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

Good morning, everybody, and welcome to Equitus' Financial Year to F '27 Interim Results Presentation. Great to have you all with us and look forward to delivering some insightful information apart from the results, but also I feel that we're going to be sharing some very good information with all of you today, which hopefully will give you some comfort as to the prospects of not only the sector, but also the Equitus business going forward. So I suppose we always start with the highlights. And the most important highlight, I suppose, for South African shareholder does remain the interim distribution per share and within target of the 5% to 7%, as indicated at year-end in May, DPS up 5.11% and [ 72.57c ] units of that sent. As I said, we maintain the guidance, loan-to-value, obviously, at 28.1% following the exit of the U.K. portfolio. I mean whilst it is 28.1% in official terms, it is technically slightly lower than that because there is a whole lot of capital that has been invested in U.K. which technically doesn't alleviate the LTV number, but obviously, highly liquid and can be redeployed as and when needed. Again, Aviva portfolio sold, netted out GBP 95 million really pleasing in SA like-for-like valuation growth. And I think we're starting to finally see the merits of our story playing out in South Africa with market-related improvements across the board, not just for Equites, but I think across the board with the valuers now starting to recognize that the difference between what an A-grade warehouses and maybe what a lesser warehouses and the level of rental that is being able to achieve and the consequential valuation that gets attached to that. Translating from that, obviously, that like-for-like SA valuation growth, and Laila will go into more detail. Obviously, as the NAV per share growth, 2.5%, obviously very pleasing, a substantial NAV growth for the period. Cash and undrawn facilities obviously there to fuel our pipeline. And as I said earlier, the loan-to-value obviously is somewhat distorted by the fact that we do have some highly liquid assets also on balance sheet, which technically could be turned into that cash and undrawn facility to bolster that as and when required. During the period, we deployed about ZAR 600 million, through 7 projects and the completion of all these projects, which will go through to sort of the back end of next year, calendar year, is at [ GBP 2.4 billion of ] value being added to the portfolio. And then as ever, our regular DCM auctions, twice a year, and we seem to be going from strength to strength. The market continues to like our paper. And whilst, yes, there is a very positive momentum in the marketplace, which may not be there forever, but notwithstanding that the Equites offering tends -- is still achieving best-in-class results in that and obviously complements to the treasury team for the success in that. Maybe we can go on to strategy, very amusing the team, instead of putting a beautiful warehouse, they've decided to put a picture of me there. But obviously, the sale of the Aviva portfolio and the redeploying of that cap in South African logistics. And effectively, at the moment, we are developing between 8% and 9% across all of the developments that we are currently undertaking. Capital deployment. So in terms of where we're at, we have exited predominantly most of the U.K. We still are effectively in three vehicles there, which we'll go into a bit more detail just now. The immediate is really to deploy that capital into South Africa. The structural undersupply is definitely there. And I think when I say the undersupply, I really refer to the A-grade product, which we will have a case study, which we'll share with you during the course of this presentation and really to try and highlight what we mean by an A-grade facility and what it actually does to an operational business. And whilst South Africa's macroeconomic position, maybe not the most alluring in the world, notwithstanding that, what we're seeing is more and more organizations looking to optimize their supply chain to try and gain market share through that. Supply chain, in our opinion, remains a key metric in ensuring that organizations retain their market positions and also look to grow them. And what we see more and more is organizations that are not investing in that supply chain are starting to lose market share as a consequence. Most of our development is is pre-let and demand driven. However, as a consequence of low vacancies on our balance sheet from time to time, we do like to put in place some speculative build. Historically, the speculative build has performed relatively well for us. At the moment, we do have three speculative units. One that's just [indiscernible] two that will [indiscernible] at the end of the month, which -- as things stand at the moment remain vacant, but with lots of interest, and we hope to be able to present some successes on those developments as and when they happen. But ultimately, everything we do is really driven to deliver a sustainable distribution growth. The other important metric is that there's no hiding from the fact that replacement cost for these kinds of assets is only going one way, and that is up. The availability of land is becoming more and more of an issue. Well, should I say, service land is becoming more of an issue which is driving pricing on land, but then also construction costs whilst surprisingly, construction costs have been somewhat muted during the course of this year haven't been as large as we potentially anticipated following the events of February. There's no question that at some stage, they will start coming through. Let's go on to a bit of detail now. The U.K. exit, obviously, and where we are at the moment. As we said, the Aviva portfolio did go. I think quite interesting on the graph on the right-hand side, which shows where the 10-year gilt was on the day that we actually transacted in May and where it was a couple of days ago, I'm not sure what's happened in the last couple of days, but that number is obviously jumping all over the place as we speak. And ultimately, what we can say is that the U.K. property sector in general relies very heavily on this 10-year gilt in terms of where valuations tend to settle. The consequence of which when you look at that graph, you'd say that we probably we erred on the right side of the decision when we've made the decision to sell where the market has gone subsequent to that potentially would have put us in a worse position today. Positives, DHL leads was finally settled with DHL in terms of the rent review and that came off a base of GBP 6, increased to GBP 9.17. So as you can see, a more than 50% uplift in rent which obviously is extremely pleasing. And whilst this asset is completely unencumbered in the U.K. And whilst we are obviously extremely cash flush as we say at the moment, no rush to sell it. We are marketing it, but basically, behind closed doors, if you like. And we hope to be able to achieve our price in due course as and when we do achieve that price, then we will repatriate the funds to South Africa. Thrapston and Basingstoke remain the two final items that remain on balance sheet. Thrapston to be drawn down by our joint venture partners at Newlands, and we await some successful conclusion of that and hopefully not the too distant future. Basingstoke, we are making really good progress in terms of a submission for a pre-let on there. We are in the process of submitting the revised plans for the already approved site, but with a different planning requirement for the buildings that we want to put on there. And consequently, we will be going through that process over the next 3 to 4 months. And we hope to be successful in the process and the consequence of which it will give us the -- I suppose, the catapult to be able to then unlock the rest of the site as well, which obviously is where we'd like to go. The final part of the jigsaw in the U.K., obviously remains