Fortress Real Estate Investments Limited (FFB.JO) Earnings Call Transcript & Summary

Welcome to the Fortress results presentation for the year ended 30 June 2025. I think first and foremost, I'd really like to thank Ian Vorster and the finance team for getting all of the financials together, getting the audit done. It's always a tough time of year and through the winter months. So well done, and thank you. Thank you to them, and thanks to the whole Fortress team for delivering what I think has been a very strong set of results. Just a few of the highlights from the results for the current financial year. We were a little bit ahead of our forecast that we forecast in the pre-close, about ZAR 26 million ahead. Ian will touch on the NEPI dividend alternative, which we've offered yet again just to enhance the returns to our shareholders. For the past financial year, our total shareholder return was in excess of 30%. We can't pinpoint it because it depends if you elected the NEPI shares or the cash, but it was quite well in excess of 30%, which I think is a very, very pleasing result and we've certainly closed a lot of the gap we had to NAV sort of middle of last year. So I think it's been an excellent result, and it's nice to see some interest again in not only the direct property market, but also the listed property market. Ian will touch on the positive earnings outlook. I think the highlight for me, which was really a huge effort from Vuso and his team was the like-for-like NOI growth in our retail portfolio of 9.4%. I think that's really starting to look fantastic and well done to the team. And I think it's also due to the sales of some of the weaker assets, which Vuso will touch on. Our logistics portfolio in excess of ZAR 21 billion, that's the standing income-producing assets, including our CEE platform. During the year, we didn't actually deliver that much. It was about 48,000 square meters of new boxes, slightly down on the prior year, but we've got 132,000 square meters in the ground. So we've ramped that up on the back of a few pre-let facilities in Long Lake and in Eastport, and we'll go through some of those videos. So I think all in all, a very good set of results. The strategic focus is similar to last year, what are we focusing on, what are we doing to enhance the portfolio quality and the NOI. We have internalized 37 assets in terms of property management. So we do that now at Fortress. We've hired property management team, but we still outsource a little bit of the admin and just the collections and the fee CAM. I think it's certainly brought us closer to the tenants, closer to the assets and is actually cost saving for us. So we've enhanced our returns by doing that. So I don't think it's the last that -- the last time we internalize some assets. I think we'll probably look to do a few more of our big logistics parks. Growth and opportunities. I think, as always, we're always looking out for growth opportunities in our core sectors, being logistics and retail. What is nice to see, the direct market is gaining some momentum. So I think sales are easier at the moment in terms of the request that we get, the calls that we get. So I think that's good to see. Obviously, it does make acquisition opportunities slightly more competitive. But I think what we've seen in the last few years, certainly with the rise in interest rates and the disconnect between the listed sector and the direct sectors, that there wasn't actually that much trading, certainly in the slightly better retail assets. And maybe the guys who were sitting on them looking to trade there maybe come back to market because pricing expectations are a little bit fairer. Our development pipeline is still quite large. It's about 210,000 square meters, excluding the option we've got on the land north of Eastport. And I think about 5 years ago, we set the strategy of chewing through the land and taking more of a developer approach, selling land, partnering with tenants. I think that's really sort of broken the back of a huge development pipeline, and we can be a bit more selective now on the deals that we want to do, which is, I think, quite a fortunate position to be in. So this is our asset base as of the end of the financial year. So SA logistics, CEE logistics, the noncore, which is our -- really our other assets. We've got some residential units in there, our office and land and industrial, that totals ZAR 2.9 billion. And we've got a current pipeline of about ZAR 3 billion. And that's really how we've been financing the developments, it's really from selling the assets, ZAR 12.2 billion. We did include some of the NEPIs, which we gave to shareholders in that disposals column there, and that's funded ZAR 11.7 billion of developments. I think quite a significant milestone, which we've reached is of our current logistics portfolio, the Fortress team has developed 70% of that GLA, which means we've got a much better feel on the asset quality, on who the tenants are, things like that. And I think that, that experience of developing these warehouses is now very deep within our development team headed by Jason Cooper in SA and Artur in Warsaw. This was just an asset-based evolution slide. I'm sure anyone who has looked at social media in the last couple of years sees these little infographics. It's really just our asset base evolution from 2018 to today. In 2018, we held quite a lot of listed investments, Resilient, Greenbay, NEPI, and we also had a lot of land and work in progress, about ZAR 4 billion. So as you see these things -- these graphs change, you can really see logistics and CEE logistics rise, work in progress and land reduce. And then the listed investments we selected just what we considered by far the best one being NEPI Rockcastle to hold on to. This is the similar slide that we've shown, but what we -- we used to call it our target asset base. I think we showed this slide about 5, 6 years ago. We've -- Ian, Vuso and myself have been -- this is our 14th combined results presentation and we've always had this target asset base in mind. I think now it's more of a forecast asset base. Largely, we're there. We should get to this rough mix in the next 2 to 3 years. So that's roughly half-half between logistics and retail. And obviously, NEPI, a stock that many of you will know, is purely retail. And then a roughly 60-40 split between rands being 60% and euros been 40%. And that's really just if we roll out the existing pipeline over the next 2 to 3 years. As we mentioned, really what we've been funding the pipeline with is asset disposals. The current year, we had another good year of asset disposals, ZAR 1.45 billion at a 3% premium to book; 31 properties, which over 2 per month. And if any