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

Welcome to Equites' pre-close presentation, 31st August 2023. I suppose it's -- we're heading up to interims post our results in May, where obviously it was probably the big reset if we want to call it that. So I'm sure a lot of you are quite curious to see where we're at, and there's obviously quite a few moving parts at the moment and as best we can and where we can we hope to be able to provide you with sufficient information to give you some comfort. The flight path that we are on is certainly in line with our expectation and certainly in line with what was spoken about in May when we presented our results. So there's 6 key focus points that we're going to touch on, and we'll unpack them slowly. As you can see the picture there is the DSV campus on 21 up here in Johannesburg. You can see the big warehouse there with the conveyor belt that comes across and the pedestrian foot path that comes across into the cross-dock facility. You can see the size of yards, and really, this is a fantastic example of a facility that works in the 22nd century, if you like. But let's talk about more important things now and let's start maybe with our strategy and where we're at. And as you know, as a group, we have, I suppose, 2 complementing businesses in SA and the U.K. So maybe we can start with SA, which ultimately remains our primary business. I think it always has been. We've always -- whenever we were asked, what is the risk that South Africa gets dwarfed by the U.K. and at some stage during our journey, this U.K. business was growing substantially faster than the SA business. But I suppose the beauty of having both jurisdictions is that in the last 24 months, the South African business has really, really been powering on. We've done some phenomenal deals and we continue to, firstly, obviously develop best-in-class facilities. The beauty of developing is obviously is that we have the ability to obviously develop real estate that obviously is going to be relevant for at least the next 25 years, maybe 30 years. And that is not just in terms of the infrastructure of the real estate, but it's all the ESG metrics and all the other, the bells and whistles that you don't necessarily get when you buy an asset from a third party. As you're all very aware, our ability to raise fresh capital in the markets has been shut for more than a year. I think our last raise was last year in Feb, which obviously was -- it's amazing, it doesn't see -- it seems so far away, but yet in real term is actually not that far away, but notwithstanding that, we've heads put together a process of recycling capital, which is probably a sensible thing as well in terms of the longevity of the portfolio for the future. It was something that we'd always envisage doing. But obviously, where we were in the cycle allowed us to raise more capital and use the fresh capital to keep on growing. Our ability to do that, as I said, has gone and the consequence of that is that we are recycling some of the older, smaller assets in our portfolio. Some of the early assets that came through on listing and some of the assets that the cost of retrofitting probably the ESG metrics would be prohibitive, some of them potentially maybe the yards are a little bit compromised and don't really fit our full-on specification, some of them are maybe a little bit too small to stay in the portfolio. And as a consequence, we've gone through a measured recycling process and coupled with that. We've been fairly successful and Riaan will talk to a bit -- talk to that a bit more in detail a bit later on. And then obviously, as I said, I mean, for us, it's key that we create product to keep within the portfolio for the next 20 years, so that we have a business that actually can go through multiple cycles. I think, with real estate that we believe will remain relevant for a long time and sustainability is absolutely critical, especially within the context of a South African operating system, which has got a state that has led, I suppose everybody down to a certain extent in the sense that we currently have energy powers, there's no question that other issues will come around storage, around water and these issues will be the next sort of items that will become higher on the agenda in terms of what can we do to provide solutions for our clients and those are some of the things that we're working on in detail, and I think we are at a pretty advanced stage where we will start introducing some of those sort of more detailed metrics. We're already doing some watery things, but I think there's a lot of scope for us to do a lot more in that regard. In the U.K., at the moment, we're not intending to allocate any capital to any acquisitions or any top structure development. So we will continue allocating capital to ensure that we protect our interests in the various options that we control there to bring those options through a process that we ensure that we get planning at them at the appropriate time. At the same time, as you're aware, we have appointed an adviser that is assisting us through a process of looking to sell the platform. In that regard, we've sold a piece of the platform a couple of weeks ago, the announcement was made. And again, we'll talk to that in a bit more detail later on but the process will continue. Obviously, the world at the moment in real estate is probably not the perfect time to be selling because of where the interest rate cycle is. But I think what we're seeing as well, I mean, with some of the inflation numbers that have come through in recent months, you can see that there is massive wall of cash in the U.K. that's just waiting to be deployed, but nobody wants to be that first mover kind of thing. So it's an interesting place to be. Obviously, July and August is almost a no show in the U.K. with people being on holiday and it will be interesting to see now September, kids go back to school and everybody is back at work, and we've got the final quarter coming up, which historically has always been especially on the investment side has always been the most active quarter of the year. So it will be interesting to see how much cash actually does get deployed during that process and we hope to benefit from that. In that process, though, we are also looking at disposing some stabilized assets and stabilized assets are assets that obviously have got a tenant in and we're collecting rent from. One of the points that we have in our stabilized assets, obviously, is that a lot of them are going through rent reviews and we'll talk about that a little bit later on in the presentation. And as a consequence, if you sell pre-rent review, you'll capture some of that potential upside, but you won't capture it all. So sometimes you need to weigh up the benefits of capturing enough because you've got enough deal flow in South Africa and you need to redeploy that capital to ensure balance sheet remains strong. But at the same time, don't give it all away. We're not necessary if you can take it through term and take it through a review obviously, the upside is probably going to be much better for you. So that's where we are in terms of strategically in the 2 jurisdictions and I think coming through the year-end results presentation in May, where the message wasn't great and we're the first to admit that message wasn't great. But I think the teams put their head down working extremely hard and what we are achieving in terms of enforcing the strategy has actually been really, really, really, impressive. And as I said, we'll talk to that just now. So the ENGL platform. So as I said, the Newport Pagnell transaction that we announced a couple of weeks ago. Effectively, we've sold this into an SPV that is for all intents and purposes controlled by Panattoni, the U.S. developer. They've got specific money behind this particular deal. And what's actually going to happen is the infrastructure needs to go in, that infrastructure will probably start during the month of September. And then once that infrastructure and the 278, which is the approval of all the road infrastructure that's being upgraded around the site, then the top structures can keep start coming up. So this process through to completion of build, we estimate we'll be sort of probably completed October, November next year, plus/minus obviously, very subject to getting the infrastructure build completed and getting that through the system, which obviously relies on municipalities, which I believe in a lot can be as unreliable as our own municipalities are in this country. So obviously, the benefit of it is that as soon as the final CPs are met, it will release GBP 30 million to us. And then on completion, there will be a further GBP 29 million, which will come back to the JV and some of that will be obviously for new loans, but obviously, the vast majority of it will be for us. And obviously, what it does do is brings down loan to value, which is great. It unlocks a lot of capital back into our system, which is great. Obviously, we've got certain gearing mechanisms that we would like to sort of close out and obviously, the final consequence of it is that we'll have a slight benefit to our NAV. In terms of the ENGL platform, where we're at, at the moment is that what you'll see is that we've got 10 sites across the U.K. The 2 sites that are in -- you'll see the 2 sites that are in the sort of light blue color. Those 2 sites currently have planning. Site number one actually has detailed matters approved, site number two also has detailed matters approved actually, but it's in judicial review. So those 2 sites are ready to go and as part of the platform sale, obviously, this is quite attractive to a buyer on the basis that they can actually jump onto those 2 sites effectively by first quarter next year, and between the 2 sites, there's just over 1 million square foot of bulk that one can build there. So that's a bit of the carrot and then the rest of the sites, we are continuing to engage with buyers and the 3 of us are going to be in the U.K. in September, during which time we hope to be able to progress certain negotiations a little bit further than where they are at the moment. What we don't want to be doing but there may be some cherry picking in it, but is obviously is selling the site-specific one. So what we don't want to be doing is selling, for instance, the 2 that have got planning and then you're left with the ones with no planning because obviously, all of a sudden, you don't have a carrot to give the buyer that's going to buy the whole platform kind of thing. So we just want to be very careful and mindful in terms of how we present that to the market. Notwithstanding all of that, we remain positive, the right buyer, which obviously will be the buyer that Newlands is able to work with going forward. But at the same time, the buyer that's prepared to give us as much of our capital and a little bit of profit possibly on the platform for us to move on with our lives effectively. And then we'd be left obviously with the remainder of the stabilized portfolio in the U.K. and obviously have quite a substantial development pipeline in SA, which obviously would also need quite a bit of capital going forward over the next 24 months. As I said, the U.K. portfolio, you can see the 10 assets that we currently own and you'll see that -- I think there's 5 of them that have got OMV-linked rent reviews. Now we -- on the GXO #3 there, we actually have agreed the rent review, but it's not signed. So unfortunately, I can't tell you what it is because obviously, until it's signed, it's not actually a deal. But notwithstanding that, we obviously -- we believe it's a fantastic outcome for us. We believe that the next deal to go through rent review, obviously, is DHL in rating #6, where the outcome also our expectation is certainly sort of north of sort of 25% on that one. And then next year, in March, we've got DPD in Burgess Hill. That one is actually a weird one in as much as that we did that deal. The deal was signed with DPD 2 years before they actually started building it. So it was done at a ridiculously rental. I mean, the base rental on that particular asset is GBP [ 8.25 ]. What's actually happened is that the remainder of the park, the land in that park was bought by Panattoni, offer the developer that we did the deal with at the time, a company called [indiscernible] and Panattoni is specking out the entire scheme and with lots of different size units, some similar to ours, some smaller, but they're specking out the whole scheme and the scheme -- the first part of the scheme will start being complete in fourth quarter this year and it will be completely complete by the end of first quarter next year. They're asking rentals across everything is basically between GBP 16.50 and GBP 17.50. Now I'm not saying they're going to get that. But even if they get GBP 15.50, imagine, we're off GBP 8.25. And that's our natural comparison so you can work that one out. And so that is what's happened in the U.K. in terms of wrinkle growth. That's what happens on a magnified basis when you're in the Southeast because there's literally no land and that's why we were so enthusiastic and so keen to get Basingstoke over the line. And the troubles that we had in with Basingstoke getting that over the line are Southeast problem because you've got a much more affluent community that obviously, the nimble process is a lot stronger. And as a consequence, it is a process but the minute you do have your planning consent, the value of land in the Southeast just goes to another level, if you like. But that being said, what we're seeing here is, obviously Amazon Peterborough is obviously CPI-linked. Tesco, the leases expiring at the end of December. Tesco still refuse to engage with us in terms of rental negotiation, which is obviously a very fascinating thing for us that you're serving 450 stores out of a chilled facility that -- it's not like you can pick up and take that business to a warehouse down the road. I mean the chilled facility is a very specific food grade facility. But notwithstanding that, obviously, it will be interesting how it does play out. But obviously, they can't go anywhere. It's too late for them to move. So it's just a question of what do you negotiate an extension? Is it a 5-year extension? Is it a 10-year extension? Do you push for 5 years and try and get a much higher rental? Or do you push for 10 years and maybe accommodate with rental. So those are some of the things that will play out the minute we get the opportunity to engage. So that -- we don't foresee any loss of rental in that regard. So as you can see, over the next 24 months, I think the 6 of those assets are going to be going through rent reviews. And obviously, what we want to do is try and maximize the valuation process out of it. So if I can give you an example, if you've got something that is under let -- you would probably -- I mean, for instance, DPD Burgess Hill, for us to get capture what we think the rent review will be. Of the current rent, the yield of the sale would probably be about 2.8% yield. Now you can imagine the buyer taking that to his investment committee and the emotional feel of a buying investment committee saying, but how can we be buying something at 2.8%? But buying it at 2.8%, if you've got confidence in the rent review that you're going to achieve there at kind of the levels that we're talking about that Panattoni are going to probably achieve, it means you'll get a stabilized 20-year income at sort of somewhere between 5% and 5.25%. So you can see in that -- so what you have is you've got a buyer that won't pay you at 2.9%. There's just no way you'll get that. So emotionally, you'll be lucky to get something in the 3% because people are saying, well, the market's down, I can't be paying 3%. So that is what's at play is that do you take it full term, sell it at 5% yield post review, but you have to be patient. Or do you take maybe a little bit less money upfront, but you've obviously got someone to deploy that cash to make the return. Because ultimately, the final element that needs to be taken into consideration here is that you're selling out of something in the U.K., let's say, 4% to 4.25% yield and you're redeploying it in a development in SA between 9% and 9.25% yield. So you can imagine what that does to distribution over time. So those are all things and metrics as a team. Obviously, we debate extensively to try and make the best possible decision for Equites looking going forward. On that note, I'm going to hand over to Riaan, and he can take you through a bit of detail on the disposal program in SA.

