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

Good morning, everybody, and welcome to interim results presentation for Equites Property Fund for the financial year to February '26. It's absolute pleasure to be with you all this morning, been an exciting few days here at head office, getting these results sort of through our various committees and Board and obviously getting them approved for this presentation. And obviously, very excited with the outcome of the last few days work, should we say. So let's cut to the chase and let's really look at the highlights for the 6 months. And we'll start with obviously the most important metric, which is the 1 that all of you are probably wanting to understand, and that is obviously the distribution per share at 69.04c, an increase of 3.8%, which very much in line for us to meet our full year target of 5% to 7%. So very, very, very pleased with that. And we will go through this presentation today, really highlighting the incredible shape that the organization is in and will continue to improve through the next sort of 12 to 18 months. So next, net asset value increase of 2.7%. So we've been talking about this value proposition that's coming through the Equites portfolio as a consequence of these high caliber, high quality buildings that we have brought into the portfolio over the last sort of 2 or 3 years. And there was, I suppose, a couple of years ago, there was a bit of skepticism in terms of, is the real value going to come through, are the rents appropriate? And I think the proof is in the pudding today where we can come and present externally valued assets that have shown significant growth in SA and really reflecting the high caliber and high quality of assets that we have in the portfolio. The loan-to-value, obviously, very pleased that it's still below the 40%. 2 years ago, I think in 1 of these meetings, we presented sort of a loan-to-value above the 40% mark, and we explain our flight path to ensuring that the balance sheet would remain robust and strong. And as you can see, we have managed to process through some of the older properties in the portfolio. We have managed to develop some incredibly long-term high caliber assets, which we spoke about in the net asset value column, but the consequence of which all of this has come through now, and we see ourselves going from strength to strength in this regard. And this will only get better as we slowly come through the U.K. exit process. In terms of recycling capital, we've had ZAR 700 million of income on the disposal side. Most of that coming from the sale of Burgess Hill in the U.K. And then we've deployed about ZAR 0.5 billion in the first half and we see that sort of ramping up, sort of during the course of the second half and then going into financial year '27, and we'll talk to that in due course in the presentation. We then obviously very pleased that we've managed to maintain our Level 2 status, 78% verified black ownership as well. And whilst these metrics are very important for our tenants as well in terms of the look through, I think it also shows the level of importance that as a management team, we place on these and the values of being a responsible South African corporate citizen. And then the final element in terms of the 6 months under review is the solar capacity. It just keeps on growing. And as we continue to add new product that is an automatic, if you like, in terms of the solar going on that roof. What we've sort of managed to do as well is through the renewal process of retaining certain tenants or bringing new tenants into some of our existing buildings, we are seeing the rollout of solar on those buildings as part of the course, if you like. So really pleased with the amount of generation that we currently have and we do believe that this will just continue to tick over nicely and continue to grow as the portfolio continues to grow and evolve. Let's maybe just look at where we are at the moment from a market perspective. The sector that we operate in remains massively robust. We see a lot of our competitors in the marketplace also probably trading at all-time low vacancies. You can see the national vacancy at 1.9, and that's across the entire industrial space, which includes everything down to sort of mini units, if you like. The A-grade sort of ESG-compliant sort of top-notch warehousing, the vacancy there is even lower at 1.5%. And I think this bodes really well for Equites and what the product that we are offering. And we'll talk to a couple of metrics during the presentation in terms of why we see actually the demand drivers within the SA economy still being extremely strong, notwithstanding the fact that the macro potentially is still not as strong as we'd like it to be. And if we are fortunate enough to start seeing a bit of the macro also improving when we really see a massively favorable 5 years ahead. Industrial rentals have grown significantly, so from the pre-COVID level. So leading up into 2019, we probably had 3 or 4 years where rentals were fairly static. And I think we felt the effect of that through the renewal process. And as we've explained in various presentations over the last few years, some of the reversions that we had in some of the existing portfolio were significant. Fortunately, they weren't as significant as maybe we expected them to be when we look through our portfolio in 2020 and 2021. And part of the reason for that is we've seen this rental growth come through the system as a consequence of obviously build costs moving on, but also the fact that we're sitting at a vacancy level of 1.9% on a national level. So that obviously gives a much stronger negotiating power to a landlord, and it's obviously very pleasing to see those things come through. We continue -- the sale process that have gone through, we've continued to sort of achieve really attractive yields, which bodes well for, obviously, the valuations on the portfolio going through. But also, I think it bodes well for the sector in essence, in terms of the value proposition that it offers investors. Where is the demand coming from? I mean obviously, the 3PLs are always big requires of space. We see that the demands put on the third-party logistics in terms of the time frames in terms of which they need to adhere to and deliver to are becoming that much more stringent. The consequence of which is reengineering some technology into an older warehouse probably doesn't work anymore. And as a consequence, we're seeing their demand