vehicles, and that's 24 hours a day. So it's just constant. So if you don't have a commensurate yard space for these ever bigger trucks moving goods around moving them around and also storing and whatever, effectively, you lose the efficiency of actually having made the investment effectively. So another key metric, obviously, is the floor. There's 2 elements to the floor. It's not just the flatness of it. As you can imagine, if you've got folks at 13 meters in the air and the floor is not flat, those folks could be pointing down, could be pointing sideways pointing up. And if you're trying to you -- were trying to put those folks into the bottom of a pallet, 30 meters away, and they're not flat. It's a challenge. So you wouldn't want to be giving that to anybody to do. The other key metric is, obviously, is that with the height the point loads that come through the goods that have been stored on this rack obviously are elevated. And hence, you have to have a floor that can take those point loads in terms of the weight structures and all our floors are designed to 90-kilo meters as a minimum. However, by just putting base plates on the bottom of your racking, you can actually take that standard floor to about 110-Kilo meters which is also quite important. Other issues or other things that we provide, we provide external canopies of 7 meters in front of docs, but 18 meters in front of on-grade. That means when the interlinks come in, they can be offloaded in a thunderstorm at night in complete safety. And what it does is it just again improves the efficiency of the operation. You don't come to a standstill because of external circumstances. We also mechanically ventilate all our facilities. And the reason for that is obviously the natural ventilation obviously comes with a dust problem, but it also comes with a [indiscernible] problem. A lot of our blue chip clients, especially those in food, but not just in food, I mean, Adidas didn't take too kindly to the bird-proofing coming away and birds coming in and defecating all over their boxes so they ended up having to employ a whole bunch of people to actually wipe boxes down, which again is a cost to them, which they didn't want. I mean -- so those are examples of why and the learnings that we've taken from many years of being in this market, listening to our client base and looking to improve the product on a constant basis. Other key metric is we obviously are very proud of the fact that we have these fully repairing and maintaining leases so that we can pass on a lot of cost to clients. But passing on a cost to our clients, legally, yes, you can do it, but you also want to try and maintain a relationship with a client. And what we've seen, especially with some of the early buildings we inherited is that what happens is that sometimes clients feel that there were short changed in terms of how the development was executed and certain things are failing because they weren't done properly on inception. And it creates a lot of tension between client landlord relationships. So we've spent a lot of time actually thinking our warehouses, how can we mitigate costs for clients as much as possible? And what can we do in the original design and build to ensure that we reduce that. And there's 2 elements that we've put a lot of effort into. The first one obviously is the floor. So all our floors now are designed on a either a 24x24 or 32x32 grid with no shortcuts so we don't have any of these channels that need to be filled by polyfiller and that has to be refilled probably on an 18-month basis, maybe 2 years at most. What happens is a lot of clients don't do their maintenance and then the floor fails and then we get them to -- you've got to pay for the fixing of it and it creates a whole hots of tension by having taken that away and only having sort of armored joints, construction joints around each panel, what it's done is reduced the amount of time you need to spend and the cost of maintaining that flow. The floor cost a little bit more upfront, but over its 20-year lifespan, it brings so many benefits. And also, it's not just the benefits in terms of the cost of maintenance, but it's also when we're doing the maintenance, we have to shut down whole areas of the warehouse, which means that the client can't operate completely optimally because he's got a whole bunch of strangers in his warehouse sort of doing maintenance work. So that's a key element. The other big one, I think, which was an irritation for clients is on external facades, plaster and paint. In South Africa, we've got extreme heat and we sometimes get proper cold, especially up in [indiscernible]. The consequence of that is your plaster does crack and the paint fades. And every 2, 3 years, you've probably got to give it a refresher. And even though the office component is quite small in one of our warehouses, it's always going to be ZAR 300,000 ZAR 400,000 to do that. And ultimately, we've taken that all away. We don't use plaster and paint on any external surface. We only clad or we use glass and whatever. A consequence of that is it always looks pretty. It looks beautiful and you take away the maintenance issue and it sounds like a soft issue, but I can tell you, in client relationships, the team will attest to that. It really has helped massively. So -- and then obviously, the cladding -- sorry, the tilt-up panels are a security issue and also speed up the execution on the build. So these are key metrics in terms of what we do and why we do them. And I think our competitors will do some of these, but I don't think there's anybody in South Africa, who does all of them. The final point in terms of the development, a big issue around what we do is linked to land holdings. So as you can see, at financial year '21, we had over 112 hectares of land, a significant land holding. And as you can see, we're going to get to year-end here with 45 but on the basis that we've actually acquired another 16, that deal hasn't transferred yet. It's waiting for a couple of regulatory things to be put in place. But what we're trying to show in this chart is that we couldn't have done the Shoprite deals. We couldn't have done the TFG deals. We couldn't have done the Sandvik deals if we didn't have this land we put ourselves in a position to execute on those deals. And we put ourselves in a position to be able to get 20-year leases and 12-year leases and 15-year leases. Without that land, we could have never done that. And what underpins our very business are those leases. It's collecting money on a monthly basis from blue-chip tenants for a long period of time. And I think the usage of the land really attests to the success of that strategy. It was a bold strategy. The consequence of it is that we are continually looking to add portions of land where we think it's the right areas. We believe that R21 has been massively successful for us. It's a key area where we would like to look to sort of improve and increase our footprint and the Meadow view area, sort of the long meadow area has been successful for us. The engagement and the joint ventures that we've done with the attack team of [indiscernible] have been really, really positive. And then what we've got at Lordsview, we slowly started crewing up that land as well. So we're creating these park environments where we control a lot of the area we're very influential in homeowners or sort of property owners associations to ensure that commensurate security and maintenance and environment is kept. And all this feeds to creating a really high-caliber environment, it's industrial. But yes, if you come to some of our parks, you'll be blown away by how beautiful they are and how well kept they are. And what does that do? It talks to an international client base that feels safe working in one of our buildings. As you can see, the consequence of all of this is that our land holding is now is less than sort of between 2% and 3% of our portfolio. The intention is that our portfolio is only going to get bigger if we were to be -- put ourselves in a position to have 100 hectares of land again at some stage, whilst it was probably 6% or 7% at the time in the future will probably maintain and stay at 2% or 3% or 4%. So the intention is to constantly look for the right parcels of land and look because that really is the future of our business without it. The ability for us to constantly bring brand-new product and maintain the longevity of leases and keep that blue chip client in our base, obviously, will dissipate. On that note, I'm going to hand over to Riaan and he can take you through what happens every day.