Thank you, Andrea. Just very briefly, I mean, why did we implement the disposal program? Two reasons. Firstly, to fund the extensive South African development pipeline. As you know, we've concluded several transactions with Shoprite-Checkers. We're working on several sites for them. We're also implementing the TFG facility at Riverfields. So primarily to fund that pipeline and secondly, as we communicated at our results presentation in May, our LTV at year-end was at 39.7%. And we are on a flight path to reduce that and aiming at reducing our LTV to about 35% and Laila will give you further details of how that happened. Just -- I mean, we've had several questions over the last months about our disposal program. We'll give you more detail in our half year results. We've divided them into 3 categories: completed and transferred where we've signed binding comprehensive legal agreements but there's, for example, may be a condition precedent outstanding mostly relating to Competition Commission. As you would know, Competition Commission approval could take anything from 2 to 3.5 months. And then thirdly, where we've concluded heads of agreement, terms are agreed, but we are busy with the comprehensive agreements, which should most of those be concluded and expect as you can see, already transferred ZAR 1.8 billion. ZAR 0.7 billion in SA and 2 transactions in the U.K. Legals concluded another ZAR 1.2 billion. That includes the ZAR 0.7 billion relating to Newport Pagnell and then the last category further ZAR 2.1 billion. So this has been a very, very big focus for us. Andrea touched on the criteria that we use when we decide whether to sell or not. Firstly, the older assets, those assets that are not in logistics park. We see more and more because of the security concerns, especially in Johannesburg that multinationals want to be in logistics park, just a benefit. We now also closely corroborate with security experts to ensure that our parks have additional measures in place. And then also an important aspect is when you -- when we're not certain that an asset may contribute to growth in net asset value is also an important marker for us that maybe that's time for that asset. Lets move to the older ones, Andreas referred to the need for ESG for our clients and it's very -- sometimes it's impractical to implement it post factor. So those are sort of the criteria that we used, I've touched on the reasons. And finally, I think we've been very, very pleased with the demand for our assets and also the pricing that we've achieved. To date with -- if you take the combined transfer and concluded. We've sold, I mean, ZAR 3 billion and above book. We know that South African -- especially South Africa, I mean, with the current interest rates, our assets are independently valued every 6 months, and we're very pleased, it was also very specific requirement from our investment committee that we want to sell and show the market that our asset valuations are accurate and that we don't destroy value in the process. A further focus area for us is to reduce our land holdings to improve the quality of our earnings. And I'm pleased to advise that we're on track to reduce our land holdings by at least 33% by year-end. I think you'll see there in the SA utilization Riverfields, that's the TFG development. We are going to implement 3 further developments of Meadowview, that's ZAR 87 million. And then the Newport Pagnell disposal is the one on the bottom there in the second column. We have a couple of months ago, acquired another part of land on the R21 in Riverfields. We see the Riverfields R21 node is one of the most significant and important logistics node in South Africa. Between what we've [indiscernible], I mean, it's certainly north of ZAR 10 billion of high quality. And we also see that the tenants are really looking to be there and just the access and how the infrastructure has been implemented in that zone, just we think that zone will just go from strength to strength, and it's certainly a focus area for us. So I think that completes my bit. Over to Laila and the important stuff.