of you have bought and sold properties, which I'm sure many of you have, there's a lot of time and effort that goes behind acquiring and disposing of assets. So the team does work hard. They probably actually execute probably 1 in 10 of the inquiries that come to us. So there's a lot of work that goes into selling these buildings. We do disclose there, if you look at the right hand column highlighted the yield. Obviously, logistics and office is low. So that's accretive. There were some vacancies there. Industrial is relatively attractive. Retail is high, I'll ask Vuso touch on a few of the reasons as to why [Technical Difficulty] Sorry about that. I think -- so the office is actually, as we've been disposing of them, have been relatively accretive. And you can see there the retail and the industry because they are quite well let, we actually do sell some income. It's still better for us to do that, but we set the target of selling the higher-vacancy, lower-quality assets first, which we've largely done and we do have assets that are easier to sell but they're slightly better quality. And I think that's going to be a challenge over the next couple of years. In the industrial column, we did sell a large portfolio of assets in City Deep to Refinery Property fund run by Mark Stevens. I think that was a good exit for us. The interesting one about that was we actually retained the solar PV installation. So we sold the assets, but we retained the solar. So we will manage the solar, own the solar and sell the electricity to the tenants via the new owner, which I think was quite a nice proof of concept. As mentioned, these are the asset disposals and developments, and really, that's our pipeline of roughly ZAR 3 billion if we include in-force and then ZAR 4.2 billion if we include the option on Eastport North, which I think we still have about another 2 years to decide if we want to exercise that. So this is looking at our capital allocation return metrics. Really, what we've got here in the green bars is the NOI on the portfolio for the year. And in the blue is the like-for-like increase in -- or decrease in capital value. We had a really nice 6.5% like-for-like increase in our capital values, and I think it's been a long time coming that the valuers have finally realized that we've been selling assets at above book for about 6 years as has the whole sector. And our valuers have been quite conservative. So it's nice to see us able to actually realize a little bit more than our book value and the retail has been the standout in terms of the revaluation upwards. So that's at a portfolio level. And then what we've tried to do here is just to indicate in those sort of red and green balls how much net capital we've allocated to those different sectors. So retail, we allocated ZAR 146 million on a net basis. So that's expansions, refurbishments minus sales same as logistics is new builds minus sales. CEE logistics in the middle, they're the largest. We didn't sell anything. It was just allocation. NEPI was the net between what we dividend out to shareholders and what we participated in, in the book builds, so net up ZAR 80 million. And then what we sold in terms of our noncore, so minus ZAR 263 million sales in offices and in industrial. And I think it's something that we have shown for a couple of periods, and it's good to see that we're still allocating capital into the better performing segments in our business. Thanks. I'll hand over to Ian to do the financials.

Morning, everybody, and thanks for your time. So our distributable earnings for the 2025 year is ZAR 1.956 billion, which is roughly 9% up on last year's ZAR 1.788 billion. That's not a comparable or like-for-like number. In last year, of course, we had the scheme of arrangement, which was implemented in February. So the earnings included roughly, well, a return on circa ZAR 7 billion worth of assets that we use to fund then be repurchased for half the year. Another noteworthy number on the slide is that of the TNAV growth, which is roughly 4.4% up year-on-year. And that's also after the distribution of the NEPI shares to those shareholders that elected them, and in there would have been a very small piece of a capital return enhancing shareholders' returns in the last financial year. So where does that distribution or distributable earnings come from? It's primarily 4 areas and that is income from our direct portfolio or NOI from our direct portfolio, and I'm going to come back to that number shortly. To that, we add our NEPI return, that's the dividend we receive from NEPI as well as the hedge thereon. Of course, we've got group interest expenses, net of interest received and interest rate protection, group overheads and tax. So we are not a REIT. We are a normal taxpayer and like any other company, you would have a tax charge in the year and potentially an overall under recovery of tax from prior periods. In the current year, the normalized tax charge for the period was ZAR 54 million. And the ZAR 17 million you see below that would have been a provision taken against distributable earnings in previous periods taken from the earnings and now when finalized has been returned to the distributable earnings. Coming back to the NOI from the standing portfolio, that just under ZAR 2.7 billion there. The interesting point in that number is that over the last 3 years if you go and just isolate NII from the portfolio, which is unaffected by the scheme of arrangement of last year, it is a portfolio number, was up 12% and 8% year-on-year. So 2023 and 2024, respectively, 12% and 8%. And that really is, to Steve's point, the new developments coming on stream and rotating out of the old industrial and offices into better quality, growing earnings. Of course, all culminating in increased distributable earnings for shareholders. With regards the dividend and the second half of the year. We have declared a dividend of ZAR 0.8629 cents, which represents a 22.9% rounded up to 23% growth, H2 on H2, which is a comparable number unaffected by the scheme. And we, again, have given shareholders the option to elect either cash or NEPI shares, albeit at a slightly lower premium than previously. When we did the slide, it was at about a 10% current prices on NEPI, it'd be about 8% and that ratio is 0.00678 NEPI shares to every 1 Fortress B share. We've done a slide just illustrating the difference. I'm sure you could work through that in your own time. With regards to that uptick in NAV, where has it primarily come from? In 2 areas. Our direct portfolio, as Steve mentioned, we've seen a nice capital uptick in the current year. That in rand value, about ZAR 1.8 billion, and that's what's reflected in the direct portfolio in the blue portion of