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

Good morning, everyone, and welcome to the Fortress results presentation for the financial year ending -- sorry, 30th of June 2024. It's nice to see all of you here in person, and welcome to everybody online. I think, just in summary, we've had a pretty good year. I think just in terms of our highlights, up on the screen there, we've beat our guidance just by a little bit north of 5%. We had guided previously at least ZAR 1.7 billion in terms of our distributable income and we got ZAR 1.79 billion. So I think it was a really good set of results. That increase is really driven by better-than-expected NOI from our core property portfolio. So I think it's been a -- it's been a really good performance on that side. A couple of other highlights that we've got there, as you can see in the middle of the screen, strong NOI growth like-for-like of 8.2%, which I think is very, very pleasing. And we've seen certainly a bit of a sentiment shift with the Government of National Unity and the tenants are getting more interested, buyers of our noncore assets are phoning more often, and the reduction in the yield curve and where we hedge on, for example, the 5-year interest rates come down. And I think that's leading to a bit more positivity, not only for us, but hopefully, for the whole property sector in SA. And I think more generally, globally, it's looking like a far more constructive outlook from this point in time. Other highlights. We said a few years ago, we wanted our logistics portfolio to get to circa ZAR 20 billion. We're at ZAR 20 billion as we sit here today. So I think that's a significant portfolio of scale. And it still has a relatively good and healthy pipeline, although it has been whittled down quite significantly over the last few years. As we mentioned in interims and I think, again, another big thank you to our shareholders for their support on simplifying our dual share structure, so we just have 1 share. And I think that makes our life a whole lot easier. And hopefully, the investment case for Fortress is a lot more understandable. Positive outlook for next year, which Ian will touch on. And then retail, Vuso will go through the retail portfolio. I think in terms of our strategic focus, again, I've said this for a number of years, we really need to maintain the discipline of funding our development pipeline with asset sales. And I think that's something which I'll show you on the next couple of slides. I think we've done really, really well over the last couple of years, and we've got a very good sales team. And I think that's really driving the source of capital for our new developments. And I think the one thing that's potentially most is we are actually selling those assets at a slightly lower in-place yield than the new developments are coming on stream. So it's neutral on distributions over time, but if we look at the previous financial year, it's actually enhancing. We sold assets at about 8% and rolled out our SA logistics pipeline at 8.6%. So that's going to be a prudent approach to the balance sheet. I think if you look on that second block, we've offered a scrip alternative, which Ian will go through in terms of NEPI shares. We also used some of our NEPI shares to sort out the capital structure, as many of you know. And that as an investment is still an outstanding investment case. I mean it's a hard currency yield of 8.5% to 9%. It's very liquid. They've got great growth prospects. Very low risk, very robust balance sheet. So I think we understand that NEPI is a fantastic investment. So we need to use that judiciously as we have done now with a scrip alternative. So I guess, why do we do that? Well, that helps us lower the gearing against the direct assets. And over time, that gives us a lot more optionality in terms of what we can do with those NEPIs in the future. So medium term, we will keep them. They provide a lot of stability to our balance sheet. But I think in terms of how we look at the next couple of years and the medium term, it probably is better for us to look to offer the scrip dividend alternative if the time is right and the market dynamics are appropriate, as we have done for now. It's something that we could certainly do in the future, but we don't want to make a hard commitment because it depends on where the NEPI share price, what our circumstances are at the time, and if we sell more direct assets where we also will lower the gearing against the direct portfolio. And obviously, the primary focus for us is that we need to get the direct assets to grow, both in terms of NOI and in terms of value. I think allied to that, we're still looking for growth and opportunities. So in our core portfolios, we need to continue to roll out the pipeline, remain opportunistic as we have done. You would have seen the sale of the -- a part of the pick and -- old Pick n Pay DC in Long Meadow. That was really just an opportunistic trade where we bought the whole DC for ZAR 500 million and sold 60% of that to Dis-Chem for ZAR 500 million and got the top 40,000 square meters essentially for free. In terms of where we've allocated our capital for the year. What we've -- we've shown in the slide before and we just tried to paint a slightly clearer picture for you as to where the returns are coming from. In the top part of that slide, that's the returns on our standing portfolio, which is quite simplistically the yield in green plus the capital growth in blue. As you can see on the left-hand side there, NEPI has had a very good run over the last year. So that gave us 28.2%. We allocated minus ZAR 7 billion, but that was because we had the buyback. So we used the NEPI shares as currency to buy back the B shares at roughly a 50% discount to NAV. The logistics portfolio gives us 12.3% in terms of total return. But that's the portfolio return. If you look at the block below there, we've got the return on the marginal capital allocated. So what we tried to do there is just give you a picture on how much capital we've allocated to the SA logistics developments. For the financial year, we brought on ZAR 1.3 billion of SA logistics developments. It wasn't all spent in the financial year, some of it was spent previously. And that gave us a total return of 16%. How do we calculate that? We take the yield on the development cost of 8.6% plus the capital uplift cost to value at the end of the year at 7.4%, and we sum the two to get to 16%. Retail. The return on the standing portfolio, 10.7%. The like-for-like increase in capital