Thank you, Riaan. Thank you. Okay. So I think that one of the key messages that we wanted to convey today is really how we've prioritized the strength of our balance sheet over the last 6 months. We said when we reported our results in Feb, we had a very specific target in mind to reach or to target 35% by Feb '24. And today, we wanted to show you how we plan on doing that, what the movements are that we expect between Feb '23 and Feb '24. So we started off the year at 39.7%. We acquired the Shoprite, came in this facility just after year-end. So that was ZAR 700 million, which increased the LTV by 1.4%. We expect our total development spend within FY '24 to be ZAR 2.6 billion. This is only the contracted committed developments. So that will, of course, drive LTV up, and that has almost a 5% impact on LTV. Now the disposal program that we worked through now and that Riaan took you through in terms of the 3 buckets, that has the impact of reducing the LTV by 11.5% and that really is the key focus area for us. We said prioritizing the strength of our balance sheet is paramount. We would not have undertaken any additional developments, acquisitions or anything else if we weren't certain or highly confident that we were going to implement all of those transactions by Feb '24. And then there are some other items, ForEx and other things, which we've been will probably come in by the time we get to Feb '24. But given where we are at right now, given the insight that we have into the advanced stages of our disposal program, we are very confident that we will reach at least our target by Feb '24. Now the one thing we haven't taken into account here is any revaluation gains. We have an internal bit, Andrea and myself because we sit on opposite spectrums of optimism and pessimism, you can guess who's who. But we think that there will probably be some positive revaluations coming through whether they come through in August or at Feb, we think that there will be a recovery of some sort in South Africa and the U.K. that hasn't been taken into account at all year. This is only items, which are contracted, known or which we have a high degree of certainty over. Although it's important to also just touch on our balance sheet. There's a lot of -- we've discussed the conservatism in our balance sheet, how we want to prioritize, and I think there are some bankers in the room. What we're trying to do really is at February '23, we had ZAR 3.6 billion of debt, which was coming up for maturity in -- within this 12-month period. It sounds like a big number when you think about it but we had a very strategic reason for having some of those maturities coming up. We knew that there would be disposals that we would undertake. And for that exact reason, we didn't go and negotiate and push out the terms of those loan facilities for an extended period of time. So what have we done already for the period, ZAR 323 million of debt has already been repaid with some of those disposals, which are concluded. A further ZAR 400 million will be repaid before Feb '24, and that will be from further SA disposals. What is important is that we are still active and present in the debt capital markets. We're having an auction in September and we'll probably have a further auction in November. And some of those notes will be used to just roll existing facilities. Some of them will be used to settle bank debt but it is important for us to still maintain a presence in the debt capital markets. And then the biggest number is, there is GBP 67.5 million of outstanding GBP debt, which we intend to settle before Feb '24. So that will probably happen between November and January, and that will be settled with proceeds from the U.K. disposal. I think another point, which I can't gloss over is CCIRS. Everyone wants to know, are they closed? Yes, they're all closed. Today, looking at the exchange rate, it's [ 23.70 ]. We closed them out slightly better than that, we won on some at others, maybe we didn't tie them as optimally as we could have, but we're very pleased that they're all closed out now. We've taken the cost of closing it out into account in our total LTV calc. So that's all baked in and there are no further costs associated with the CCIRS. The one element, which I'm quite excited for is we hope that when we present our August results, who knows, today is the last day. So who knows where it will end up at the end of today. But what we do hope to be able to show is that there will be that exposure to underlying rand depreciation over the period, which you will actually be able to see come through for the first time in the August results. So -- and then the last point is just -- and I think Riaan touched on it really well is just -- we're focusing on a conservative balance sheet. We want cash reserves, and we want to shift our balance sheet towards more income-producing properties, and we're on track to do all of those, okay? That's it for me. Andrea?