drivers coming through. We're seeing the same thing from retailers. The advent, obviously, of e-commerce. The attention span of the buyer at the other end of that e-commerce platform is not very long. You can probably look at quite a bit of research that is out there which talks to people, flipping from 1 page to another, should they not get what they want within an immediate effect. The consequence of which is the amount of technology that we're seeing are all these players starting to utilize more and more to ensure that the advent of AI, the progress with the amount of data that's available to them, of the algorithms to be able to respond to the demands of an ever more demanding consumer. And really, we fit so nicely in that because our level of understanding of the product that we use, our compatibility to the thought process through the industrial engineers as well as through clients that are looking to win market share, obviously puts us in a great position. The ESG compliance, obviously, is also a major factor. And whilst, yes, we have a political changing of the guard over the last, let's say, year 18 months, where we're talking about pooling some of the sustainability metrics that have sort of become the norm in society, I think where we find ourselves is within the realms of a South African environment where energy availability is another issue that goes on top of it. So what we are being able to present to our clients is a product that actually -- firstly, I think meet sustainability goals or historically accepted goals. But more importantly, what it does is it does -- it fills the gap where the erosion of our infrastructure has left an opportunity for us to sort of step in and assist in that, and we'll talk a bit more in demand about that. In terms of our business and where we are. We're obviously really pleased that the economic signs of recovery in SA. And whilst the macro is still not totally reflecting that, obviously, a reduced interest rate, a continued commitment by a central government to want to bring sort of private business into partnerships with the public Fiscus, if you like, to try and ensure that things actually do get delivered and done, is starting to bode well, and then hopefully, this will reflect positively in the economy going through. Where we stand in that, we currently have control of 47 hectares of land for developments. But more importantly, we do have access and availability probably to another 30 to 40 hectares of land over the period as and when we need it, which is really pleasing because what it's not doing is it's not putting a constraint on our balance sheet, but yet it's giving us the availability through -- with a look through to a period of time. And the level of interest and engagement that we've had with various market players really bodes well for the consumption of the land that we have on hand in the not-too-distant future. The amount of speculative development we've done, we've done 2 facilities this year. The 1 is let and the tenant is in or is putting his racking in while we finish building it. The other 1 is basically almost done. I mean the commercials have been agreed, and it's going through legal process. This bodes well, obviously, for the quality of our product, but it also bodes well for the fact that our portfolio remains at a very, very low vacancy level. As a consequence of the success that we've had with our speculative program over the last couple of years, we've made the decision to basically extend that speculative program into the forthcoming year with another development at Riverfields and then another 1 up at Jet Park as well to try and capture the demand of clients that don't necessarily always make decisions with the necessary time to do pre-lets. The income-producing portfolio continues to deliver sort of not only valuation uplift, which is creating, obviously, the capital growth that we require, which obviously then leads into lowering the LTV, and effectively, it really leads into generating that extra capacity, if you like. And if we look at the graph that's on screen, if you look at the financial year '27, if we stood still now, if we allowed for a 5% -- 5.5% annual portfolio growth, which we believe is not an unrealistic requirement due to the quality and the caliber of tenants that we have in our buildings, the spare capacity that our portfolio growth will afford us and in financial year we'll be basically ZAR 700 million of new product that we can bring in without affecting the loan-to-value at 37%. And if we basically brought on that ZAR 700 million in '27, we go to financial year '28, we can basically then deploy ZAR 1.2 billion. And then in financial year '29, it will go to ZAR 2 billion and then in financial year -- that should be '30, not '29, it actually goes to ZAR 3.3 billion. Obviously, the caveat to this is that we don't lose any tenants and that we basically retain the current level of occupancy. So it is a hypothetical, but I think point that we're trying to convey here is that when you've got such a high caliber portfolio, the additional benefits that it affords by just being and the compounding effect that it affords is significant. And I think we're going to start feeling the effects of that, coupled with the headroom that the U.K. sale is also going to give us in the forthcoming year. Over and above that, obviously, very pleased that we've been given preferred bidder status. So this deal is not concluded. It's a significant facility that was basically put through a tender process. And obviously, we're very pleased that the team was able to convey to the client, the caliber of product that Equites would be able to deliver and the unlock of this facility on R21 in our sort of premier Riverfields node is really a feather in the cap to the Equites team and what they have been able to achieve over the years and the way that we present our product to the client and the engagements that we had through a very competitive process. I mean it's going to be approximately ZAR 1 billion investment, including the land, the building is going to be fully edge certified and have significant solar availability and which will obviously assist in our yield enhancement, we're looking at a 10-year lease with a 6% annual escalation. The beauty of this as well is that because it's in the Riverfields precinct, and we'll talk to you a bit later on, the ESG component of this will not just be from a solar perspective, but we're looking to bring in also the water and sanitation