value is not coming through just yet. And I think there is a more constructive, more positive sentiment looking forward, but I think the values are still probably a little bit shy on increasing those values. If you look at where we were in April and May when they were actually conducting these valuations, I think there was a bit more uncertainty and interest rates have come -- certainly look like they're coming down in the next couple of years. So I think there will be probably some uplift in that valuation next year. But that gave us 10.7% on the standing portfolio. And below there, the total return on the one development that we brought into use, which was AbaQulusi, which Vuso can touch on, that gave us a return of 13.7% on a similar methodology. The next one is our Fortress logistics, that's just our CEE portfolio in Poland and Romania. That gave us a standing return on the portfolio level of 7.6%. Also not much in terms of the capital values. I think the values are still pretty conservative that side. And that total return on the capital we allocated -- sorry, that column is all in euros, EUR 58 million, total return, 13.4%. That was the 2 projects that we finished in June in Gauteng up here which I'll touch on. The last 2 columns are really the noncore: office and industrial. So as you can see there, we're still getting a yield, but the valuations in both those portfolios moved backwards. So the total return is quite negative. And I guess, if you're looking at where we're allocating capital, we're taking it from those two on the right-hand side, office and industrial, and we are allocating that to logistics in Europe and in SA, and then enhancing and expanding the SA retail that we hold directly. So that one we sold ZAR 366 million in offices, ZAR 342 million in industrial. And those yields, which I'll touch on a little bit later, 5.1% and 10.8%, in-place yields. So we actually are enhancing our distributions by doing that. Another slide just on the vacancy. I think we've had some pretty low vacancies for the last couple of reporting periods. Well done to the asset management team. And as we said, that's probably the biggest driver of like-for-like NOI growth, is if we can take space that we got no income on last year and get income on it this year. And that's really been a big driver. As you can see, we reported by rental, and no issues other than the offices. And that is done strategically because we're selling a lot of these offices at the moment to companies who are specialists in residential conversions, and it's often easier to sell it and we get a better price if it's completely vacant. So that's strategic. But as we stand here today, we're now sub ZAR 1 billion in offices. So this is our current asset base. Really, our 2 core sectors are logistics and retail. That's what we understand. I think we've got scale in both of those segments. Where you look at the developments and the asset disposals, those 2 bar graphs, that's really the key for us, is we need to keep disposing of the assets to fund the pipeline. So if you look at our noncore assets as we sit here today, we've got ZAR 3.6 billion in offices and industrial. And that's what we deem noncore. So that's really the source of the funds to keep going with the pipeline. Our pipeline has come down a bit, so it's ZAR 2 billion. And if you look at the likelihood of us being able to sell through to develop, I think the best indication of that is what -- how have we done in the last 5 years since 2019. We've cumulatively sold from 2019 to today ZAR 7.4 billion of noncore assets, and we've built ZAR 9.5 billion of new logistics both here and in Eastern Europe, and some retail enhancements. There is a bit of a difference there. But as you can see, we've got ZAR 1.6 billion additional noncore assets versus a ZAR 2 billion pipeline. So that will start to -- those will start to even out and match each other over the coming 3 years. This is our target asset base, and we have just sort of broken away that NEPI one because we're using some of that to settle this -- well, to offer a scrip alternative. How much we use to ultimately settle, it is up to you. I think if we look there, the SA and CEE logistics, ZAR 20 billion, so we're at that target that we set ourselves about 5 years ago. And Retail, ZAR 20 billion to ZAR 25 billion, ZAR 10 billion of that is ours and ZAR 15 billion is NEPI. That retail that Vuso will touch on is still performing quite well, but probably a little bit subscale to stand on its own, unlike the logistics. Just in terms of property disposals, I think this is detail that we've been asked to give and we're quite happy to give it, in terms of what does that yield actually look like on the property disposals. We've made a nice premium to book. A lot of that was, as I mentioned, in the Pick n Pay old DC in Longmeadow. So we've stripped that out. So if you look at the ZAR 1.69 billion that we sold for financial year 2025, and you look at that block at the bottom, the in-force yield was 7.9% on the ZAR 1.19 billion that we sold, excluding the Longmeadow and the land. Why is that? Because we sold a lot of vacant assets. So if you look there, the offices were only giving us a 5.1% yield. When we look at a sale and approve it, we look at an assumption that it's fully let, but unfortunately, our offices haven't been fully let for many years, we've been sitting with 20% to 25% vacancy for a while. So that 7.9% then gets rolled into the 8.6% development yield on our SA logistics and 7% to 7.5% in CEE. So it's short-term accretive, long term very accretive because we'll start to get growth on those better assets. This is, again, just those asset recycling picture. As I previously said, we've booked ZAR 9.5 billion, largely funded by the ZAR 7.4 billion in asset sales. The difference has been made up with debt and equity. And if we roll forward 3 years, our total really committed pipeline, and I say committed in terms of we've got the land, and we think the best use of our incremental capital is to complete that pipeline in our existing parks. Eastport North, we have an option. We still have about 2 years to decide whether we trigger that or not. So if we take our noncore, ZAR 3.6 billion, our committed pipeline 2, it's quite easy to fund that even at a moderate sales of ZAR 700 million per year. I think we'll probably target about double that for this year, and I think it's easily achievable given we sold ZAR 1.7 billion in the last year. Okay. I'll get Mr. Vorster to run you through some of the financials. Thanks.