Coton Park, that has been concluded and handed over to JD.com, who were the buyers of that asset. And we are in the process of finalizing the accounts with our joint venture partners there of Newlands and the funds from that both working capital and profit will be distributed by the end of this month. The use of the funds. So as everybody is aware, the consequence of GBP 95 million of cash basically coming back to South Africa would have potentially put us in a consequential risk of breaching the 75% of the income coming from property counters, the result of which, we were also linked into certain funding agreements with banks and our debt capital market position also didn't allow us to sort of foreclose on any of those positions meant that we needed to get a little bit creative with where we deployed that capital to ensure that we got the necessary returns from the capital. And at the same time, we didn't put our position -- our REIT status position in jeopardy. Those funds currently -- or 75% of those funds have been invested in U.K. listed logistics REITs, which are obviously highly liquid and which continue to give us dividend income through the period. Obviously, in the event that we were to secure a disproportionately even more significant pipeline we currently have our ability to be able to liquidate those positions and repatriate the capital is fairly simple. And hence, we remain confident that the income profile that we will continue to get from those investments will benefit effectively our distribution. Obviously, on a side note, one of the U.K. listed REITs that we were invested in was [indiscernible] I'm sure most people listening today would be aware of the fact that Segra are going through the process of being taken over by Prologis. The consequence of which is that there was a mark-to-market gain for us, which we have crystallized already and repatriated the proceeds to South Africa. So that is the position at the moment of where the the funds are being deployed. We continue, obviously, to look for acquisitions or so within the South African market. What we are seeing within our sector is that the assets that are of an acceptable quality to sit within an Equites portfolio are achieving pricing, which would be significantly dilutive to Equitus' position and consequently, we remain very circumspect to be deploying capital at those levels. But we continue to draw the market, we continue to speak to the market and should the opportune opportunity present itself to us. Obviously, we are in a highly liquid position to be able to transact. The other question, obviously, we get asked often is why don't you do some share buybacks. Obviously, we do have a massive pipeline coming through and working on some pretty significant development deals, which will come through into financial year '28 and into '29, where capital will be obviously very, very important to have at hand to be able to deliver on those things. And plus on top of that, obviously, the share has been trading particularly well of late. The consequence of which is obviously any share back would be significantly dilutive to our position. And hence, it is something that we are not considering at the moment. However, for whatever reason, should the shares start trading where it was maybe 18 months ago, we did take advantage of certain positions, and we did effect some share buybacks. The development update, and I think, obviously, this is massively interesting. I mean, as you can see, capital value of about [ GBP 2.4 billion ] coming through the system. Obviously, not all the assets are 100% owned by Equites, but notwithstanding that, within the joint ventures that they sit. They remain highly accretive to Equites. The benefit of the joint ventures also bring through asset management fees and in some instances, also some borrowing cost premiums that obviously benefit the underlying for us. We've deployed effectively almost [ GBP 600 million ] in the period to today. We're in the process, obviously, of delivering on almost 200,000 square meters of GLA. And the yields across all these projects will vary between 8% and 9%, and in some instances, maybe slightly better than 9% where we've had the benefit of the expectation of certain procurement costs inflating through the period where we've been fortunate enough to basically tender product and get it acquired prior to some of the increases that we were expecting. So there is a little bit of benefit there. The bulk of the portfolio's development, if you like, is pre-let and obviously, Tiger Brands stand out there. TFS is starting to come through. We currently are doing some improvements to the [indiscernible] plant on behalf of Shoprite. And obviously, we've started and commenced the DHL facility in Boksburg as well adjacent to the [indiscernible] facility. Premier FMCG has, as of today, being PC, actually it was PC, I think, during the course of last week. So very pleased with that. The client obviously really, really happy. And obviously, there will be some snagging going on between now and Christmas to ensure that everything can be delivered effectively. We do have two speculative developments at Jet Park, two buildings, one of 10,000 square meters and 7,000 square meters and that River fields one of approximately 18,500 square meters for a total of 36,000 square meters, which as we speak today and have not been let. What we can say is all three of the units are under great interest from multiple different types of clients. And we are expecting to potentially try and close something out, hopefully before Christmas, but certainly before year-end at the end of Feb next year, which obviously will then deliver more high-quality income-producing assets into the portfolio. And at that moment, we will then reassess based on -- and Riann will take us through some of the the renewals that are coming through in the new year. And on the basis of that, then we can decide whether we go through another round of potentially unleashing a bit more speculative into the system. And as I said, DHL Boksburg and Shoprite, both great additions to the portfolio. In terms of occupier demand, and I think we often get asked is the market slowing down? Is there interest? I mean, with macro at below 1%, I mean, is there demand drivers. And the reality is that there are demand drivers. There's no question. I mean a couple of weeks ago, we had the [indiscernible] conference up at Sun City and the various panels that spoke was interesting. Some of the comments that came out of -- I can't remember, one of the panels in particular though, in terms of the introduction of more and more Chinese businesses into the marketplace. And there's no question that we've noticed that as well in terms of the demand drivers, and we currently have three Chinese tenants within our portfolio, and probably another three or four looking at some of our speculative units as we speak. That's an interesting sort of unpacking of what's actually happening in the market at the moment. In terms of RFPs, as we said, there's constant RFPs come to market. That being said, there's also a significant amount of engagement with existing tenants as we speak with ideas of improving supply chains in different different parts of the country and those ongoing conversations obviously leave us with a great expectation of some of the product that we will be able to deliver in the next few years. The demand drivers are obviously coming from a wide and varied type of industry. Obviously, 3PL full on logistics businesses take the lion's share, which is to be expected. Obviously, a lot of that 3PL logistics space is contract-driven and interesting to see how the 3PLs now are looking to go to more campus-based offering rather than a deal-specific offering as more and more money needs to be spent in technology to ensure the ability to deliver within the demands of their clients. And I think the introduction of Amazon into our market, there's no doubt may take a lot significantly more efficient. It's making BASH more efficient. It's