process with it. This particular site will have the benefit of having a sewerage plant to recycle the water as well. In terms of the U.K. portfolio, the fundamentals in the U.K. remain challenging. As we know, the political environment at the moment is not the most stable that we've had over the years. And -- but notwithstanding that, the U.K. still remains the fifth largest economy in the world and remains an economy that is extremely attractive to very, very large and deep pools of capital. As we've announced, we are looking to sell the Aviva portfolio. We refer to it as the Aviva portfolio. Our marketing agents in the U.K. have labeled this portfolio, SpringBox with a B-O-X in terms of the play on the warehouse. But that process is ongoing. And we believe that the buyer of the portfolio will benefit from a fantastic portfolio, but they have obviously the added benefit of the fact that the Evri facility that's in this portfolio is now no longer Evri -- it's actually a DHL leases as Evri in the U.K. has been bought out by DHL and it's received regulatory approval. That obviously has a massive benefit to the covenant strength on that particular product and the cash-on-cash yield for the prospective buyer is significant as a consequence of that Aviva debt being in place until 2032. We are aiming to complete this -- the sale basically before financial year-end. What is positive is that we did complete the sale of DPD Burgess Hill in August, and obviously managed to make that sale go through at a 5% yield. And obviously, a very happy buyer on the other end. The consequence of which is we have settled all our debt outstanding with HSBC, so the remaining debt that we have, and I'm sure Laila will talk to it in the U.K. is the Aviva debt effectively. In terms of our Newlands platform, where are we? So obviously, the really pleasing thing at Basingstoke, as you know, we achieved planning at the back end of last year. We have now managed to sign the 106, and we have come through judicial review. So the planning status of that site now is indisputable, and it's in place and cannot be removed. And management is now that we have absolute finality on that, and we're working through the various other sectors, sections of getting the sites spade ready. And we're almost there with all of that and because we have this level of detail available to us now, we are now commencing a process of looking for the best way to monetize this particular site, and that would be either through a forward-funded process, potentially an outright sale. But we are obviously engaging with various parties in the U.K., and we hope to be able to give you more information on that in the not-too-distant future. What's pleasing at Coton Park, which is a site that also proved to be quite difficult to get through its process in terms of getting the planning and getting everything done, that deal was done with JD.com earlier in the year. What I can tell you is that we are about 4 weeks ahead of program there at the moment. The civil contractor benefited from 1 of the driest summers in U.K. history, and obviously, the ability to move soil around and create the -- and do the bulk infrastructure work, ended up being a lot simpler than would otherwise be the case in a normally wet U.K. The Goldthorpe position, we have been paid for the company in Goldthorpe, but we have not transferred the company over to Newlands yet as we are waiting the original landlord to release the EIL, the Equites International Limited guarantee. The guarantee being in place basically gives us complete control of that company, which means that whilst planning has been achieved there and the 106 is almost ready to be signed, Equites controls that process, and we will not allow the 106 to be signed until our guarantee is released. So we are in control of our guarantee not being exposed there, which is quite important to us. In terms of Thrapston, we had a non-determined appeal process that happened during the summer months and I think, concluded around the middle of August. We are hoping to hear during the course of next week what the determination is from the inspector. Our team and including our senior counsel that worked on this process remain fairly optimistic that there potentially is going to be a positive outcome here. In the event that we do have a positive outcome, Newlands have indicated that they will be drawing down on this particular piece of land, and that process will probably happen in March, April next year. So I think this is -- now we're getting to something where we just thought we'd share something slightly more informative, probably doesn't really talk to the results in a way, but what it talks to is why Equites and why are we seeing this level of success through our business. And I think it really talks to -- that we see the real estate as 1 of the foundation blocks of having an efficient supply chain. And ultimately, like any house, if you build a house and you don't put proper foundations in it, you end up having problems at some stage during the process. We see the real estate decision-making as being as 1 of those foundation blocks. And if you get it wrong, it becomes very difficult to remedy, especially when you're committing to processes over a 10- and 20-year horizon as some of our tenants are. And that takes me nicely into where we are with our relationship with Shoprite. As you know, Shoprite over the years have created this unbelievable network of distribution centers across the country, which has effectively allowed them to ensure that they have product on their shelf. Without having that product on their shelf, obviously, you can't sell it. So ultimately, everything starts from ensuring that, that is possible. They currently have about 29 DCs across the country. And 1 of the latest additions, obviously, is the Riverfields DC that we provided for them up in Halting and that particular DC is serving 500 stores. And is 1 of 5 -- over and above that, we have 5 more warehouses which are in the RLF joint venture. The Riverfields DC is 100% owned by Equites. Now the process of them being able to have stock in the in-store is a consequence of these distribution centers. They are industry-leading at about 98% in stock over the last 3 years. What we can tell you is that the level of receipt of good that Shoprite is achieving is not as high. And why is that? That is a consequence of the fact that a lot of their suppliers have probably not invested in their supply chain to the same extent that Shoprite