Good morning. Welcome. Thanks, Steve. Appreciate it. So if we move on to the financial performance, the actual -- the nuts and bolts of the dividend and distribution and what funds it. For the 12 months ended 2024 June, our distributable earnings, ZAR 1.79 billion, plays ZAR 1.7 billion -- well, sorry, ZAR 1.8 billion of last year. It's important to note that these two numbers are not comparable, and I'll touch on that as we go through the presentation, because of the scheme of arrangement. That represents roughly a 5% premium on our forecast or guidance provided of ZAR 1.7 billion. Our tangible net asset value per share is up by roughly 70% and largely as a result of the scheme, and I'll go through a bit of detail on that as well. So where does all this distribution come from? And if we have a look at our simplified distributable earnings, where it comes from is NOI from the portfolio to just under ZAR 2.5 billion. That last year would have been about ZAR 2.2 billion. And I think, unfortunately, with the capital structure, the AB structure and the scheme of arrangement and the history in the last couple of years, this often gets missed in our, call it, distributable earnings calculation or methodology. And that is the fact that we don't capitalize interest and include it in the distribution. So new developments that result in new rental income hit that line as rental income and NOI. And of course, the capitalized interest intra-period -- we do raise it for IFRS purposes, but doesn't find its way into this. This calculation is sort of -- is missed. So the smoothing of that increase in distribution doesn't come through. It's more of a tiered sort of step-up. And that's roughly ZAR 300 million in the current year being the standing portfolio as well as those new developments. From that, we add our NEPI distribution net of the hedge of about ZAR 1.35 billion. Also not comparable to last year. In the first half, we would have had circa ZAR 160 million NEPI shares, in the second half around ZAR 107 million, as a result of the scheme of arrangement. Our net interest funding is about ZAR 1.8 billion net of our interest rate protection, which I'll touch on as well, overheads at the fund level, ZAR 240 million, and then, of course, some tax that we pay given that we are no longer a REIT. With regards the second half earnings, our distribution of ZAR 0.7019. That's about a 10% increase on the guided ZAR 0.6206. And as Steve alluded to, better-than-expected performance in various aspects of the business. We have offered the scrip alternative, so shareholders can either take the ZAR 0.70 in cash or 0.00662 NEPI shares for each Fortress being held. So what does that mean? And a practical example, if you hold 1,000 Fortress shares and you elect to cash, your return will be roughly ZAR 700 in cash. And at yesterday's price, net of the dividend that NEPI will pay, presumably in early October, as this would land probably post that distribution about ZAR 900 in value, in a NEPI alternative. When we look at what's happened to the NAV in the last year, corporate action being the scheme of arrangement and the related, call it, consequential transactions and impairment unwind, some debt-funded stock scheme arrangements that have all been sorted out that resulted in a significant uptick in the value because all of that was done at roughly a 50% discount in intrinsic value of those Bs that were repurchased. The more important or the less -- I'd say, more important, but the interesting part in this slide is exactly what Steve just alluded to. If you look at the development pipeline and the direct property, the movement between those 2 -- the development pipeline has gotten that much smaller. We sit with roughly ZAR 1.5 billion on our balance sheet at 30 June. And we've transferred circa ZAR 2.2 billion, being the SA and CEE, new logistics boxes into our completed buildings. And all of that is -- it creates that new NOI that I spoke about in our simplified distribution. And then, of course, importantly to note that we haven't been a significant incremental borrower to fund that differential because of the sales. And that's the net debt position that if you have a look at the ZAR 0.47 that we attribute to that. From a funding and liquidity perspective, our spot LTV as of today, about 37%, at 30 June 38%. The main reason for that differential has been the run on the NEPI price since 30 June. Our see-through LTV hasn't changed much, around 46%. All-in cost of funding locally 9.75% and in Europe 4.8%. Relationships with the banks, as most of them are here in the room today, pretty good. No covenant breaches. We're pretty good from that perspective. If we look at the balance of our liquidity and funding from a DMTN perspective. We raised ZAR 900 million in a public auction earlier this year. That was done with known expiries in the latter part of the year. Our involvement in the DMTN program in the last couple of years has been