Thank you, Andrea. I think this slide summarizes our impeccable property fundamentals. And it is these fundamentals that ensures the sustainability and predictability of our rental stream and I think also it illustrates the strength of our core business. Now in these environments, inevitably, we're all getting phone calls inquiring about our share price and certain macroeconomic conditions but I think this shows that our business has never looked better. We've managed to grow our portfolio significantly over the past period. But with that growth, we've maintained and improved our will to a level which is unrivaled. Our vacancy level shows that our business partners are happy to do business with us and when our leases do expire they want to stay in our facilities, and we are continually attracting more and more A grade tenants that are obviously in line with what we want in our portfolio to ensure the sustainability of the income stream. Fortunately, when we look at our pipeline, we are well placed to continually improve these fundamentals. And we really think that, that bodes very well for the future. This slide talks to the portfolio split, and you'll see that we're very much still a South African dominated business with 62% of our portfolio being SA based 53% are logistics, South African logistic assets, 4% is landholdings and 4% is developments currently underway. The U.K. makes up 38% with 34% being logistic properties and 4% being land. A couple of years ago, we thought that the U.K. portfolio will start dominating. This has not happened primarily because of the strong growth of our South African portfolio. As Andrea showed you in the previous slide, we've been very, very successful in rolling out pre-let developments to blue-chip tenants. And we've also made some very important and strategic acquisitions over the past 2 years through the acquisition of the DSV campus as well as our -- as the growth of our Shoprite portfolio. So we can see when we look forward over the next 2 years, that South African part of the portfolio will continue to grow very strongly. I mean, it's already in the market that we are concluding a 90,000 square meter agreement for a 90,000 square meter facility for Shoprite at Riverfields. And there are also many other deals that we'll be announcing over the next period. So the business is certainly very well positioned to capitalize on the many opportunities that we have in both SA and the U.K. We are continually focusing on improving the quality and longevity of our income stream. And we do that simply through 2 methods. Firstly, by extending leases when they come up and we are leasing properties to tenders that doesn't meet our requirements to replace them with A-grade tenants and then being very active through our development pipeline in concluding pre-let agreements because the benefit of a pre-let as opposed to speculative development is that in a pre-let, you're working with the tenant the tenant is investing significantly into the building. The building is being designed for that tenant, and it's normally a long-term view of tenant tax. And then obviously, it is in the interest of the tenant to get the certainty of a long-term lease. So also, we are fortunate in a position that we -- that only -- that less than 10% of our leases are expiring over the next 2 years. And given the nature of our business -- being business based on single-tenanted buildings. We are able to meet regularly with our tenants, and we have time on our side to ensure that we understand whether the building suits the needs of the tenant, whether it may be too small, too big. And also, we have some insight through these meetings on how that business is doing. And that gives us the opportunities to be proactive and to -- even if a tenant may need to vacate the building that we've got a year to 18-month notice to ensure that we can replace that tenant. Now this is the new slide. And I think when you look back over the last 8 years, the market has supported us tremendously. We've raised more than ZAR 10 billion of fresh capital over the period, and that's enabled us to grow our business significantly. But we know that we are -- every analyst every shareholder looks very carefully at how the capital is deployed. And we've just taken the last 2 years to show you that we've deployed close to ZAR 11 billion into our business, and we've converted that allocation to product with an average lease profile of 16 years. Now that illustrates that we have kept our discipline in sticking to our very, very strict investment criteria and that in deploying this capital, we've continually improved our property fundamentals because it's very simple. The better the fundamentals, the better funding rates warranty like an access from the debt market, the more participation we get in our TCM programs, and ultimately, the better our shareholders' return becomes. So it's -- we always say how simple our business is and actually that illustrates the simplicity of the business and also the strength of where we at, at the moment because of what we've done in the past 8 years. Yes, the rental growth, I think, in the pre-close and also Andrea strongly alluded to the fact that we are now seeing significant rental growth in the South African market. Around 15% to 20%. We've concluded leases at over ZAR 80 a square meter in all 3, the centers were operating in, Durban, Cape Town and Joburg. We've listed about 8 reasons there, as to why we're seeing the significant growth. I want to just very briefly pause on 3. Firstly, the availability of the type of facilities that we are developing is at an all-time low. Secondly, the ESG requirements have all of a sudden became very, very important for all our tenants. If you have 97.5% of A-grade tenants, mostly multinational, South African listed companies. The incentive schemes of the executive are being linked to ESG Companies have got global targets on emission on doing cleaner business and the facilities that we've created lends themselves to improving the ESG elements. And we've invested ZAR 3 billion to ZAR 4 million over the past period in investigating, getting experts on board to ensure that we can improve the ESG credentials of our building. Then obviously, through COVID, not a lot of decisions were made. Company set on their hands because it was very difficult to predict where the world will be going, and we're now seeing that as a result of that, people are again focusing on the optimization of the supply chain. And the result of all of this is that we see that the growth and we see increasing demand for the products, and that's why we've been able to convert our land holdings into income-producing facilities during a very, very quick period. I think -- that's probably one of the slides we're the most proud of. I mean, I think it illustrates the strength of our business. Thank you very much. Laila, people came to listen to you.