have. You can imagine what those conversations must be behind closed doors. I leave that to your imagination. But the consequence of which is that what we are seeing is more and more of these large FMCG companies are needing to explore their own supply chains. And as a consequence, we are quite optimistic that several RFPs will be coming through the process over the next 2 to 3 years to ensure that these clients can maintain a level of efficiency and a level of throughput to their clients, which meets expectation. So I mean that's the first one. And the second one, obviously, is the TFG facility up at Riverfields. I think we've spoken through this before, but the consequence of having a facility that was designed to take into consideration not only store delivery, but a growing online provision has allowed for a massive reduction in cost in terms of the fulfillment of both sides. And the order fulfillment to an e-commerce customer as well as to store now basically comes out of 1 facility basically defined as an omni-channel enabled facility, consequence of which is that the same vehicle that does 1 delivery can do the other, thereby massively reducing cost. Over and above that, what it's done is because of the level of technology that's been invested into this facility, you can see that the replenishment in stores, and I think we've shared this with you guys before, it's been reduced from 4.6 days to 2.6 days. And when you multiply that over 3,500 stores plus that the TFG Group has, you can imagine what the effect of that would have on revenue. And the consequence you can see in the availability marker, it means that stock is actually on the shelf being able to be sold at 91.8% rather than 84.9%. Consequently, the quantity of product that potentially ends up being still in stock at the end of a natural cycle of sales is thereby massively reduced, which means what needs to be discounted to push through a sales process, obviously, is greatly reduced as well. As you can see, the facility is able to handle 450 shipments per week. And as I said, the omnichannel nature of the facility allows for a massive reduction in operating costs. And I'm not sure -- I think a lot of you may have been at an SA REIT conference, I think, at Houghton probably about 4 years ago or so where -- I think we had an analyst from the U.K. that came and presented the total cost of supply chain. And in that graph metric, I think he spoke a lot to the fact that the last mile is actually the most expensive part of the supply chain, and thereby reducing that cost of the last mile, I think we'll have massive optimization benefits for the TFG Group over time. So again, very excited to share these kind of metrics with you because these really underpin Equites' thinking, Equites' way, Equites' ability to transmit the potential of making really informed decisions to clients to take their businesses into the 21st century and being able to fulfill, win market share and have successful businesses. On that, I'm going to hand over to Riaan now, and he's going to talk to you a lot more about the detail of what's actually happened in our portfolio over the last 6 months. Riaan?

Thank you, Andrea. In summary, just the slide shows that our property portfolio over the past 6 months increased by ZAR 600 million to ZAR 28.3 billion. Our lease expiry profile and another uptick there to 14.1 year average weighted lease expiry profile. Escalations are currently across the portfolio at 6.1%. If you exclude the Shoprite leases, which are 20-year leases escalating at 5%, the average is close to 7%. We disposed of property to a value of ZAR 0.7 billion and those disposals in the U.K. and SA were done around book values. Vacancies as of today is only 0.3%. We had 2 vacancies at year-end at halfway 31 August and 1 of those properties have subsequently been let and the net initial yield of our portfolio, excluding Shoprite is at 8.25%. The next slide talks to valuations. And Andrea alluded to it, we've seen very healthy escalations portfolio increased -- valuation increases over the past 6 months of about 4%. The main drivers were the rentals that we've achieved have been better than expected. In fact, we've seen very healthy rental growth over the past 18 months. Coupled with that, especially in the portfolios at Waterfall and Meadowview, those were portfolios that we acquired in 2015 and 2016, respectively. Those properties were done at very attractive yields by the previous owners and had 10-year leases escalating at close to 8%. So there were reversions, but they were better than expected. And we've also seen over the past 18 months that the disposal yields we achieved were some of the best in the industry. We've also added some solar revenue, which assisted the valuations and the combination of our long well and strong average escalations continued to drive steady valuation growth across the portfolio. We've also broken the valuations down for you between our major node. And you'll see the Waterfall node was the best performing. The reason for that is that those properties have got a very large office component, and we've seen some good recovery in the office sector over the last 12 months. This is probably 1 of the most interesting slides of the day and I must thank Justin and Warren, they put in a lot of work. We've always gotten a lot of questions from analysts and shareholders regarding where is our rentals versus market? Are there a real threat of significant reversions? And I think this slide tells a very interesting story. Now bear in mind, I've just referred to the Meadowview and Waterfall portfolios. Those portfolios all the properties in them have now been renewed and they're now in the base. If you look at the slide, we've broken down the average through rentals as compared with the average market rentals in the 5 most significant logistics parks we own. Now to put things in perspective for you and assist you in evaluating the slide, please bear in mind, we've got 3 type of warehouses in our portfolio. We've got generic warehouses, which are standard warehouses up to Equites spec with an office component of not more than 5%. And on average market rentals are around ZAR 90 to ZAR 95 per square meters for those generic warehouses. And in fact, you'll see Riverfields Lords View and Jet Park, predominantly in those 3 nodes, we've got the generic ones, and you can see the average market rentals are between ZAR 90 and ZAR 95 and the through rentals that we are achieving there are about 10% less