somewhat sporadic, and it's been driven largely by not being able to properly forecast our cash flows at a fund level given the payment of dividends or the nonpayment of dividends and so on. Of course, that's now changed and we have a nice line of sight on where we're going and we can then plan. So we have communicated in the space that we'll be a biannual placer and we'll approach the market Q2 and Q4 calendar -- of the calendar year, which we started earlier this year. We've had some refinances already. And just to note, we have put a collar over 24 million of our NEPI shares. At the current price, the call strikes are probably more relevant being between ZAR 135 and ZAR 139. That was done sort of pre the elections in May, serves twofold. One gives us availability to liquidity should we need it, and 2, a bit of a price hedge on the price at the time. If we look at our exposure to variable rates -- sorry, variable rate debt. We start with what's drawn at our balance sheet date of circa ZAR 21 billion, make economic adjustments to get to our economic exposure. And against that, we hedge. At the moment, we sit at roughly 91% hedged. We appear to be quite a bit higher than in previous periods, but it is important to note the timing of when we do this and when we report it is sort of, at this point in time, about ZAR 1.5 billion of our hedge position rolls off in the coming 12 months. And we still favor the Cap product over the Swap product. And I'll go into a bit of detail of what that means if we do see some interest rate cuts in the coming 12 months. What that hedge book looks like, Caps over Swaps, roughly 70% in Caps now, 30% in Swaps. And weighted to the long end, as you can see, June 2027, '28 and '29. So what does that mean if we see some interest rate reductions? At the moment, our hedge book is all in the money. So to the extent we see interest rate reductions that are caps in excess of the strikes of those caps, economically, we don't really change on the portion of the book that's covered, meaning we will pay less interest to the bank and we will receive less premium on the cap product. We'll see further benefit as we flow through or as we sync through those Cap strikes. Holistically, what it means on our book is that for every 100 basis points cut that we see now, we'd probably experience about a 25 basis point cut in our actual debt charge, until, of course, you flow through some of those Cap strikes, which are quite away off if you look at June 26 at 5.11. From a debt maturity perspective, it's a pretty similar picture to what we've shown in previous periods, with a book of around ZAR 23 billion 11of tenors between 3 and 5 years, we'll have about ZAR 5 billion coming to market or coming to expiry every 12 months, not dissimilar in this period with ZAR 4.8 billion being expiring between now -- or sorry, 30 June and June of next year. Of that, ZAR 1.5 billion has already been repaid and refinanced and the balance is largely in negotiation to be refinanced pre 30 June of next year. Our debt split, unsecured to secured. As we've mentioned before, we target sort of an 80-20 mix between our unsecured and secured portfolios. We view this as pretty prudent given that we still have a development pipeline in our portfolio. But it does enhance or reduce our interest charge because we've seen some very good pricing in that unsecured market of late. But we will continue with that strategy. Our unencumbered asset ratio at the moment, circa 36%. And our interest cover ratio, just over 2x. Regards our forecast for next year or guidance for next year, we've got 3 numbers that are not -- are no longer comparable. Last year's earnings, as I've mentioned, against this year's earnings of ZAR 1.79 billion, and then our ZAR 1.79 billion against our ZAR 1.75 billion for next year. The main reason for that, of course, is that we've got 52 million NEPI shares less that we used to fund the scheme of arrangement. So on an adjusted basis, if we look at that bottom left-hand corner -- sorry, at the bottom of the screen there. On an adjusted basis, the distributable earnings will grow by 15%, largely as a result of that new development income -- the standing portfolio increases, et cetera. We haven't assumed any interest rate cuts in that number. 15% of the distributable earnings level translates into about a 14% increase at a per share level because we did issue some shares at -- sorry, at the first half in settlement of the dividend. So in summary, balance sheet is in a pretty good space. Will provide us for growth. And the Board continues to -- will continue with its policy of payment of 100% of the distributable earnings determined on the Fortress methodology of calculation, which we know deviates from FFO, but it is a conservative and cash-backed methodology, doesn't make us an incremental borrower and creates for a sustainable dividend flow. Thank you. I'm going to hand over to Vuso to take us through the retail.