Thank you very much. Hi, everybody. So Riaan said, our business is really simple. I'm going to take you through some really simple financial metrics. I mean if we just start off I think Andrea alluded to it right at the beginning. We've grown distribution per share by 4.1% over the prior comparable period. This is in line with our guidance, and we're very proud of a very stable distribution per share growth. Our NAV per share is up by 0.8%. Now when we look at NAV per share, we're comparing this to the Feb '22 results. Our NAV grew from 18.61% to 18.77%. And we'll talk -- we'll touch a little bit around the factors and what drove the NAV per share growth. We're maintaining a 100% DPS payout ratio. Our LTV sits at 33%, which is conservative. It's ticked up slightly from Feb, but still very well within our target range and then we had ZAR 1.4 billion in liquidity at 31 August. So if I jump straight into the balance sheet, I'm going to touch on a few items. If we look at investment property, you'd see that investment property moved by about 3% from Feb to August. Now it may seem like we didn't do an awful lot I think what you'll see later on when we touch on the pipeline slide, you'll see that a lot of the transactions we've been working on will actually come to fruition in the second half. So you'll see a massive jump in that IP line in the second half. If you look at trading properties, you'll see that there was a slight decrease. Now trading properties is something which has become a feature on our balance sheet. And it relates to the turn key developments which we do in the U.K. The reason for the decrease is we sold the land at Hoyland plot-2 to Arrow, and that just resulted in the decrease. Cash and cash equivalents at Feb, we were sitting quite cash flash because if you recall, we did an equity raise just before the period end. We try to manage our balance sheet as lean as possible, and that's why there was the decrease in cash and cash equivalents. It doesn't have any bearing on our liquidity position because we still have a significant amount of undrawn facilities. Held for sale. We don't have any assets held for sale at this point in time. We disposed of the assets to Mabel, as Andrea alluded to at the beginning of the presentation. And then in other assets, there's one line item which sticks out in particular, accounts receivables increased quite dramatically. Again, that relates to the arrow development, the turn key development at Hoylands. During the construction phase, we are spending the money. And at the end of the construction, we'll receive all of that cash from them. That will happen in December -- December '22, Jan '23 definitely before we report year-end results. If we look at loans and borrowings, it's increased from ZAR 9 billion to ZAR 9.3 billion, and that's in line with our capital structure and how we fund the increase in investment property. And then just one other point right at the bottom, the noncontrolling interest, as you all know, we have the joint venture with Shoprite. We have the joint venture with EPPF, and you'll see that, that noncontrolling interest line item has grown slightly as a result of these joint ventures. There was a note -- a further note and the equity to shareholders, I thought we should just touch on that. During the 6 months, we've had no accelerated book build. The only increase relates to the DRIP, where there was some take up on our reinvestment program as well as the shares which were issued in terms of our conditional share plan scheme. So not too much of an increase in that number for the period. If we touch on the distribution segment, again, I'm just going to touch on some highlights. If you look at gross property-related income, that includes the revenue as well as income from foreign exchange derivatives that includes cross-currency interest rate swaps as well as the foreign exchange hedges over the period. Property-related expenses has grown in line with our -- the growth in revenue. However, it has ticked up slightly as a percentage. And if you look at the income statement, you'll see that. The reason for that increase is we have undertaken sustainability audits at our own cost. We've been speaking about these for quite a while. So that's sitting in there, which is a one-off for all intents and purposes. We've also increased the frequency of our valuations. As you'll recall, we now value our properties externally every 6 months. Unfortunately, those services aren't very cheap, and that's now sitting in our property-related expenses as well. And then there's some additional property costs mainly one-off, which we think will be washed out or flushed out after this period. Our admin expenses are reasonably flat as Andrea alluded to, we are opening an office in the U.K. We don't expect this to jump dramatically, but there may be a slight uptick as a result of increased administrative costs both in South Africa and the U.K. If you look at the net finance cost, that number is increasing. As you know, and we've been saying this for a long time, as we grow our portfolio and particularly, we grow the percentage of income-producing assets in our portfolio. We expect that number, that negative number to keep increasing. So you'll start seeing that -- that net finance cost naturally ticks up over time. The other income or loss, it's a small item relates to some insurance recoveries, which we include in that line item. And then the antecedent dividend is really tiny. As I said, there wasn't -- there weren't many share issues during the period, and that results in a small antecedent dividend. We then adjust for noncontrolling interests. We arrive at our distributable earnings, and then we get to the number that everyone cares about the most. Our distribution per share of ZAR 0.815. My team has said to me that in every presentation, I say we love our bridges. I'm going to say it again. We love our bridges because it illustrates quite nicely how we arrive at our DPS growth. If we just touch on a few key items, we are a property business. And fundamentally, we believe that our underlying property should be delivering the majority of our DPS growth. So if you look at it, we had SA like-for-like net property growth of 6.5%, which contributed 4.6% to our DPS growth. There was some portfolio activity during the period. There was the disposal of the assets to Mabel. There was also a development with a small rent free, and that detracted 0.6% from our DPS growth. U.K. cash flow hedging, I think [indiscernible] has done a phenomenal job. This is our -- where we hedge our distributable earnings. If you remember, we have a progressive hedging policy, if you're nodding at me from the front and we basically trade [ FECs ] over different buckets of our distributable earnings. And that worked out quite well for us. It added 1.2% to our DPS growth. Funding costs, unfortunately, rates have moved up dramatically. Over the 6 months that we're looking at, rates have moved out by 150 basis points in South Africa and 125 basis points in the U.K. Now whilst we all are hedged, we aren't fully hedged and as a result of the unhedged portion, those funding costs have reduced our DPS growth by 1.3%. And then there's some other items which takes us to our total DPS growth of 4.1% for the period. The LTV bridge, I'm going to touch on a few key items. There were some developments during the period which we funded out of our debt facilities that increased the LTV ratio by 1.8%. There was then the FX impact. I'll touch on that a little bit more in the NAV, but that also increased our LTV by 0.6%. Then the SA disposals, we spoke about the 6 assets which were disposed to Mabel that reduced our LTV ratio slightly. And then the portfolio uplift and reduce the LTV ratio slightly. There were some other items which pushed that up and that takes us to our LTV ratio of 33.3% at period end. The NAV bridge I think the most pleasing point on this whole slide is that for the first time, we're starting to see some SA portfolio uplifts. So what we saw is that on a like-for-like basis, the SA portfolio was up and that contributed ZAR 0.32 to NAV per share. U.K. developments, this block refers only to every to the Hermes uplift. If you recall, we completed this development during the period, and that's the fair value uplift on Hermes. And there are some other options which we had to fair value as a result of our U.K. restructuring, very small that also sits in that line item. On a like-for-like basis, the U.K. portfolio was down Andrea touched on it, where there's some pressure on U.K. valuations. What we found is that during the period on a like-for-like basis across the U.K., prime Logistics yields moved out by 50 basis points. In our portfolio, some of that was offset, however, not entirely, and that resulted in a 26% decrease in our NAV per share. The net FX impact, if you think about our business, we have U.K. assets. We then have in-country debt. We