making 60-60 more efficient. It's making basically everybody that's offering a delivery service more efficient and the demands of being able to to give to a consumer that's becoming ever more fickle and demanding in terms of receiving their good as and when they order it. That obviously bodes well for us. That being said, it bodes well for some of our competitors, too. And as I've said, I think in previous presentations, we continue to back ourselves as being one of the leading developers of this product in the country, but the competition is stiff and there are many other very competent developers out there that compete for for offerings as well. And the unfortunate reality is we don't win them all. We'd love to, but unfortunately, we don't. But what we look to do is continue to sort of also gravitate to nodes where we believe the ability to deliver from does have a common sense element to it. And ultimately, it's almost impossible to be in every single node. So you can't always fulfill on behalf of a client that may want to be in a node where we don't actually control any land. That being said, we -- in the previous year, as you can see, we've had repeat business from TFG and Shoprite. And as we've said for many years now, some of the cheapest business that we'll do is always the repeat business as the need to pay agents and the like, obviously get stripped out of the process. Riverfield is obviously a key node. Everything in yellow on this obviously owned by Equites. I think if you add everything that we own up and built and what's coming, I think it's almost 600,000 square meters of GLA there. with an ability to probably add another 200,000 square meters to the land parcels that we still own and are able to develop out. Obviously, a very key node for Equites. We see this as probably the premier logistics node in the country. We obviously have some stiff competition. A lot of the properties on either side of R21 owned by the JT Ross group that have developed them over the last 10 to 12 years. And their success has obviously also been our success and obviously a massively successful node I think complements also to the landowner that had the vision to put infrastructure down in this node which really does allow for these massive warehouses to operate efficiently. In terms of the road infrastructure, we've recently done quite a bit of work with the traffic engineers trying to lure a tenant into the location. And what we can tell you is that notwithstanding all of this development there, the road infrastructure in and around Riverfield is currently operating at about 40% of its capacity, which means it's got lots of headroom for the addition of all the new warehouses that we're bringing to play. But more importantly, what we worked out is that particular client was was able to release in excess of 1,000 vehicles within an hour and get them on to the highway within less than 3 minutes. Now you can only do that where you have infrastructure that allows you to do that. And I think what's critical about this particular node is that infrastructure is in place already. Over and above that, we continue to improve our infrastructure by introduced, obviously, the solar story, which we'll talk to also later in the presentation. But more importantly, in this node, we are starting to introduce obviously, the recycling of water as well and the ability to offer low water usage to our clients as well. So all these in-house offerings that we put out there, obviously benefit the clients, and we continue to grow on those things. And as you can see, the Tiger Brands facility pretty substantial coming out the ground there due to be complete sort of end of first quarter, beginning of second quarter next year. In detail, Tiger, obviously, coming out the ground. It's a 35,000 square meter facility. There is some land, which is basically set aside and with the requirement for Takealot to execute on the expansion within a certain period of time, failing which certain penalties start coming through the system, underpinned by a 10-year lease and with a very good escalation. And again, this is within the Tradeco joint venture, and working fantastic for us. And what it does do is it allows us to unlock Extension 116 and as a consequence, already introducing 116 to various RFP solutions through the system at the moment. DHL Boksburg, as I said earlier, this adjacent to the Colgate facility. 75% of this facility will be used by Colgate. DHL have got the liberty to then be able to offer the last 25% to third-party clients that they may have in the system. The benefit to Colgate here is obviously they can give notices to DHL as their capacity requirements increase, they can demand certain pallet positions back, which obviously is a very close symbiotic relationship. What it does is it brings efficiency to the whole supply chain, thereby reducing those costs for Colgate of allowing DHL to operate more efficiently and consequently, obviously, being able to offer a better price to their clients. And Ultimately, these are the kind of unlocks that we are seeing more and more and the creative ideas that are being used by the various 3PLs to secure new business and we very much are trying to work hand-in-hand with all of these organizations to be able to deliver on their requirements. And this leads me into the case study. I think I mentioned it a little bit earlier. I think it's quite an interesting one, and it's one that we try news also in in some of the presentations that we make to some of our clients. And this is working on the basis of a client that potentially may have hypothetically full warehouses occupying about 60,000 square meters of space in the Greater Halting area. The assumptions we make is those warehouses are probably slightly older, a consequence of which is they probably at about 9 meters height, what does that allow us, they allow us probably 5 pallets in terms of your stacking. They're probably paying around ZAR 70 a square meter net for that facility. The electrical setup in that facility probably not the most efficient. And obviously, the cost of redoing it probably not in the landlord's interest at this stage. And then what's assumed in these are assumptions and obviously, they can be played with. We've assumed that there's 20 Intersight shuttles a day and we're assuming also that the warehouses are approximately 30 kilometers away from each other. The other thing we've assumed is that your overhead is effectively 12 people per site in terms of staff which, obviously, with 4 warehouses becomes 48. And then the security position with 4 sites for 24/7 is 8 people. What we've been and is that we've got and said, well, if we were to look at this and bring everything under one roof to an Equites specified warehouse, what would the results of that be? The first part, obviously, is that you would reduce the amount of GLA that the tenant would need would go from 60,000 basically to 33,400. This is on the basis that effectively an Equites spec warehouse is at 15.5 meter clear height, which gives the client obviously 9 pallet stacking positions. And thereby, obviously, greatly reducing the amount of GLA that one needs because, obviously, it really translates into selling the air again. Our net rental, obviously, at ZAR 95 a square meter is substantially more, but the amount of pallet positions that we are able to offer offer a lower rental -- of a lower GLA obviously makes puts paid to that, because of the technology and the new efficiencies that come with the electrical installations that we are able to offer today, there's obviously a material saving in the kilowatt hours per meter squared that would use in there. There would be no intersight shuttles and your overhead because of the nature of the height with probably 18 people, which obviously is a significant reduction in overhead. The other thing is, obviously, as your security detail would only be at one site thereby only requiring three people. And ultimately, the productivity gains across the whole operative system