Okay. Thank you, Laila. So the SA strategy, and we sort of maybe extrapolate a little bit more from what I spoke about earlier. What we're seeing is, obviously, as we're seeing the major players, both in the retail side but also on the third-party logistics side and anybody that wants to sort of play in that world. We're seeing great investment in real estate and that's also a function of people starting to need to deploy more technology into their facilities. There's sort of a cutting point at which notwithstanding how big your facility is that if you don't introduce technology, there's only so many orders you can get out the door if you're doing everything manually. And you get to a point that if you don't introduce that technology you're limited to that point. So the minute you get to that point and what we're finding with everybody is that once upon a time, you'd have an order would come and it would go. But obviously, because of online because of the way that retailers are also pulling stock into their stores. The consequence of that is that you need to provide an environment, which allows you to do thousands of deliveries a day. And I mean, as an example, DSV Pharma, which we own up in Meadowview, I mean that particular facility because of the technology and they can actually can pull 30,000 orders a day. Now it would be physically -- I mean the facility would probably need to be, I don't know how big to process 30,000 orders a day just because quantum of people that you would need to actually physically go and draw those orders. So that's where technology is helping. The consequence is that people that are willing to operate in meaningful levels, obviously, are needing to really, really seriously reconsider the real estate solution. The other thing is that I think the quantum of speculative build and the quantum of new build that has happened since 2019 has probably been at an all-time low. So what have you got? You've got a situation now where you've got probably the lowest vacancies in our sector. And I'm talking across the board, I'm talking from the 500 square meter little mini unit right up to the 50,000 square meter monster warehouse. What you're finding is that the availability is really at an all-time low. So even people that have got what we would define as maybe a lesser warehouse and maybe they start marketing. I mean we had a broker function last night as an example and speaking to various teams of brokers in the networking. The one guy in particular said, well, assist directors of this brokerage, we actually own a facility in, Isando, and it went vacant, we put it on the market and we were marketing at ZAR 55 a square meter. What actually happened is we ended up with 3 people wanting the facility, and we ended up doing a deal at ZAR 59 a square meter. So what the narrative that's coming through is very much one -- that all of a sudden if you're paying ZAR 60 and soon, probably ZAR 65 for a 30-year-old building, does it make sense to be paying ZAR 90 for a brand new building where you can tickle the bells and whistles? And what we're working on with new business developments and stuff is we're working on some scientific metrics where we're wanting to show clients the value of spending the ZAR 90 and coming into the 22nd century, as opposed to, if possible, finding something that's existing and maybe not ideal, but you sort of massage your way through it. And that's the interesting part of where South Africa is at the moment. And the lack of vacancies obviously is driving that price, which obviously is fantastic. So as a consequence, I mean, we've closed off tonight 31st of August with zero vacancy in our portfolio for the first time. That -- let me ask Riaan on it, it's not signed yet? Okay. So we don't have 0% vacancy then. So we've got a small unit in the U.K. and I think 1,200 square meters next to the DHL in Redding, which we've agreed terms with a tenant that we haven't signed it. But yes, so it's obviously not material. But obviously, it would have been nice to put that zero there. But anyway, it won't be there in anyway so be it. But the consequence of us having no vacancy in SA, we brought 2 speculative buildings to market earlier in the year that were both completed in April and basically by the end of June, both were late. So what we've done a deal with Emirates up here in Joburg and we did a deal with Consol Glass down in Cape Town at Bureau Street. So because we've got, obviously, the land holding because we've got no vacancy in the portfolio. In terms of our metrics, when we sort of plan and think forward, we're trying to work on the basis that we want the business to be allowed to have a 2% vacancy. We think that's a fair vacancy for the business. And on the basis of that, then we believe that it does make sense to put a bit more spec into the system. What it does is well, it unlocks some of the smaller sites. It's -- I'm not saying that you will never get a pre-let for sort of 5,000 or 8,000 square meter unit, but the light good is far or less because there are probably multiple options to clients in terms of existing in the marketplace. So we're looking to bring in a couple of these smaller units and the history in that location has proved very successful for us. And the impact to balance sheet, obviously, is 0.4% in terms of loan to value. So it is not a meaningful impact to balance sheet in the process. But at the same time, what it does do is by the middle of next year, it potentially allows us to have 3 more assets, 3 new tenants that weren't in our portfolio as we've done with Rico and Emirates at Meadowview. Those are clients that are so happy with having come into our stable, the quality of build, the quality of product that they have even their counterparts that have flown in from Dubai in both instances when they've seen the asset that they were moving into, they were obviously very pleasantly surprised, which is great. We remain unapologetic about being a developer REIT. So the landholdings in South Africa, I think, will stay for the future. What we are committing to and I think what we committed to also is that the quantum of land holdings that we will have will be monitored very, very carefully. And what we don't want to be doing is building up billions of rand of land holdings. The reality is that you can't please everybody, you've sort of almost got to put your flag in the pole and own locations. That's the way we're sort of seeing it, and if you own those locations effectively, what actually happens is if a client wants to be in that location, it's almost a guaranteed win in terms of the development on that. So that is our strategy in terms of wanting to own locations. I mean, technically speaking, we've got -- once we've implemented these 3 spec builds. And if we managed to sign off a couple of new business deals that we're working on at the moment. The reality is we'll have of the existing land will have very little. I think the most meaningful portion will be the 17 hectares that we've recently transferred in. And on that piece of land, I mean, we currently have an RFP out for a 30,000 square meter facility so -- and the only way you can participate in these RFPs is if you do have the land. If you don't have the land, there's no chance that you can participate. So we see that also over the next, let's say, 2 to 3 years, there will be further recycling of older units, non-ESG compliant units, less core units. I mean, as an example, the hanger on the runway at Cape Town International Airport. It's a great facility. The client pays on time, great client, fantastic business, doing exceptionally well, but is it a logistics facility? Yes, probably not. So at the appropriate time, and if we can get the appropriate price that is a classic asset that would probably be part way within the next sort of 6 months, let's say. But obviously, we'd want to do it in terms and conditions, which are always going to be potentially dilutive to our distribution. And that really is leads in sort of talks to the asset management, the proactive nature that our teams have been able to engage with our tenants where leases are expiring. We've been very precise in deciding where to go and start and initiate a negotiation for renewal and where not to. As you can imagine, the last couple of years have been fantastic for us on the inflationary side. So what we're wanting to do is we're not wanting to go too early because then we don't capture all that inflation. But also, you don't want to go too late, where potentially you run the risk that you might have lost a client. So it's that balance that needs to be found effectively. And obviously, in that -- I mean as a team, I think it was during COVID in 2020, we sat down and we worked out over the next 5 years, all of our reversions, and we all have to do our own opinion in terms of where they would go. And obviously, we've got the optimistic and the less optimistic and the team, as Laila said. But notwithstanding the optimism in the team, what we can say the least optimistic we'll refer to it as that rather than pessimist. I think it's -- it's a much more positive word, yes. But the least optimistic person in terms of that charting that table and then when you compare it to what was actually achieved in the market, we were all wrong. We've done so much better than what we thought we would do. And I think that's a testimony to where the market is going, it's a testimony to the fact that there's no vacancy. It's a testimony that our clients genuinely really happy with us as their landlord. I think the compliments that Riaan's operating team sort of gets on a continual basis from the clients in terms of where we try and go that extra mile and the reasonableness of which we engage and stuff and how we keep them on their toes and we keep reminding them, don't forget to do your maintenance because otherwise, your reinstatement is going to be very punitive, if you ever move out. And those things are very important. What you do is you build up relationships, you build up trust and from there, I think there's future business to be had. Sustainability, obviously, absolutely critical, especially within the realms of SA, energy, water, absolutely critical. But it's also in the build. We try to get as close as we possibly can to carbon neutrality during the build phase. As you are all very aware, the process of making concrete and the process of making steel is probably fairly damaging to the environment. So we need to find solutions to offset those things. And obviously, we've been chosen by Cape Town to be one of the guinea pigs in terms of selling electricity into the crude in Cape Town. And I think we