that column. Of course, we are a developer. We've developed and completed about ZAR 800 million worth of developments in the current year. So when you look at the development pipeline, there hasn't been nothing allocated or taken from it. That's just a net number, and we spent roughly ZAR 800 million in the year and transferred out roughly ZAR 800 million resulting in an immaterial movement. Our listed portfolio is up year-on-year. And we've separated the portion from the growth in the NEPI position to that of what was distributed to shareholders. And the ZAR 0.31 that you see on a per share basis would have been the enhanced returns should you have -- should you have elected that in the NEPI shares, culminating in the increase of 4.4% on our [ NTAV ]. From a liquidity and funding perspective, we are in a very comfortable position. A couple of noteworthy points on this slide is if we -- we obviously measure our investment in NEPI at spot, and that obviously moves on a daily basis from [indiscernible] our spot LTV today, roughly 38% [indiscernible] at year-end. We have roughly ZAR 3.1 billion worth of available facilities and cash available to us and EUR 50 million. We've had quite a busy year in terms of liquidity and funding and managing our debt position. We early refinanced ZAR 4.2 billion with Nedbank in the financial year, one highlight. And secondly, we've been far more active in the debt capital markets in the last 12 months. We have had, as a strategy, a move to be a consistent issuer in the space and a biannual placer. And this year, we were able to place just over ZAR 1 billion in Q3 of last year and ZAR 820 million in Q2 of this year. And between those 2 placements, a compression of about [ 6 points ] across all tenors, which I'm told is unprecedented, and that's really a reflection of 2 things. One is debt market is well priced at the moment. And there's a new appreciation for the simplicity of the Fortress business, its capital structure now that has been sorted out. And of course, that all result in a lower cost of funding and enhanced distributable earnings for shareholders. When we look at how we manage our interest rate risk. Of course, we have roughly ZAR 26 billion worth of drawn positions, but one has to make certain economic adjustments to that to get to what our exposure to variable rates are. Our economic exposure is just under ZAR 21.2 billion. And against that, we have roughly ZAR 17 billion worth of interest rate protection. We still favor caps over swaps. Our blend is roughly 70-30, 70% in favor of caps and 30% in swaps. We like the -- sorry, we like the cap product especially in an environment where we can see potentially a mismatch in the interest rate curve and what could happen with inflation targeting being 3% at the moment. The cap product allows us to protect to the upside, but share in the downside, and I'll come back to that shortly. On the right-hand side of the slide, you'll see an amount of ZAR 2.3 billion. What that is, is some forward starting caps that we entered into this year. Effectively, what we've done is increased the tenor of our hedge profile, but not increase the notional value. So as a swap or cap falls off in the periods of '26, '27, '28, they will be replaced by these forward starting cap. So it doesn't increase the total amount or the notional amount of protection we have, but it allows for a longer runway of protection. Just coming back to why we like the cap. So if you have a look at the columns in blue and the numbers inside them, those would be the cap strike prices. So if we look at our South African debt, the JIBAR just over 7%, arguably you are in the money to the extent the protection is working above that. But as you float below the cap strike, we just simply pay less interest. Unlike the swaps, if you look at the gray bars, 7.01% or 7.03%, you would lock that rate in over the period regardless of what happens. And hence, we do like the cap product. If we look at our debt maturity profile, not dissimilar to any previous period. We've got, as mentioned, roughly ZAR 26 billion worth of debt in tenors of between 3 and 5 years, which would mean that roughly ZAR 6 billion becomes available to expire in any one -- sorry, any 12-month period. This year is slightly different in that we've already refinanced circa ZAR 4.2 billion that I mentioned with Nedbank and 1 or 2 others, effectively pushing those tenors out into the later periods. But you can see it's quite well managed and into at least 24 and 36 months out. Our all-in cost of funding in South Africa is 9.13% and Europe 4.2%. And how that is calculated, it is the base rate plus the margin on the debt and the effect of the hedge. So as mentioned, those cap products come with a premium. We amortize that premium over the life of the product and included in the cost of funding that we show. So for modeling purposes for the analysts and shareholders, one can use those rates and they're more indicative of the actual rates that the group would incur. From a debt split perspective. Historically, we've targeted sort of 80-20 between senior secured and the unsecured market. We've revisited that sort of targeted range and are more comfortable now to move from the 20% exposure closer to sort of 30%. The reason for that really is sort of propelled by the reduction in our development pipeline. Five years ago, 6 years ago, as Steve pointed out, our development pipeline was much bigger. It was almost ZAR 5 billion of non-income-producing assets. And as time has come on and we've completed those buildings, we've effectively built unencumbered assets. As a result, we're more comfortable to go to the debt capital markets, take up the unsecured debt at better pricing. And should there ever be a wobble, we have the unencumbered assets to go and refinance from a senior secured perspective. So again, trying to take advantage of tightening spreads in that market. With regards our guidance, we have revised our guidance upward from what we put out in our pre-close. We had previously guided ZAR 2.04 billion to ZAR 2.07 billion. That was off a base of ZAR 1.93 billion and represented a 6% to 7.5% increase. We've revised our guidance now, effectively shifting that band upward that now the low end of the band is ZAR 2.07 billion; high end, ZAR 2.1 billion. Still represents a 6% to 7.5% increase, but now on our actual earnings of ZAR 1.95 billion. Our balance sheet remains in a very strong position for growth. And the Board is committed still to the payment of 100% of our distribution -- sorry, our distributable earnings methodology calculated amounts for distribution. So all looking good for next year. Thank you for your time. I'm going to hand over to Vuso to take us through the Retail.

