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

Good morning, everybody, and welcome to Equites Property Fund's interim results for the period to the end of August for the financial year to Feb '25. Welcome you all today. And we are [ not ] live. We're transmitting from our offices here in Cape Town. And for the first time, we're actually doing it on a live stream for these periods. And we obviously look to potentially take it back to an in-person presentation for year-end. But for the time being, we've decided to do interim results. And in this way, and I trust everything is acceptable to our shareholders. Let's maybe start with the period under review. I suppose like everything, it's always good to start with the most important piece of information that many people would be looking for is the interim distribution, which will be ZAR 0.665, which is very much in line with guidance. And we'd also like to reaffirm that the payout ratio will be 100%. NAV, as you can see, NAV has come off quite substantially in this period and predominantly attributable to the impact of the ENGL sale. We'll unpack that in a bit more detail later in the presentation. But in a nutshell, the large portion of the write-off in the sale has been recognized upfront. And we obviously are going through a process in the ENGL sale that will allow us to potentially unlock significant value for Equites on the back of certain planning consents that hopefully will be coming through in the period ahead. But we'll go into a bit more detail of that a bit later. Loan-to-value printed slightly above the 40% mark, which is obviously where we were hoping to be below as we were at year-end. This, very much in line with the trajectory, if you like. We do have significant assets that are in the process of being sold. And like all these things, sometimes they take a little bit longer than they originally anticipated. And I think, Riaan will unpack that in a bit more detail in the presentation. But the flight path from an Equites point of view, obviously, is to get to end of Feb for year-end with that number printing around the 38% mark and -- which is sort of a very, very well position for Equites going forward. Liquidity, which is obviously important, as we have a strong development pipeline, and we have dividends to pay. As you can see, ample liquidity with cash and unutilized facilities, and Laila will talk a bit more detail of that later. Final element, which we sort of obviously extremely proud of is 23.5 megawatts of solar capacity on -- in the platform now. And the capacity basically, increasing from 16% to 19% of the total energy consumed in our warehouses now coming from renewable sources. That number, we are of the opinion, will continue to increase, and we'll unpack that in a bit more detail later in the presentation. But obviously, the level of increased 3 percentage points in a 6-month period, obviously, is quite impressive. And we are expecting that to go from strength to strength. I think before we go into the detail of the presentation, I'd just like to take you through, I suppose, the Equites thinking, where we're at in terms of the focus areas. We've sort of, I think, divided up into 5 streams here. Obviously, the first one, and probably the most important to Equites' sort of history, present and future is the SA portfolio. It is the backbone of Equites. We -- as you are all aware, we have done significant developments in what we call Retail Logistics Fund, which is the joint venture with Shoprite. We completed all works at Canelands earlier in the year. We completed the works at Centurion. And we are very close to completing everything in Gqeberha at Wells Estate as well. So very pleased to have delivered these warehouses very much on time and actually on budget as well, notwithstanding the fact that like all these things, you can imagine on developments of that scale that the lead times into them are substantial. But notwithstanding that, you don't always get everything 100% right in design upfront, the consequence of which is that we obviously need to make certain alterations through the process as the development is ongoing. Really pleased with that, and we'll unpack developments in a bit more detail later in the presentation. Lease renewals had a very successful run over the last 18 months or so in terms of renewing. Most of our leases and even in the few instances where we have lost tenants or tenants have decided to move out, we've been very successful in reletting that space almost immediately. And that obviously, leads into the fact that we still remain at a 0% vacancy in the SA portfolio. We commenced some speculative developments during the course of the last year, and it was 3 developments for a total of 20,000 square meters. What we can say is that 2 of the 7.5 have both gone and the 5,000 square meter development, which is basically PC-ed this week. We are currently in negotiation with a couple of tenants to potentially take that off of our hands. And we are expecting that before Christmas that, that facility should be let as well, which is great news. In terms of the U.K. portfolio, the reviews are going well. DPD Burgess Hill, obviously, there was a record-breaking review. DHL rating has come through now in the high 20s, which is also exceptional. We're really pleased with that. We're currently negotiating with Puma for the review on that particular property, which hopefully will be done before Christmas. And then we have a review on Roche down at Burgess Hill as well, which is an index-linked review, so will just be a scientific exercise. As things stand today, our U.K. portfolio, our stabilized U.K. portfolio continues to deliver. You can imagine with the reviews coming through, the increased income is obviously very beneficial and is also contributed significantly to our DPS position. And obviously, very pleased with that. Notwithstanding that, we do have 2 properties in that portfolio at the moment that are going through a process of being sold. And we will sort of announce to market as and when we're in a position to do so. In terms of the funding and the balance sheet, obviously, we continue to do exceptionally well in the debt capital markets and obviously, hats off to the treasury team, done some sterling work in the last sort of 18 months, 2 years. But in particular, the last 6 months, we've seen some success in. And we are going to auction again in November and expecting also to potentially do pretty well there, too. So that's fantastic. We instituted a DRIP with the year-end in May and -- a bit too successful. And you will see the effect of the DRIP in the numbers as we unpack them later, and Laila will go into that detail. So yes, we were surprised by how successful it was. We [ were not ] expecting that. But obviously, we welcome the fact that the shareholder base obviously, still very confident in the Equites name and what we're doing, and hence, the uptake being so strong. In terms of the sale process, as I said earlier, Riaan will be talking in a bit more detail there. And as you can see, the sale process has allowed us to recycle that capital out of some of our older, smaller assets into the newer state-of-the-art assets. In terms of the ENGL platform, the transaction has been concluded as we -- I think we uncovered that and gave that to the market in our pre-close earlier in the year. And the framework has been agreed. The process of that complete