than the average market rental. Now obviously, that bodes well and clearly illustrates that over the next period, at the next renewal, the risk of significant reversions are greatly reduced. Then also to put the Meadowview and Waterfall portfolios in perspective. There, you need to bear in mind that Meadowview, for example, we've got some cross-dock facilities, those are facilities with a very low coverage, around 30%. And consequently, rentals are much higher than for our generic warehouse. We also, and particularly at Waterfall, have a lot of head office warehouses where some of them have as much as 60% office components. And there, again, you can see the average market rental at Waterfall is about ZAR 125 when you take into account the quantity of office space, and we are currently trading at a passing rental of about 10%. Below that, whereas at Meadowview, we are slightly below where the market is. We are very encouraged with this. These graphs exclude RF portfolio because we think the valuation or reversal risk there are nonexistent because they are 20-year leases with contractual 5% escalations over the period. This slide clearly illustrates and support the smoother income earning trajectory and the also reinforces our balance sheet resilience. And you can see the current rentals in our core nodes are largely in line or below market, which is really boding well for the next 4, 5 years. The next slide talks to our like-for-like rental growth over the past 6 months, which was 5.1%, which is slightly below our targeted range of 5.5% to 6%, and that's due to some of the last reversions from the Meadowview and Waterfall portfolios. We are starting to see our other income generating streams coming to the forth. And there, I'm referring to the solar and also some asset and property management fees. On the right-hand side, you see the expiry for the next couple of years. Now interestingly, we had a look at it yesterday and for the period until February 2029, we have 19 leases coming up for renewal, but the GLA percentage is less than 20%. So of the 19 leases, 12 of them, we've already either gotten a firm commitment for the tenant to extend or discussions point decisively that they are very happy with the facility and willing to stay. I think we've often emphasized the beauty of our portfolio where we've got triple net leases. And we've got 60 -- just shy of 60 lease in South Africa. So from an asset management point of view, we can be very tenant-focused and also proactive. This slide shows our top 5 tenants by rental income. You can see we derive more than 40% of our rental from 5 very, very important and financially strong tenants. Shoprite is sitting at about 27%, but you have to bear in mind that we're projecting to spend more than ZAR 2 billion on contracted developments over the next year to 18 months, which will reduce our exposure to Shoprite to below 20%. We're also adding other tenants, we've announced recently that we've signed development -- a lease with CEVA Logistics, and we've also completed a lease with Nebula. So we continuously adding strong other tenants to diversify our portfolio as far as possible. That's all for me. I'll hand you over to Laila.

Thank you, Riaan. Okay. So we've touched on a number of the financial highlights. So I'm going to skip through some of them, distribution per share, NAV per share, we've spoken about. Let's touch on the loan-to-value. We are reporting a loan to value of 37.2% at August, and we expect this to reduce significantly with U.K. disposal proceeds. I think it's important to pause here and just talk about the capital structure. We had historically stated that we have a target LTV of between 35% and 40%. And given where we are right now, we're very comfortable with this position. Should the U.K. proceeds return and we know that this will reduce the LTV significantly, and we will look for means to get back to that target range as quickly as possible. So it is a very exciting time for our business, having the runway to be able to implement on what we believe is going to be quite a positive period in terms of demand for logistics facilities in South Africa. In terms of cash and available facilities, we have ZAR 3.4 billion in cash and available facilities, and we'll touch on that a little bit later on. And then our cost of debt, something we're very proud of. Cost of debt continues to reduce in South Africa coming down from 8.63% at Feb to 8.25% at August. And then lastly, 97% of all debt outstanding for more than a year is hedged at the last reporting debt. And again, we'll touch on that a little bit more later on. I don't often talk about IFRS matters in these reporting updates. But for the first time, we have something called a discontinued operation. So when you look at our financials, they look slightly different to what they would usually look like. So what I want to just touch on is what comprises this discontinued operation. Because we've made the strategic decision to dispose of the U.K. income-producing portfolio, all of those assets, those income-producing assets as well as DHL Leeds and Thrapston, which is a land parcel, all of that has been classified as a discontinued operation. So when you look at our balance sheet and income statement, this is disaggregated from the remainder of the numbers that are included. So let's start by just looking at some of those numbers on that balance sheet. If you look at the investment property balance, what we have seen is that -- and I'm looking now at both the investment property line plus the assets held for sale. What we have seen is that the South African portfolio was boosted by like-for-like valuation increases of 4%. And we saw growth in that actual South African investment property portfolio. On the whole, we've also seen an increase in the overall portfolio value from ZAR 27.7 million to ZAR 28.3 billion at August '25. And again, this is supported by fair value adjustments on the underlying portfolio, like-for-like valuation uplift to 4%, and then the addition of the expenditure of ZAR 0.5 billion on acquisitions and developments in the portfolio. We disposed of 2 income-producing assets in South Africa over the period and 1 in the U.K. But despite these disposals, we are still seeing an increase in the portfolio value, which is quite pleasing for us, especially in terms of our mandate to keep growing this investment property portfolio. If we look at trading properties, this is the line which is fairly new. We've started recognizing it over