are there to be seen. What you can see is at the bottom is effectively where the saving comes from. What you'll find in every warehouse is that a warehouse will never operate at 100% occupancy. There would always be a bit of a pool area for for surges that may come from time to time. That pool gain going into one warehouse would be greatly reduced. The higher stacking high obviously gives you more and then effectively by using every single door more efficiently because you don't have four sites, you've only got one. There is also a paired gain in terms of the usage of the doors in one facility, which obviously then gives you the growth headroom too. We take it one step further. And effectively, we work out what the gains are in terms of the diesel on certain assumptions. Over and above that, what we see is we've allowed for a relocation cost and tracking to go into a brand-new facility. We are of the opinion that the annual savings would be approximately [ GBP 54.3 million ] against a once-off cost of [ GBP 28.5 million ] for the relocation. It basically means in under 7 months, you've got a full payoff. Over and above that, because of the savings per square meter, eliminated through all various elements, as you can see on the right-hand side, not only rent but overhead the amount of drivers, the reduced diesel consumption, the labor productivity, the reduced security and electricity when you add all the pieces together, for the client to be in the same position, they would need to be paying us ZAR 643. So there will be a saving of ZAR 643 from rent. We'll get to what that translates into our rent. If if they were to translate their operating costs into the new facility, they could afford to pay ZAR 231 a square meter to be in a breakeven position. So understand that by paying ZAR 95 a square meter, there is an incredible, incredible saving, not only in cash, but I think the most important, which obviously, we can't put into this presentation because we don't have that. But over and above that, the level of efficiency which would probably translate into availability of stock to the consumer wherever that may be in a business-to-business relationship in a business-to-consumer relationship and an online relationship. The improvements that would come from that would also drive revenue growth. So really, this is the story that Equites has been selling now for the last 12.5, going on 13 years. And ultimately, this is the story that we are seeing from multiple clients that have embraced the thought process and the processes that come through it. The final element, obviously -- and here, we have no control of it. Obviously, with the diesel price going where it's going, we've put a table in terms of what those savings could be. But over and above that, obviously, in a time of big corporates being put under more and more pressure in terms of their CO2 emissions, the availability of massive reduction in CO2 into the atmosphere is also something that benefits our clients. And obviously, based on the assumptions that we've made, obviously, people could increase those assumptions in certain instances, and that could be reduced. But we feel that the assumptions we've made are very much in line with some opportunities that have been affected within our portfolio, and we're going to see those benefits coming through for our clients. On that note, I'm I'm going to hand over to Riaan who's going to take us through the detail of our portfolio and where it is at the moment.

Thank you very much, Andrea. The first slide illustrates once again the impeccable property fundamentals of our portfolio. It's something which we are very proud of and something which we focus on because ultimately, we're a property business and the quality of the portfolio is what enables us to provide to our shareholders the predictable certain income streams that translate into distribution per share. You'll note that at the end of the period, our vacancies is at 1.5%. Important to note that subsequent to 31 August, we led two of three vacant properties. The well continues to be a stellar 13 years, slightly down from 13.7 at Feb '26. The weighted average rent -- average escalation profile is sitting at 6.1%. But it's important to note that if you exclude the 20-year leases of Shoprite, the escalation profile goes to 6.9%. You'll note on the left-hand side that 93% of our income is derived from A-grade tenants. Now, the combination of the well, the escalation profile and the quality of tenant provides us with the certainty and provides us with the predictability and sustainability to ensure that performance remains stellar. Our income-producing assets gets valued twice a year, and you will note that the valuation increase of 2.4% has been achieved mainly through healthy rent escalations and market rental growth. This slide deals with our portfolio composition due to the disposal of our Aviva portfolio in the U.K., our portfolio value is slightly down from [ ZAR 28.7 billion to JPY 25.4 billion ]. This will rise again as we complete the Tiger Brands development, the development and the take-out developments that Andrea referred to. You will note that at the moment, 86% of our portfolio consists of SA logistics properties. There's been a slight change from the previous period in that properties held for sale is now much lower and also our exposure to the U.K. has reduced from a top end of 35% a couple of years ago to only 6%. Also as a result of our successes in the request for proposal market through new developments. Our land held holdings has decreased to below [ ZAR 300 million ]. You will note that Andrea has mentioned that we've acquired further land that will be coming on stream to ensure that we always have available land to participate in the RFPs as development remains our primary focus in increasing our portfolio value. This is a very interesting illustration of our portfolio. Vertically, you'll see the various nodes where our properties are located. And then the bullets illustrate the gross letting area per node and the bars illustrates a comparison between the passing rental in that note as compared to the market rental. Now the reason for this slide is to convey message regarding potential reversions going forward. We often get the question as to what our passing rentals are as compared to market rentals because it's important to know whether our financials will be heard by larger versions. You will note that there are two nodes where the passing rent is below market rent. One is in MeadowView, where we own 220,000 square meter of GLA. There, the passing rent is just below 7% above market. It's as a result of achieving very good renewals in that area, a lot of the businesses there have head office components. And we are very proud of the rents that we're achieving there. And also, it illustrates that tenants are very happy with that node, the security it offers and also the good location. On the right side, there's a couple of properties that are outside of Logistics Parks. They are alone-standing properties. It's about 220,000 square meters of them. And that group of properties are -- have a passing rent of about 6% above market. Importantly, all our other nodes, have a passing rate of below the market rental. Our biggest node is Riverfields with 360,000 square meters. And fortunately, all the properties that we own in the Riverfields node has been recently built. They're built to a very high spec and a very high quality, and we believe that they will continue to do exceptionally well. Jet Park and the Western Cape are significantly below the market rentals. So overall, we can see that we are well positioned to deal with renewals. We have concluded successfully all the renewals for the financial year '27, and we have about 67,000 square meters of GLA to renew during the financial year '28. Again, referring to the tenant engagement activities over the past period. We renewed four leases, two with new clients, expanding our tenant base, and we've renewed two leases with existing clients. And