Good morning, everyone, and thanks for joining us. So there's this one working now. Our retail portfolio by value has grown to ZAR 11.8 billion. We continued to focus on the commuter and convenience shopping market. Our focus has been on -- or our strategy has been on selling noncore assets, reinvesting in the portfolio in the form of extensions and redevelopments. Over the last 12 months, we sold 3 noncore assets, being Kimberly Junction, Midtown Mall in Rustenburg and Paradise and Corner in Thohoyandou. All of those assets were smaller in size. I think we've worked hard to reduce the vacancies. We were worried about what the vacancies would look like in the future, so we thought that it was a good time to sell them. So we vacated those ones. But we also spent some money extending Sterkspruit Plaza to get to 19,000 squares. I think that extension has made Sterkspruit Plaza or cemented Sterkspruit Plaza as the main dominant shopping center in the town. We also redeveloped Bloemfontein Value Mart and introduced Shoprite. That allowed us to gain more of the convenience market in that area. On an operational side, I think we've had a good year. We renewed 339 existing leases and signed 73 new leases in the period. That all resulted in a slightly positive rent reversion rate of 1.4. We think that going forward, the reversion rate is going to remain in the low single digits. That's on the account of a tough trading environment. Our in-force escalations at 5.9%. Our vacancies, I think the team has worked very hard to reduce vacancies and maintain them at a low level. Our vacancy rate is at 0.6%, down from the 1.1% level reported in December. I think that we'll be able to maintain vacancies on this level. Our rental sales ratio on the portfolio is around 6%. Our collection rate is quite high at 99%. And we think that we've got a -- we're comfortable about the health of our tenants at the moment. On the NOI, we increased NOI on a like-for-like basis by 9.4%. I think the main 2 drivers of that were, firstly, rental growth and a reduction in vacancies. And secondly, it was improved cost savings. In the base year, which is financial year 2024, we still had some low shedding costs in there. And obviously, in 2025 with less low shading so we managed to save some costs. You may ask that -- or some of you are thinking, is this a sustainable growth rate? The answer is no. We're focusing between 5% and 6% for next year. I think we're comfortable at that level. I spoke about Sterkspruit Plaza earlier on. So Sterkspruit, for those who don't know, it's in the Eastern Cape, close to the Lesotho border. So we've owned Sterkspruit for a number of years now. We've expanded -- in fact, this is our second extension of the plaza now, taking it up to 19,000 squares. The latest expansion was to accommodate Boxer, some of the banks and some value fashion. It's gone very well. I think the guys are trading to expectations. So Sterkspruit, in the center, but we also own the major taxi rank in the town. We're also in the process right now of developing a bus rank on our land. So we think that the additional consumers that will be brought will help the center. It's fully let, anchored by Boxer and Shoprite and it's got all the usual suspects in terms of fashion. We've installed a 1.1 meg solar plant. 31% of the electricity consumed in the building is produced by our plant. So it's an asset that we like, very popular in the area. It attracts a lot of the villages around us and also attracts shoppers as far as Lesotho. On turnover growth. We achieved a 3.9% growth on a like-for-like basis on turnovers. This graph just illustrates that over the last 5 years, we've been able to grow turnovers above inflation. In terms of what we're seeing on the trade, consumers are still focused on more essential goods, and that's just a sign of where the economy is. So your grocers, your value fashion, your pharmaceutical tenants are still trading well. We've also seen that from an entertainment point of view, fast food restaurants are trading well as well as liquor stores. We've got 2 buildings at the moment in Venda in Thohoyandou. First one is Venda Plaza. We've just installed a solar plant there about -- in May actually this year. Initial outcomes that it's producing good electricity for us. This town, Thohoyandou, is quite popular. Again, it attracts a lot of the villages around it, anchored by Shoprite. We've got the usual suspects, your Mr Price, your PEPs, all the value fashion guys and a bit of food and fast food. The building incidentally that we sold is actually right next door to this Paradise in Corner, but that was a smaller building about 3,700 squares. Over 80% of our tenants are national tenants. This slide here just shows that these are our top 15 tenants. And the main point that we're trying to illustrate here is that the majority of our tenants are so focused on that essential goods and services category. These guys, the top 15 tenants, account for about 60% of our rental revenue. If we split our portfolio by categories, we focus on the township, CBD, suburban and rural markets. I think all of those have performed well. The townships -- all our township buildings are fully let, trading nicely. The CBDs are still producing good trade. However, a lot of the CBDs are still facing challenges of degrading infrastructure, and that's something that we need to keep a close eye on. On the suburban side, vacancies are fairly low, but you'll see that the turnover is slightly less. The main reason for -- or the growth in the turnover is slightly low. The main reason for that is that in some areas, we've had increased competition where we are mainly in Arbour and Galleria, where there's been some expansions and new entrants of competitors. And in Pineslopes here in Joburg where in the previous year 2024, a nearby center burned down, the grocer there, and they came back in 2025. So we're going through a period of normalizing again. Our rural portfolio is performing well. It's been stable for a number of years. So, yes. From future extensions and redevelopments. So we own a shopping center called Botlokwa in Matoks. Matoks is a village on the N1 between Botlokwa and probably halfway between