will be looking to turn -- switch all that on 1 October. So we're almost there. And I'm really looking forward to us being able to present a slide in terms of showing as a consequence of the investment we've made, the kind of returns that we can make out of the energy process. And we do genuinely think that there is really good scope for an alternative source of revenue for the business going forward. And at the same time, providing energy security to our clients and potentially also giving them slight discounts to tariffs in the process of creating that energy. Obviously, the key is the battery and how one manages the battery. But fortunately, we've got a team of sustainability experts that obviously would be doing a lot of work in that regard, both to educate the directors so that we can understand what we're signing off, but also to ensure that clients actually fully understand what they're actually getting and those are obviously very, very important. I mean obviously, I spoke to the portfolio of churn, and there are assets, as I said, like hanger and stuff, there will still be some churn coming through. And then the U.K., obviously, at the moment, as we said, there's a couple of assets that will be going through a sale process, and we look forward to announcing those in the not-too-distant future, which obviously will help the balance sheet significantly. But obviously, the beauty of the assets that we do have in the U.K. is that apart from Tesco is, they're all brand-new build. They all have, not all, but most of them have significant rent review clauses in them, some of them obviously have index rent review clauses, which are still not bad. You're still going to get 16%, 17% on review, which is not -- it's not nothing -- just obviously, when you get 40% or 50% then obviously you think, well, that's a terrible one, but it's actually still a very good review. And as a consequence, we've got assets that are fantastically built, brand-new [ arm ], very good. We've got great tenants in great locations. So we do have a portfolio in the U.K., which is actually quite a liquid portfolio. So where and if necessary, we need to recalibrate balance sheet to South Africa because the opportunities in South Africa continue to come our way. And so far, obviously, we've been very fortunate in South Africa that we've managed to achieve what we've achieved and obviously, that will result in redeployment of capital from 4.5% -- or 4% to 4.5% yield of current valuations basically coming back and being redeployed at north of 9% here. And obviously, because we don't have cross-currency swaps, the full effect of that will be felt by the balance sheet coming through. So I think those are really important metrics. But like everything, Rome wasn't built in a day. We had to take some very difficult decisions this year. I think we've taken them. I think what today was about was reemphasizing that we are certainly on the right flight path to achieve what we committed to. And like everything, we'd love things to take 3 or 4 months. But the reality is things sometimes take 5 or 6 months. I mean, within South Africa, anything over ZAR 96 million has to go to Competition Commission. And that by itself adds between 2.5 to 3 months to your process of actually getting money in the bank. So those are the things that one needs to be mindful of in terms of the cash flows. This is quite a nice photograph. I mean the front one is TFG. It's just over 50,000 square meters. What you'll see on this facility is that TFG have decided to take this facility to 20 meters to eaves. So the middle section of that warehouse effectively has got a DM1 floor, which is a super, super flat floor. It's the flattest floor you can get and it's got narrow aisles. So effectively, what they've done is they've upped the quantity of pallet positions they can put into that space significantly. What you'll see is this facility has been geared up to take online on. And you can see that on the gable end here, we've got a lot of doors, and that is predominantly for online when that gets going, the volume of traffic that will be leaving the facility from there is off the charts. [ Fortino ], which is an American engineering -- industrial engineering firm were appointed to do the internals on this. We piecing it today, believe it or not. So I'm looking forward to going on to site later this afternoon and seeing it. And then as you can see on the far end of the facility there, there's open land and TFG will be renting that land from us, and that's for future expansion. So they are wanting to ensure that we secure that land for them, and we believe that it could be anything from 2 to 5 years, and that will probably be a 2-phased expansion. It will be a first phase and then a second phase to complete it. On the bottom side, as you'll see the Shoprite, that's a 90,000 square meters. And believe it or not, you can see it over here, so there's quite a big wall. That wall actually is 7 meters. So you can see it of cut to fill that we had to do on this site. When you look at the site, you don't notice it, but I mean that whole site is 43 hectares. So it's not an insignificant site. The Shoprite one is only 15.5 meter clear height. They look the same size, but that's because, obviously, the TFG was ground level is much lower than the Shoprite one is. And what you can see, again, is the top end of Shoprite it got 60-meter yards there on this side, on this side of the warehouse, you can't see the 60-meter yards, and then you've got a massive yard area over here as well, which is for parking trucks, it's for crates coming back. It's for crate washing. It's there's a whole host of things. So you can see they operate on this level on this scale. You can't do it in the 35-meter yards. These are 60-meter yards that these guys have got to operate at this level and to want to get hundreds and hundreds of trucks in and out and vans in and out every day. There's absolutely no chance you can do it unless you commit to the vision of being a 22nd Century service provider. And in the background, you can see the DSV, which we saw at the beginning. So you can see this node is starting to build up. We own the land sort of right of this road 17 acres over here, which obviously is the next parcel that we're hoping to sort of start unlocking. And between us and Doug Ross sort of we really do own this node, which is great because we're both committed to ensuring that the beauty and the integrity of the infrastructure remains, and it becomes a really pleasant environment to work in. And you can understand when clients come, you can not, but be impressed. I mean you can see the road infrastructure. It's all double carriage way everywhere and the R21 is just over here. So that's correct. This is at Jet Park. This was the old avenue site, have a head office that we knocked everything down. And what you can see is the first Cargo Compass is in the bottom right. And Cargo Compass hazard stores going up in the middle. That should be really at the end of November. And to the left of that is Norbit. I mean, I think, Riaan and the team had a roof waiting there on Tuesday night. So that's coming on. I think that should be ready end of October, I think. And then what's coming up in the front here, as you can see, this is Encore, which is part of the SPAR Group. So on this side, we've got two sites left, one here, one there. That's about 10,000 of bulk we can put on that one. And this one is about [ 7.5 to 8 ] on this one. And then that will be complete, beautiful park right on the highway, highway exposure, protected. It's a unique offering in Jet Park. Everybody told us that there was no chance that we will get ZAR 90 a square meter, we've got north of ZAR 90 a square meter of every one of those assets. So if you deliver the product in the appropriate manner and you offer the client what they require, ultimately, you can't give them this at less than ZAR 90 a square meter, that's the sum total of it. This is the EVRi facility up in Barnsley. I think some of us, I don't know if anybody was on that trip last year here, I don't think anybody was. But we actually physically -- I wish you were on that trip. We physically went into the site. But this site is going full tilt at the moment. It's the biggest site in the U.K. And obviously, you can see the quantum of vehicles and trailers and stuff on it. So in conclusion, obviously, we want to reiterate our guidance of ZAR 130 million to ZAR 140 million. Obviously, there are some moving parts and some of the moving parts if they end up being slightly better than expected and slightly sooner than expected. It will obviously help to the north. And if things needed a little bit more patience than it will move to the south. So the guidance remains exactly where it was. The payout ratio remains at 100%. Loan-to-value at interims will probably be around 40% or just north of it. But as we've tried to highlight, the intention was to get the balance sheet to 35% by year-end. The flight path is certainly going in that direction. And obviously, we do have this massive pipeline of developments coming through the system in SA. And it's not like we can just turn those off, while we wait for something to transfer, so they will carry on. And the sales will happen when they happen. And as the money comes down. Warren will smile more and more. But yes, so I think in conclusion, I think the management team are really, very pleased with where -- what we've managed to achieve in what is essentially quite a short period of time in property, which is six months. I think we've come a long way, we've put in place and we're starting to implement and things are starting to come through the system in a really positive manner. So obviously, very pleased with that. And I think that really brings today's presentation to a conclusion. And obviously, we welcome any questions from those present. And just as we're in a small little room. And I mean I'm just going to try to chirp out there because I want to kind of think, but one of the reasons that we want you to RSVP so that we can get the appropriate size room for you. And when you don't RSVP and then you pitch up, it's -- it gives [ Mell ] sleepless nights. I mean she's been asking should we be in the room or should we got a bigger one? Smaller? Bigger? Smaller? Bigger? Smaller? That's fine. But anyway, it's always great to see you here. But obviously, it does help us a lot if we know that, so we can plan appropriately. But notwithstanding that, I suppose it's quite intimate in here, and it's good to see you all anyway. Thank you. Questions? Yes. I'm sorry. We need the speaker because of the online guys, sorry.