have some cross-currency swaps, which adds to the synthetic gearing. But overall, 40% to 50% of our U.K. business is still relatively unhedged. So when the currency when the Rand strengthens as it did over the period, that will result in a decrease in the NAV. And over the period, that was a 26% decrease in NAV per share. Then there are some other items which take us to ZAR 18.77. I'm not going to touch on valuations too much because I think that we've done an awful amount of work in terms of making sure that our valuations are as transparent as possible. I just want to reiterate that 100% of our portfolio is valued externally, both in South Africa and the U.K. at Feb and in August every single year. What we do see and what I do want to point out is that if you look at the SA valuation and you look at the average Rand per square meter, it sits at ZAR 12,300 per square meter. That's probably at or below replacement costs. So if you were just to do an overall reasonability test, I think it bodes well to where our valuations are sitting right now. In the U.K., what's always interesting for us is that if you look at a value Rand per square meter value in the U.K., it's more than 3x that of South Africa. So when we're expanding and growing in the U.K., you can see the clear shift on a Rand per square meter basis. Okay. I thought that it was interesting and very pertinent to just touch on how we're managing a very challenging macroeconomic environment. I'm not going to touch on all of it, but I do want to highlight a few key areas. There's an undoubted increase in the cost of funding. Rates are moving out on a daily basis. We don't know where base rates are going to settle. And for us, it's very important to stick to our treasury policy. 86% of our drawn facilities are currently hedged, and we are looking for opportune moments to increase that hedging where it makes sense. As the bankers in the room know, it's incredibly expensive right now to increase that hedging. But we are looking to take advantage of opportune moments as well as other strategies. So historically, we'd look at interest rate swaps only. Now we're looking at caps and other options and strategies, which make more sense for us. So a very keen focus on just managing that cost of debt. From a liquidity point of view, we hold significant funds and in our cash reserves and buffers and undrawn facilities. And then funding the pipeline, I don't think it's a secret that equity raises are off the table right now given where our share price is. So we have to think about alternative ways to fund our pipeline. We are actively looking at our entire portfolio, identifying areas for disposal, whether it be in the SA portfolio or the U.K. portfolio and alternative strategies to fund the pipeline. Economic and valuation uncertainty. We don't know where valuations are going to settle, particularly in the U.K. So what we do on almost a weekly basis is just stress-test our U.K. valuations, make sure that we're within ranges for covenant perspective, which is not a problem for us at all, but also just to test where our LTVs will go given various scenarios. And for all intents and purposes, we aren't concerned about where those will end up. From a capital allocation point of view, Riaan, and I'm going to go back to this because Riaan said our business is reasonably simple. We have to be incredibly mindful of how we allocate capital. I think that's the single most important thing for us to do right now. When the cost of debt and equity moves, we have to be very mindful about how we price future developments and how we make sure that those still meet our minimum hurdle rates. So at the moment, all developments going forward are assessed based on what we expect our cost of capital to be given the very challenging macroeconomic environment we faced. Okay. Treasury management I'm skipping the first slide because I want to point out a couple of highlights. [indiscernible] is looking at me because I skipped over that slide. But I think very importantly, what's important to us, firstly, is that we're still very comfortable with where our LTV is even though it's moved from 31.5% to 33.3%, we're very comfortable with where it's at. We still that we have a far room to go. We're comfortable within the 30% to 40% band. And so 33.3% for us is incredibly manageable. And we think that even given our pipeline, we're very comfortable with where that will go. The other point that I just wanted to draw your attention to is that if you look at the ZAR all-in cost of debt and you look at how it's moved. It's moved from 7.25% to 7.78%, so it's moved by about 50 basis points in South Africa despite an increase of 150 basis points in the base rate. So I think we're doing an incredible job in terms of just mitigating the increase in the cost of debt. And the same thing for the GBP all-in cost of debt. Again, I think it was a 25 bp movement in a period where there was 125 bps increase in the Bank of England base rate. And then just in terms of the percentage of total debt hedge, I did allude to it earlier, 86.2% is hedged, and the average term of hedges is 2.4 years. I have to note that this is before we concluded the Aviva facility. And that actually is something which I should have spoken about. But just we managed to conclude an Aviva facility on the 31st of August. Now the reason that this is important is because not only did we upsize a significant U.K. funding facility. We upsized by about GBP 40 million. We also managed to secure the facility at an all-in rate of under 4%. Now anyone who's been watching U.K. gilts because this facility was linked to U.K. gilt. It's a 10-year fixed facility. Anyone who's been watching U.K. gilt understands that, that is an enormous feat for us. We'd love to say that it was all brilliant planning, but I think it was brilliant planning and a little bit of luck. So we're very comfortable with where we've managed to lock in that facility, and we think that it will take us through an incredibly turbulent time in the U.K. where we don't have to think about repricing and it's locked in and we have that sitting there for 10 years now. Okay. Quickly from an ESG perspective, Andrea said that ESG is ingrained in the very fiber of what we do. I think it has to be as corporate citizens, I think each and every one of us sitting here has heard ESG every day for the last year. But what we're incredibly proud of is that if you look at how far we've come over a reasonably short period of time, not to illustrate, that first point says that we've generated 8.3 megawatts of solar energy or renewable energy in the portfolio in the first 6 months. We've added 5 new solar plants to our portfolio in the last 6 months. We started off the period with 8. We've now added 5 more, and this is on -- mainly on existing facilities, some new facilities and this is a 36% increase in the amount of solar that we're generating over the first 6 months. In no way is this slowing down. In fact, it's speeding up. So what Riaan and the team do is, on a regular basis, go to engage with tenants to understand where this is feasible, where they are, where ESG is an imperative for them, and we try to come up with solutions that are mutually beneficial to both us and to the tenant. So I think that where we're going in terms of renewable energy generated is phenomenal. As a side note, we managed to reduce our carbon emissions or to avoid carbon emissions of 3,189 tonnes of carbon. All of our new builds, we've said this time and time again, all of our new builds are either EDGE certified or BREEAM. I think a new development is that the majority of our buildings are actually advanced stage which instead of being 20% more efficient, it's now 40% more efficient. So we are trying to push the envelope. And then social is very important to us, and the social element of ESG often gets overlooked. For us, 71% of our SMMEs in our AmpCore Incubation Program is female owned or driven. And for us, that's incredibly important in terms of narrowing the gender gap but as well as making true and meaningful contributions to empowerment and upliftment in the country. And then we had a sustainability linked loan with Standard Bank, as you would recall, One of those was to increase our ESD spend with SMMEs. We've managed to blow that out the water, and we've increased our spend by 122%. So we've met all of our sustainability-linked targets according to that facility, but I thought that this was an important one to highlight. I spoke about this in the pre-close. I'm not going to speak about it too much more, but we sort of wanted to illustrate that we are sitting with our tenants, engaging with them, understanding what their requirements are and really offering them a number of solutions when it comes to renewable energy. I think when we have one-on-ones or post this presentation, we can chat about this a lot more. For now, I'm going to hand over to Ashley and Graham.