Botlokwa and Makhado. It's currently 8,000 squares in size anchored by Boxer. We are planning to do an extension of 7,900 to introduce Shoprite and some more value fashion -- increase our fashion offering. So obviously, we're talking to people like Mr Price, Pepkor, some of the Foschini brands, but also to add on our entertainment, fast-food restaurants. We hope to complete that probably October next year. And then Tzaneen, another area that trades very well for us. We're currently in partnership with Resilient and [indiscernible] on Tzaneen Lifestyle. We'd like to do an extension of 20,000, and that extension is going to house brands like Woolworths, Pick n Pay and some of the fashion guys. We think that it will trade well. It is a very strong area for us. And I think that is me. Let me hand back to Steve -- let me talk about Mutsindo first. This is our second center that is in Thohoyandou. It's anchored by a spa. You can see that it's close to both the main taxi rank in the area and also the main bus area in the area. The center trades very, very well for us, a typical Fortress center, an anchor, some value fashion and some fast food. Now many people will say that [ The Spa ] is the top spa in the country. If you meet all their landlords, they all tell you that. I can't tell you that, but what I can tell you is that [ The Spa ] trades very well. It's the top one in our portfolio and probably right up there with all the other spas -- top spas in the country. So a good center for us. We've had it for us for a while now and every year it just ticks up. Thank you very much. Let me hand over to Steve now.

Thanks, Vuso. I think another really fantastic set of results. So well down to you and your team. Just a summary here of our SA logistics portfolio. We have been selling -- if you look at the GLA there, it has reduced. We have been selling some of the smaller older logistics assets, fetching very good prices for the smaller assets in Linbro and Longmeadow. They generally have a smaller yard, higher office component, owner-occupiers love them. So we're happy to let those go, and we're getting sort of ZAR 9,000 to ZAR 10,000 a square meter on those assets, which actually results in a very low yield for us, but I think the owner-occupiers look at it slightly differently and what's my replacement cost to actually build this asset and can I find it? The vacancy there for me is a standout number. I mean, I think practically, it's close to -- it's almost at 0, close to 0, which does indicate the strength of demand for logistics assets, prime logistics assets in SA. And I think it also limits the risk of oversupply and gives us a bit more confidence to do a few speculative buildings as we are doing. Reversions, they're slightly positive. And I think as we have mentioned in the past, what does a 0% reversion mean in our life? Well, if we take, for example, a long-term lease that we signed 10 years ago, escalating probably between 6.5% and 7.5% at the time. That means that's compound growth over 10 years, and we're renewing on average those leases at the expiry rental. So a few years ago, I think we were probably a little bit scared of these huge negative reversions in the logistics space because the escalations were just running well ahead of the market rentals. But since we've seen a very sharp and significant rise in construction costs over the last few years, the asking rentals have had to go up to compensate the developers, the landlords for the increased cost. And I think tenants are really largely accepting of that now. There was a bit of pushback how can that be, you advertising ZAR 65 two years ago and now you're asking ZAR 85 to ZAR 90. But -- that's just -- fortunately, there's very little vacancy and all of our competitors are asking the same. Generally, leases are resetting on the prime logistics assets, high 80s, low 90s for our generic space. This is Eastport on the R21 in Ekurhuleni in Gauteng on the East Rand. I would say the R21 has probably become the key logistics hub for the country, which would make it one of the biggest in Africa. When we bought the site, it was 1 million square meters. It was quite daunting. We had estimated about 450,000 square meters of space. We did sell some land to Teraco so that vacant piece there will become an extension of what is currently Africa's largest data center. Crusader have actually expanded in this park. They're taking another building. We're doing that spec development in the middle. And Liquor Runners is moving out of Long Lake where they occupied it temporarily and we're doing 31,000 square meters for them, which is quite exciting. They do a lot of distribution for Heineken and some premium alcohol brands. That's the expansion at Eastport. On the left there, past that big Pick n Pay DC building that you see, we do have an option to acquire the land just north of Eastport. We haven't exercised it just yet. But given the number of RFPs in the market, I think it's probably highly likely that we will exercise that in the next 2 years if we want to win a significant transaction that can capitalize that. Clippa is an interesting one. We did do a JV with the tenant, so they own 50% of that building and are desperate to buy the other 50%. And I think we do still really like that structure of partnering with the tenants in terms of ownership. I think it lowers the risk for us. It gives them a sense of ownership of the assets so they really look after it. And it just allows us to recycle that capital at a very incremental return. John Deere was one that actually M&T developed. We just bought it. It was quite a small one, funny shape at the end of the pocket there. And that's the last remaining pocket that we have at Eastport. This is the Eastport North site. We can do about 150,000 square meters. Fantastic highway exposure. And that road on the right there, running past Eastport is actually the R25 -- sorry, R21 expressway, which will run parallel to the R21 and be a much higher speed dual carriage way in time. That actually runs through the whole Riverfields development past Serengeti and up north towards Pretoria. This is just what we currently -- what we completed during the current year and what we have