unpack will take time. We've received the first GBP 4.5 million. But ultimately, Equites' position is to maximize the value creation out of what we have. We have increased our position in Basingstoke. We'll talk about that in a little bit more detail. But we are expecting to go to 3 committee meetings before Christmas this year, which should unpack significant value for Equites should we be successful. But again, as I said, we will talk about that in a bit more detail later in the presentation. And then the final element of the strategic focus, obviously, is the alternative revenue. Solar continues to be -- continues to be rolled out exceptionally well. The green energy, notwithstanding the fact that we have a situation where we haven't had load shedding for a while. There's no question that the roof space that we command and the ability to provide energy to our clients and the intelligent use of that energy, sometimes with the use of batteries. Equites doesn't provide batteries for the tenants, but obviously, we designed the system to allow for batteries should the client decide to put batteries in themselves. The combination of the 2, obviously, is extremely beneficial to the client, but more importantly, obviously, what it does do as well is it gives ESG benefits to both us and our clients, but more importantly, it gives energy security as well. We entered our first wheeling agreement as well in the period. And that is providing energy to the office that we are currently sitting in and transmitting from. And obviously, very pleased with that and hopefully be able to utilize this immense roof space that we command to do significantly more wheeling opportunities in the periods ahead. I think we can then maybe go to a little bit on the SA market. I think the SA market is extremely compelling at the moment. You can see from the MSCI data that's up there that there's no question that the sector is outstripping all other asset classes in real estate. And obviously, we're very pleased to be exposed to this in our entirety. The vacancy levels across our portfolio, obviously being 0, but across most people's portfolio that play in this space is an all-time low and basically is below 1%. The demand drivers are still there from the client base. And this is really linked to the fact that supply chain is evolving extremely, extremely quickly. And as a consequence, having suitable real estate to allow for those technological advances to be efficient in space is becoming more and more important. And we're seeing the focus at Board level, at operational level across a whole host of clients becoming more predominant. What we're seeing across our base portfolio is also the negotiations that we're undertaking. Our rental achievements are sort of between ZAR 85 and ZAR 95 a square meter. And I would like to caveat this with the fact that this would be for a warehouse that would have less than 10% offices, where offices are slightly higher. And I think Riaan will probably talk to this a little bit later where we have some warehouses that have slightly higher office contents, you'll start seeing that those rentals are basically over ZAR 100 a square meter. Over and above that, obviously, we'll caveat that also with cross-docking facilities where your site coverage is sort of in the mid-20s. That would also occasion rentals being well over ZAR 100 a square meter. What's been quite an interesting unpack for us in terms of our portfolio is that we've sort of -- we've come the full cycle of 10 years. This year, on the 18th of June is 10 years since we listed. And we did a little bit of an unpack in terms of where our reversion releases went to. And if we had a straight-line lease and we carried through the rental where it started to where it was on the renewal, what we've seen is that the actual annualized growth rate across our portfolio is approximately 5%. And that really talks to the reality of potentially looking at a Shoprite lease with a 20-year term on it, and 5% probably being there or thereabouts, correct, which obviously I shouldn't be admitting in front of Shoprite. But notwithstanding that, I think the numbers talk to that. But more importantly, I think what it talks to, it talks to the fact that we have the ability in the long leases to not be spending money on lease renewals, on paying agents, on affording new tenant installations to clients and all these various things, which also add costs to a process over time. So the essence of the Equites business with this very long WALE is absolutely critical to saving significant cost in the process. Tenant demand remains high, and we'll unpack that in some of the developments we are undertaking and some of the negotiations we're undertaking. And through our land bank, we are looking to capitalize on that in a meaningful way. If I can add to that also that it would seem in Gauteng, I think, the R21 would probably remain the logistics central. I think it really is becoming a hub for logistics. And more importantly, what's interesting to see is the scarcity of land availability in both the Western Cape and KZN with availability of land, obviously, driving rentals pretty hard there. And it will be interesting to see where new nodes can be unpacked. In terms of the U.K., take-up in the U.K. has continued to be strong. What's interesting about the take-up in the U.K. in the last sort of 6 to 9 months has been a lot of the take-up has been absolutely linked to pretty large units. So what we're seeing is 500,000 square foot, which let's turn it into South Africa, it's a 50,000 square meter plus warehouses, seem to be going fast and furious. The space between sort of 10,000 and 30,000 square meters, maybe a little bit less so. And what's interesting is that the developers in the U.K. that have got the courage to develop above 50,000 square meters speculatively, seem to be extremely well at the moment. But like all these things, it will probably end up being oversupplied and then the demand drivers will drive off. But notwithstanding that, the take-up remains and it's positive. We are still seeing, as a consequence of the scarcity factor, notwithstanding the fact that the vacancy level has gone up, but the vacancy level has gone up in terms of gray space that is coming back to market rather than brand-new space with all the ESG credentials. Notwithstanding that, what we're seeing is a 9.3% year-on-year increase in rentals. I think we can caveat that also, we're saying that you probably need to exclude London from that. I think London went extremely hot for the maybe 3 years before that. I think that London has cooled off, and it's probably a little bit more horizontal. Prime logistics yields, I think still remain between that 5% and 5.25% band. I think when we start seeing meaningful interest rate cuts, the expectation is going into 2025 that, that will compress into the 4s. And obviously, we are looking with very, very keen interest to see when the market starts going there. And obviously, as the risk-free rate in terms of what government bonds are offering starts diminishing, sort of going into 2025, what we're seeing is also we will start seeing that core and core plus capital coming back into the market, which should drive that yield compression. The current high cost of capital, so notwithstanding the fact that we have seen the first interest rate cut. That interest rate is still fairly high. The transactional evidence is still