Thank you for this. Is that audible?

It's fine.

Okay. Great. So I've just got a few questions. Can I give all of them as four questions? But first one is just the mark-to-market. You spoke about the 10 assets, right? Just what is the level of mark-to-market on the U.K. portfolio? And if you have similar on the SA portfolio, please? And then second one is just on the Newlands sale you mentioned -- you mentioned something, where the Newlands team goes with the buyer. Is that a prerequisite or -- let me -- yes. And then the third one is the Tesco issue. Is there a dispute on that? Why they're not talking to you? And then the fourth one is just the range of IRRs on the solar?

Okay. So let's start with the first one.

First one is mark-to-market SA, U.K.

So obviously, I mean we're going through the process of valuations, and we're probably about 75% done, so not complete. I mean, obviously, we're not in a position to tell you exactly where we're at yet.

On the rents.

Oh on the rents?

Yes. Because you mentioned GBP 8 versus GBP 17 in the market on one of them assets. I just want to get a sense on the portfolio -- on that portfolio?

Our opinion is that on the ones that are OMV-linked, we are predicting between 30% and 40% in terms of growth on the OMV ones. Okay? The CPI-linked ones and the RPI-linked ones they will range from 14% to, let's say, 18% because, obviously, they've got caps and collars depending on what those caps and collars are. The one, obviously, we've got is the DPD in [ Swans ]. That's a fixed uplift, it's 2.25% compounded per annum. So that one will be -- what will that be about 12% which is shy of 12% on that one or whatever it is, yes. So that's where they were mark-to-market. But the OMV ones. Yes, we're expecting substantial increases, yes.

SA?

SA, in terms of reversions and re-signing. I mean we're getting reversions. It's just that the quantum of reversion is significantly smaller than even we thought we were going to get. So that's the positive side of SA. So -- and that is also a function of where clients are getting the broker network to do a market research for them in terms of where rents are being achieved, I think what's coming through very strongly is that even in older 20- ,30-year-old buildings even in areas that we potentially wouldn't go to like [ Al Road ] and Wadeville. The level of vacancy in a lot of these places is at an all-time low. And that's a function of very little new stock having come online in the last four years.

Just maybe to try and get more clarity on that is if you were to resign or relet everything now, and you said there are reversions. Is that like a single-digit number or a double-digit number? I'm just trying to get a sense here?

Where you've had a 10-year lease agreement? Obviously, after 10 years, it's trading at 8%. But a lot of the stuff we developed over the last 5 years, some of them come up after 5-year for review. And those ones, we see no reversion because how we develop them, their modern facilities. We've seen over the last 18 months significant rental growth in South Africa, specifically in the areas where we own them. So I would say the two categories are -- I mean, for example, the listing portfolio and the acquisitions we did disposals listing. Those are now coming off a 10-year highly escalated environment, and there are some, but certainly stuff we've developed, which come up for the 5-year and going maybe in the next two years for the 10-year reversion -- 10-year review, we're not seeing any significant reversal. In fact, probably flat or continue to escalate. I mean, we've just done a proposal for -- we're seeing a client this afternoon, it's 5 years is up, we're proposing exit rent plus 7.5%. And we've seen a lot of that with the facilities that we've developed.

Just on the U.K. stuff, [indiscernible] you said there are some buyers, and they might buy those assets?

No there are lots of buyers, but not all of it. They will never give you all of it. That will give you a piece of it.

Which is -- can you give a [indiscernible] of how much they do seIl it or how much...

It will be -- you'll probably be able to capture somewhere between 55% and 65% of it.

And how reasonable do you think about the disposal there?

Well, it depends only if we can redeploy that capital in a way that's meaningful. Otherwise, there's no point, might as well wait. Yes. Sorry, I just couldn't overhear, obviously -- had some priorities there that came in the side. [indiscernible] Apologies.

[indiscernible] our next question was on ENGL disposal? Does Newlands go along with them?

No. I mean that was the deal that we agreed with them.

Also because they have a 40% share with the platform and you need their approval.

And obviously, they won't sell their 40% unless they are part of it. So for us to go to a prologue, since they we'll buy our 60% and become -- probably wouldn't work. You would have two competing developers that might see the world with very different eyes. So ultimately, the best deal that you're going to do is one, which is acceptable to both parties. The minute you try and force a deal on someone, I think, it doesn't bode well.

