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

Good morning, everyone, and welcome to the Fortress REIT Limited Interim Results for the Interim Period of the Financial Year 2022. It's the 6 months that runs from 1 July to 31 December 2021. It is really nice for the first time in 2 years to have a live audience here at 54 On Bath in Rosebank. And I think we've actually almost taken up all the seats that we had laid out. So it's really nice to have everyone here, and welcome. And to those of you who've joined us online, hopefully, for our year-end, we can have a little more audience participation and some human interaction again, but welcome, everyone. So just a couple of highlights for the period. Many of you would have seen the results announcement. And for those of you who want to download the presentation that we're going through it is on our website. And on the webcast, for those of you who have dialed in, it should be in the top left corner, there should be a question box. Our new Head of Investor Relations, [ Ryan Neistat ] will then read out those questions at the end of the presentation. So please, at any time, if you've got a question, feel free just to put that in the question box, and then we'll take questions from the audience at the end. So a couple of highlights for the period. We sold ZAR 286 million worth of properties, again at a bit of a premium to our book value. I think once again proving that our book values are fair and correct. And bear in mind that we are selling the tail of our properties, the slightly lower quality ones. So I think that does sort of highlight that our properties are certainly viewed as relatively well priced by the market. I think just on that, you would notice that since the previous year, that run rate has slowed down a little bit. I think there was a slight sentiment change in July with the riots. But pleasingly, that's come back. And actually, we've seen a significant step change in our sales team, the number of inquiries we're getting. So we're still hoping to do a decent number of sales for financial year 2022, held for sale at year-end, ZAR 367 million as we sit here today, ZAR 130 million of that has already been converted to cash and transferred through the Deeds Office. I think in Vuso's portfolio and the retail team, sales growth of 8.2%. You will go through more of those numbers. But again, that's a really, really pleasing growth. We've acquired 2 smaller sites in Poland just to enhance that development pipeline. And I think as we've said before, that really is a developer space. The yield compression has surprised, I think, certainly us and the whole market. So it's difficult to acquire income-producing assets there at a fair value in our view. So we acquired 2 sites there in Lódz and Zabrze. Just another big highlight that we'd like to point out is our vacancy by value and by GLA, 6.5%. That's the lowest in 4 years. So I think it's really testimony to the asset management team in terms of driving those vacancies lower. And as many of you know, and as we've pointed out, a vacant property doesn't have no yield but actually has a negative yield that costs us, so that really does help our NOI. One of our core focuses is our SA Logistics pipeline. We managed to complete 93,000 square meters of GLA and let that. Those are all new developments done by us in Central and Eastern Europe, as we highlighted last year at our year-end results. In July last year, we acquired 50,000 square meters of newly developed warehousing in Romania. There was an 8% yield, and we developed 15,000 squares in Poland with our team, which is headquartered in Warsaw and -- for the first time, we have our MD, Maciej Tuszynski, here all the way from Warsaw. If you have any questions about what's going on there and the strife in Ukraine, please feel free to ask him over a coffee at the end. I think also what's been very, very pleasing to see and well done to enforce in the finance team, raising ZAR 2.2 billion for this period in domestic medium-term notes. Those have a sustainably -- sustainability-linked KPI where we get a margin reduction and I'll take you through that. So this is our current asset base. I think if I could point out, we have been showing this slide for a number of periods. But I think what is the kind of key message here in the slide is if you look at the bottom left-hand corner there, this time 2 years ago, December 2019, ZAR 9.3 billion of noncore assets. This time last year, we're at ZAR 6 billion. Now we've got ZAR 5.6 billion. And that may look like not much of a difference, but we have actually transferred some of our logistic -- all of the logistics assets to industrial. So that has actually gone up and reduced even further. So I think it's really just sticking to that focus of selling our noncore recycling our capital into better quality, higher growth assets, which is mostly coming from our South Africa logistics pipeline as well as some retail refurbishments and extensions. So -- that's really where we are today, ZAR 45 billion of property assets. If we look forward into the sort of medium to longer term, where do we want to take that asset base? And as we've said in the past, we really have 2 core competencies, that's logistics and retail. So if we look at the left-hand side of that graph there, that pie chart, we've currently got ZAR 10 billion of logistics. What does our pipeline look like, it's about another ZAR 5 billion to ZAR 6 billion. So currently, we have work in progress of ZAR 2.6 billion. It's going to cost us about ZAR 3 billion or so to roll out that -- the rest of that pipeline for the top structures. That will take it then to about ZAR 16 billion of SA, which is about over time, about 2/3 of our direct SA pipeline. We have Central and Eastern Europe. There's the current assets of about ZAR 1.3 billion plus a bit of pipeline there, acquisitions and buffer and then obviously, on the right-hand side is everything that gives us retail exposure, most of which is still the 23% we own in NEPI Rockcastle, and then the other ZAR 10 billion is the 53 shopping centers that's run by Fortress in South Africa. So what are we focusing on? I think this is important to what the Fortress team wakes up and concentrates on every day. It really is the development pipeline. So our Head of Development, Jason Cooper, and his team, which oversee all the developments have built, I think, a fantastic in-house capability. So it's really focusing on rolling that out, and we'll take you through how much we've done and how much is left to go. So I think that's been a very positive trend for us. And I think we are certainly one of the market leaders in South Africa for new warehousing developments, and that is focused on our big logistics part. Follow closely with that is just managing the assets on a day-to-day basis. I think if you look at that first bullet point, what our focus is, certainly for this period is just to repair and rebuild all of those assets that were damaged in the in the riots last year. We did have quite a lot of impact from that. Pleasingly, though, Sasria has come to the party. And I think we've been really pleasantly surprised by the support that they've got from government. So we've collected most of our Sasria claims. So we've got the cash in our bank, and we've got the money. And I think certainly the intent to rebuild those properties and make them income producing again. And also just reducing the vacancies and future-proofing the assets where we need to. So that is just making sure that the assets don't become redundant that they always have a relevant application for what tenants are looking for at the moment. So that does sometimes mean cutting things out, losing GLA. If you look at the older industrial assets, reducing the office component, making bigger yards. So all of the things that we get feedback from that our tenants want, we need to apply that to the older assets in our portfolio. The asset disposals, that's really how we fund the pipeline. That's continuing. And I think, as I said, there's been a bit of a sentiment change and that market is largely in South Africa. Sentiment-driven, interest rates are still relatively low, although longer-term rates and hedges are going up, variable interest rates are still quite low. And I think a lot of the owner occupiers and private investors still consider that sort of yield spread on acquisitions versus variable quite attractive. What we're seeing, and we'll go through a little bit later is maybe some more portfolio and joint venture transactions, which we haven't seen in the market for quite a while. Another focus, as you would have seen on the 17th of February, we put a proposed amendment. We issued a circular to shareholders to amend the MRI in order to enable dividends to be paid. We'll touch a bit on that. it really is that share structure is quite complicated. And it is really a shareholder matter that does require some engagement and discussions and work on our part in order to make sure that the shareholders understand what they have. And can assist us possibly in optimizing the structure and maintaining REIT status. As always, we remain opportunistic on acquisitions, indirect, direct corporate actions if things are favorable, and we can find deals that make sense. So just a couple of portfolio stats. As I mentioned, GLA by vacancy and by value, the lowest in 4 years, weighted in-force escalations a little bit down. All those arrows are down, 2 are good to bad. But the weighted in-force escalations have been trending down over time. I mean many years ago, they were sort of probably between 8% and 10%. Now generally, the longer leases, the bigger retail probably signing around 6, sometimes 6.5, 7. That lease expiry has come down marginally. There is a big retail asset, which has a head lease, which actually expires in November. So hopefully, that will go up this time next year. So those are our vacancies, a nice -- a really nice trend in the core portfolio and the overall portfolio. I mean if you look there, the standout is the office. But fortunately for us, it's only sub 4% of our assets. So it really isn't a big driver of the overall portfolio returns. I'm going to hand you over now to our CFO, Ian Vorster, who can run you through some of the financial aspects.