limited. But again, the weight of capital that's waiting with bated breath for the movements will be interesting to see play out into 2025. As I said earlier, the rent reviews have gone well. And we're expecting a very good rent review with Puma coming through as well now. And more importantly, when you look at the weight of our expectation of what will come through on the rent review if you were to allow for that rent into our portfolio, what you'll see is our U.K. portfolio currently valued at a yield of about 4.8%, but it's a reversionary yield to 5.5%. Obviously, what that talks to is the fact that we are going to be going into a 2025 where that yield compression may start going into the 4s and we will have a portfolio that will be off its current rent, be valued in the mid-5s. And obviously, that talks to some pretty significant compression coming through for our portfolio into the new year. As you can see, the review cycle that we've been going through over the last sort of 24 months, well, for all intents and purposes sort of come to an end, I suppose, in February next year. We do have DHL leads in October back end of next year. It's a small unit, so the effect on the entire portfolio will be limited. And then obviously, in the cycle, we've got the final one, which is Evri, which is still couple of years away in 2027. But notwithstanding that, Evri already highly reversionary and obviously very excited about what could happen to that when it's due. In terms of developments, we concluded the Encore SPAR DC at Jet Park earlier in the year and pleased to report that the client has moved in massively successfully, and his business is really operating massively efficiently. And the consequence of this, obviously, has opened up spirals of communication within the SPAR organization and we'd be obviously welcoming of any opportunities that may come in the future. And we continue to engage with the team at SPAR and hopefully, there could be something coming out of that at some stage in the future. We have 2 parcels of land left at Jet Park. One of them is quite far down the line in terms of a negotiation for a pre-let. And we hope to be able to announce that to the market, let's say, before year-end. In terms of the 2 spec units that we undertook at Meadowview, as I said, 2 of them have gone and the third one is currently in negotiation. And we hope to have that let before Christmas this year. We've commenced a further speculative unit at Riverfields on a piece of land that we have there, and that will be for delivery middle of next year. And as luck would have it, we already have somebody nibbling at that and obviously, very excited about the fact that our product is so well received in the marketplace. As I said, Wells Estate should be PC-ing during the course of this month. And then effectively, our entire Shoprite portfolio will basically effectively be income producing in early 2025, but certainly before year-end, which is great news. In terms of our current situation in terms of where we find ourselves in terms of developments, I think the graph here is very telling in as much as that you can see the quantum of developments that we've undertaken over the last few years. And you can see how the focus has shifted from U.K. back to SA. And for the time being, we see that basically becoming 100% SA in the upcoming years. We will still be involved in the unpack of our development land in the U.K. and hopefully exploit it in a way that we can create some value but without taking any ownership or exposing the balance sheet to any undue risk. In terms of SA, the land bank is allowing us to continue to negotiate we are estimating that we will probably have a good ZAR 1 billion of developments to unpack in the year ahead. If we add that to the fact that where the world is going within SA, with the positive outlook and the level of demand that we think will only go from strength to strength, we are estimating 2 years of ZAR 1 billion development pipeline work coming across. We're currently are negotiating on an excess of 150,000 square meters across 7 different schemes, and that excludes any potential developments coming out of the Shoprite JV, which obviously bodes well and speaks extremely excitingly about where our business is going. And the level of certainty that these developments are going to give us with long-dated income with good escalation clauses and obviously, affording us also the alternative revenue from the energy sources coming off the roofs as well. I'm going to hand over to Riaan now who's going to take us into a bit more detail in terms of what's actually happening on the ground in our portfolio. And I think incredible work that Riaan and his team have done over the last 18 months to allow the business to continue to move forward successfully. Riaan?

Thank you, Andrea. As always, it gives me great pleasure to present these impeccable property fundamentals to you. And all our strategic and operational investment decisions at Equites are continuously aimed at strengthening these property fundamentals. Firstly, because it translates into the secure, sustainable and predictable rental stream that we need as a REIT. And secondly, it enables Warren and Justin and the treasury team to secure funding for us at incredibly low cost to debt levels. You'll see that our WALE, our weighted average lease expiry profile has increased from financial year-end '24 from 12.5 -- 12.6 years to 13.2 years. Our SA rental escalation at on average is now 6.2%. Our -- we have a significant rental uplift in the U.K. through the rent reviews at DPD (sic) [ DHL ] Reading, DPD Burgess Hill as well as GXO Coventry. There are further interviews at Puma and Roche to be concluded in the second half of this year, and we are also expecting some significant uplifts there. Our portfolio has increased to ZAR 28.3 billion, attributable to a 2.2% like-for-like growth as well as some completed developments, which Andrea referred to. Our U.K. valuations were stable. However, it was offset by initial impact of the ENGL disposal. On the 31st August, we had 1 vacancy. That vacancy has fortunately been filled and taken up by a multinational on a 7-year lease, which starts in October this month. The portfolio split, as you will note from the graph, 78% of our portfolio now consists of pure logistics properties. The exposure to income-producing assets in SA has increased to 63%, up from 58% at year-end. Land in SA and developments at SA now comprise 8% of the total portfolio. It was 11% at year-end, which shows that we are successfully converting landholding into development income-producing assets. And our exposure to U.K. has decreased from 23% at year-end to 20% at the end of August. We're well aware of our disposal program where we currently hold about 9% of our total portfolio as held-for-sale assets, which is reflective of our disposal program, which is currently underway. The lease expiry profile. In summary, only 23% of our leases by GLA expires over the next 5 years, which means that 77% of our leases by GLA expires post 1 September 2029. I mean, this gives us enormous comfort and it allows us to focus on a number of releases every year which is manageable and without unnecessary pressures. To give you some further context, of -- 6 of the leases that expire over the next 2 years have already been dealt with, in that 2 has been concluded through Addenda. A further 2, we had tenants vacate and we found substitute tenants, and we concluded new arrangements on 5-year leases with the new tenants. And a further 2 leases, the tenant has indicated in principle that the tenant wants to stay and the only negotiation outstanding now is the new rental. Obviously, this graph shows why our income is secure and predictable. The next slide deals with lease renewals, and we've giving you the full detail of the exit rentals and the new rentals at which the renewals were concluded. Now over this period, the past 6 months, 7 leases were renewed. Now when I look at that graph, 2 things stand out for me. Firstly, yes, in some instances, there were reversions. But secondly, when you look at the renewal rentals, they are at significant levels. When you look at the reversions, I think it needs some perspective and context. 