Good morning, ladies and gentlemen, and thank you for joining us today. Our retail portfolio has performed very well this year. We've had low and stable vacancies. And some of the -- in fact, the asset management initiatives that we've been doing over the last couple of years are starting to pay off. And we've been doing that on our core retail assets. My view is that, generally, the retail sector is stable. And it almost feels like it's ready to start -- to come out firing as the economy improves. I'm optimistic that we should see some growth in the economy, firstly, with the promise of political stability from the GNU, I think on the ground, we can already see that a lot of the noise about the construction mafia is out in the open and we're getting a lot less of that influence and community activities around that. The news around Eskom with lower load shedding, that's benefited our tenants. And I think that will improve as time goes by. And obviously, the collaborative efforts between government and the private sector on projects like Project [ Wulinjela ], the work at Transnet, the work on railways, and also the work around Eskom. So that's making me optimistic. This is our shopping center in Mbombela, Nelspruit, and Nelspruit Plaza. I think it's 19,500 squares in size. We've recently extended our solar plant there. Initially, the municipality kept us at 15% of our supply, but very lesser during the year, so we expanded the solar plant. It's a CBD center. At the main taxi rank of the town, close to the main bus rank of the town. Anchored by spa. Fully let at the moment. We've just recently did a deal with [ Splits ] the only [ Splits ] in town. Generally, they have 1 [ Splits ] in a town. So they'll be opening in October. We've got a 3,000 -- [indiscernible] 3,600 density, which is quite good. We get about 1 million people visiting the center per month. It's one of the strong centers that we've got in the portfolio. We are as I said, it's 19,500 in size. We are in -- we're planning to expand it by an additional 4,000. Hopefully, in the next 12 to 18 months, we should start that work. There's a bit of planning and approvals that we need to go through. Our portfolio has increased from ZAR 10.1 billion June last year to ZAR 10.6 billion this year. I think a lot of that was driven by the extensions, refurbishments and the asset management initiatives that we've done over the year. So that's come through. During the period, we sold 2 noncore assets, Game Paarl and 225 Pine Street. We're still -- it's good because we -- the portfolio value still increased notwithstanding those sales. I think our strategy of selling noncore assets and reinvesting in the core portfolio, we'll carry on with that. What do we mean by reinvesting the core assets? We'll carry on doing redevelopment, extensions and refurbishments of the core assets in the portfolio. During the period, we -- 601 leases came up for renewal. We renewed 541 of those. So we've got a 90% retention rate, which is good. We had a negative -- slight negative reversion of 0.8% during the period. The main reason for that is actually 1 tenant. So we had a car dealership, which is 4,300 square meters in size. That came up for renewal after a long lease, I think a 10-year lease that had been escalating. So the rentals were above market. So when that came up, we obviously had to renew it at below market -- sorry, at market, we had to revert to market. But without that particular tenant, our reversions would have been positive. The escalation rates, still in force, so good at 6.7%. Generally, we're getting between 6% and 7% escalations in new deals. Our vacancies come down to 1.4 by income from 1.6 in December. When you look at it on a GLA basis, our vacancies are sitting at 1.7. And when you consider the makeup of our vacancies, we've got 8,600 square meters of vacant space in our portfolio. 4,600 of that is retail vacancies. So when you look at the pure retail vacancies, we're actually sitting at below 1% vacant on the retail. The rest of the vacancies are offices. We are doing quite a lot of work in working those vacancies. I think this year we'll start to see those vacancies come down on the office and on the retail. Our NOI growth was positive at 8.5%. I think the main driver of that was some of the refurbishments and extensions that we've done over the last couple of years have started to come through. But also our vacancies have been low and stable for -- throughout the period. So I think that started to come through. I think we'll probably continue to see stable NOI growth because we're selling noncore assets, we're reinvesting in the existing portfolio. Our vacancies are low. Tenants are trading well, stable. And we're hoping that they'll benefit from any rate cuts in the near future. One thing that is not on this slide is our collection rates. Our collection rate has been stable at about 98%, which is pretty good. When we look at turnover figures from our portfolio, over the last 12 months on a like-on-like basis, turnovers have grown by 6.4%. And I think what this graph is also showing is that, over the last 4 years, the turnover growth from our portfolio has been above inflation, which is quite good. Again, the grocers and the supermarkets have taken the lead in the growth in turnover. In our portfolio, grocers and super markets have grown by 10%, Health care and -- Health and Beauty has also performed very well; that category grew by 8.5%. Fast food restaurants also performed well, 11%; liquor stores, 11%. And motor-related traders, I'm talking about the spares and those type of tenants, coming off a low base, they grew very well at 15% this year. Apparel, a bit behind on 5.5%. If you look at -- if we dig deeper into trading by category, our township centers have performed well, I think a lot of that has been the work that we did at Evaton, Palm Springs, Yarona, that's starting to come through. You can see that the vacancy rates are quite low, that 0.5%. In fact, post year-end, that's