Morning, everyone. Thanks, Steve. Appreciate it. Unfortunately, for the 6 months ended 31 December 2021, we -- our distributable earnings was underneath the A benchmark, which means that we are unable to declare and pay a dividend without shareholder permission, which Steve has already touched on. And should that permission be given next week Friday, in fact, we will declare and pay a dividend of ZAR 0.5085 on both the A and B share. That collectively would be approximately 76% of the JSE distributable profit as defined number. And go a long way in assisting us in meeting REIT status for the year of -- for the financial year being 2020 to June. We adopted REIT best practice metrics as of 30 June 2021. And what you can see there in our LTVs, the alignment of our -- what we refer to is the economic interest LTV, which is driven by our management accounts to that of SA REIT best practice now at 38.8% and 38.9%, respectively. With regards to our simplified distributable income. The slide seeks to show the nature of what finds its way into our distribution and whether or not it is cash backed or not. Pleasingly, you can see that the majority of the items, in fact, are now cash backed for just run down some of the more material items and any changes NOI from our properties. That's obviously all rental income less costs, clearly cash. Small change to the dividend that we received from NEPI Rockcastle. We now account for it on a cash basis as opposed to an accrual basis. So that number of ZAR 457 million with the dividend hedge of circa ZAR 73 would give us the ZAR 530 million that we received from NEPI. From that, we deduct the interest rate protection, caps and swaps admin costs, et cetera to get to our distribution per Fortress methodology of ZAR 830 million. It is up on last year, the equivalent period for last year were 1.2%. But it's important to note that that's not necessarily like-for-like as there were some items that found their way into the distribution in the prior period specifically cross-currency interest that we no longer have. We reconcile that then to SA REIT best practice FFO. Primarily 3 adjustments that we make from our distribution methodology to that of best practice. And that is that, 1, we account for dividends received from listed investments on a cash basis as opposed to an accrual basis. 2, we don't distribute capitalized interest and 3, we don't deduct the IFRS 2 share-based noncash deduction from our distributable income in informing what gets -- what finds us way into the dividend. Regards our NAV and the movement between 30 June and 31 December. And I'll start with the buyback. We have to make an adjustment for -- sorry, for shares repurchased. We had -- we ran a program in January -- sorry, in July and August of last year where we repurchased 26.9 million Fortress As and 25.4 million Fortress Bs, so a slight adjustment for that. The next 3 upward movements, development property, pipeline and listed portfolio. If I start with the listed portfolio, that would be the increase in the NEPI price from June to December. We equity account for the investment, but and then measure it against its fair value. So there was a slight uptick in its price and that results in a movement there. Development pipeline and direct property what happens between those 2 is, obviously, we have got more spend during the 6-month period in the development pipeline. And as we complete buildings, they transfer into direct property, specifically 3 projects in Clairwood were completed in the 6-month period and transferred across to direct property. But then with the additional spend, there's an uptick in the development pipeline. Direct property would have also been affected by the acquisition of Eli parks in Romania. All of this would have been debt funded and that's the big red block that you see on your right and the borrowings, the resultant of which is an increase in the net asset value per equity share, which is the combined share position of ZAR 12.76. From a liquidity and funding perspective, as mentioned, LTV 38.8%, pretty comfortable at this stage. Obviously, that's at 31 December, and we know what's happened in the market since then it might be a little bit higher at this stage given movements in the NEPI price. Steve touched on the new issuances in the sustainability linked bonds that we've done. We issued ZAR 900 million in Q4 of last year in 3- and 5-year tenors and a further ZAR 1.3 billion earlier this year in 3-, 5- and 5.5-year tenors. These sustainably linked bonds do come with a KPI that we've linked specifically to our solar rollout projects or pipeline and they ratchet down in 1- and 3-year periods provided we meet the KPIs, which we hope that we will do so. Cash and available facilities at this point, ZAR 3.5 billion. We have had some covered relief granted in the last 6 months. This related specifically to the period of July and August of last year and mostly in the liquor and restaurant sectors, not too material, ZAR 10.5 million, credits of ZAR 7.5 million and deferrals of 3%. Pleasingly, the cash collection as a percentage of billings now approximate pre-COVID levels. So there's some normality seen in the debtors book again. From a See-through LTV perspective, we proportionately account for our investment in NEPI, we would have a See-through LTV of 45.8%. And then just to touch on the relationships with the banks, some of the bankers are in fact in the room today, which is great to see. Relationships are good. We're well within covenant levels. I think a facility interest cover ratios are around 7 -- sorry, 2.7%. So very comfortable. I'll come back to that shortly. With regards our variable rate interest and our hedges. So Fortress has a policy that we cover, no less than 75% of the book for a period of no less than 4 years. Our drawn position at 31 December, circa ZAR 18.5 billion. We make adjustments to that to get to a sort of more permanent economic exposure on which we would hedge so as to not overall under hedge on a permanent basis because that obviously comes at a cost, if you lock yourself into swaps or if you take out caps and then you've got the premium that would come with that. So economic exposure, more permanent basis, sort of ZAR 16.9 billion, covered local swaps and caps of 13. And now with our offshore expansion program, foreign caps and swaps of ZAR 500 million, leaving us with a hedge percentage of 79.9%. If we just have a quick look at the profile of that, you can see it's sort of -- it lends itself to the longer end, which is great for protection of hopefully, dividend flows in the longer term and managing that interest cost. All-in -- sorry, our combined cost of swaps and caps likely 6.82% and a broad negative 0.26%. Our facility expiries. I've made this point before in a fund that has circa ZAR 20 billion of available facilities, and that's kind of our level of requirements at this stage. With tenors of between 3 and 5 years, we're always going to have circa ZAR 45 billion of maturing debt, no different for the coming 12 months, in fact, the coming 18 months. But as mentioned, the relationships with the banks are good. So there's no cause for concern in terms of refinancing risk, et cetera. And as mentioned as well, we've entered and are quite active in that debt capital market space. So if we have a look at our funding mix with that -- with those 2 issuances and the work that we've done in that space, we've sort of achieved our targeted split, which is 20% unsecured debt capital markets to 80% secured funding. So what will happen now is from this point onward, if the -- to the extent the funding book increases or decreases, that would just sort of move with that. So we're in the normal sort of refinance process at this stage. And then last year notes, our all-in cost of funding likely 6.96% that's at today's date or the date of the report and a broad 2.55%. Thanks. I'm going to hand over to Vuso to take us through some of our retail properties.