the last 2 years. If we look at what's included in that line, it's Basingstoke, Coton Park and Newport Pagnell where we expect to receive proceeds from Newport Pagnell by November '25, and that will then be completely reduced from -- eliminated from this balance. The increase in loans and borrowings, if we just touch on that line item, we raised ZAR 1.2 billion in short-term debt in the first half of FY '26. And this debt was really well priced in the market. We raised it at JIBAR plus 85. And I think, once again, it's a testament to us recognizing moments or opportune moments in which to raise debt at pricing, which makes sense for us, always very attractive for us in the market. So all of this has resulted in a very strong financial performance over the period and the growth in our NAV per share from ZAR 16.49 at Feb to ZAR 16.93 at August. Okay. So if we move on now to the distribution statement, which we always say is the most important bit for analysts. If we look at the net property-related income, it grew by 7.4% from 1H25 to 1H26. This was supported by like-for-like rental income of 5.1% in South Africa. There were also some rent reviews in the U.K. and then the new developments, which came online at Riverfields, Wells Estate and Jet Park. The 5.1% like-for-like rental growth in the portfolio is slightly lower than what we typically expect. This was impacted negatively by a couple of items, the first of the reversions, which Riaan spoke to, to the reversions at both Meadowview and Waterfall, which is now in the base as well as periods of brief vacancy at Garret Street as well as another facility in Cape Town. Both of those have subsequently been let. And at the reporting date, we had a vacancy of 1.5%, but that has subsequently been reduced to 0.3%. So we do expect this number or this like-for-like number to be healthier or more positive going forward. If we look at the admin expenses, and we get a lot of questions about what we expect this admin expense to be. The distributable portion of admin cost is ZAR 56 million for the first half of the year. Included in that, and you can get this number from the segment note. But included in this is about ZAR 11 million relating to the U.K. And going forward, we do expect this number to come off quite significantly. So given the current run rate, we expect admin costs for the full year to be somewhere between ZAR 100 million and ZAR 110 million. I think what's also quite important is if you look at the finance cost or the net finance cost line, despite the increase in borrowings, as I spoke about, the ZAR 1.2 billion, which we drew down during the first half, despite the increase in borrowings as well as a decrease in the capitalization when the number of capitalized interest, we still have a reduction in that net finance cost, and that's really as a result of the reduction in the margin as well as a slight impact of the 2 rate cuts in the first half of the year. So if you look at it from an overall basis, I think we've performed incredibly well. The distribution is underpinned by strong like-for-like rental growth, containment of admin costs as well as a reduction in net finance cost. So if we touch on the bridge, again, just to talk about how this distribution per share growth is made up, we have like-for-like rental growth of 5.1% in the SA portfolio, which was the biggest contributor to the growth in distribution per share. There were some rent reviews in the U.K. at DHL Reading, Puma and Roche. There were some accretion unlocked as a result of the disposals in South Africa. And then tightening in funding costs due to effective treasury management. When we look at the detractors, it was really an increase in those overhead costs as a result of transaction costs in the U.K. relating to the Aviva disposal. And then there was some dilution coming in from the development in South Africa, particularly relating to Shoprite at Wells Estate. Now that, that is in the base, we expect like-for-like increases that will now form part of the like-for-like base, and we expect increases of 5% per annum as a result of those Shoprite escalations. And then lastly, we're still experiencing the impact of the write-off of certain ENGL land parcels. And because of the impact of the cessation of capitalized interest on those land parcels, there is an impact to distribution per share. If we just move on to the NAV per share, and Andrea touched on this, Riaan touched on it, but I think what's really pleasing is to see the increase South Africa like-for-like valuations. For the first time, we've really experienced the impact of market rental growth coming through in these valuations and we see a 4% increase in SA like-for-like valuations, which contributed ZAR 0.58 to the growth in NAV per share. There was a slight write-down in terms of the U.K. fair value, and this is just the previous land parcel where we wrote of some costs associated to that land parcel, but really tiny impact. The loss on the ENGL developer segment, I know that in our shareholder engagement, we'll talk about this quite a bit. But this is really costs relating to those properties, which are classified as trading properties. And you'll see in the note, there's about ZAR 100 million, which we wrote off relating to these parcels, and that impacted NAV per share by ZAR 0.10. Importantly, last year and during the first half of this year, we spotted moments in which we could take advantage of a low share price and capitalized on the opportunity to repurchase shares, because of the level at which we repurchased the shares it added ZAR 0.03 to our NAV per share. At the moment, given where our share is trading, we don't see an opportunity for further repurchases. However, should market conditions change, this will always be an element which we consider in terms of capital allocation. And then there were some FX movements. If we look at the foreign exchange rate or the GBP-ZAR rate today, you would never say that the rand was weak at the 31st of August, but there was about a 50% movement or a weakening of the rand from February to August, and that resulted in a ZAR 0.05 increase in NAV. And then there were some write-downs as a result of fair value movements on derivatives and a slight reduction as a result of where we disposed of assets relative to book values. In terms of the loan-to-value, I think we've spoken about this quite a bit, but we started the period at 36%. We -- the share buybacks, which we spoke about, which was accretive to NAV, did have a slight