as I said, we're looking to -- we have restarted working on our financial year '28 renewal pipeline. Importantly, at the bottom right, you can see the tenant concentration. This will change over the next 18 months when we bring on stream our new developments, and we are also very confident that we will be successful in further RFPs as well as the expansion of business with existing tenants that should change that composition over time. In essence, 69% of our portfolio led to our top 10 tenants. Importantly, those top tenants are of impeccable financial credentials, so it adds to the certainty of the rental income. Our joint venture with Tradeco, Andrea alluded to it, we are very privileged to have extended the joint venture to cover further parcels of land. The joint venture is with the Erasmus family through their investment vehicle Tradeco. And Equites owns 50.1% of the joint venture, whereas Tradeco owns 49.9%. Now it's a joint venture with between two companies with completely different skill sets and attributes. We at Equites are responsible for business development, concluding leases then with prospective tenants. Our development skills create impeccable buildings and the property and asset management falls within our responsibility. In turn, Tradeco owns large tracts of land, they are a proven entity with highly specialized skills in obtaining development and zoning rights and then also implementing large-scale infrastructure through road networks, water and other essentials. And this allows us to draw down parts of land when we require them and that when an RFP necessitate a further piece of land being activated, we will then enjoy it down. This enables us to limit holding cost and also reduce capitalized interest. So it's a true win-win between the two of us. Firstly, we get the access to the land. And then in turn, once completed, Tradeco gets access to high-quality logistics assets. That's all for me. Laila, over to you.

Thank you, Riaan. I think if we take a step back and just look at what impacted our performance over the last 6 months, there are three key changes that I would say have paint the backdrop as to what's happened in the financial statement. So the first, and Andrea has spoken about this was the disposal of the Aviva portfolio and the settlement of the associated debt. And that changed a number of line items on the balance sheet, particularly reduction in held-for-sale assets as well as the settlement in the loans. And then secondly, what we did with those proceeds. So we invested in listed highly liquid U.K. Equites, and that was [ Sgro, Tritax and Loometric ]. And then the third thing that I think impacted us quite dramatically is just how we refinanced our new debt. And that I'll leave for Warren to talk about. So, with that as a background, I think we can talk about some of these highlights. And a lot of them, Andrea has touched on already, but the guidance and where we're tracking with distribution per share. We've grown 5.1% on 1H '26, which we're very pleased with, and we still see ourselves guiding in line with our previously guided results for the full year. In terms of NAV per share, NAV per share is very strong, and we'll talk about that in a little bit more detail. And this was bolstered predominantly by valuation increases in the South African portfolio as well as some fair value uplift, which we realized on our U.K. Equites. And learn to value at 28.1%, which means that we have incredible or at least a significant runway to implement our pipeline. And then importantly, and we talk about this metric quite extensively internally, but very promising to see total return on an annualized base of 18.5%. And that's our total accounting return. DPS is over the starting NAV plus the growth in the NAV, and if we annualize that at 18.5%. So let's go into a little bit more detail and talk about just the balance sheet in some more detail. So if we start right on the top line, we see the movement from [ 22.6% to 23.7% or 23.8%. ] And I think, when we look at this, it's important to note that the Aviva portfolio was sitting in that property is held for sale line. So you actually see that reduction in that property as held for sale line. But where you see the increase is as a result of fair value movement of ZAR 580 million for the period as well as ZAR 600 million of acquisition and development spend. And we'll talk about that in a little bit more detail further on. In terms of the trading properties, Coton Park is complete and no longer, there's no longer any balance sitting in that trading properties line relating to Coton Park. So that all relates exclusively to Basingstoke and Andrea has spoken about the Basingstoke plan and where we see ourselves at Basingstoke at the moment. In terms of cash and cash equivalents. Our liquidity is incredibly healthy. We have a large cash buffer as well as undrawn facilities, and that takes us to ZAR 2.9 billion in cash and undrawn facilities, again, just demonstrating the liquidity that we have to implement a pipeline of developments as well as acquisitions. And then included in that other assets is listed equities of ZAR 1.2 billion. We know that it's a big number. So what we have done is we've included disclosure around the balance sheet element as well as the income statement element. And just importantly, what we do is we distribute the dividends received from these shares, we don't distribute any capital gains. So even though we did realize a capital gain on the disposal of the [indiscernible] Shares, that's not included in distributable earnings. But obviously, it does have a positive impact on the NAV. If we look at [indiscernible] and other borrowings, as expected, we settled the Aviva lean, but there were some new facilities, which we refinanced or drew down on in the period, and Warren will talk through those. Then really, if we just take a step back and look at a number of shares in issue, there wasn't a significant than the only shares that were issued in the period related to the share-based payment scheme. But other than that, no movement in number of shares, and that takes us to the growth in the NAV per share. So really predominantly propped up by that ZAR 580 million fair value movement on our investment property balance. Okay. If we look at distribution statements, we split out the revenue from continuing ops and discontinued ops. And so everything that would be included in the discontinued ops has now technically been -- the majority of it has technically been sold, and that was the Aviva portfolio. Importantly, we include the distribution from those listed shares in revenue from continuing operations because in our view, it is deemed to be property-related income. It was really just a switch from those Aviva assets into these listed equities and not the full portion, but 75% of those proceeds. If we then look at the admin expenses, and I think, there's a question that always gets asked by analysts, why do we expect our stabilized admin expense to be. If we look at that number, ZAR 46 million in terms of distributable admin costs for the period, the reconciling items between the income statement and this number is noncash items, so depreciation, share-based payment expenses, and then one-off legal costs. But we have included that recon as an appendix in the shareholder presentation because I think we've become quite used to what analysts need to see. And then in terms of the net finance costs, we expected to see a decline as a result of the settlement of the Aviva loan. But Importantly, and again, another question which we always get asked is what is included from a borrowing cost perspective, and we've shown the split in the commentary along side. If you just look on the left-hand side of the slide, you can see ZAR 94.5 million of capitalized borrowing costs. The majority of that relates to SA devs and land and then the U.K. trading property is the Basingstoke portion and then U.K. land, which we don't expect to have going forward. Okay. And then just -- it's a very small