Thank you, everybody. Welcome to U.K. [indiscernible]. Here's Graham and Ashley. So look, [indiscernible] We are just going to talk through a few slides a bit of an update on some of the sort of core assets and the portfolio actually sort of worked through oil, first of all. But before we sort of talk about the scheme of Hoyland. I thought I'd just going to provide the U.K. on where we see the market at the moment. Wynand and Andrea sort of touched on a few sort of points this morning. So again, the clear sort of issue in light of the market at the moment is see where capital markets are the last couple of months have clearly been challenging that the capital markets are in a bit of turmoil. The big sort of western economies are clearly trying to combat inflation, and that's sort of leading to interest rate rises, which is causing the debt buyers to have increased costs and look closely at that pricing. So there's clearly some uncertainty around the capital markets at the moment. I think Laila's touched earlier but that's probably led to a sort of 50 basis points decrease in or increase in yields. Which I would tend to agree with. But that's really one part of the story. Yes, yes, there is a price correction going on at the moment, and there's a bit of uncertainty in the capital markets. But I think it's important perhaps to sort of reinforce the occupier side, where you see no downturn at all in demand for logistics space. Probably quite conversely, we're actually still seeing strong demand and continued take up. And there's probably a number of drivers for that. I think the U.K. economy while possibly heading for a recession or are there some days are suggesting that we might avoid that. It is still performing reasonably well and Internet sales are continuing to sort of drive demand. But as Wynand sort of touched on earlier, that is only one aspect of the U.K. market. The market is a lot broader and stronger than that and we're continuing to see a lot of onshoring. So there's a lot of occupiers who has other space abroad, whether it's China issues, whether it's Ukraine, whether it's Brexit, those sort of issues are leading to sort of increased levels of onshoring in the U.K. And I'm thinking if you then look at a number of sort of big global sort of customers that we have a good relationship with. There's been a lot of talk in the press over the last 12 months about where Amazon are. We're quite close Canelands we talk to them regularly and believe they're supposed to starting to look at earlier again and talking to us about deliveries through '25 and beyond. And then I was with the [indiscernible] just yesterday, who still have a mandates to replace their aging portfolio in the U.K. with more sustainable buildings as well as attracting new customers. And I were telling its only yesterday that they believe, that they're probably looking at take-up levels of 2 million to 3 million square feet per annum, and that's just one major customer. So I think the U.K. market is really sort of balance in 2 halves. Yes, there's a bit of uncertainty around the capital markets, but the occupier side is still very strong. I think then you add into the mix as well, the planning system in the U.K. continues to be challenging and it's slow and then that leads to a sort of very constrained supply of land. But then also, I think the spec development sector has started to sort of slow up. So there's not a lot of spec development sort of coming through a number of spec schemes that are being put on hold. So if you are able to advance sites through the planning process, put your infrastructure in and you're ready to talk to the market, ready to talk to customers, we believe that you're still in a very, very strong place. I'll talk a bit at the end of the presentation about our portfolio because that's important as well about pricing, but I'll refer to that at the end of the presentation. So perhaps if we just go through some of the sort of key sites, and I think the first one is Hoyland, I'll ask Ashley to talk through that.

Okay. Thank you. So good morning, everybody. So I think we'll have a look at the first slide, a picture of the Hoyland-EVRi or Hermes is now rebranded to EVRi. This building, some of you may have seen this on the U.K. [indiscernible]. It's 31,000 square meters. This is the third distribution hub, that they have -- that Hermes-EVRi have put into their network. This one is just in Hoyland, which is just out of Barnsley in the North of England, complementing 2 others of which we built the one in Rugby, which is their Midlands center. So -- and this is obviously critical to the every supply chain. It's going to be -- they're fully fitted out there. They're sort of mobilizing it now and it should be fully operational before Christmas. So if you just go to the next page and slide and have a look at some of the metrics. This reached practical completion in July. It will be fully operational at the end of the year. It can do -- to give you a sense of scale, it just 1.1 million parcels a day, and those parcels could be anything from a cost of purview up to is things like sofas and beds that they will actually push through this facility as well. Equites got the benefit of a 20-year lease with 5-year rental increases. And on completion, it had a capital value of GBP 107 million which gave a valuation uplift of 43%, taking into account its development profit that Equites had as well as giving a yield on cost of 5.1% and net initial yield on completion of 3.3%. So -- but -- what was important is we think this is already significantly reversion in the market. So the rents are really moving on back to Graham's point about supply and demand. So the net -- sort of the implied equivalent yield, we think, is currently around 4.5% to look at current market rentals in Barnsley. So as you can see on the plan there, there's actually the 3 schemes. Then the other 2 are with EVRi partners. So if we just turn to the next slide, we've got a CGI of what the development will look like completed. So we've got the EVRi building at the back there. And then in the foreground, we've got the 2 sheds that are being built for Arrow Capital. So if you just turn -- and all the roads that you can see there, they've been put in as well as part of the infrastructure package to bring connectivity to the motorway, which you can sort of see running in the background along the back of the EVRi unit. So if we just turn to the next page, we great, we took these photographs on a rather dull day in the North of England. But it gives you a sense of those buildings going up. You can sort of see the one is following behind you with the steel cladding on the back one and just the steel units on the front one. So those have taken about a month ago. So they're going to be -- that value is going to be completed by the end of the year. So we should -- as Laila said earlier, we should be getting our profit and cash, delivering GBP 5 million of profit and GBP 20 million of net cash to Equites probably sort of flowing through in January before year-end. The -- those units just [Audio Gap] from our perspective, an Equites' perspective, those are fully derisked now. Those units have been sold. So whilst we are funding the development, there's no risk of tendency or occupation of leases. There's a balancing payment on completion, which will come into the group and the occupation risk and getting tenants lies with the funding partner, Arrow. Okay. Turning to the next slide. This is a Basingstoke, which probably won't be -- which is familiar to people in the room. We've talked about this for a while, given going back to the history of planning and check as history of planning. But this is 3 units. We sort of turn to the master plan on the next page. So we've got these [indiscernible] for sold as the land sale to Lidl. And again, Arrow partners are under contract to purchase Plots 2 and 3. The planning here is that it went forward in May this year with an officer's recommendation for approval and such as the politics of planning in the U.K. but actually frustratingly, got turned down on 2 arrow technical point regarding visual impact and landscaping both of which we think we can overcome at appeal. So we are sort of going for a technical review with a planning aspect to it. That hearing will be held throughout October with the decision expected in early December. So on or around the 6th of December, we should get a decision on planning here. The -- as I said, the land for Lidl is a land sale. We have to put the infrastructure in before we get payment, but that is a sale that's contracted. The Plots 2 and 3, and again, that is subject to an announcement by [indiscernible] on the SENS last night, there's a dispute there. They are under contract but there's a dispute, but a formal notification provision was not met and they're challenging that contract. We disagree with that, and we've agreed -- both of parties have agreed to enter into an arbitration process to understand the outcome of that. So I won't say any more about that. Obviously, it's commercially sensitive, but I'm sure we can -- Andrea will discuss that with those people that need to. So that's facing so hopefully, we'll get good news on that at the end of the year, and we'll be building that and progressing that through next year. I should have said at the start, we own 1/3 of the land there and 2/3 in to auctions. So we are exposed because we've applied 1/3 of the site and then 2/3 is fully under auction.