Thanks, Ian, and thanks for joining us. Good morning, everyone. So this is Sterkspruit, one of our centers in the Eastern Cape. It's about 2 hours away from Bloemfontein, also close to Lesotho. It's 15,000 square in size. And so we've done 2 -- there was the first phase, the second phase, we will be doing a third phase. So we'll be increasing it from 15,000 to about 19,000, anchored by Shoprite. Rest of the tenants include national fashion retailers. So in the extension, we will be adding an additional anchor tenant -- food anchor tenant and then we also had some interest from other fashion retailers. So if we look at the retail portfolio, we've got 53 buildings. We haven't sold or bought anything in this period. So the portfolio is about worth ZAR 9.7 billion. We have, however, received offers to purchase 6 of our shopping centers, which are noncore. We hope to conclude those just to strengthen the quality of our portfolio. out reversions were negative by 3.2% during the period. I think this trend of negative reversions is probably going to be with us for about the next 6 to 12 months, although it's going to be in the low single digits. On the positive side, I think total negotiations with tenants are starting to improve. And that's on the back of improving sales figures. So I think maybe next year, we'll be reporting on positive reversions, at least I hope. As Steve said earlier on, the escalations that we're achieving are around 6%. You can get -- sometimes it gets 7%, but generally, it's around 6%. Our vacancies by value sitting at 2.7%. And if you look at it on a GLA basis, our vacancies are sitting at 3.6%, slightly down -- 3.7%, slightly down from July -- from June last year when we reported it was 3.8%. In terms of GLA, we've got about 20,000 squares of vacant units in our retail portfolio. 5,000 of that is office. So if you look at pure retail, we're sitting at about 2.7% on GLA. I think it will get better because some of the GLA, we're actually holding for some of the redevelopments that we'll be doing. So as we push the button on those projects, that figure should decrease a bit. Collections. So we've collected about 98% of what we built. And Ian mentioned earlier on, ZAR 7.5 million arrangement was reached with tenants for the COVID relief. Most of that set in the restaurant and gambling -- places of gambling businesses, but also a big portion of that relates to Bellstar in Cape Town, which is quite heavily reliant on the train station. So the train station has been closed for a while now. So that helped us quite a bit. So I was reading in the paper, in fact, yesterday, they say that they think end of March, the station will open. But judging from history, I think we're probably looking closer to June. So hopefully, that things will get better. From a trading point of view, on a full year, we're up 8.2% on 2020. The only time that the figures were below the 2020 figures was during the July. You can see it might be smaller in your graph, but from September, we started coming up on that. There has been some improvement. I'll touch a bit on the centers that were affected on by the riots in particular, Evaton and Palm Springs, there's been improvements there. So I think that, that will start growing again. If we use 2019 as the base, our figures on 2021 is 6.5%, up on 2019, which just reinforces the fact that we think we are certainly above pre-COVID levels. We had to exclude the Mafikeng building from these figures. It sort of skews the figures. You might have picked it up when we did the preclose, but looking positive. The trends that we saw pre-COVID are continuing. So people are focusing on essential goods, grocers and pharmacies are doing well. Also, people are focusing on more value fashion, so your value-orientated retailers are doing fairly well. There's also been quite an uptick in home improvements, DIY interior sort of category. So that's doing well. The restaurants obviously rebounded quite well on a low base. So last year, there was quite a good growth from restaurant tenants. If we look at our trading on a category basis, you'll see that the townships are down 1.3%. A lot of that has got to do with the riots. And now if we exclude Evaton and Palm Springs, which were the most affected because of their size, Township sales would have been up by 8%. I think in that market, we can see that the government's ZAR 350 million is certainly helping. But you can also see that there's a lot more feet coming back into shopping centers. So I think that trend will carry on. Evaton opened around -- majority of tenants opened around August -- end of August, and Palm Springs, the majority opened around September. Palm Springs is slightly more affected because we're also doing an extension, a planned extension. So we're putting in pick-and-pay. So there's also a bit of tenant movement in there. But we're seeing -- I think what we're seeing is that, that segment is certainly on the up. CBD. CBD is also done quite well. I think that's just people going back to work. We're seeing a bit of normalization in travel patterns and moving patterns. And that we see in the activities around our taxes and buses in or around our shopping centers. I mean if we look at Central Park and Bloemfontein, last year, we had about 22 million people. Majority of the people that come to Park Central -- to Central Park use buses, and that was up 11% on the 2019 figure. And Park Central in Joburg, similar figures. There, we're doing about 1 million people per month. So there was also certainly a return of activity in that market. I mean just driving here this morning on Jericho street, I don't know if you noticed the taxis that are all over the place. I think it's a trend that we're seeing almost everywhere. It might have something to do with the lack of buses and trains and all those sort of stuff, but there's certainly some normalization in people's movement. Suburban centers, quite a big increase. I think a big portion of that relates to some of the small regionals and regional centers, one being Galleria, which had a big improvement, obviously, on a low base. I think people are starting to go back to the regional centers. So we're seeing good growth in there. But also, as I mentioned, places like Pineslopes, White River, seen good growth there. And I think that portion of it is restaurant trades coming back to normal. But I also think a portion of that is just the convenience offering and people's preferences. Rural centers also grew quite well. Obviously, the government grants are helping there. But I also think we'll see what happens with Stats South Africa when they come with their results. But over the years, I've noticed that there's a lot more development happening there. So there's a lot more settlements coming up in the more rural areas. And there's a lot more hardware stores, independent hardware stores that are popping up everywhere. So every time I go home, I mean, I go to Mthatha maybe twice a year. But every time I go in areas, we didn't have houses, there's now houses. The rural areas also had a good December in the sense that it might have been pent up demand because the previous December, there were less traditional ceremonies. This year, there are a lot more traditional ceremonies. I mean in December, for myself going to Mthatha 3 times within my family for 3 different functions. Similar, there was also a lot of movement from, call it, the more metropolitan areas to the rural areas. There's always some movement from those areas, but this year, it looked like quite a bit, I mean, I drove from Mthatha to Cape Town. And when I got to Graaff-Reinet before that, I've seen a lot of taxis going to the home lands or to go into the Eastern Cape. When I got to Graaff-Reinet, I actually started counting the amount of taxis that I saw. So in a 30-minute stretch between from Graaff-Reinet, I counted over 100 taxis, and there are a lot more taxis still going to the Eastern Cape at that time. It might have been a pent-up thing, but setting a lot of traffic that we saw. Looking forward, so obviously, the priority is to rebuild the centers that are affected in the riots. So the 2 centers that are still closed is Biyela in Empangeni and then 336 in West Street in Durban. So we think those -- we think we'll open those by July this year. Construction is going well. So yes, that's what we're expecting there. And in terms of the existing portfolio, Steve mentioned that we are looking at doing redevelopments and some extensions. So Mafikeng, I mentioned it before, but we will now push the button on that, so we'll be introducing Shoprite and Clicks to that center. Morone, which is in Burgersfort, we'll be relocating Choppies shops there, anchor tenant there, but we'll be bringing in Shoprite. So that, again, will probably open that early next year. Vryheid Plaza. So we'll be extending Vryheid Plaza from about 8,000 squares to about 15,000 squares, bringing Shoprite an additional anchor tenant, already have got quite a lot of interest from a lot of fashion retailers. So that's going to be a nice one. Palm Springs. We're in the ground now. We're a little bit delayed by the riots and some community issues. We expected to open that just after Easter. We'll now open that around July of this year. The center here is Botlokwa. If you driven between Machado, the center that sits just next to the highway. It's about 8,000 squares in size, anchored by Boxer, trading very well. Its catchment has got a very deep growth catchment quite a bit of agriculture going around there. So we are going to be extending this or we're planning to extend this center also. It's not ones I mentioned. If you look at the far left, there's a piece of land. This will be adding an additional, call it, 7,000 squares there. Again, Shoprite will be the anchor tenant, and we've also got other fashion retailers that will be joining us. I'll now hand over to Steve.