impact on the loan-to-value. We also spent some money on SA developments and acquisitions. It was about ZAR 500 million, which we spent on SA developments and acquisitions. And then the disposals and valuation uplifts in total reduced that LTV by 2% over the period. Again, that write-off of costs relating to the U.K. developer segment as well as some associated transaction costs, that increased the LTV by 1.1%. And then there were some other movements, which bring us to the LTV of 37.2%. I touched on it upfront, but we will continuously monitor where this loan-to-value is as a result of repatriation of U.K. proceeds, and we will look to optimize our capital structure in the short to medium term. Okay. And then I think it's quite important to just pause on where our cost of debt is at the moment. It's often a point of pride amongst us within the organization. We are very pleased with how we've managed to reduce the margin on our debt, but also very pleased with where we find ourselves in terms of hedging. So in terms of our policy, we need to hedge at least 80% of outstanding balances, which are outstanding for greater than a year. We use both vanilla interest rate swaps as well as interest rate derivatives, and that results in quite a dynamic outcome for us in terms of where our all-in cost of debt is. So in terms of our probability, there's a very light gray block in that graph on the right-hand side. And we really think that, that is our range of probability, and we look to minimize or to lock in a fixed cost of debt within that range. And that allows us to really provide certainty when we're pricing new development or looking at new acquisition opportunities so that we have the certainty in terms of where our cost of debt will be when making that investment decision. We know that because of our stunts and what the level of hedging that we have at the moment, 97% of our debt being hedged, we don't have much exposure to rate cuts. So we are fully aware of the fact that we've sort of stepped out of the market in terms of full participation in rate cuts. However, we're very comfortable with this level and the 8.23% at where we are or 8.25% where we are at in terms of our cost of debt. And then lastly, I just wanted to touch on, once again, ZAR 3.4 billion available in cash and undrawn facilities. And that really means that we'll be able to refinance any facilities which are coming up, we'll be able to repay any facilities which are coming up, should we choose not to refinance them. And at the same time, we have sufficient runway to execute on any acquisition and development opportunities in the short and medium term. So I think that's it for me. I'm going to hand back to Andrea.

Awesome. Thank you, Laila. So just in concluding, before we go to a bit of outlook, really, the ESG component and where we're at. I mean we -- I spoke to it a little bit earlier in the presentation, but obviously, we've grown the capacity by about 1.2 megawatts over the year. The quantity of solar that we continue to bring on to our facilities, our expectation is that we will probably grow it by north of 5 megawatts over the next 2 to 3 years. And this is a function of the new developments that we're bringing on board, but also a function of through process of lease renewals and renegotiations in those processes, one of the offerings that Equites is putting on the table is to provide this energy security through solar panels and in some instances, depending on clients, battery backups as well. Really pleased that 48% of the portfolio obviously is green certified. We do have an EDGE zero-carbon property, and we are working through a process at the moment where 2 more properties may be added to that EDGE zero-carbon as well. But for the time being, there's only 1. What does that translate to in scale? That's about 850,000 square meters of our portfolio is green certified, which is a substantial number, and will only improve as we move forward. I think the final element of this and probably very relevant to Gauteng where we've seen significant water availability issues over the last 18 months, the consequence of which is Equites is looking to provide solutions to our clients to ensure that they can make sure that their operations are viable effectively. And having no water and the unavailability of toilets, for instance, is actually a massive, massive problem. A lot of our clients who have found themselves in those positions have actually had to send their staff home. So we are providing a solution that will allow them to have certainty of operation by providing sufficient water through a recycling of about 75% of the water consumption on-site for basically the flushing systems. And what's actually quite, I suppose, impressive about the team at Equites and the way that this has been thought out is that there was always a belief that water was going to be an issue at some stage in the future. And the way that we've built all our buildings in the last 5 years is we've done a dual plumbing process, where the potable water plumbing and the non-potable water plumbing basically come from 2 different sources. And at the moment, obviously, both systems are plugged into the same source, but the ability to just change your plug-in externally to the building without having to affect the building and use the non-potable water for the flushing systems whilst maintaining potable water for the tap system and the likes. The consequence of which is that we believe that not only are we alleviating a small little -- bit of pressure from the municipalities and the quantity of water that we will be using, but I think more importantly, we are going to be giving some water security to our tenants. The facilities at the moment do not take the water to a potable standard. Could that be done and added on at some stage in the future, should it be required, it could be -- the costs associated to obviously are different. And at the moment, the cost of water doesn't justify that process. But if water does follow in the same footsteps as electricity costs have done over the last 10 years, all possibilities are there. So that's where we are in terms of sustainability. And then in concluding, obviously, we'd like to share our prospects. We obviously are reaffirming our guidance of 5% to 7% for the year. What are the factors -- when you know we often get asked the question, what are the factors. Will it be closer to 7% or will it be close to 5%. And I think key factors in terms of where we sit in there will