Okay. Thanks, Ash. So if we turn to the next slide, there's a CGI of our scheme at Newport Pagnell, which is Milton Keynes. You can see the M1 to the left-hand side of the scheme. I hope you guys are familiar with the M1, but it's the main or South Ontario route that links the [ Northerns ] and the Southeast and London. So prime size, this is a scheme we've been working for a while, and we successfully took it through planning in the summer. We got a positive outcome and committee, and we're just waiting for the judicial review period to expire, which expires in about the middle of November. If we actually just turn to the next slide, a few sort of bullet points and signed plan of the scheme that we got consent for. So we're actually, as I say, we've got outlined permission. We're now working through what we call reserve matters in the U.K. So the scheme has outlined, which deals with the principal of development and the quantum development. So what we're now working through is the reserve matters, which is things like the color of the cladding on the building, the sort of level of landscaping and sort of -- sort of minor -- sort of that matters like that. So we're sort of currently working through those with the offices of Milton Keynes council. We have significant interest in this scheme. We're currently discussing terms with a number of parties. So we firmly believe that towards the end of this year, we will be able to announce a deal here, but we have a lot of interest there, and there's a number of options that we can look at, and we're just exploring those with our partners in South Africa. The capital value there, we believe, is in the order of GBP 200 million, which is a significant scheme for us in the U.K. Yes. And the last bullet point here is we have a lot of interest, as I saying, and we will work through with the Equites team, what we believe is the right deal for the joint venture and also for the Equites shareholder base. So we're very excited about Newport Pagnell. If we can turn to the next slide, please. You probably have seen this sites for -- it sort of sets out the U.K. portfolio over 13 sites that we sort of have been working on for a while now. The sort of 3 bullet points on the left there, just highlights 1.4 million square meters of floor space, 15 million square feet with a growth development value in the order of GBP 3 billion. So a sizable portfolio. And where the team are sort of making really good progress on a number of opportunities. I think a few sort of highlights without going through every single scheme that is sort of listed there. We believe that the scheme of Thrapston will go to committee in quarter 1 next year with an officer recommendation for approval. It's well known now because it's been part of the planning process that we have DHL lined up for kind of size of the pre-let of about 800,000 square feet. So we're continuing to push sort of discussions with them and agree commercial terms which we're just sort of reviewing at the moment. We're waiting really for plans to come through, and then we will then know certainty at the timing of the scheme and what the build costs will be. So we haven't agreed commercial terms with them yet because we don't want to, but they are supporting the planning process and very much want this building as soon as we can deliver it. So that is a really exciting opportunity. But all the other schemes, we are continuing to grow this through the sort of planning process. We have quite strong interest in a number of schemes. Peterborough, we have 2 occupiers wanting to come in and support the planning process there. I think I've touched on previously when I was out in South Africa about scheme, Egham, which is actually going to be a data center opportunity. We've now selected a party there probably towards the end of the year, we'll be looking to announce a deal there, which is sort of concluding commercial terms with that party and we'll then sort of take forward a planned implication next year with them supporting us. So we're still very pleased with where we are with that portfolio. One, I touched on it at the start of my sort of slides was just where we are with [indiscernible] and where we are with the market. I think it's important to understand that most of those sites are held under what we call auctions. So if there is movement in the capital markets that affects land values, then we will draw down the land at the time we had planning. So we're hopeful that we can take some of these sites forward through next year, we will be drawing those sites down off the current market values, which are sort of 30% perhaps lower than where they were at the beginning of the year. So that's quite an important point. And I think what's also important is we firmly believe there's going to be a lot of rental growth in the U.K. market. We're seeing strong rental growth sort of 10%, 15% over the last 12 months. But we believe construction costs will probably level off. The capital markets are what they are, and there's been a bit of movement in those. But the only sort of piece in our answer that we have some control, I really like is rents. And everybody we speak to is also the opinion that we're going to continue to see strong rental growth. And that really comes down to the supply and demand dynamics as well that there's still strong demand, non-water supply. So we believe we can really move those rents on. So we believe that portfolio is in good shape. And I think when we go through 2023, if we can get through announcing deals on Newport Pagnell, hopefully resolve and overcome planning at the Basingstoke, [indiscernible] capital out of those opportunities, we believe there will be significant new opportunities through 2023. And we also believe that the state of the current market will mean that those opportunities will probably be low capital-intensive opportunities. So by that, what I mean is we're not having to buy land and take significant planning risk, we can control that bar options again, where you've got a fairly low capital entry to control that option. And then you take it through the planning process and draw down [indiscernible]. So we believe there will be further opportunities now that a number of overseas entrants are perhaps pause. So yes, we're sort of excited about the current portfolio and the opportunities that we see in front of us. So that probably includes the U.K. presentation, and I'll come back to the team in South Africa.