number, but the current tax expense, you do see that sitting and in this recon. And that relates to the U.K. So Hoyland and Thrapston, in terms of South Africa, we don't expect to have any tax leakage. If you look at the segment note, you'll see there's a small ZAR 11,000 leakage, and that just relates to some property management services that we do. But besides that, no tax leakage expected in South Africa. Okay. And that really brings us to the distribution per share of [ GBP 0.7257 ] Our bridge. As expected, we'd expect to see the majority of the distribution growth driven by an increase in rental and particularly in like-for-like rental. So like-for-like rental growth is 5.3%. And when you look at our average escalation across the portfolio at 6.1%. So what reduced this from 6.1% in the portfolio to 5.3%. We still are feeling the impact of the -- predominantly the waterfall reversions, which were concluded in 1H '26, and those are coming through and that impact is still being felt. And as you recall, there were some significant reversions in that node. What we also have in this period is that we do have -- we did have periods of vacancy. So there was a small asset at MeadowView as well as 1H at LordsView where there was some vacancy during the period, and that impacted our like-for-like rental growth, but still at 5.3%, we're quite confident, especially bearing in mind that a large proportion of the portfolio, the Shoprite portfolio escalates at 5%. Then a tightening in the average cost of debt over the period. Now it's quite interesting, if you look at the commentary, you'll see that at period end, our cost of debt only decreased from 8.25% to 8.23%. But that just measures the cost of debt at the end of the period. During the period, we actually had significant periods of tightening. And I think Warren will just talk about how our cost of debt move over the period 1h '27 compared to 1H '26. The low admin costs, as discussed, especially as a result of closing of the U.K. operations, and that contributed to the increase in distribution per share. And then solar income contributed [ GBP 0.029 ] to the growth in distribution per share. Let's talk about some of the detractors and this block has been, I think, a constant in the last few presentations, but just the write-off of costs relating to ENGL. And this was predominantly as a result of borrowing costs, which were recognized at Peterborough West, Goldthorpe and Thrapston, which were capitalized in 1H '26, and and those are no longer being capitalized, and those have now been written off, and that results in some dilution or some detraction from EPS. Then the Aviva portfolio disposal is an interesting one because we heard from a lot of market participants that the portfolio was yielding 5.5%, you're going to bring it back to South Africa, and all of that will be accretive in year 1. But what actually transpired was that the Aviva portfolio was yielding around 5.5%. There was also the positive spread on the debt. So between the 5.5% and 3.92%. And so that resulted in that yield being closer to 7%. Because we didn't bring it all back to South Africa, we actually invested those in the U.K. equity. So 75% invested in U.K. equities, which was yielding around 6%. There was some dilution, but what we are very mindful of is that as we bring those proceeds back to South Africa, we'll be able to feel that accretion coming through over time. So very comfortable again with our decision and how we're managing that accretion over time. And then the development dilution, we did complete one speculative build during the period. That had a period of vacancy. It's now being led from 1 September, but that did result in some dilution for the period. So overall, quite a clean bridge, and it shows us quite clearly how the growth was driven from a distribution per share perspective. If we just look at the NAV per share bred, again, as expected, the fair value uplift on [indiscernible] Property was a predominant driver for the growth NAV per share, ZAR 580 million on our portfolio, which we believe is significant. Then the fair value gain on listed shares, that was on [indiscernible] when the Prologis offer was made public, we did make a decision as to how we were going to trade out of those shares. And we did crystallize that gain, which contributed to the growth in NAV per share. But as I said earlier, none of that gain is distributable. And you can see quite clearly in Note 13, we've split it out and only the distribution received is distributable. Then there was some write-down on the Aviva portfolio and that detracted from NAV per share. At the same time, there was deferred tax liability relating to that Aviva portfolio. And when we disposed of those companies, we realized [ GBP 0.18 ] as a result of the disposal of that portfolio and the derecognition of the deferred tax liability. And then we spoke about the ENGL portfolio and the write-down of some of those land parcels and FX because we have a much smaller proportion of our business now exposed to FX, that impact is a lot smaller and then just some positive fair value on derivatives, which ultimately drove our NAV per share to ZAR 17.43 and again, very positive, and that is ultimately contributing to the total return, which we discussed way upfront. Then my last slide is really just -- because this was a significant contributor there was significant growth in the period, we thought that we'd just pause for a moment on our valuations. And what's quite interesting is you can see where our valuations are tracking. And this talks back to Riaan's slide. In MeadowView, for example, that portfolio is trading at 8.9%. But as Riaan said, we see that we are slightly over rented in MeadowView as a result of very positive outcomes on our renewal discussions. So it's a bit of a double-edged sword. And there, you can see that, that portfolio or the net initial yield on MeadowView is 8.9% as a result of it being slightly over-rented. In the rest of the portfolio, and I think our best indicator of whether our valuations are reflective of fair value is market evidence. And we know that where assets has been trading in the market have been incredibly tight. So anecdotally, just evidence of transactions, big logistics portfolio is trading between 7%, 7.5% across the country. If we just look at the average yield across our portfolio, you can see that there's definitely room for compression. And we believe that these valuations are very fair if not slightly conservative, particularly in a node like Riverfield, which is brand-new assets at 8.1%, we believe that there's significant compression, which we can still recognize in that node. So really just big picture. We believe that our valuations are incredibly reasonable, if not conservative in a lot of the nodes, and we just wanted to provide some color as to how this is made up. Okay. So I'm handing over -- sorry, last slide for me. But in terms of our loan to value, I think we started the period at 35.1%. Developments and acquisitions for the period amounted to [ GBP 600 million, ] which increased the loan to value slightly. And then the disposal of the Aviva portfolio reduced LTV by 10.8%. We split out and we kept this intentionally separate because the investment in U.K. equities increased the LTV by 3.5%. But if we were to liquidate all of these, they are highly liquid and put them in cash just because of how the LTV formula works, our learn to value would be significantly lower, probably around 25%. And then if we look at what assisted the LTV was just 0.8% reduction as a result of the valuation increases, and that takes our LTV at period end to 28.1%. Again, just another factor reaffirming that our balance sheet is an incredibly healthy position and sufficient runway to execute a pipeline of development and acquisition opportunities should they arise. Okay. So we've had an incredible period in terms of our cost of debt as well as our financial risk management. So I'm going to hand over to Warren to just take us through some highlights.