be the timing of the U.K. disposal. Obviously, also the exchange rate at the day that we do have the pounds available to us as a consequence of the disposal and the rate at which we repatriate the funds to SA. And then obviously, within the processes, we -- whilst we have a speculative development, which completes in December. And whilst we have a tenant that is engaging with us, we need to ensure that, that tenant would move in, let's say, in January. If the tenant decides that they only want to move in, in February or March, those small little elements, believe it or not, do have an effect on a few cents this way or that way, if you like. So those are the important factors to be considered within the realms of our portfolio. But obviously, in conclusion, I'd like to say that the last 6 months has been massively pleasing in terms of what we've achieved. We really are starting to build on the hard work over the last 2 and 3 years of renewing leases, reletting property, selling older properties, bringing on newer properties, making sure that we're offering solutions to clients for a very, very long term and the ability to retain those tenants for a sustained period of time. Over and above that, we continue to bring through a level of excellence in the organization. We have engaged in various things with both bits and UCT, where we are getting more and more exposure to the young talent coming through the system. And at Equites, we have managed to deliver on bringing the talent through the system and giving people massive opportunity early in their careers and then responding to it. And I think that really leads into my final part, none of this could happen without effective leadership. And in that sense, I really want to commend my co executives. I mean, Riaan for the incredible work that he goes with the asset management team and everything that he does in terms of ensuring that we remain top of mind with all our clients and the level of efficiency and proficiency that we have in terms of the detailed work that goes into the work into providing our clients with the information necessary and ensuring that they look after our properties effectively. Laila and obviously, he her finance team, I mean, the incredible work that they do to ensure that we continue to get the cheapest money possible to make sure that the money is always on tap. And the ability for us to also treat our clients in terms of the builders, the subcontractors and everybody that provides services to Equites to treat them with fairness and respect, ensuring that we pay them timeously. And I think all these things really lead into an organization that prides itself as being best-in-class, and we'll continue to deliver best-in-class product to the benefit of many, many and varied clients to ensure that they continue to be the best versions of themselves. So we see ourselves integral in all of that. And then in conclusion, I'd like to thank, obviously, the Chair and the Board for their work in the last 10 days. It's always a stressful time, and obviously, a lot of consideration and work and reading and debate goes into these processes, but obviously, robust debate, which is great for us as an executive team in terms of conveying this fantastic message. So on that note, I'd like to thank you all for having spent the morning with us and trust that the presentation was well received. Thank you. Now I think we end with a few questions, Laila, and what do we have there?

Okay. Thank you, Andrea. So the first question is for Riaan. Riaan, thank you for the slide on rentals. What are we seeing in terms of escalations? And is there a demand for CPI-linked escalations within leases?

Thank you, Laila. I think our policy has been well received and accepted by tenants. When there's a 20 lease, for example, as with Shoprite, we are willing to go as low as a 5% escalation. With 5-year leases, for example, we've seen escalations ranging between 7% and 7.75%. And with 10-year leases between 6.5% and 7.5%. I think the level at which developments are done at the yields it's done, I can't see that the market trending towards the CPI-linked escalation profile. We've had request, but we've seen that with us and our competitors and other players in the market, it does not find favor with landlords.

Okay. Thank you, Riaan. Andrea, there's just a question. We provided detail on 1 RFP, but we mentioned another 3PL is a new tenant in the presentation. What are you seeing in terms of RFP activity? And how do you expect the pipeline to evolve?

Okay. So I'd say over the last 12 months, we have responded to about 268,000 square meters of RFP requests. We've probably won about 120 of that. We are negotiating probably a further 100 of that, and we have not found favor with the difference. So we have seen a level of activity and request for proposals at an -- probably the most elevated level that we've seen in the last, definitely 5 years, which bodes well. I think the slide, we know that a lot of the FMCG guys are under massive pressure to be able to deliver timeously and some of them have not invested in their supply chains for quite a few years. So we are very optimistic on that front.

Thank you. And then I think this 1 is for me, but there's a question around solar revenue. The number isn't big in the income statement. So why would we note this is impacting valuations? And I think there are 2 reasons. The first is the impact on valuations is the discounting of the future cash flows. So we signed PPAs for the term of the lease in some instances for 5 or 10 years. And so it's the impact of discounting all of those future cash flows. But the second bit is what we've actually seen is that by having solar on these facilities, by making them ESG-compliant, we find that often it impacts the discount rate or other factors which they take into account when assessing that property. So we have really seen quite a big impact in terms of solar or the electricity generation capability on a building, and we expect this to follow or to move in the same direction going forward. There are some questions, which are a little bit more detailed, but we'll get back to those individually. And that's it.

We call it a wrap.

Yes.

Awesome. Well, thank you, everybody. I trust you'll have a pleasant day further. And yes, I look forward to engaging with the various shareholders on the one-on-ones in the next 10 days, and hopefully, we can unpack things in more detail as required. Thank you. And yes, we will see you for pre-close in Feb.