So, it mustn't be perceived as a negative. I mean somebody that's going to deploy the capital would want the team that have worked on those options and those development proposals for a long time. Because obviously, there's a long-standing relationship with the landowners. There's some further negotiations to be done around the development. So it's very likely that a buyer coming in would be a prerequisite also for a buyer to say, look, I don't want this. Well, they don't have the skill to do it -- so I mean, you've got a lot of the large asset managers don't have a development platform in-house. So they're fine to asset manage once the product is finished and ready, they can put it in a different fund and appropriately, but to actually bring it out on the ground, I mean, they wouldn't know how to do. And then your fourth question?

Tesco?

Tesco. Okay. Well, there's no disputes. It's just -- Tesco, a funny bunch. Tesco have been a dominant landlord in the U.K. over the last 20 years and they've used their position of dominance -- some would say sometimes inappropriately in the sense that they've got a reputation, I mean they've always behaved okay with us. I mean -- but it's just what we find in strange is that they -- notwithstanding that we've issued a Section 25 notice to them a friendly one, they've acknowledged receipts of it. But when we say, well, do you want to sit around the table and have a chat. Let's see what's -- they say, no, we're not ready yet. And so it's just a very weird strategy of negotiation. It's something that we've never seen before. But we remain patient, and we're pretty cool with the situation there anyway. So how that situation is unpacking anyway. I think it's all in hand, should we say.

The last one is IRRs on Solar. Yes. I mean -- so I'm going to caveat this. There are a couple of different scenarios. The first one is where we signed a PPA with the tenant, and we offer them a discount to tariff. The second one is we sell directly to the city of Capetown. That's usually a slightly lower rate, but you have a guaranteed put a buyer.

Of everything.

Yes, of everything. And then the third one is starting an uptake agreement with someone, who isn't necessarily the tenant that's occupying that building, but someone who's agreeing to buy the Solar from you at another location. And all of those prices are different because some of them have wheeling charges, some of them have just directly supplying to your tenant. What we target is IRRs around 20%. Now where -- and that's what we've seen in terms of the proposals that we're putting through. We -- there's some subjectivity right now is around lifestyle of solar and efficacy. We are very conservative in our modeling right now. Obviously, they depreciate fully to zero. So you're just amortizing and this works on what we estimate the generation ability will be how many sunlight hours, there will be all of those sorts of factors. But that's where we're seeing it will come in right now.

If I can put one more caveat to that is that obviously, that's on the basis that, you need to understand that we own the land, the building that we're putting there, the land is into the building, it's not into -- so the Solar is not contributing to the building. It's not contributing to the purchase of the land. It's just the Solar that's getting put on and it's just the return on the Solar because everything else we need to do anyway. So just to take that into consideration. We're not subsidizing the development with income from the Solar, and that's why their IRR is so good. But I mean, if you didn't have the building and you were just putting the solar on the land, you need to pay for the land and we need all those other extras, which we don't have those extras, if we like, because we're putting them on a structure that really is going to exist.

And that kind of goes to IRR?

Well, I would have thought so. I mean you're not paying for the land. That's the first thing. I mean, if you were paying -- if you were paying ZAR 1,500 a square meter for the land, I mean it would have an impact on your IRR there's no question.

A few questions, just in terms of your expectation for 1H '24, do you guys have a like-for-like number and an idea of what your admin expenses will be for this half?

No. Mweishö. I'm not going to comment on that right now, if that's okay. I mean, admin expenses, we don't expect it to be too dissimilar to what it was before, probably a lower capitalization percentage, but that has been taken into account in our forecast. So no surprises there. And then in terms of like-for-like, we don't expect it to be vastly different to what it was, but we're not going to provide any more detail -- that's okay right now.

There is a process that we are going through and in terms of our heads, we've got a 24-month process that we're unlocking and at different junctions of that 24-month journey, if you like, there will be events that happened that will alter things. So it's not a straight line. It will be more of an event line, if you like, where the event happens, you have the consequential impact. But obviously, we're not in a position to give you any detail on that at the moment.

Okay. Cool. And then do you guys have an idea of what your U.K. exposure will be by the end of the year seeing as you guys are now speaking about selling some of the stabilized portfolio as well?

So I'm going to combine that to the question from Nazeem, if that's okay. So Nazeem has asked a question online as well. So just combined with Mweishö. What Nazeem has asked what will our income-producing portfolio be the value of our income-producing portfolio in the U.K. after these disposals, which we mentioned in those three buckets, which I think, you can...

I think -- I think it will be approximately GBP 240 million depending on valuation, it could be a little bit better. My personal expectation is that the valuations that are coming into August are already a little bit better than what we expected. And I think the valuations in Feb, when we do the next year, I think we're going to be even better because again, it will talk to. I'm expecting a fourth quarter in the U.K. that is going to see a rush of money wanting to go into the market. So that will certainly have a positive impact on valuation.

So it's GBP 240 million for income producing and then if we haven't sold the Newlands platform it will still be that worth the value of the land...

Which, I mean, the combined total of that is about GBP 41 million, GBP 42 million.

Yes.

Okay. And then the SA development, you've got about GBP 2.6 billion there?

Well, that's -- obviously, that's to end of Feb. Some of those developments only finish in October next year. So it will keep going.

Okay. But I'm trying to figure out what was your expected capital appreciation on the SA developments?

I think fairly flat, probably on completion because the Shoprite impact will be quite large in terms of those completions. So even some of the smaller assets might have a little bit of an uptick. The Shoprite ones will be fairly flat, and they will be pretty dominant in the site, I think the effect will be fairly flat. But obviously, once they come into the system, the annual 5% escalations across that portfolio, what we're seeing from the value is, especially on the historic Shoprite ones, and we don't foresee that changing is that they're very comfortable in giving us almost the entire 5% every year.

Okay. And then just lastly, I know it's kind of difficult, but do you guys have a ballpark figure for what you expect to get from selling the platform to JV? [indiscernible]?