Thanks Laila. As Andrea and Laila have highlighted through their presentations, we are well positioned from an investment deployment perspective going into this forthcoming period. If you look at our cash and undrawn facilities of [ ZAR 2.9 billion, almost ZAR 3 billion ] as well as the [ ZAR 1.5 billion ] of listed equities. Now what is key as we go into a capital deployment period, is the certainty around pricing our RFPs, our investment decisions. And in this regard, 83% -- over 83% of our debt is hedged. And that's both debt and the hedges that are over one year to maturity at reporting period. Further to that, and I'll touch on this a little bit later, only 2% of our book is short-dated, that's less than one year. And then who provide our credit rating affirmed our credit rating earlier this year at AA-. Now in terms of our asset ratios, Laila has spoken through our loan to value, and our interest coverage ratio has increased significantly as we bring developments on board, and we've paid down a fair chunk of debt. But I want to go into some of those asset ratios just in more detail and in simple terms. So on the right-hand side, the bottom 4 roads, 62% -- in fact, over 62% of our assets are unencumbered, and 56% of our debt is unsecured. Now what does that translate to? It means that for our occurred lenders, the effective loan to value is around 33%. And then very importantly, for the likes of our DMT investors, that unsecured LTV is sitting as low as 25%. And which is -- gives us a lot of headroom going into the development period that we're going into. And the tagline of the headroom to deploy really speaks to that. A lot of the information on this graph, we have touched on already. Laila has mentioned the slight uptick in our cost of debt. So 8.25% at the same time last year, August '25, 8.13% in February, ticked up slightly, 8.23% at August '26. Now that's a twofold reason. One is we had a higher amount of short-dated debt in the preceding period. We had ZAR 1.2 billion of 1-year notes, which given the liquidity we had, we were able to repay those notes. So that's a reduction in cheaper short-dated debt had a slight impact on the increase in the cost of debt. And then obviously, with the Reserve Bank increasing that doesn't have -- that has an impact, too. Our sensitivity in that regard is 20%. And what that really means is that for a 1% increase in rates, it's a 20 basis point increase in our cost of debt or put simply, if the reserve bank decides to increase rates by roughly 2 increases of 25 basis points, so a 50 basis point increase in rates would increase our cost of debt by 0.1%. And again, it's that level of certainty that then feeds into our investment decisions that we can make. What this slide illustrates is our debt expiry and it shows you how not only from a total debt. If you look on the right-hand side, the top graph, what our debt maturity looks like all the way through to 2032, but also note issuance profile and of more interest because of the heightened rollover risk that sits in MTN note. So in the bottom graph, you'll see that there's two bank private placement notes that are maturing in November and December. Those will be repaying. And then really, the next auction is November '27 maturity. What I do want to point out here is two important things is we've spoken about almost [ ZAR 3 billion ] of cash and undrawn facilities. That's sufficient cash to pay down all maturities up until the first quarter of 2029. That's an important thing to note for the liquidity and that certainty that we have as a business. The second element is debt investors would have received a term sheet earlier this week. That's for an upcoming auction that we're going to be doing at the end of this month. That's a new 7-year note that we'll be issuing that will give a maturity of November 2033, which is further to the right than any of those graphs show. And that speaks to the maturity of the business that we're now looking to extend that debt tenure. Weighted average maturity is 2.9 years. We're slowly moving that out and a later graph will illustrate in more detail. We have a great relationship with the real estate finance team at all the banks, and they hate me showing this graph because it shows our TMT and thread compression all the way back from 2020 through to the current period. These have been readjusted to show the spread over Zaroni. Obviously, all the earlier ones were priced over 3-month Java so these have been adjusted. And the banks do have to follow where we're issuing in the DMTN market. But importantly to note, as a business, what we do do is we balance our MTN issuance with our bilateral bank term loans and facilities. It's important for us to work together closely with the banks. As I mentioned earlier, there is a slightly higher rollover risk sitting in DMTN issuance. And so only 42% of our facilities -- of our debt facilities are DMTN notes, the rest sits with the banks. And then we've shown this slide before, it is quite busy one, probably to take home and read as you go into beds. What I want to show though is two elements here, is that we've had both tenure extension, so tenure getting longer and spread compression in the last 6 reporting periods. So I'm going to use the latest one, which is on the far right-hand side, the first half of 2027. And what that illustrates is that the debt that matured in the past 6 months, had a weighted average maturity of 2.4 years, but the new debt that we put on to the book had a weighted average maturity of 4.8 years. So we extended the duration of the tenure of the debt that we put on. And not only did we -- were we able to extend that, we also reduced the cost of debt with the spread over [indiscernible] coming down from 138 basis points, and that includes the [ ZAR 1.2 billion ] short-dated note that we had an issuance, and we reduced it from 138 down to 125 basis points. And we've achieved that every 6-month period for the last 6 reporting period. Andrea, back to you.