6 of the 7 leases that we illustrate on this graph were in respect of properties that we acquired in 2015 and 2016 from Intaprop and Attacq. Those properties were developed by the former owners and development yields between 9% and 9.5%. And the new leases escalated over the 10-year period at 7.5% to 8%. Secondly, as I mentioned earlier, when you look at the renewal rentals, they are very encouraging. And it also confirms the significant rental growth that we've had over the past 2 years. And then thirdly, with these renewals, we acquired 16 properties from Attacq and Intaprop. And with these 6 renewals, 15 out of the 16 properties have now been renewed and are in the base. I think that gives some context in that the rest of our portfolio, especially the properties that we developed were developed at different deals and are certainly currently very close to market-related rentals. Our disposal program that Andrea referred to, as you know, we embarked on this program to recycle capital to deploy into new ESG-compliant prime distribution centers also to reduce our LTV and to ensure that we've got the ammunition when the opportunities are there for the taking. This program has already generated ZAR 1.8 billion of proceeds since we started. We have, over the past 6 months, concluded a further ZAR 1 billion of disposals. These disposals we expect will complete during the second half of 2025. And we've also earmarked an additional ZAR 400 million of properties that we wish to dispose in the new year. We apply, as we always mentioned, very strict criteria when selecting these properties. They are primarily older, non-ESG compliant properties and also properties that would have been unlikely to contribute to net asset value growth going forward. Importantly, we've managed to disposed of these properties in aggregate, in line with our book values. Our Board and Investment Committee have set very strict criteria on pricing as well. And we are very encouraged that we are realizing the values in line with the independent valuations of our properties, which we undertake every 6 months. That's all for me. Thank you very much. Over to you, Laila.

Thank you. Thank you, Riaan. Okay. So let's start with some highlights, and I know that Andrea has touched on them before, so I'm going to potentially race through some of them. But just to start DPS, ZAR 0.665, and this is pretty much in line with our guidance. However, later on, we'll get to where we are guiding and how we're comfortable guiding at the upper end of that guidance for the full year. We maintained a 100% payout ratio. In terms of our LTV, our LTV is reported at 41%. However, there are a number of transactions which are still underway, and we expect that to decrease to 38% by Feb '25. We had a very successful DRIP program at May -- or in May, there were 65.9% take-up, and this raised about ZAR 337 million in new equity. Our ICR has improved from 2.2x to 2.4x. And this is as new developments come online. Obviously, with the rate cutting cycle having commenced, we expect this ICR to only improve going forward. We have ZAR 2.2 billion in cash and undrawn facilities as at August '24. And then just in terms of our cost of debt, the ZAR cost of debt is 9.09%. So we continue to see a reduction in this cost of debt, and our U.K. cost of debt has remained at 3.92%. So let's jump straight into it, and let's look at the distribution statement. What drives our business is that property-related income. And if we look at net property-related income, it increased by 8.3% over the period. This was supported by like-for-like property income of -- like-for-like property income growth of 5.6% over the period. And then the additions, particularly of the Shoprite assets and the Encore asset, which Andrea spoke about earlier, increasing that to 8.3% over the period. There was an increase in admin expenses year-on-year. This is an inflationary increase as well as some once-off consulting fees, professional fees relating to that ENGL disposal, which was concluded during this period. If we look at the net finance cost, and this ties in with what I'll speak about in the balance sheet, but there was a higher outstanding debt balance if you compare 1H '24 to 1H '25, and this resulted in a higher net finance cost if you compare the 2 periods. So despite the cost saving and the saving in the margin, there was a slight increase in that net finance cost. If you look at the note and you look at some of the disclosure that we've put out, you'll see that the capitalization rate has also decreased. And as Riaan said, more of our portfolio is now income producing, which has naturally resulted in that finance cost capitalized becoming a smaller component of the gross finance cost as well as distributable earnings. Then if we look at the current tax expense and other income, there's a small current tax expense expected and this is as a result of the Newport Pagnell transaction. And then the antecedent dividend is as a result of the DRIP in May. And then if you look at the noncontrolling interest, that increased, and that's as a result of the increase in the Retail Logistics Fund portfolio. There was an increase in assets as a result of the development at Wells Estate, the development at Canelands, the increase in -- or expansion at Centurion and all of that has resulted in an increase in the noncontrolling interest, particularly relating to Retail Logistics Fund. That takes us to our distributable earnings over the new number of shares and issue in that -- distribution per share of ZAR 0.665. Now if we just look at what makes up this distribution, I think we start off with what the increases were, and we spoke about the like-for-like rental growth in South Africa of 5.6%. This added ZAR 0.0331 to distribution per share. We then look at the like-for-like income growth in the U.K. And it's quite nice to show this. Andrea spoke about the uplift in those portfolios. And what we actually had in this period was a 7% uplift or like-for-like increase in the U.K. portfolio as a result of those rent reviews which have come through. Then the Shoprite dilution. So the way we think about the Shoprite dilution is we look at the yields at which these deals were concluded at compared to the cost of funding these deals and that resulted in some dilution. Now importantly, once that dilution is in the base, we see that escalation coming through, and you'll see that, that comes out of the distribution growth. So once all of those transactions are bedded down, we expect that to be in the base, and you'll start seeing the growth coming through from the escalations. Again, there