improved slightly. The CB stores are also trading well. Again, it's work we did at Park Central, Central Park and [indiscernible]some time ago. There we've got a slightly higher vacancy rate. There's some awkward space that sits in Central Park Bloemfontein and in one of the buildings in Rustenburg, but some of that we're working on. And hopefully, that will reduce as well during this coming year. The suburban centers are slightly slower than the rest of the portfolios. The main reason for that is that the work that we're doing at 204 Oxford, the old Thrupps building, and also the work that we're doing at Bloemfontein Value. As we finish those projects, this sector should improve. The vacancies, about 2.3% on the vacancies. Most of that sits in offices. Already quite a lot of work has gone into that, and that number has started to reduce already. The rural sector is trading well. It's been stable for and consistent for a number of periods. Just some of the projects that we're doing. As I mentioned earlier, Bloemfontein Value Mart. This shopping center hasn't really had an anchor. So we've recently done a deal with Shoprite, they will anchor the center. That work should be complete in May next year. So we got -- we took 2 -- we vacated 2 tenants there, 2 big box tenants to make room for Shoprite. And then Sterkspruit, currently 15,000 squares in size. We've taken it up by an additional 4,500 squares. We've got Boxer signed up there. And some of the banks that were in the CBD but not in our center, we've now brought them into our center. That will cement our dominance in that town. And then we're pretty much finishing up at Oxford Centre. So the parking work was done some time ago. Woolworths will start trading there 17th of October. They [ took PO ] a few weeks ago. So yes, I think that would be a good run. This is our shopping center in the West Coast, Weskus Mall. It's a regional center in the area. 35,000 squares in size -- of 35,300 squares in size. We've got a solar plant there as well. And we're actually looking for ways to expand it, considering a number of opportunities to expand our solar there. Center is fully let. We've got about 70 shops in there. I would like, at some point, to extend the entertainment offering. Because it's a regional center, it would be nice to do something like that. I think will attract more people. But that's still in the thinking phases. As I mentioned, we're fully let. Recently added tenants, include Food Lover's Market, [indiscernible] Unique, KFC and McDonald's and Destination Outdoors, all are trading at above expectation. I think the trading density for that center is 3,100 at the moment per square meter. Cool. I'll hand back to Stevie.

Amazing to see the retail performance just kind of carries on and keeps going year-on-year. Just some highlights on the logistics portfolio, value of completed buildings in SA, ZAR 15.3 billion. I think if you look at the top right-hand side, valuation per square meter, and that's quite an important figure for us, just under ZAR 10,000. We're replacing these buildings, and it really depends on the spec and the coverage, but anywhere between ZAR 12,000, ZAR 13,000 and sometimes upwards to ZAR 16,000, ZAR 17,000 for low-coverage, high-spec assets. So I think that does give us a far more defensive portfolio because of our low value per square meter. And the competition from new assets is limited because you just simply can't compete. The guys need ZAR 90, sometimes ZAR 100 a square. We just renewed [ Ciplamed ] which is a building we built 7 years ago in Cape Town at ZAR 75 net. So it's very difficult to compete with our existing assets which are still at -- of such good quality and still prime with new buildings because of the construction cost inflation we've seen over the last few years. That reversions figure, I just mentioned [ Ciplamed ], it was predominantly that off the back of a 7-year lease, we signed a 10-year lease, and I think negotiated a little bit of solar savings for them in terms of the photovoltaics. It's a temperature-controlled facility. I think also pleasing is the weighted average lease expiry, which is now almost 5 years. That's come up nicely as we sign longer and longer leases on our new developments. I'll share a video about our biggest logistics park, Eastport, which is just north of the Johannesburg Airport. We did develop in the previous financial year Pick n Pay, you can see that there. We sold a little bit of land to Teraco initially, that's on the right-hand side, that's Africa's largest data center being built. That's actually going to triple in size. They've bought another 108,000 square meters from us. I think that investment on -- which is within the Eastport Park will be about ZAR 15 billion. So it does give, the infrastructure in the park, I think, a lot of structural significance for the municipality and the whole province. We've got another 2 pre-let deals, which we've just signed at Eastport for Liquor Runners at just over 30,000 square meters and another one for Crusader Logistics who are actually moving from Pomona just down the road. And then what we will do, I'll show you shortly, there's a site in between the 2, which we're going to do on spec. It's about 13,000 squares, which is roughly the size of the dot one, which you just saw there. Very successful park. That's the R21, which goes from Johannesburg to Pretoria parallel to the N1, but it's not as congested and built up. These are the sites that we're currently in progress of developing should be ready end of next year and early 2026. Fortunate for this park, we've got a tenant by third-party logistics provider by the name of CEVA. They actually do a lot of the Amazon distribution for SA at the moment. So Amazon don't do their own distribution, they use CEVA logistics platform as a third-party logistics provider. This is a little bit old, but Pick 'n Pay have done a 3-megawatt photovoltaic plant. This is a John Deere dealership. There was a little bit of space strain