Thank you, Warren. Just a quick slide now on sustainability. Obviously, a key metric within the Equites portfolio. We obviously continue to grow the solar capacity as we unlock all these developments. Every single one of them will is accompanied by a solar provision. We are basically expecting a further 5.1 megawatts to be added to our system over the next 24 months with all the various developments coming through with a CapEx of approximately ZAR 62 million. We continue all of our developments basically are EDGE certified, looking for advanced EDGE certified consequence of which is as more and more new buildings come into the portfolio and being developed to ensure that they meet these metrics. We currently have 60% of the portfolio EDGE certified. And of the 60% of the portfolio that is certified, 77% of that is advanced. So I think it's a hell of a complement to kind of product that we own in the portfolio and the long term quality that will sustain in our opinion, rental growth for a significant period of time. We've obviously made the governmental agencies were trying to do, but patience and constant communication resulted in us finally managing to get the permitting required. And we are basically in the process now of finalizing our first water treatment plant, which will be fully operational before the end of this financial year, a consequence of which is that 100% of the potable water requirement in the facilities where the plant has been put will basically be achieved through the plant. That's obviously the first step. And there's obviously massive learnings in these processes as they were with solar we started sort of 5 to 7 years ago. And no doubt we will improve our offerings to our clients. I think what's important to note at the moment, this is being done predominantly as a service as unlike the solar, which potentially will add to the distributable earning potential of the business for now at current water prices, this is a breakeven investment, if you like. However, we feel it's absolutely critical for the long-term sustainability of our products and learnings that will come from it. We also do believe that the consequence of the the level of investment that needs to go into our water infrastructure across the nation, water prices will need to move at some stage. So we are trying to be ahead of that curve. Final element, obviously, important. We've managed to get a level 2 B rating and 80% verify Black ownership. And over and above that, we have 6 statement, 102 transactions completed within our business journey to date, which obviously all talk to the social responsibility that as an organization we take and obviously try and adhere to the best metrics possible without obviously looking without the risk of destroying value in the organization. And we get to the final slide, which is prospects. Again, it gives me great joy to reaffirm our 5% to 7% distribution growth for the financial year. Notwithstanding all the challenges that we've discussed during the presentation, notwithstanding all the challenges that the globe keeps throwing at us. We are comfortable in our shoes with where we're at. The development pipeline, obviously, is delivering spectacularly well for us. The reversions and the small amount of vacancy that we have experienced through the speculative process, and we will experience in the second half. However, taking into consideration all of these factors we're still very comfortable with what we are guiding the market. And over and above that, we are in the very [indiscernible] position of having a extremely, extremely strong balance sheet with the ability to deploy capital to opportunities as and when they arise and be effectively and remain one of the leaders in the logistics space within the South African marketplace. And on that note, I would like to thank everybody for participating in the presentation. I thank my colleagues for their contribution to it, but not only to the presentation, but obviously thank them and the entire staff at Equites for the incredible work that they do to ensure that as an organization, we continue to deliver as expected by our shareholders. And on that note, Laila has got some questions, I'm sure, and let's take some questions. Let's go there.

Yes. Unfortunately, they are lofty question. So we're going to I've aggregated some of them. And if I could just start because there are quite a few questions around the income received from the listed shares. And I think I have said this during the presentation. But just to clarify, please look at Note 13. So yes, it shows [ GBP 161 million ] of gains from those U.K. equities, but only [ GBP 69 million ] is actually the dividends received. So it's not [ GBP 161 million. ] That's included in distributable income. As with our properties, we don't distribute fair value gain. So it's only the [ GBP 69 million ]. And then if you were to calculate a yield on those, it's the [ GBP 69 million ] over the [ GBP 1.5 billion ] that we would have invested in those equities. But there are more detailed questions. So we do have one-on-ones and everyone that's asking these questions does have my e-mail address. So please e-mail me or we will get back to you just in terms of unpacking the more detailed questions, but that's really the fundamental of how that investment works. We don't distribute anything that is a fair value gain. It's purely the distributable income from those REITs. Okay. I mean Andrea, there's a question, when are you expecting to repatriate the remainder of the Aviva proceeds? What is the latest you believe you'll bring this in?

How long is a piece string. I mean, ultimately, there's no question that if we could put that money on money market at the moment in South Africa, we'd probably make a little bit more. But obviously, it would then start impinging on our ability to retain our REIT status. So ultimately, that is the underlying metric that we need to constantly monitor. The development pipeline keeps on going from strength to strength and should we be successful in further RFPs between now, let's say, in the end of the financial year, which we're obviously extremely hopeful to be we would then need to start making decisions around the allocation of capital to those developments. And the consequence of that is that we would then need to start planning the repatriation of those funds. In the interim period, though we continue to get, I think, meaningful distributions from those shares from the ones that are invested, which allow us to basically convert that back into distributable income, which obviously extremely important to us and consequently. So again, I haven't given you a precise date, and ultimately, I don't think I can, but I'd be very surprised if, let's say, within the next 18 to 24 months, we still had funds there. I would be very surprised.

Okay. And then Fayaz is asking a question, he says that our LTV is quite low, and excluding the listed REIT is about 25%, where do we expect our through-the-cycle LTV to be? And I guess this ties in to [indiscernible] Question around how quickly will we bring those proceeds back.