Yes. Thanks, Vusa. Thanks very much. Just -- I mean, one of our [indiscernible] logistics projects has taken a long time. Clairwood, I think it has been a relatively expensive project with all the soil conditions. But as you see it now, it's really starting to come out the ground and tenants are getting very interested in it. I think we did the first one, [indiscernible], the African Sugar Logistics Super Group Consumer Division has now taken network of about 14,000 squares. We are busy developing another 50, roughly 30,000 squares, got some good interest from some national tenants. If you look coming up, you'll see the container terminal, which I think is quite a nice addition and it actually does start to assist a lot of the tenants in the past. If you look at the shape of that piece, it was also rather difficult to utilize, but we've managed to lease out every square meter. These are some of the mid units that we did in what, we call Pocket 7. That's the 30,000 that's underway at the moment. We're hoping to have that lease concluded before the completion date. So I think this park has really been fantastic, estimated at completion, 300,000 square meters of GLA right in the heart of the Durban South Basin, and there really is nothing else like it available in that node. So if we look at our logistics portfolio, it is as we stand our largest portfolio, the South African Logistics at 10 billion, 1.2 million square meters. If you look at that building valuation, I'll ask you just to hold that in your head because we'll touch on it a bit later, ZAR 8,100. What we have seen with building price inflation, especially in steel, I mean, it's been marked over the last 12 to 18 months is that all of the buildings that we've done are now significantly below current replacement cost. So I think that means that I think the rentals that we're offering on the new buildings are hopefully below where other developers are probably pitching current buildings. So I think the fact that we didn't take our foot off the gas on the rollout of the pipeline in COVID, we didn't panic. We completed a lot of buildings. Those would have cost us significantly more had we waited. So I think we've made the right call here. Also that block in the middle reversions, I know everybody gets very excited about it, but that's 4.8%, but only on 7.6% of the GLA of the portfolio. And as we've said, for an interim period, the sample size is small. So just be careful if you're going to extrapolate that. But I think we are seeing some dear assets and sort of green shoots in the reversions. The vacancy is low. Our like-for-like growth of 3.4%. So this portfolio is starting to look a lot more positive. The development update. I think what's intriguing there is if you look in that GLA column down currently under construction, 283,000 square meters, that's all of it. We don't own all of it. But I think it really does paint a picture of our intent to keep going with the construction, to roll these boxes out as they -- as the first or second box in the logistics park gets built. Suddenly, the tenant interest starts to really come to that part. No one believes you're going to do anything. If you just start to show them pictures and leaflets and brochures, they always wait for the first building to get built. The yields there, most of them at Clairwood slightly lower because of the slightly higher construction cost. And pick n pay 7% as we reported before, there is some economic benefit in that for us because they will be buying 60% on completion and then the 2, at the bottom there Stargard, and Bydgoszcz 8% in euros, 6.8% in euros. So you'll see all of that is predicted actually to finish after our financial year-end, but sort of most of it, this side of the end of calendar year 2022. So this is just the overview of what we've got in our pipeline. So currently, that 2.6% asset value is both land and work in progress. We added Louwlardia in there, even though it's finished because a few years ago, we said, look, under our control, we've got a pipeline of just over 1 million square meters, which was quite a daunting task at the time when we looked at the market and how much we would have to -- what percentage of the market we would need to deliver, and it was quite scary, but I think we've managed to get it done. So we've completed 389,000 squares, which gives us 620,000 square to do. And of that, it's about 250,000 squares currently on the go, which leaves us, if you look at the bottom right, 360,000 squares remaining. So we said a few years ago, we really need to convert the land to income-producing assets and chew through that development pipeline. And we're getting there. We only have 1/3 left. So I think in the next couple of years, we should hopefully have converted all of that income producing absolutely top-quality assets. So again, I'll focus just continue with the pipeline, something that we've done, which I think has been not unique in the market, but perhaps a little bit different is these joint ventures with tenants, which we really like. I think it gives us more -- it enhances our initial yield. So it makes it more profitable. We need less capital to do that. And also, I think it lowers the risk and we've got the tenant owning a share in the building in which they occupy. So I think that's certainly been a huge plus for us, and it's a very easy partnership to manage. Our 2 biggest ones, Eastport and Clairwood is going to be a big focus. Just to touch on briefly the office portfolio, I think the highlight there is it's very small for us, only ZAR 1.7 billion. The rest of it is indicative of the tough time that the office market has been going through. But I asked you to hold that ZAR 8,100 per square meter in your mind, and you look at that building value per square ZAR 9,700. It's -- I mean, it is much, much cheaper than replacement cost in terms of where those are building probably ZAR 20,000-or-so per square meter. So I think it's -- we've marked this portfolio down. We're looking to sell it. The vacancy has been mitigated since our pre-close because we let about 12,000 square meters to OUTsurance at Oak Avenue. So that is pleasing. We're looking at the moment at converting 2 assets, Oxford Manor and Fourways Office Park, quite a long process in terms of the feasibility of the zoning, can you do it, what do you do? I don't think by any means it's going to be the panacea for the office market that some people had hoped, but hopefully, it's another step towards exiting this portfolio. One of the parks that we bought from -- actually from M&T who then got it from, if you recall, the original Zendai, We did 2 assets here Zest and, excuse me, Cargo Carriers in the foreground. And at the back there, that's another site, which we can do 60,000 square meters on. So we started the first building if you are driving along the M3, you'll see it really is on top of the hill there, near where they moved the Fourways Farmers Market. It's -- I think it's called Taroko Farm, you can go in right in front of it. It really is a fantastic site, really well located. If you look in the background there, that's our Linbro Logistics assets where we've got -- if any of you have Smeg appliances at home, that's actually the main distribution center for Smeg, which is another one. So just to touch on another portfolio, which is noncore for us, but it actually has been -- I think the performance here has been above our expectations. Certainly, in COVID, a lot of the smaller tenants struggled with the -- with just getting cash and struggle to pay. But it has actually come back quite nicely. The vacancies reduced. The wait in this portfolio, just by its nature, will always be low. So we've got about ZAR 3.3 billion there. I think just one of the highlights for -- not for the period was actually only effective 1 March is a few years ago -- I think actually this time 2 years ago, we announced that we had done 2 projects with Inospace, which is a really innovative concept, not that dissimilar to Sirius from Europe, if any of you follow that, really taking all the industrial space, making it funky, giving it relevance cutting it up and really, I think, catering for the tenant demand in terms of closer to the CBDs smaller units with an office. So we tried 2 projects, those one on the screen, now 50 electron, and what we used to call Crocker, which is now Wadeville works, really worked well. So we spent a long time with the Inospace guys understanding their model, giving them a trial project, it worked well. We liked it. We liked the team. So what we've decided to do is take ZAR 625 million of our assets, ZAR 590 million of it, put it into a combined portfolio of roughly ZAR 1.2 billion, which will have bank debt in the 60% to 65% loan-to-value, very limited credit support pro rata from the shareholders. I think it's circa ZAR 30 million, ZAR 35 million from us and from them. We will then -- in order not to dilute their shareholding because obviously, we need them to have a big equity stake so that our interests are aligned, we'll advance ZAR 300 million of mezzanine at a 12% rate. That needs to be serviced from a cash perspective at primarily 75 bps. Obviously, anything that's not serviced will roll up and it's got a maximum term of 5 years. I think this is exciting for us. It's really an entrepreneurial team that have a massive equity stake in the business and have built it up. So I think it's a model that we've been considering doing but for us to do that internally is just not how we programmed. I think it's way to management intensive. And they've got the systems and the experience in that space. So I think it's something that in time, we would look to add assets into perhaps introduce third-party capital. It's not something that we want to own forever. It really is a mechanism that we're looking at to exit some of our industrial assets and exit it profitably. So that's just some of the points that we mentioned. So I guess, property disposal is important for us to cut the tail. We have a lot of smaller properties on our books, which are management intensive, low growth, and we need to dispose of that and recycle the capital. So as I mentioned at the start, ZAR 286 million at a premium to book and held for sale ZAR 367 million, of which ZAR 130 million transferred earlier this year. A lot of questions we get is who's buying. It's actually a dead mix