shape site and our partners developing that. We're going to acquire it on completion, which is quite soon at an 8.5% initial yield. So in the next 12 to 18 months, this whole part of Eastport will be done firstly, for Crusader, then Liquor Runners and then a small spec box in between, which we thought was best to do now while we -- while that whole site is under development. The sale of the land to Teraco, just a little short of 2,000 a square meter, which I think is a very good exit price for us, especially considering it's the back piece, not the prime highway sites at Eastport. Development update. The top part of that slide is what we've completed for the year. I know it does look busy. That's by design because the guys have been quite busy rolling out some products. What we've seen is the estimated yields, I think, for the completed developments for the year, they have gone up a little bit when we did some of the final accounting. So that's pleasing sort of 8%, 8.5% in SA, 7% to 7.4% in Eastern Europe. Currently under construction, you'll see if you look at the completion date, not much coming for FY '25. It will mostly be after the June year-end, but I think it's all very positive. We're getting, I think, good yields and the lease terms are 10 years, 5 years, 115, 112. So I think that's very pleasing in terms of the security of our income. Only 2 spec boxes. They're one in Zabrze, Poland and then the 1 that I just mentioned in Eastport. The SA Logistics development pipeline a few years ago, in 2018, we had 1 million square meters under our control. That's including our partner share at the parks I think we've done a really, really good job in terms of rolling that out and chewing through the pipeline, 164,000 square meters left, excluding the Eastport North option. That's just what we've got in a tabular form. Here, you can see the Eastport so that on the bottom left there, that's the only site we'll have remaining once we've completed Liquor Runners Crusaders and the small spec development. And post the sale of the land to Teraco just some more details. Here's a picture of Clairwood. I think this one was -- gave a lot of people in this room, gray hairs. It took us a long time to get going with the environmental approval and things like that, but it's largely done. We have only one pocket remaining, which is Pocket 6, but everything else is left. And I think through the fullness of time, this has actually been a very successful park. It's unique in offering in and around Durban. If you look at the video, you can see all of the old industrial space in and around there. It's actually not far from the old Durban airport for those of you who remember that. That's the park. Those are the rigs at Pocket 6, which are doing the soil improvements, which we needed because this whole Durban South Basin has what we call Hippo Mud so we need to do almost put these rigid inclusions similar to piles 50 to 40 meters below the surface down to the bedrock to stabilize the building. So it was extremely expensive engineering, but anywhere else, even the old Transnet sheds in the port need the same engineering solution. So now that we've done it, I think a lot of the bigger tenants and the international tenants are quite keen to come here because they can store containers, you can load the floor and you don't have the sort of height restrictions as you do on our neighboring properties being old industrial space. That's Pocket 6. We are in discussions with a third-party logistics provider to do a new box for them, but nothing has been signed yet. This is an interesting one, Gan-Trans that used to be Sammar who then moved into Pocket 2A didn't require that building even though there was an in-force lease and wanted to exit. And I think just it speaks volumes to the product that we were able to exit that tenant and get another tenant in back to back with no vacancy for us. Such as the demand for this type of product in and around the port. Durban is still Africa's biggest port. Our imports and exports are largely through the Durban harbor. Hopefully, if they make it more efficient, we can then look at unlocking the rail siding. As you can see at the back there, there was an old siding here, which they used to bring the old horse races to Clairwood on. That siding, we tried for many years to do a deal with Transnet. But unfortunately, they just weren't particularly amenable to anything. But if we can unlock that, if there's some change in Transnet's thinking, I think it will just add value to the whole intermodal capabilities of Clairwood. So as I mentioned, just one remaining pocket and then Pocket 5B, a small 14,000 squares will be finished towards the end of this year. Offices, value of completed buildings, ZAR 1 billion that is less than ZAR 1 billion now, and hopefully, in a couple of years, will be really, really immaterial. What we have seen, though, in the office portfolio, we've sold a lot of the underperforming assets. And I think if you look at the like-for-like NOI growth, it's positive, we're selling a lot of the vacancies, a lot of the problem assets. We've recently concluded a deal for 3 assets to a residential conversion special. So we're hoping to close out all 3 of those and that's really driven, if you look at the top right-hand side by the value per square meter, ZAR 8,600 is I would estimate, it's not really our core business, but I'd estimate that's probably about 1/3 of replacement cost for these assets. And because that price point is so low, it does enable us to sell it to residential conversion specialists who can then convert these assets. It's also more suitable in terms of the location being suburban 1 or 2 floor office parks. The industrial portfolio also non-core. But I think quite different in our approach to the offices. This portfolio still performs really well. Like-for-like NOI growth of 10.5%, still a relatively high vacancy short lease expiry, but that's just the nature of the tenants they signed generally 3-year maybe a 