were some new developments, which contributed slightly to the dilution for the period. And then we spoke about this at length. When we were looking at how we were thinking about the U.K. portfolio, we did say that we wanted to look at rebalancing that U.K. LTV and that resulted in some dilution during the period. So just switching U.K. debt for SA debt or repaying the U.K. debt resulted in some dilution. We split out the impact of debt saving because we really wanted to show what the impact was of the decrease in those margins through successful debt auctions, and that increased our distribution per share for the period. And then there was some impact as a result of the change in admin costs and the DRIP dilution for the period, which takes us to the ZAR 0.665 distribution per share. And if we look at the balance sheet, I think we have to start by looking at what drives our business, and that's the investment property. So if you look at the investment property for the period, we had like-for-like valuation increases in South Africa of 2.2%. In the U.K., valuations were flat in GBP terms. We'll talk about the FX in the next slide, but in GBP terms, valuations were flat. Then if we look at the investment properties held for sale, you'd see that, that balance increased from February '24 to August '24. So if you look at it in aggregate, the investment property plus investment property held-for-sale, you'll see that, that was reasonably flat. However, you look at the movement, and you'll see that we actually transferred a number of those investment property assets to investment property held-for-sale. I just want to pause and talk about that actual investment property held-for-sale because it ties into what Riaan was saying about the disposal program. We started off the period with ZAR 2.1 billion of investment property assets held-for-sale. A total of ZAR 0.5 billion SA assets has actually been sold, so transferred out of that held-for-sale balance, and ZAR 1.7 billion of that opening balance remains held-for-sale. What happened during the period was we identified a further ZAR 1 billion of assets, which we've identified as part of our disposal program, and that was then transferred into that balance of assets held-for-sale. So we now have ZAR 2.7 billion worth of assets held-for-sale. We expect to dispose ZAR 2.5 billion worth of these before Feb '25. So our disposal program is well underway. We expect to dispose of a number of these assets before period end, both in South Africa and in the U.K. Now if we move on to just some other highlights, which I just want to point out, the loans and borrowings increased by ZAR 0.4 billion Feb '24 to August '24, and that was really as a result of drawing down on those facilities to fund the development activity for the period. We actually spent ZAR 0.9 billion or ZAR 900 million in development activities, and that was funded through increased borrowings as well as the recycling of proceeds. And then if we just look at the share capital during the period, you'll see that, that has increased, and that's as a result of the share issuance in respect of the DRIP. So I'm going to move on now to the movement in NAV and probably spend a little bit of time here. So if we look at the movement in NAV, we started the period by -- with the NAV at 17.14. I see our numbers have gone a bit wonkier because we've rounded them all. So that should actually be 17.14. We'll update the slide online just to show you what those actual movements were. But let's talk about what happened during the period. The SA portfolio, as I said, there was a like-for-like increases of 2.2% on a like-for-like basis. In the U.K., it was flat for all intents and purposes in GBP terms, but then the major detractor to NAV was really the ENGL transaction. And I want to pause and just explain what happened. Andrea will go into more detail about the actual transaction. But in terms of the sense, we recognized GBP 4.5 million upfront, that was cash in the bank upfront consideration. There was then a deferred consideration of GBP 4 million. So in total, in aggregate, if you look at the increase in our assets, that was GBP 8.5 million. So let's round it up around ZAR 200 million. What happened on the derecognition part was we had to derecognize all the initial sale companies, which were either sitting in investment property or in trading property. And then what we also did was we looked at the subsequent sales companies, and we impaired those or took a fair value write-down on those as a result of realizing that we'd only recognize GBP 500,000 in relation to those subsequent sales companies. So in aggregate, we actually derecognized or impaired ZAR 400 million. And so the net impact is really ZAR 200 million to NAV, which is what you see in that ENGL transaction, and that's the movement attributable to the ENGL transaction. Now what I have to say is that for accounting purposes, we're only allowed to recognize what we know. Andrea will talk about the possible or the potential consequences of potentially unlocking some of those further sites. Unfortunately, that's not how accounting works. We've had to recognize what we know for this period, and that's the impact that is recognized and that you can see in the movement in the NAV. From a ForEx perspective, when we closed our cross-currency interest rate swaps, we said to the market as a result of closing these swaps, we are leaving our NAV in the U.K. completely unhedged. And now during the period, we saw an appreciation in the rand. At Feb, the rand was at ZAR 24.33 to the pound. At August, it was ZAR 23.31 to the pound. And so there was an appreciation of about 4%, and that's why you're seeing that impact in the FX, which negatively contributed to the NAV. If it was converse, you would have seen that appreciation in the NAV, but we were very upfront and clear about the fact that we were going to leave that NAV completely floating once we close those cross-currency swaps. And then we saw massive support for the DRIP. Andrea said it may have potentially been too successful. But we were very happy raising some equity for the period that was at a discount to NAV, and that contributed to the decline in the NAV for the period. And that's where we end up with our NAV at ZAR 16.32. So again, I said the numbers went a bit wonky. We'll update the presentation just to show that those actual movements for the period. Then I just want to show the movement in LTV. We started the period at 39.5%. The ENGL transaction, those upfront -- the upfront consideration, that reduced -- sorry, the upfront impact of the ENGL transaction increased the LTV by 0.2%. The SA disposals for the period, as Riaan spoke about, that decreased the LTV by 0.9% for the period. And then there were some SA developments, which increased the LTV by 2.9% during the period. The DRIP, the successful raise of ZAR 337 million, that reduced the LTV by 1.1%. And then there were some other impacts which increased the LTV to 41%. Now I'm going to move over to the next slide because we just wanted to show what we are seeing and how we're seeing this LTV really unpack for the period. We are seeing further SA disposals. As Riaan said, there have been heads of terms agreed over -- 2 portfolios in South Africa, and we expect those to decrease the LTV further. We then also have earmarked a further ZAR 400 million worth of SA assets, which we expect to reduce that LTV before the