between owner occupiers and tenants and smaller investors. It's literally 50-50 on this list. So I think it's -- that's continued. Inospace was the first real JV portfolio transaction that we've seen for a number of years. NEPI ended the year on a marginally better share price. I know they have just released results, and many of you would have seen that. These are really just a reflection of the results. And if I can just cast your attention to bullet point #4 there. Obviously, they have -- there's been a market sell off generally. And I think anything with Eastern European exposure people panicked, I think unnecessarily so. But if you look at approximately a 20% discount to NAV, and you imply that discount on the income-producing portfolio, you're getting roughly a 7.7% yield on what I would consider probably the best by quality Central and Eastern European retail portfolio there is. So you've got a lot of scale, a very prudent balance sheet at a fantastic price. And our stake is large, and I think it's very strategic for us. So that one we are we are currently very comfortable with. One of our smaller developments in Bydgoszcz gosh, which is in Central Poland, just northwest of Warsaw quite a good node, Panattoni is there, Carrefour there. So we purchased this in December 2020. We've just started another smaller development, and there you'll see our branding, which looks fantastic, even better than I think the South African one. So this is just exactly what we do here. It's what the market wants, it's low office component. They don't have a lot of B-grade industrial there. So a lot of the -- they don't have the option of refurbing old stock or moving to old stock, they need the new stock, so we've started the development there, which is -- it's a 7,000 -- actually, 7,700 squares on this, what we call for. And we've left just over 2,000 squares of that an online clothing retailer called Volcano, which just indicated to us that there is demand for slightly smaller units there, and so we decided to do that. And we've got just over 20,000 squares that we can do on that side just on the left. So I mean, it's a relatively small portfolio. As I mentioned, the -- we acquired it at very competitive prices in the middle of COVID. The yields in that market have compressed dramatically. I think we acquired the Romanian asset at 8%. I think we're seeing market evidence sub-7 there. So it really has just this wall of capital chasing it, which I think probably crowded out investors like us who sort of care more about returns and led us down into a slightly more developer-focused model. So we do have a team in Warsaw under Maciej Tuszynski, who's here today. And I think we've got a leasing team, a development team. It's quite small, but we needed that to oversee these developments. So if you look at the pipeline there, it's not that large, 125,000 square meters of completed and income-producing developments with available GLA for development of roughly 250,000 and as I mentioned, one very small asset under completion, which has 2,000 square meters left to an online retailer. This is the 1 that we announced in July. We did buy it with a bit of an earnout. It was brand new, and they hadn't let all of it. I think really, again, evidence of the demand for warehousing in that market, it took them, I think, about 6 to 8 weeks to lease up the space. We gave them until December, they were done kind of end of August. So we acquired that on an 8% yield on NOI. It's a very good location. Romania is still -- there's a bit of a risk premium. So I think we're getting -- we got a good deal there, and the yields are still quite attractive. So just to touch on briefly, some of the environmental, social and governance aspects. As we said at year-end, we did have that fire stemming from the riots in Cornubia and north of Durbin. UPL was the tenant, they sought pesticides. Currently, UPL have done, I think, a good job in terms of cleaning up. They spent an absolute fortune. They are working with the department. We just are really hoping to get the demolition permit finalized, get the warehouse taken down and start to rebuild. If you recall, that warehouse actually had 2 tenants in at UPL and Retailability, who bought Edgars. Retailability are now looking to go on to the site next door, which is between macro and the burnt warehouse, and they need a slightly bigger warehouse. So that will be 13,000 square meters, which I think is just it gets the positivity going back into Cornubia. And I think, again, just proves that the location is really good. Just in terms of renewables, I think that solar rollout, as Ian mentioned, that's one of the KPIs linked to our sustainable sustainability-linked bonds. It's just an imperative. I know we're sitting here in the midst of stage 4, stage 2, nobody knows, but just not enough power. So we are trialing some battery storage systems, which also look like they are going to start being more important. And I think certainly, just from a tenant perspective, in terms of offering them some sort of backup power while there is load shedding and not relying solely on generators, which are expensive and consume a lot of diesel and probably not ideal for the environment. Something that we're doing, which is at the bottom of that slide, which I think is quite important is just adding these smart meters across the portfolio. It is taking a long time. But what we realized was, as opposed to just focusing on the generation of the power to the tenant let's also focus on their consumption. That's controlled by us. And with these smart meters, we can actually indicate to them how to lower the consumption, how the phases are working. I mean I've learnet a little bit about electricity that I had no idea existed before. But I think that smart meters for water, smart meters for electricity is really just lowering the tenant's consumption and adding value to them. On the social side, our B-BBEE level is level 4. We do quite a lot in and around the communities in which we operate. So we like to support our ecosystems, that's food entrees for Africa. Enterprise and supply development programs in here in Gauteng. We've got big exposure as well as KZN. And then obviously, keeping with what we've always been a big proponent of in the past, which is our skills and education initiatives, a lot of bursaries with SAPOA with anchor stockbrokers, and with other students and schools. Just briefly on the governance side, just some changes, which you would have seen announced, but just to recap, Jan Potgieter is now our Lead Independent Director. I mean, I'm putting words in his mouth, but hopefully has some more time since he stepped down as CEO of Italtile at the end of last year. Bram Goossens, who was the previous CFO of Equites is now Chair of our Remuneration Committee and Ina Lopion, has stepped down of the remuneration committee just due to the workload. Industry challenges, as we mentioned a few times, construction cost increases, which is just by far the biggest one there is still. Hopefully, though, that does start to bring the -- asking rentals up. The problems with councils are no secret delays in plans, rising municipal rates and less delivery. So I think that's something which we are fighting on a number of fronts, both directly and through industry bodies such as such as SAPOA. I think it's just -- it's an ongoing challenge for landlords, and it's really a difficult one, and we need to work side-by-side with the local municipalities as well as I think, national government. JSE and tax consequences, which I think we'll touch on now. So we have, as I mentioned, center proposal to shareholders. We are below the Fortress A benchmark for this interim period, which means the board is not authorized to pay any dividends to either shareholder. So shareholders are not doing anything, but we would like to amend that MOI for this period in order for us to pay a dividend, which the board within be able to propose ZAR 0.3085 to both share classes. So in other words, if you hold the Fortress A or Fortress B and the MOI amendment is passed, you will get 0.3085. If the ever MOI amendment is not passed, then no shareholders will get anything. That vote is next week Friday on the 18th of March, there is a general meeting. So you do still have time to vote. Obviously, if we are able to pay out the dividend it will then greatly assist us in meeting the REIT requirements, which require us on an annual basis to about 75% of our total distributable profit in our MOI, it's hard-coded that there is a first period and a second period. So we won't be able to pay out enough in the second period without paying out some of it from the first period. So we would certainly as management and the Fortress Board like the shareholders to support the payment of a dividend, and we think it's beneficial for the company as well as for shareholders who would get money in their bank accounts. In terms of the prospects, we did release a trading update not so long ago. Our distributable earnings are marginally below where we forecast largely as a result of 2 items, which is the NEPI dividend was lower for this period due to a provision that they took on a legal case, which they lost it in arbitration as well as a slightly higher interest funding cost due to the interest rate rise in January. As we mentioned, we are below the FFA benchmark for the first half, and we forecast for the full year to be below that benchmark again, come year-end on the 30th of June. There are assumptions, and we draw your attention to that in the SENS released on the 10th of March. Just portfolio statistics, nothing really that we haven't gone through in the slides. Just if I can draw your attention to 2 things. Reversions, we've just added a percentage of portfolio subject to reversion, which is by GLA, so you can get a sense of where there is a negative positive number, okay, how much is that? How big is it? How material? As well as at the bottom, tenant retention rates, which is also weighted by GLA by portfolio. So Hopefully, that gives you useful information. If there are other stats that you would like us to start compiling for year-end, please let our Head of Investor Relations, [ Ryan Neistat ]. Q&A. Obviously, there's some stuff that's come through on the website. I think we will start with if there's anyone in the room that would like to ask questions, Toby?