under construction. As I mentioned, not that many completions during the current year, 48,000 squares, but we do have 132 under development at the moment. That one in Bydgoszcz there just for Volcano has actually been completed. Quite a nice yield there. And we've decided to just complete the rest of the park, which I'll show you a little bit later. This is just the progression of our pipeline, has been topped up with the Eastport North option, but it is getting relatively small compared to the overall portfolio. So 143,000 square meters of pipeline plus the 150,000 Eastport North. This is just an overview of Clairwood. We have one remaining pocket there, Pocket 6. It's been a long road with Clairwood, but I think thankfully, touch wood, we had the vision and actually the financial strength and balance sheet to see it through. And I think we've really developed what is -- if you just look at these videos and you look at what surrounds Clairwood in terms of quality of assets, it's multi-level, old industrial, rubbish to be quite frank. The problem is brownfields don't make sense around the Durban port. The asking prices are just too high. So I think we were fortunate to get this last remaining vacant site, which was the old Clairwood racecourse. [ Gantrans ] actually was an interesting deal. They took over the facility from Sammar who moved into Pocket 2 and have occupied it for -- will occupy it for 5 years. There was no vacancy there, just one tenant moved out, the next one moved in. So I think it does speak to the demand that we have for these assets in Clairwood in close proximity to the port. And as we've seen over the years, a very safe and secure park in the Durban node. That last remaining site, we can do 35,000 possibly up to 40,000 square meters. And I think what we're seeing is the container demand. If you look there, the rail, very excited about what's happening at Transnet, particularly in relation to Clairwood with the rail siding, which you can get directly into the port. It does need an upgrade. We spent many years bashing our head against the hurdles that Transnet put in place for us to unlock that. But hopefully, now with a little bit of, I think, a loosening of the grip of control, perhaps we can build a decent rail siding there to allow those containers to access the port not via trucks and road, but directly via rail, which is a far more efficient process. A lot of these warehouses in Clairwood actually need container storage facilities, which means we have to enhance the yard and make it a lot stronger to cater for the weight of the containers. Long Lake has been one that we've set on for a while, and I think we were very lucky to win the Suzuki build, 8-year triple net lease, that is if you're looking at the site on the bottom right there, the one on the far right, so we've done Zest, we did Cargo Carriers. Liquor Runners occupied that one building temporarily. And while we were building, we decided to do one on spec in the middle just because it's far easier to build it in that fashion rather than having one and one and then trying to develop the site in the middle and interrupt the tenants. So the Spec 1 warehouse will be vacant when Liquor Runners leave at the end of the year and Spec 2 will be completed middle of next year. South African office portfolio, it's almost getting too small to get its own slide now, 1.3% is the value of completed buildings over our total assets at year-end. Like-for-like NOI growth, I think, was pleasing. Reversions negative, but not as bad as we have seen. So I think well done to the asset management team there for really sweating the assets, upgrading them, making sure that they're let and salable. So I think, hopefully, in the next sort of 2 years, we'll be completely out of this office portfolio and hopefully out of the site just down the road here in Sandton. The industrial portfolio, I think yet again continues to be surprising to the upside. In our view, a lot of the same dynamics that are driving the logistics drive the industrial. If you look at that picture there, Jonas Road led to Goldfields logistics. So it's really the users of our industrial space are no longer industry, as we know, manufacturers of things, higher power users. They've really become logistics users who are looking for a slightly cheaper product, not racked, not super prime, just block stacked for other uses. So it's very similar in terms of the demand dynamics. ZAR 5,000 is well, well, well below replacement cost. Vacancy is sitting at around 8%. There's some sort of unique assets in there that keep the vacancy quite high. But it's a good portfolio. It's got a good yield. And I think if we really had to ramp up the sales, it would be pretty easy to sell these last remaining assets. The JV with Inospace, it's really -- if you look at that NOI growth since inception of 51%, that was the reason we did it. We needed a solution for a lot of these older industrial assets. Some of them are multilevel. And that solution was make it -- cut it up into smaller spaces and try and lease those out. And you can see there, they're getting rental of ZAR 80 overall and ZAR 146 a square on the micro spaces. But for us, at Fortress, it just didn't accord with our management style or what the teams were used to in terms of trying to manage these small spaces. So we needed that operational backbone, which in Inospace provided for us, and I think it's been a very successful partnership there. NEPI Rockcastle. This was 1st of September. I think the shares are a little bit down since then, but many of you would have seen the results there, which we've summarized here. Still phenomenal scale of that business. I think accessing the middle class in Central and Eastern Europe in growing economies is a pretty proven way of growing the retail. And I think when you're looking at big retail and this growing middle class, it's really a virtuous cycle of increasing spend, increasing value and really growing off those assets. Just something that did happen after year-end, which we included in the announcement, we acquired another site in Poland in the city of Wroclaw. It wasn't a new build logistics site. It was a an old factory. And I think what's always