As much as possible from your math. I mean yes -- listen, ultimately, what we want to do is we want to put ourselves in a position that we can focus our energies on doing constructive things to take our business forward. The moment most of that would seem to be SA focused. But like we said at year-end presentation three years ago, we were 80% in the U.K., 20% here. Now at the moment, we're about 95% here, 5% there. Things change and they can change very quickly sometimes. So where we are at the moment, our focus is on delivering the pipeline that we've got here, delivering on the land holdings that we've got here. For us to get a sale concluded would benefit us, obviously, at the appropriate price, we don't want to give it away, but it will also benefit our relationship with the Newland's guys. It's been a very good relationship. We've gone through a lot together. We've -- obviously, we were absolutely gutted last year in December when Basingstoke didn't come through. We're going back in for planning now. We hope to get a committee date in the first half of next year. Obviously, next year is a bit of a funny year, because the elections are coming, so depending on when they call them, it will have an impact on when we can have that committee date. So ultimately, the relationship is really good. But obviously, they've also got a business to run. They've got 20 employees. They need to pay salaries. They've got an overhead that they need to cover. And also -- well, three of them are, David, maybe not -- but anyway, but there are three young ambitious guys that want to do well. And there's nothing that would give us more joy than allowing them to go on their merry way with a partner that could fulfill their ambition for them. We unfortunately cannot allocate capital to those developments because they just don't make the returns that we require to satisfy you guys. It's really that simple. Should we not have sold the portfolio at the appropriate price and in 2 years' time, interest rates stay back to 1% and everything works again, and we're getting valuations at 3.5%. And who knows, but highly unlikely. But yes, we just want to do the right thing. The right thing to our shareholders and the right thing to our partners.

There was a question online from Chris regarding the risk in achieving the flight path and achieving the projected LTV. And maybe just in short, I mean, we are pretty confident what we've listed here based on intentions based on in the third advanced stage of proper discussions either terms agreed on a nonbinding basis and in the perks of legals. Obviously, the one risk there can be a global event, which shocked the markets. And all of a sudden, you don't get to the conclusion of a contract. And I think in disposing, it can never be disposed at all cost. There's still an overriding consideration of shareholder value. So whilst we are confident of achieving this, if there were to be an external event that makes the purchase price that buys as a consequence of us inappropriate, then you may see a delay. But obviously, it is event that hasn't happened. And in the absence of that, we are working towards achieving what we've communicated.

I think there was another question. I'm combining [ Lukman and Maher ] because they're asking a similar question. They're basically asking what is the impact of the disposals? Are they accretive or dilutive to earnings, is there an U.K. disposals? You may be want to?

You could.

Okay. So I mean I think when we put out our guidance at Feb '23, we said that we do take into account in our revised guidance. We do take into account the fact that if their disposals will in all likelihood be dilutive. They are higher-yielding assets. In the U.K., however, we see those being largely accretive and I think the question further went on to ask when do we see this actually generating or translating into growth for shareholders. I think once we bring the proceeds back or if we pay debt and invest it in 9% yielding assets, you'll start to see that growth coming through fairly quickly. So there may be some dilution from developments in year one, but you should start seeing us growing out of that fairly quickly. Nazeem had another question, Andrea, which you touched on, but he asked about Basingstoke planning time line.

Where we are with planning at the moment. Some of you will be very familiar with it, so I'll maybe give a little bit of detail is that as part of the process, there's a new round about that needs to be built on the side of this scheme, which allows people to get into the -- into the scheme and out of the scheme without affecting the traffic flows locally, position of that round about where we had it positioned on our land was not to the satisfaction of the highways guy they wanted to position somewhere else. So we had to go through a process of negotiating with them and the adjacent landowner in terms of repositioning it, and that delayed us by about two months. So that has now been agreed and been signed off. So we're hoping to get everything into Basingstoke by October. And obviously, if we get everything in October, then the likelihood is that we will get given a committee date for April, but with a caveat that if they call an election in May and the April committee meeting will be canceled -- I mean you will fall into a committee day post elections, which potentially could push you out to even probably July, the way we've sooner than that.

The follow-up is -- if we don't get planning. So what's the worst-case scenario.

So the reality is that where Basingstoke's growing is to the south on to Junction 7, okay? I mean they've got a hospital plan for there. They've got I don't know how many residential units and they've got in their plan, they've got requirement for logistics. Well, for work, what they call it -- Employment Land that's what they call it. Yes. So they've got requirement for employment land. It's just -- obviously, it's satisfying. So don't forget, I mean, the last two applications that went in from us both went with a recommendation for approval. So the people that are employed by those in so council and the people that are employed by the various console T processes, that's highway, that's environmental order, they all recommended to the committee to approve the scheme. Now the scheme was rejected because the people in the committee are not planning experts, the people in the committee are politicians. And they pander to the wins of being reelected in the next election. And obviously, you've got the village of Dummer, which is quite an affluent village amount 4 kilometers, 5 kilometers outside of Basingstoke, which if you were standing in certain parts of Dummer, if you looked up on the previous scheme with little, you would have seen the top of the roof of a little, okay? And what they were saying is that I don't want to see the top of the roof of a little. It's impacting my visual impact and it's potentially impacting the value of my property. And the politicians obviously took that to heart. We took it to appeal. Obviously, the minister that looked to that agreed, he's of the opinion that Employment land needs to come there, but just it needs to be something, which ties in better with the environment and putting a 600,000 square foot. So let's say, plus/minus it, you're putting a TFG picture that you saw. It's putting something of that size, maybe a little bit bigger than that and plunking it right there in the middle, one big, huge building. And that's basically what they're saying is -- they're saying, make your building smaller, make them lower. You're going to have some buildings, but then you're more likely to get an approval. But notwithstanding that, it still remains a political process. And in its very nature until it's approved, it ain't approved. But the reality is that the value of that land will never be zero. It will always be something because at some stage, is it in a year's time? Is it in 2? Is it in 5? At some stage, it will have value. And if you have to even convert it into a residential scheme and then sell off the opportunities to a resi developer then so be it. And that's what you may need to do at some stage in the future. That's probably your dues day scenario.

Just maybe to add to what Andrea is saying, obviously, the redesign take into account the comments. The visual impact has been reduced significantly. The plan for the area acknowledges a great need for logistics facilities as well. That's the only side it could be. So our advice is that, obviously, the compromises we've made is still going to make the development viable, feasible, and we're confident that, that being able to go back and show the committee back, it's been an iterative process where we've taken into account, and there would be no visual impact from the neighbors. So we're pretty confident that we should be okay this time.

I mean -- it's been a journey. Obviously, it's been a learning curve for us as well, and it's been unfortunate. And obviously, a consequence of the rejection last year means we lost out on a deal, which was an absolute blinder, but not going to win them all. We've had some good ones, and this one, unfortunately, hasn't gone exactly to plan. But I think as a management team, we're confident that at the appropriate time, something will eventually happen and that we will not have wasted our shareholders' money. So of that, we are fairly, very confident. That's it? Anything else? Any other questions here? We're good. Anyway, for those that did come, thank you for coming it was glad to see you and for those online, thank you for having joined. I hope you glean the necessary information to guide yourselves through the next period, and we look forward to seeing you in the first 10 days of October for the interim results, which obviously we're very excited about. Thank you. Cheers.