Steven, Ian and Vuso. Mass results came out. They were better than the NEPI results. They did a lot of detailed work on NEPI obviously, given the history, they know the business and the assets incredibly well. Can you give some comments on the -- I'm sure you've read the report they wrote. There's market speculation that it might make sense to merge the 2 assets. Some of the parts might be beneficial for everybody over the long term. You're the negative controlling shareholder. It will be very influential in that. I'd love to hear your thoughts, please.

Sure. I mean so I have read the report, obviously. I mean I think there are a lot of analyst reports from sell-side analysts who don't hold shares from other analysts who do, so we do get a lot of feedback on NEPI. I mean I think largely the report is, I think there's a lot of positives to be gained from that report. I think they are highly complementary of the bond program that NEPI has. Over 70% of the assets they consider fantastic. And I think the biggest takeaway from me is they've done all this deep dive and on a DCF basis with a long-term forecast, have come out and said, "Well, NEPI's book value is what they say it is." So I think there's a lot of actually positives to be taken away from that. And when you look at the RR, I think it was 11.5% to 13% that they predict over the medium term in euros from a company that large and that stable. I think, it's fantastic. It's what we've been saying all along is that NEPI is. It's a really solid investment for us. So I think I mean it's great. Would we like NEPI to always perform and to maximize their performance? Absolutely. And if there are other people with other great ideas being matters a shareholder, other shareholders, other market participants, I think we we'd always be open for that. We need NEPI too to work in order to go for it.