appealing for us as real estate players is in Eastern Europe, certainly those old communist block countries, the industrial real estate was located very, very close to the city center, often in the best location with public transport access because it was about getting workers home and getting workers to the factory. So this asset is 7 kilometers from the city center. It's about 76,000 squares, over 200,000 square meters on the site. So we can add additional GLA, which the current tenant who signed a 20-year lease with us is very keen on doing. We've already acquired the land. But even if we don't add the GLA, 20-year lease, the yield was 8.75%. There's no rent-free periods. Very significant deposits, which we require just to mitigate the credit risk. So fortunately, if we look at the net cash deployed after the deposit, we're getting a pre-gearing yield of about 10%. So it's very attractive. And I think over time, we'll hopefully upgrade it, add some additional warehousing for them. And I think if you're looking super long term, what happens post the 20 years, a city like Wroclaw we would predict would ultimately probably grow into that in terms of retail or residential redevelopment opportunities. Many of you joined us on the tour that we had to Poland to see a lot of these assets. Thank you for joining us. Stargard is one of our smaller ones in Northwestern Poland near [indiscernible] Interesting to see Vestas occupy some of the warehouse and a large 15,000-square meter yard, which we developed for them on a pre-let basis. I think Northern Poland [indiscernible] and Gdansk is really also forming a bit of a hub in terms of renewable wind energy and Vestas have come here. Hine have come here, they're a supplier to that industry. So we've started building a larger warehouse, as we did for a lot of the assets in Poland, where we sort of start the warehouse and then we just build the pre-let portion, hoping that another tenant will come and we can just keep expanding it. Slightly different layout compared to SA. The tenants generally are quite comfortable to have a big warehouse and they'll get a piece each and share the yard. I think security and ownership in terms of that is probably not as critical. This was one that we did in conjunction with MDC2, run by Hadley Dean, who used to be the CEO of EPP. That is the A1 highway just at the bottom of the screen there. It's the main north-south corridor in Poland and the S12. This is 50,000 square meters. We can do almost another 30,000 square meters at this site. I think which is really in the middle of Poland as a country geographically. You can see Zalando, the big German online fashion retailer, has got about 100,000 -- just over 100,000 square meters next door. I think really, this is a big box central DC location, not only for Poland, but for the whole of Europe. So that's Notino really use it for distribution across countries there. Oriflame, both similar businesses actually sort of cosmetics and fragrances. Notino do have a few retail stores in the NEPI centers and this is the their main hub. So an excellent location. We're just waiting for some inquiries before we push the button on Hall B. This next one, Zabrze. I think a great proof of concept there. It was acquired -- the land was acquired and sourced by our team directly, and we started building close on 80,000 squares. We've done about 44,000 to date. Logistics uses 5-year leases, but very generic space. I think a fantastic location in the Silesia region actually just behind the M1 center in Zabrze. And I think it's all our colors, all our branding and we're very comfortable with the sort of enhanced spec, the BREEAM Excellent rating. It's really what we're trying to do more of with our team in Poland. You can see the site there. We put the roads in around it. The site on the right there is actually owned by Kaufland, who have plans to do a big distribution center for the operations in Poland next door to us, so an excellent location. For those of you who haven't been to Poland, Bydgoszcz is just a little bit northwest of Warsaw. It's probably a secondary logistics node, but it's certainly growing. We have got a site that's very, very close to the city center in the background there. When we went to look at it, it was only 2 buildings built there and a shell of a third and the developer had really run out of money. So we bought it, it was quite something and a little bit daunting to go in there with such a big pipeline, but it's nice to see that in a few months, once we finish Hall C, it will be completed, 90,000 squares. Fantastic park, we would love to do more of these close to the city, smaller boxes with more potential for tenants to give up space, to take more space. Touch wood, they've only ever asked us for more space. But I think it's a very flexible, very low-risk park and one that we really are proud of. I think the standout here and not in a good way is the vacancy 15%. We acquired an asset from [indiscernible] fund in February, and during the DD, we did realize that the 1 tenant who's been around for over 30 years was having a little bit of a wobble on their finances, but we're still there and still keen. We acquired this space at roughly replacement costs. So we just agreed with the seller to withhold an amount of the sales price should anything happen to the tenant. The tenant then approached us indicating they were having some financial difficulties, although they kept up to date largely with the rent and they hadn't gone bankrupt, but that did trigger an option on our part to cancel the lease, which we did. We tend to take quite a hard line with tenants who can't pay. Our best option in our sort of base case scenario is we cancel, we evict them. And if they get their act together and get the cash, they're welcome to come back in. But that's the best way of dealing with tenants who are trying to sort of get a rent reduction due to their own financial difficulties. And fortunately, we had essentially covered ourselves financially by the amount held in cash in escrow from the seller. And I think over time, we'll just cut that box up into slightly smaller spaces. We're already close to signing a lease actually with a rather