Graham, that was very insightful. And obviously, from our point of view, when we were with Graham and Ashley and the rest of the team a couple of weeks ago. And for all its challenges, we still remain massively positive. U.K. We just see the supply side really coming towards us and assisting us in growing our business. So let's just run through a final slide effectively in terms of what are the prospects for us. As you can see, there's significant developments coming through the process. As I said earlier, in terms of -- sorry, Parow spec and Meadowview Site 14 spec, those 2 are currently in full-blown negotiation. The Jet Park number 6, that was a spec we've signed a deal with this finnish company called Normet which is great. Cargo Compass is complete, TFG's extension is complete. And obviously, the TFG extension on that particular facility is to accommodate also a lot of their furniture business, which will be going into that facility. And then the Riverfields facility will be looking to accommodate a lot of movement of their inventory holding away from Cape Town and basically bringing it to Gauteng and that's a function of their business probably being 70% in the Greater Gauteng region, but they were historically warehousing sort of 80% in the Cape, which occasioned, a, a massive supply chain in balance. So time it took for an order to be fulfilled in Joburg from Cape Town was becoming too long. And obviously, the cost of it was just going through the roof with where diesel prices are going. So that's interesting. I think the one that we sort of put in here and [ Peter ] [indiscernible] alluded to it in his presentation that there's a new 90,000 square meter facility coming in Joburg. And that's what we call Shoprite and Riverfields. The commercial terms of that dealer basically have been agreed. We're just trying to finalize the last bit of dotting line crossing tea. So it's not completely signed off yet and hence, this is the first instance in which we are sort of putting it out there specifically, if you like. But again, it's a testament to Shoprite trust in us. Shoprite right wanting to deal with us. The difference with this one is that because we control the land in Riverfields, we are retaining 100% ownership of this one. It's not going into our joint venture platform. And again, it's once signed, hopefully it will be a 20-year lease with the same sort of metrics as the other ones. We've got Canelands and Wells Estate. I think we've spoken about those extensively. The other transaction that we did was actually an existing building, which has led to Motus, which we've actually bought back from. Strange enough, that was a building that Motus bought from us. It was in the original [ Interprop ] portfolio transaction that we did in 2015. They had an option to buy. They've decided to exercise it. And so we sold it to them and we've actually bought it back, I think 5 years later at the same price we sold it to 5 years ago. So great building, great location. We control the home node. And hence, it was important for us to get ownership for that reason. In the U.K., obviously, Hoyland Plot 2, you saw the photographs. PC date is set for the 17th of December in terms of my latest construction program that I've received, we're still all on target. So that's exciting there. And then obviously, Basingstoke Plot 1 and Basingstoke Plot 2 and 3, Plot 1 being the Lidl transaction, should we get the favorable outcome in December on the planning and we're very hopeful that we will get that and we will kick into gear in the new year. Post that, there will be a 6-week judicial review period, which will take us probably until the end of January and then we will kick off everything effectively from February. In terms of Plot 2 and 3, we did put out a notice last night in terms of the cancellation note that we got from Arrow. Obviously, we fundamentally disagree with the cancellation note. And we will go through a process now in arbitration to try and resolve it. And I'm fairly confident that reasonable heads will come to prevail in that process. I think to say more than that at this stage would probably be inappropriate. But notwithstanding that, I suppose, your worst-case scenario is that if for whatever reason the cancellation was upheld, we would be left with 18.7 acres of land in a prime spot on the M3 on the junction which will be extremely valuable and life does go on. The sun will come up tomorrow morning and then we will deal with it appropriately. But we are still fairly confident that it will resolve itself. So we'll leave it at that. And in terms of strategy and outlook, I mean, I think the medium-term outlook remains massively promising. As Laila alluded to, capital markets in the short term are probably closed. However, we are, as a management team, exploring multiple opportunities in terms of finding the necessary equity to fulfill our ambition, both in the U.K. and in SA, and we have got multiple sort of prongs of attack in that regard. And we will invariably find the right solution, which will, a, allow us to fulfill that ambition. But secondly, also to do it in a way that what we don't want to do is destroy existing shareholder value. So that, I think, is very, very important. The vacancy rates obviously are all-time low. So the ability to put product into the market remains absolutely critical at this stage as they say, make hay while the sun shines. And it's not often that you get to say this. We always like to sort of kick ourselves as other people being better than us. But I stand here in front of you today, and I'm a lot more confident in terms of the sort of the medium-term outlook of our SA business than I would have been maybe 2 or 3 years ago. I think the U.K. has got its challenges. Invariably, it's a developed economy. It's a very powerful economy. It's politically a very powerful country. And invariably, they will sort it out and they will come out the other end. I'm sure. But where we are as South Africa at the moment, I mean, the energy crisis, I think, is pushed the boundary in terms of opening up that energy world to the private sector. And you know South Africans are a resolute bunch. And I think some of the clever ideas that are coming through the system at the moment in terms of how we can bridge that gap and create a platform of energy that will allow South Africa to reach its potential and create the jobs necessary for its population that doesn't have jobs at the moment. I think everything that we're seeing, everything that we're reading, everything that we're interacting would talk to a much more positive outlook, which obviously is really reassuring for us. The U.K. business, obviously affords us this ability to create capital as well. Basingstoke, Ford's capital. I mean Newport Pagnell, we put the slide there. We still haven't decided in terms of the exact strategy on that. Is that hold or is it a sell? The reality is that there is merits to both but we will make the appropriate decision at the appropriate time. And invariably, whether we hold or we sell or we do it -- we do a forward funding with someone that wants to own the Finnish product, depending on how that evolves, invariably, Equites will still get either a notional gain like we did from the EVRi deal with that significant uplift or we'll get a cash remuneration on the back of placing it with a third party, if that is what we feel is the best solution for our business. Obviously, on the total return, we obviously have been pushing that quite hard in the last couple of years. We are very big believers of NAV as an integral part of our business. The unfortunate reality is where we are today. I think it would be probably not very clever for us to give you a reassurance of the guidance that we sort of we had or the outlook that we've given on there. The U.K. market at the moment has obviously got a lot of vagaries in it. In terms of valuations, yes, we've lost 50 bps. The situation in the U.K. is very strange in as much as the valuers when they come to value, they value on the basis of a willing buyer, willing seller. What we may get in the short term in the U.K. is some force sales because of some redemption issues that some of the funds may have. What happened -- and if we look at 2008, as an example. In 2008, the loss of valuations took probably about 18 months