Maybe just a question for Ian. Your FX hedging of the NEPI income, the most recent one you added 2024, it's at 2022 euro -- rand per euro, which the hedges happen. When you roll forward the current interest differential from ZAR 17, you don't quite get to ZAR 22. Do you do off-market hedging of the forward income? Or is it the exact forward curve at a date and you were just very opportunistic at a particular point in time where there might have been rand weakness.

Well, that is the answer. So from today's date, yes, with the rand strengthening, it wouldn't be -- the 4 point wouldn't be at -- I think it's actually slightly higher than that, I think, for 2025. But yes, dependent on when you get in. So I think we've got -- we locked in those rates at north of ZAR 18 -- ZAR 18, ZAR 13 when we did the hedge.

I mean I think I'd like to take some questions now from the -- anything from the website, if I could ask Ryan just to prioritize operational questions because I'm sure that's going to be quick, before we get on to any questions around the capital structure and the MOI.

Sure. The South African Logistics market has sort of muted market growth in the last few years and probably will remain so given the difficulty is the macroeconomic environment. Are you not concerned about allocating more capital to the SA Logistics pipeline?

So I think if I could answer that in the way that we have in the past where -- we have logistics parts. We have -- in terms of capital allocation, you've got the choice. You can sell the land, or you can develop on it. Now selling the land is at the current book value would obviously you would sell it to an owner occupier, to a competing developer. And I think it would lead to a devaluation of the park as a whole. So although it's not probably 100% correct to look at the land cost as a sunk cost, I think it's probably not correct either to assume that we could sell those POC subdivide and sell those pockets within Fortress Clairwood Logistics Park or Fortress Eastport Logistics Park, and get book value without destroying the value of the assets that we currently hold and of the whole. So I think it's nice on a spreadsheet. It's nice in theory. I think the practical reality falls a bit short. So we do look at, well, what's our yield on incremental CapEx, that's north of 10%. So I think we view it as a good allocation of capital. And as I mentioned, we are glad that we continue to do that certainly in cover times because now we have a really great portfolio of new assets, which are radically below current replacement cost. The rentals may also be slightly below current market asking rental. So I think there's -- well, hopefully, in time, if this continues, we'll start to see an end to the negative reversions.

When will Fortress seek to exit or realize value from its industrial property vehicle. Will this likely be through a sale or separate listing? I'm assuming that relates to Inospace?

Yes. So it's now the 11th. So we've had the Inospace deal effective for 10 days. So unlike private equity, we aren't looking to the door before we've actually looked to get in and have a board meeting. So in time, it has been designed like that, but I think there's a way to go before we actually look to exit.

And then just a question around, are there any additional plans for green or sustainable funding going forward, additional...

Yes, we continue in that space. In fact, it's made its way into our secured funding pools as well. So I think it's there certainly is liquidity in that space, and it will continue. The answer is yes.

Just looking at Poland, would you consider any residential developments in Poland or only industrial?

Only industrial.

And then just a question on the local office. Are there any large buyers? Are they private?

If there are, I think, please just do let us know who's in the office market. Our sales team has been scouring for the large office portfolio buyers for a while. At the moment, it's smaller investors, owner occupiers and quite a few conversion opportunities, which I think, as I said, are where they actually make practical sense on a feasibility few and far between. Outside of that, I think, perhaps sectionalizing and selling as we have done in the past, where you're making a building, maybe it's 8,000 square meters in a park with 4 buildings, and you want to make one 2,000 square meters where an owner occupier could potentially come in or a small investor could buy that. I think you need to break it down because I think those investors are probably smaller rather than the large portfolio investor.

Just a follow-up question around logistics. You did mention sort of the focus to develop land already owned. What is the strategy of acquiring additional land.

So I think we wouldn't be close to it, but provided the price makes sense. So I explained our yield on incremental CapEx where we bought the land, I think, to acquire new land parcels, we would probably need the land at a significant discount in order to make sure that we are allocating capital in a smart manner. So it's certainly not a no. And definitely, if there was a land adjacent to our park, and we could see some value in expanding an existing park, I think we would certainly be open to that. Land prices have probably stabilized quite a lot. They haven't really gone up in the last couple of years. So potentially, if there's rental growth, and we can make sense of it, yes. But again, that's one of the avenues that we would need to weigh up at the time in terms of how we allocate our capital.

And then just a few questions around NEPI. I'll just group them. Just your thoughts, views and implications of potentially unbundling NEPI, given that it's separately listed and then focusing on the SA assets, which you know very well.

So unbundling NEPI, I think, is not really a practical reality for us with the current share structure. As it works now in terms of the MOI, it would be pari-passu. So let's just say we've got -- it would be ZAR 15 billion, roughly ZAR 7.5 billion to the As, ZAR 7.5 billion to the Bs, it wouldn't really work. Shareholders would need to vote on it, I think. So until we have a capital structure that allows us to unbundle, it's not practically possible.