end of the financial year. And then we've identified certain assets in the U.K. Now this is quite a big element of reducing that LTV. I think Andrea will touch on that when we're just looking at our prospects. But really, we have identified some assets in the U.K., which we will look to dispose of before period end. And then we've just provisioned for some contracted developments. We only have ZAR 600 million worth of contracted developments before period end. And then we've made provision for some uncontracted developments where we expect to commence some developments before period end and some other elements. And we expect the LTV to essentially end up at 38.2% -- or 38% by Feb '25. We just wanted to touch on some treasury highlights because once again, we think we've done phenomenally well in the debt capital markets, and I think it would be remiss of us not to pause and reflect on how we've done. At period end, we have ZAR 2.2 billion cash and undrawn facilities. We have ZAR 2.5 billion worth of debt facilities maturing in the next 12 months. Of that, ZAR 1 billion is listed debt, which we are looking to refinance. We will have a debt auction in November. As history has shown, we have done exceptionally well in these debt auctions, and we'd look to continue placing successfully -- or successfully placing debt in the market in November. We have already engaged with all of the funders in which -- as relates to the remaining ZAR 1.5 billion and they've all expressed their appetite to either refinance or to roll those facilities. Again, as I pointed out, our interest coverage ratio has increased to 2.4x, and we only expect that to improve going forward. If we look at our balance sheet management, I think we've touched on this. We raised some equity through the DRIP. We have successfully disposed of ZAR 0.5 billion worth of assets in SA and ZAR 0.1 billion in the U.K. So that's ZAR 0.6 billion worth of disposals in 1H. And then we expect further disposals in the second half of the year to reduce the LTV to an estimated 38%. Our weighted average debt maturity has reached 3.5 years. We listed successfully a 7-year note for the first time in February '24, and then we tapped that note in April '24. And we're very pleased with where our margins are both on 3-, 5- and 7-year debt. Those continue to reduce over time. Our cost of debt in SA has reached 9.09% and has remained stable in the U.K. at 3.92%. 88 -- 86% of our debt over 1 year is hedged. Our treasury policy requires us to hedge at 80%, but we look for opportune moments in the market to increase that where we think that the market allows for us to do that at acceptable or advantageous levels. There's an interest rate sensitivity of 36% in our portfolio over our debt. We have looked at it in -- just this morning, we've looked at what the market is pricing in. And they're pricing in 100 basis points of decreases both in SA and the U.K. before the end of calendar year '25. Now while we will benefit from that, it won't be 100% benefit from that because we only benefit 36 basis points for every 100 basis points decrease in the base rate. And then just to reaffirm, GCR has affirmed our long- and short-term ratings of AA minus and A1 plus, which we're very comfortable with, and we have an unencumbered asset ratio of 54%. Now this just really shows -- and I think we've spoken about it significantly or quite a bit, we're very proud of where our cost of debt is. But it just once again shows SA cost of debt to 9.09% and U.K. cost of debt at 3.92%, which is actually below SONIA as a result of our Aviva facility, which is a long-term, fully hedged facility. So that's it for me. I used to do the ESG slide, but Andrea has become a bit of an ESG [indiscernible] himself. So I'm going to hand over to him to take us through these highlights.

Thank you, Laila. She's, as ever, too kind. But I think it's been an exciting period for us on the ESG front. We achieved our first ever t EDGE Net-Zero Carbon certification on a building in Germiston in Johannesburg. I'm led to believe it's only the second one that's been achieved globally, but obviously the first one in our portfolio. We currently have 2 other facilities that are going through this process, and we'll hopefully be able to announce that within the next 6 to 9 months that we also have achieved that net-zero carbon. As you can see, the emphasis that, as an organization, we're placing on the sustainability metrics are absolutely critical to our DNA, if you like. We made this decision probably about 5 years ago. And like all things, it takes time to educate oneself, it takes time to start implementing. And then also, it takes time to be able to impart that knowledge to your clients and work together to try and achieve these things. And I think testimony to the ESG team at Equites and the work that they've done to get us in this position, I mean, we continue to add our solar capacity up at 23.5 megawatts. And the expectation is within the next 18 months with what's coming online in terms of developments and stuff is that we'll probably be able to take that close to 30 megawatts within the period. 32 properties basically have PV systems, and that's up from 29. What you'll see is that, that number will continue. But as a percentage of the total portfolio, it will become bigger and bigger because as a consequence also of the sales program, a lot of the properties that we are selling, probably are in a position that make it relatively not cost efficient to in part certain things to them because of the way that were built at the time. Our renewal energy that's coming out of our systems, effectively, we're just shy of the 20% mark in terms of the total energy consumed in our warehouses. And obviously, we have expectations for that number to continue to grow. I think the most exciting thing maybe because it's new to us, is that we are looking at our first sort of water treatment plant with a view to basically being able to treat both gray and black water. We are in the final throes of the final design process at one of our parks in Gauteng. We have identified 4 further parks where we are looking to install similar type of systems. What's interesting about this though is that whilst the cost of water probably doesn't make these as profitable as the solar sort of implementation that we've undertaken, we are of the opinion that it's absolutely vital that we are ahead of the curve here. We see water sustainability, notwithstanding the fact that the infrastructure is probably not as good as it could be and it's crumbling. But I think it's an essential part of where things are going globally and being at the cutting edge of what can be done and taking it to this level is really buying in a lot of goodwill from clients, especially the global multinationals and the big listed in South Africa that we are effectively taking the process to them rather than the other way around. And absolutely very excited about the first plant hopefully going to come up and will be fully functional in the first half of next calendar year. I'm hoping the first quarter, but probably realistically more the first half. And we hope to be able to report on that during the course of next year with some key metrics. We are estimating that we will be able to recycle approximately about 70% of that water, which will greatly reduce the consumption. Obviously, we're not going to be -- we're recycling it to make it potable