to actually come through the system. So the system basically, it doesn't give you all the upside of the valuation on the way out, but at the same time, it doesn't take it all the way, away from you immediately on the way down. The system allows for a little bit of a smooth lining. So we're not anticipating U.K. valuations to fall of a cliff because the system won't allow that happen. Will we see some distressed sales at values that might catch the eye? I think probably yes. However, I also do think that the top end of the market, which is where we are playing, we'll probably settle somewhere between 4% and 4.5% in time. And the quantum of money that still wants to be in the sector is still there. Everybody we spoke to 2 weeks ago in the U.K. was -- we just want to see what happens for now, but there we're seeing a lot of the Asian capital coming back to the U.K. market as a function of this. We're seeing a lot of the sovereign wealth money coming in, and we're seeing a lot of Middle East and money coming back into the market. And a lot of the views there are that they are coming in as equity buyers, 100% equity buyers with a view to then levering the product at some stage in the future when the capital markets permitted at rates that are -- make sense. So I suppose the beauty of the U.K. market is that it's got these deep pools of capital that are always looking for opportunities and different pools come at different times with different metrics, different understandings and us having the presence that we have and the platform that we have in the U.K., we are starting to get noticed by the relevant platforms, if you like, and starting those engagements. So that's a very positive thing from us. And whilst the U.K. -- as the South African portfolio, we believe will continue to show some growth as we go through the next 6 to 12 months. I think we're going to see the few leases that we are renewing will be renewed at very good levels. And I think it will give -- the South African value as a lot more comfort to start allowing for those valuations to come through. We -- as I said earlier, we are looking to -- we are maintaining our 4% to 6% guidance for the full year, and everything seems to be very much on track. And from closing out financial positions with various hedgings, but also with the strategy of making sure that we also are looking at our portfolio now, especially in SA, in terms of looking at the noncore assets and whilst we always thought we would do that in the next sort of 18 to 24 months, we've probably got an opportunity at the moment with where valuations are going up. We're achieving really strong rental growth in terms of the renewals and as we place those into the market, we'd like to think that we will get really good values for those assets. And I think that really sums it up. We're going to take some questions. If there are questions also for the U.K. partners. They're still online and obviously can take those. [ Mel's ] got the microphone. So if you do have a question, [ Mel ], I think [indiscernible] now in the front has got his hand up.

Thanks for the results. Just 3 quick questions focusing on the South African portfolio. So the first one maybe for Riaan, is just on the -- I think you mentioned that new rents you've signed in the 3 regions have been around ZAR 80 per square. It's just a question around what the expiry rents were on those particular leases? The second question is around just the average rent per square on the South African portfolio, broadly speaking, you can give a range? And the last question, maybe for you, Andrea, is just around given the rising cost of debt locally, internationally but locally and also building costs, what do you think happens to development yields going forward?

You want to take the first one on the rentals?

Just on the rentals. I mean, obviously, there are 3 types of renewals. When you have a building that has been led to a tenant over a 10-year period and you get to the end of the period, you will see some reversal because the last 4, 5 years, there hasn't been a strongest of growth. So on the longer-term leases, we've seen small reversions. But any lease which were renewed of a 5-year basis or newly entered into they clearly, we're seeing very little resistance from tenants when you talk we ZAR 80, ZAR 90 because of the lack of availability and the other elements I've mentioned. And on average, we see rental settle between ZAR 80, ZAR 90. Obviously, some of the newer stuff that will be coming online next year is even at higher rentals where it's single-phase buildings and not specialized. So we're really seeing that the market decide to accept those type of levels of rent. And on the yields, Andrea?

Sorry, repeat the second question, the second question.

Second question was around the average rent per square on the portfolio in general? Given where market is, the South African portfolio.

On that, it's difficult for us to give you that because obviously, we have a single phase, we've got the cross dock and then we've got a couple of specialist building. So let's exclude the specialist buildings. On the single phase, I think your average is probably seeing at the moment, probably below 80% as an average. So the single phase is probably the one where we will -- I don't think we'll experience any reversion on renewal, especially if this level of growth sort of continues, which we don't see it sort of slowing down in the sort of medium term because of availability factors. On the cross-dock facilities, the average rental is probably sitting in the high ZAR 90s. But you're doing new deals on cross-dock probably over ZAR 100 square because obviously, with 25% site cover the land is not free, and you do have to cover it with concrete and put some storm water capacity on that external hard stand. So your GLA that you can apportion those costs to is obviously smaller and hence that. But I mean, I think on the reversion thing, and I think that's what you're really alluding to. In terms of the size of our portfolio, the escalation that we've got sort of fixed in and what that will occasion in terms of increase in rental like-for-like year-on-year. The one thing is rental reversions are certainly not something that keep any of the management team up at night that I can assure you. There will be some from time to time. But as a product of the whole portfolio, it will be very, very small. In terms of the development and the cost of funding, the challenge, obviously, especially with the blue chip clients, is that they're looking to keep their red starting rentals as low as possible. So obviously, we are trying to push those as a function of that. I think we'll probably have more success on maybe not pushing the rental, but maybe pushing the escalation clause. And from an Equites' perspective, I think the escalation clause probably more important. Again, it's a function of the size of our portfolio. Even if we start collecting rent from a client, we're slightly maybe losing money in that first year. But if we've got 10 or 15 or 20 years of a guaranteed escalation at a level which was better than what we were achieving before, what that does is once -- I suppose that loss is bedded into the existing portfolio, that escalation becomes the kicker for us over time. And as a REIT, I think the escalation clause is probably fundamentally -- obviously, you're not going to be doing deals at 2% yield. I mean, -- but fundamentally, the escalation clause is really, really important. And our focus is if you don't want to give us more rent or then you must give us more escalation. So -- but like every deal is a negotiation and Riaan and his team are obviously are very adaptive. And also, sometimes you sit there and you argue with someone for 25 bps or 50 bps or an escalation clause, when you actually show them what the material quantum is on an annual basis. All of a sudden, it gets people to calm down a little bit. So there's a perception that's crazy. And obviously, probably on a compounded basis over 20 years, it probably can become crazy. But in the short term, there are ways and means to getting there, but remains positive.

[indiscernible] asked about development deals as a result of...

Yes, it's one of his [indiscernible]. The development yields are not going. The escalation is what we're fighting for.