And then just around strategy at NEPI, they recently mentioned possibly looking at Western Europe. Just your thoughts around that? Have you engaged with management. And then just linked to that, do you think this indicates a lack of opportunities across CEE?

I think our view has been -- it's always interesting to look because from the looking, you learn a lot. I don't think looking is embarking on a whole new strategy. I think it is literally just that, just looking, assessing what other Western European companies are doing, what the market dynamics are. So I think the fact that they're looking is probably just an educational exercise. And I think there are opportunities across Europe. They are the dominant Central and Eastern European retail landlord. And perhaps now with the strife on the border, not that I think any of us are -- who have insights -- light insights into that market are concerned from a security of investment perspective, it is more concerned from a humanitarian perspective, but perhaps there are a lot of foreign investors that want to exit and some deals come to the fore.

Just a question around your inflation expectations for South Africa, and where this would most likely affect Fortress?

Look, I mean I think inflation is definitely going to be on the rise. As we mentioned, that impacts us in a number of ways, some negative, some positive. The negative is, well, it costs us more to build. The positive is, well, the likes of our retail tenants, there will be higher turnover in the grocery stores. We have a lot of fixed-rate debt. So I think inflation, as long as it's combined with a little bit of growth, which we hopefully are seeing coming through and it's not absolute stagflation, I think we'll probably be positive in the medium term growth.

And then just moving on to a few questions around REIT status distribution policy in the MOI. I'll group those. The understanding is that the company may lose REIT status, if it doesn't pay distributions for 2 years in a row. Why is the need to pay a dividend now. And then just a question on the NEPI taxable dividend. Is this taxable? If not, the tax leakage will be small if the income is retained. Ian, do you want to?

Yes. So the first question around 2 years. Now that's not correct. The test is an annual test with reference to a financial period that's just ended 4 months post period. So the declaration that the company needs to make is to the JSE by the end of October. It has paid and declared or declared and paid 75% of its distributable profit as defined per 13.47(c) and 13.47(a) of the JSE list requirements. The NEPI dividend, yes, NEPI dividends are exempt, but exempt income is still gross income. So it forms part of the distributable income as defined in our JSE calculation. Should we not be a REIT, it would be, of course, exempt gross income, not taxable. So correct, the total tax charge to the business wouldn't be circa 27% going forward of, call it, ZAR 2 billion. It might be an effective tax rate of somewhere half of that. But we would still suffer a significant tax charge as well as any CGT on the disposal of any assets, less of a concern now days, unfortunately, but yes.

And then just on the distribution proposal, 2 questions. Why have you deviated from the distribution methodology proposed last year, i.e., to the As in order to meet the 75% payout requirement. Secondly, why the urgency to distribute in 1H as opposed to waiting to the end of the year?

So we have a different set of circumstances this year. In 2020, we had taken a scrip dividend from NEPI, which gave us a lot of flexibility, as Ian just mentioned. Scrip dividends and the subsequent cap issue, that is not gross income. So it doesn't fall into the JSE distributable profit figure. So we had a lot more flexibility, which allowed us to pay nothing in the first half and to pay something in the second half and still meet that 75% dist. Unfortunately, this year, we don't have that same flexibility. So we needed to pay out something from the first half. As we mentioned at, I think, year-end and certainly subsequently in all of the roadshows with the shareholders, we drew from the MOI, which in clause 34.7 says that all shares of all clauses rank pari passu in all respects other than 2 clauses, which is clause 7 and clause 34. Clause 7 is really redemption of the A shares. I don't think that applies here. Clause 34 is really how the As, if we declare a dividend, get their set benchmark before the Bs get anything, provided they meet the benchmarks that also doesn't apply. So therefore, we drew from the -- the wording from the MOI, the actual wording, and we proposed that pari passu, we did chat to a lot of the shareholders and got their support and buying in the period from September to December last year, and they were comfortable that, that made sense, and we could do it. We obviously needed to act on that, get it done now because before our year-end, we don't have the ability to travel back in time to wait for, let's say, September or October and then do something before our financial year-end. So we thought it was certainly a low-risk strategy to have the vote done now and then enable us to at least pay out 75% of our first half, which would be half of the required minimum distribution requirement to maintain this status.

And then just relevant to that, what are the implications of proposed MOI changes being voted down? And then just following up from that, why would you not look to buy back A shares using retained income, which will benefit both A and B shareholders?

So just on the buyback, I mean we did obviously do that last year, relatively thin volume I think we bought back. What was the it, a couple of hundred million on that As, ZAR 25 million, ZAR 26 million?

Yes, ZAR 26 million.

We -- it's quite difficult to buy back in significant volume, both As and Bs -- sorry, Ryan, just the first.

The implications of the MOI getting voted down to changes.

No dividend for anyone.

All this in 6 months...

Yes, we wouldn't be able to pay our dividends. So if it goes through, everyone will get a dividend. If not, no one will get any dividend.

And just your view and considerations for against the capital restructure, quite a broad question.

That is a broad question. We've said consistently for the last 2.5 (sic) [ 2 ] to 2.5 years, the capital structure is suboptimal, but it really is a shareholder matter if shareholders elect to retain it. And that's certainly the feedback that we've got from -- not from all the shareholders, but bear in mind, we have about 7,000. So we haven't got that from all 7,000, but from the larger shareholders, we've got feedback that they certainly at the end of last year were comfortable with the capital structure and wanted no changes made. So that's where we are. So we try and manage it and propose these patches to maintain REIT status, which we still think is in the best interest probably of the company and of the shareholders. I think that's been our consistent view. But in the absence of shareholders, really being willing and wanting change, well, that's their prerogative. It's not up to us. We don't have those votes.

[Operator Instructions] It's the last one I have, and we can just move to the room after that. Just a question again on the MOI amendment. Did you engage with shareholders prior, just to get a sense whether it would be passed?

We did. Yes. We engage with all of the larger shareholders who saw us on the road show quite actively between September and December last year.

No further questions from the webcast. I don't know if you want to open up to the room once more.

Sure. Nothing. Great. Well, we are here afterwards. If anyone wants to chat to us or ask Mr. Tuszynski about what's happening on the eastern side of his home country, please feel free. We'll hang around for a while. There's like way too many snacks, so we do need some assistance in eating those, feel free to put them in your pocket and take them away. But thanks, everyone. It was good to see you.