water, but rather to be used for the flushing systems, for the irrigation systems and also for the car wash systems that are quite extensively used in some of our facilities. So very exciting and obviously and a further feather in the Equites cap in terms of trying to be at the cutting edge of what's going on and what we can afford our clients for the future. I think it's -- maybe now it's time to talk about the ENGL disposal in a bit more detail. As you're aware, the first part of the transaction comprised the sale of few of the SPVs that control certain land portions. Now that came with a GBP 4.5 million tag, which is already basically cash in the bank. There's a GBP 4 million deferred consideration, which will be coming effectively from the profitability of schemes that we are undertaking with Newlands from their portion of profit which will be afforded us during the course of calendar year 2025. The vast majority of that profit will be coming out of Newport Pagnell, which obviously is contracted and is progressing on time, on schedule and most importantly, on budget. Over and above that, we have 3 SPV companies that had an Equites guarantee against them. Those guarantees are in the process of being removed. And the consequence of the removal of those guarantees as those SPVs will transfer to the new joint venture at GBP 0.5 million per site. Our expectation is that 2 of the 3 sites will potentially be done before the calendar year is out. The third one will be -- will probably go to the long-stop date of 30th of June 2025. The remaining part of the ENGL joint venture basically comprises of effectively 4 elements. First one, Basingstoke, which -- I mean, has been spoken about extensively over the years. We have been fairly unlucky with the planning processes there. We should be going to committee again this year on that before the year is out. We will be going to committee this year. Our expectation is we're going with a recommendation for approval. And I think the most important part of this is that with the new Labor government in place, the pressure on planning approvals and the pressure that committees are being put under to not succumb to political nimbyism is at an elevated level. Notwithstanding that, though, I think the work that the team have done on the ground in the U.K. with the public participation, with the processes of rejection being listened to and adhered to, and the work that we've done and the ability for us to present to the committee, the fact that we have reduced the visual impact dramatically from the first scheme that was rejected bodes well for a successful process in that regard. The next 3 parts basically is Thrapston, Coton Park and Newport Pagnell. Maybe I'll start with Newport Pagnell. That obviously is under contract with Panattoni as was issued in the SENS earlier in the year. And that is, as I said, on track and progressing well and should be delivered in terms of top structure buildings by end of July next year. And then all the infrastructure works on the road infrastructure that's going to be feeding into Newport Pagnell area should be completed by October '25. So that looks to be going well and obviously, very pleased with the outcome there. And Thrapston, we are expecting to go to committee before year-end. And the consequence of a successful planning there will result in the new Newlands joint venture effectively drawing that land from us and Equites being afforded a fee for that. So we hope well and very much like Basingstoke, talking to council that will probably be receiving a recommendation for approval as well. And our expectation is that there should potentially be a positive outcome of that. The final one, obviously is Coton Park. Now Coton Park is currently in the final throes of a negotiation for a forward funding deal. There's a couple of title elements, nothing to do with planning. Planning has been approved already and is consented. There's a couple of title issues that are being resolved at the moment. And the expectation is that this deal potentially should be consummated before Christmas with a view to being on site in January for a delivery at the back end of '25 or beginning of '26. And we will keep the market abreast of this as and when the deal is 100% unconditional, the moment it is still very conditional. The value unlock that will come as a consequence of all these items will certainly more than compensate the NAV number that Laila presented in the presentation in the upcoming periods. Obviously, as a consequence of the fact that we are not totally in control of the outcomes. And whilst we remain very optimistic of the outcomes, we're not totally in control of them. And until we are in control of them and we can effectively, from an accounting perspective, as Laila would say, we can then book those in and bring them through the process. So we obviously remain optimistic and the bedding down of this is going to be an 18-month process. Equites is in no rush to do anything that will compromise the positive potential outcome of the unlock of it and also maintaining that positive relationship with our Newlands partners. As difficult as negotiations sometimes can be, positive thing is that we've come out the other side and with a very clear vision of where Equites wants to go and where Newlands want to go and very respectful of each other and we continue to work together to get these things over the line, which obviously is fantastic for the process. I think we end the presentation now with our prospects. And before I turn to the thing, I think where I'd like to start is, obviously, I'd like to start with the fact that we've come out of 24 months of, I suppose what we would define at Equites is almost a perfect storm. We came through a period of very fast, increasing interest rates, which had, specifically in the U.K., a massive impact on valuation there, had a massive impact on our land bank there and the opportunity to deliver product to ourselves at a discount to value which would have allowed us to conclude successful transactions as we did at Hoyland, as we did at Peterborough with the Newlands team. The reality is that the consequence of where the markets have gone, that particular vehicle for our business was no longer functional. We've come out of the cross-currency swaps, again, for the same reason. They were no longer functional. And the elevated level of risk that they basically brought to our balance sheet was no longer worth the process. We've come through, as Riaan unpacked, cycle over the last 24 months of significant lease renewal. During the past 10 years, there were probably 3 or 4 years that saw no rental growth coming through the system. And the consequence of these leases with sort of 7.5% to 8% escalations, put them in a position of being reversionary. We've taken that. We've bedded that reversion into our numbers. We've renewed, as Riaan said, 15 of the 16 leases. Those numbers will start basically being delivered upon from the base that we're in now. And the final element, obviously, is as we unlock the final piece of capital out of the U.K. joint venture and we start bringing that capital back to SA, we've got this incredible portfolio, an opportunity in land bank to be able to redeploy that capital in a meaningful way. The optimism, so the future, what is -- what are we looking at? We're looking at a country that for the first time in many, many years, is talking about the opportunity