large retail tenant and we have in Bydgoszcz who needs a smaller distribution center in Gdansk. So I think we're not particularly worried about the relet-ability of that asset. Like-for-like NOI growth in excess of inflation and development yield still 7% to 7.5%, which is quite attractive in euros. That's our pipeline, including Gdansk. Currently, we've utilized all the space at Bydgoszcz so that has dropped off our pipeline. Renewable energy, I think, a very big focus for us. We deployed -- completed projects worth about ZAR 156 million for the year. Predicted return on those is just over 23%. And our predictions are actually largely coming true. When we look historically, our solar PV installations have given us just over 20% total return. So it's a very, I think, attractive use of our capital, although we've only deployed just over ZAR 500 million. It's quite hard to actually deploy more, especially as we get to the smaller buildings. So if you look at the number of plants that we installed, we rose from 59 to 96 within the year. So an increase of over 60% in the number of plants. But that's as we get to the smaller buildings, we're doing 100-, 200-kilowatt peak type of system. So it is smaller, but I think it's still adding a lot of value to our portfolio. And fortunately, it's run by our internal team and I think they're very experienced at rolling these things out. On the social side, our CSI initiatives led by Jodie and our finance team have been, I think, really starting to make an impact for a lot of people focused around the areas in which we have assets. I think one standout for the year, especially as we are based in Johannesburg, was the refurbishment of Donald Mackay Park at the bottom of Ponte. It really was a tough public space, lots of vagrants, lots of crime and we got stuck in there as a public-private partnership with City Parks and Jozi My Jozi and we fixed that up, and it's now a really fantastic public space, and we're hoping to roll that out into other parks in the CBD. We do have a big asset there -- well, a small asset, but valuable park central next to the Noord Street Taxi Rank, which is adjacent to [indiscernible] park and we're hoping to sort of help the city fix that up. And I think it's really -- it doesn't cost a lot of money. It's just about assisting with really the rollout. From a governance perspective, as we have previously announced, we do have a change of Chairman. So welcome to Herman Bosman who's our new Chairman. Nonhlanhla Mayisela has taken over as Chair of the Risk Committee after Ina Lopion's retirement. She is also joined by Venessa Naidoo on that committee. And Jon Hillary has joined the Nomination Committee. Ian did mention the outlook from a guidance perspective. I think we're looking at quite a good year ahead. Vuso mentioned 5% to 6% NOI growth is what we're forecasting on the retail. I think overall, the market's in quite a good position. We would really like for some interest rate cuts to come through. This forecast just assumes interest rates are flat, both in euros and in rands, but if we do see some interest rate cuts coming through provided it's on the back of the [ ZAR ] being independent, I think it would be a very welcome tailwind for us as listed property and for the whole industry. Thanks very much. These are logistic portfolio stats for your information.

I don't know if there are any questions from the audience. [Operator Instructions] If there's nothing online, nothing in the audience, we can then -- anything? No. Anything online, Ryan?

Yes, we have a single question from [indiscernible]. One for Steve, one for Ian. What contribution did solar make to your revenues this year? And where do you expect this to get to?

In terms of the actual revenue, I we did like -- did put it in here, sorry. Solar income for the financial year was ZAR 90 million. Where does it get to? We're almost done with the solar rollout in terms of our current pipeline, what we can do on the buildings on a sensible basis, without giving it too much. Really, what changes that in terms of leap forward is the -- if we can get wheeling right, then we've got a lot of roof space in and around the urban nodes and we could really ramp that up. But at the moment, the wheeling is very, very difficult in certain municipalities. I think it's a difficult one for them to get their head around. Electricity resales is generally their biggest revenue generator, their biggest source of profit is buying energy cheaper from Eskom and selling it to the end user at a more expensive rate. So if you start to take that away with a lot of solar, I think it creates complexities for their business model. But those are the numbers there.

Just a follow-up question on solar, what proportion of energy requirements are being covered by solar?

I think we did note, I think it was about 18% for the current year. We're hoping to get that significantly up. I think the other interesting development in the technology in that space, the panels have become much cheaper, but the battery systems have not only come -- become much, much cheaper over the last 12 to 18 months, but they've become more reliable. I think previously, we had done battery systems. They were very expensive and they weren't particularly reliable in terms of what they were doing on site, in terms of the times that they could come on and off. But what we don't view in our future is using the batteries really as backup power, that's probably best supplied by generators. It's really -- it's better for just time of use tariff optimization. That's really where the batteries come into their own.

Next question for Ian. Are you seeing any margin compression on refinances?

We have. There has been a noted change in the last year. There has been some margin compression. On average, about 10 basis points per tenor -- 10 to 15 basis points per tenor.

Okay. No further questions from the online audience. I don't know if there's anything from the room?

Okay. Well, thanks, everyone. We'll be around. There's lots of snacks and coffee, so if you want to just grab us and ask any of the execs or any other Fortress staff any questions, please feel free to do so. And thank you very much for attending.