of 2.5% GDP growth coming in '25 and potentially '26. The effect of that across the platform will necessitate significant real estate investment from operating businesses in SA with that kind of growth coming through. Supply chain is becoming ever more important. The quantum of data that is being presented to the market and the importance of creating a supply chain system that allows you to get product to the end consumer in an ever, ever, ever shorter period of time, will necessitate more and better real estate to be able to perform that function. We believe, as Equites, we are in the pound position to afford clients, not only the IP that we've developed from working with multiple types of businesses, but also the ability of our balance sheet and the cost of our capital and an improving market metric for property in general that will afford us the opportunity to be able to deliver on that prospect. The existing stock, as you can see in our portfolio is nonexistent, but this is true for most of our competitors, too. And the reality is that the top end of the market, but not even the top end of the market, I think, the entire real estate sector of the industrial sector across the country is seeing an all-time low, which bodes well for the opportunity of bringing more stock to play, and that bodes well for Equites' prospects going forward. So what are our key focus areas? Our key focus areas obviously are the implementation in the most profitable way possible of the disposal of the ENGL platform, extracting the most value for Equites. For the time being, we expect to maintain our stabilized U.K. portfolio. We are coming to the end of the review cycle and we will evaluate with our IC and with our Board in the periods ahead, should there be better ways to deploy that capital going forward. And as the interest rate cycle starts easing itself, should valuations reach significant highs again, would it be in Equites' interest to look to capitalize on that and have these enhanced capital returns redeployed in newer product going forward. SA continues to present massive opportunity for us. We are continuing to look to allocate capital to obviously, high-quality real estate. We are seeing our partners such as Shoprite, continuing to look to expand their supply chain. And we are very excited about the prospects of continuing to partner with them in the future and what the next 2 to 5 years will bring from that. With TFG, we've seen some exceptional returns already in terms of their operational metrics. I mean, it's not a secret that their bash is going from strength to strength. And I think the real estate solution that we provided in Gauteng has certainly assisted them in that. The ability for them to get product also to store in ever faster times, which is resulting in them being able to execute on sales to the end consumer. All these positive elements are effectively benefiting the opportunity of creating more real estate for these clients. I think the entry of Amazon into the marketplace in SA is going to be an interesting one. I think the most important part of it is probably not the fact that Amazon are going to require x amount of square meters, I think is that what Amazon are going to do is going to focus the minds of everybody that operates in the SA system. And ultimately, it's going to drive a requirement to be able to compete on an even keel with potentially one of the greatest companies in the world when it comes to supply chain. So that bodes well for alternative opportunity from an Equites' perspective, and we are very excited about that. We continue to focus on an ever-increasing alternative source of revenue, energy being obviously one of great sort of opportunity. And it's really starting to deliver. The other one being the asset management function. We've got a couple of assets in SA, which are being managed by us, where we have joint venture partners, and we are getting some fees from that. And we continue to look at those opportunities within the realms of not only our SA portfolio, but also our U.K. portfolio. And if we can get some of those items done correctly, there is an opportunity for us to create a bit of an asset-light strategy, which will result in significant increase to distributable earnings. And I suppose that leads me nicely into the final part of the presentation, which is that we continue to guide a ZAR 0.130 to ZAR 0.135. But with where we sit today at the half year, I think we have the comfort and the visibility to be able to guide that it will be at the upper end of our guidance that we will be looking to close out financial year 2025. And I think on that note, we would like to thank you all for having sort of dialed in and listened to us. I hope that the presentation has been informative. And it's giving you comfort that Equites is in really, really good shape, that as a management team, we are massively optimistic about the years ahead. And the ability that the team has shown and the resilience that the team has shown to have come through the last 2 years in the health that we currently find ourselves in, leaves me extremely proud of the team, proud of my co-executive, proud of our Board that we've shown the courage of our conviction. We've made some difficult decisions, but we certainly are looking to come out the other side now in great shape. And on that note, I want to thank you all again for having joined us. And I'm going to hand over. Laila has got the iPad there with some questions, and we'll look to try and answer them to the best of our ability. Thank you.

Thank you very much. We have a flurry of questions, but we don't have that much time. So I'm going to choose 3 or 4. And then to everyone whose questions has come through, we'll get back to you in the next day or 2 either via e-mail and/or setting up calls. Okay. So to start, Andrea, I think a strategic question. Matthew from Laurium is asking, can you unpack why you're selling more U.K. properties given the fundamentals in the U.K. appear to be improving and the expectation of further rate cuts in the U.K.?

Ultimately, we had identified a couple of properties. We're not selling them all. A couple of properties for sale. And as part of a program, we had to choose certain assets to sell to ensure that our balance sheet remain healthy. It's never a perfect situation. And ultimately, we do need to recycle some of that capital. We have chosen assets in that portfolio that have gone through reversion and will potentially be fairly flat in the process, and we are looking to execute at values that potentially in a year's time, could be slightly better, but still offer great value from where Equites invested and the total IRR that we will have delivered to the Equites team -- to the equity shareholders will be significant nonetheless.

Now I'm condensing a couple of questions between Nazeem, Francois from Anchor. There's basically questions around Basingstoke. So there's a question around the carrying value for Basingstoke at 1H '25, which I'll answer. And then just the capitalized interest, and do we expect that the fair values are still -- or the carrying value is still reflective of the fair value? So at the moment, we're carrying it at GBP 30 million. We've capitalized just under GBP 1 million for the period on the Basingstoke land. But I think to put that in context, Andrea, where do we see in terms of the second payment and where do we see the fair value of the land?