5-year lease, that ZAR 2.3 billion of completed buildings. These are far easier to sell and actually quite a lot of demand for these industrial assets. Part of this portfolio is our InoFort JV with Inospace and run and operated by Inospace, it's a very innovative concept, really taking old industrial space, cutting it up, making it far more attractive to smaller users who are happy to rent it on a per unit basis as opposed to a per square meter basis. Our NOI growth there year-on-year was 17.5%. Forecast for next year NOI growth is 10%. We hope, [indiscernible] and David can deliver on that. But it's really -- I think they -- it's working. We did 2 properties as a trial run and then entered into this portfolio JV where we contributed ZAR 600 million. They contributed roughly the same. We put some mezz debt into there to ensure that there was alignment in terms of the shareholding. And it's really good. I mean if you look at the average lease inquiries per month, 833. It's an amazing amount of interest in this product. So I think the market can certainly absorb a lot more of this. We focused on the big boxes, but there's probably a little bit too small for us, very, very operational so I think partnering with sector specialists like Inospace is proving a very good outcome for us. If you look at the rate per square meter, you can see traditional spaces which is more or less what we are getting, ZAR 60 microspace is ZAR 115. That does come with the requirement for operational management, cutting these boxes up. But if you do it and you do it well, I think it really -- it does produce some NOI. I'll just show you a video of the one. This is the one that we did early on in terms of a trial with Inospace, it was an old logistics box Barloworld Logistics 3000 squares of offices, no yard, upstairs, mezzanine storage on the way to the airport, just a really sort of unusable building for a new style logistics user. As you can see, they make it very attractive. They have part management, so you can walk in. There's almost a reception desk, coffee areas, shared boardrooms, and I think it's interesting to see the smaller office users coming, people who need an office combined with a bit of storage space. It really is great. That old building had columns all the way down as it was completely unsuitable and they managed to repurpose it and now make it work. So I think they really do know what they're doing. And I think the -- certainly for the growth of the market, and I think also for the benefit of the country in terms of supporting small, medium and micro enterprises. This is a fantastic product to introduce it to the market, and we hope that they can do more and potentially find more of our assets to convert or those of other funds struggling to see what to do with the old industrial. As I mentioned at the start, NEPI we've got about ZAR 15.5 billion. You would have seen the operational results. I mean it's very, very difficult to find any floors in those operations in that business. Rudiger, Lisa and [ Muruk ] and the team, I think, have done an unbelievable job at managing the cost through a pretty tricky time in terms of retail real estate inflation. But year-on-year, NOI growth. And if you look at the like-for-like, that's 10%. That's in euros with a very conservative balance sheet, highly liquid investment giving you a sort of FFO yield of 8.5% to 9% in euros. It's very, very difficult from our perspective and our point of view to beat those returns with other direct investments that we see. So I think it's really, really a strong business with a good outlook. About 4 years ago, we embarked on a strategy of doing some direct logistics in Eastern Europe, which was largely led by the fact that we had exposure there and experience in those markets through NEPI, and we felt that the retail and logistics were our areas of core competence. So we went and bought some assets there. Currently, we've got ZAR 3.1 billion of completed buildings. We do have a development pipeline there. The development yields are between 7% and 7.5%. And where we quote development yields, including the SA portfolio, that's all in. So we factor in the cost of funding, all of the soft costs. We do have a market-related internal project management fee that goes into that. So that's an all-in development yield. As those buildings roll out because, as Ian explained, we don't pay out the capitalized interest, it jumps in terms of our distributable earnings. I think this portfolio is performing well. We completed 50,000 square meters in Lodz, fortunately, we let that just before year into Oriflame, who are in the process of just kicking out the warehouse. This is one of our first acquisitions in Bydgoszcz. Sort of a little bit northwest of Poland -- sorry, Northwest of Warsaw, very, very good product with only 2 buildings there when we bought it. We're currently expanding it. We have a pet pharmaceuticals company called Medivet who needs a temperature-controlled warehouse. I think this one is a little bit different to our classic big box logistics park. The units are slightly smaller. And what's interesting to see is the tenants moving around expanding within the park. So that's our last site you can see in the background there. We have prepared the earthworks and everything to expand it, which we will do as and when we get a bit more tenant interest or some pre-let transactions. We added some photovoltaics there, which are working nicely. So that's Medivet in the background. That's a 12-year lease I think the interesting thing to see, certainly in our logistics portfolios where we have anything that needs temperature control and you add photovoltaics because it's sort of using power 7 days a week and actually that return is really attractive as opposed to logistics where there's no work on the weekend and you can't sell the power on the weekend, the returns are much lower. So this is a retailer called Notino. They do cosmetics and perfume. We developed that in conjunction with [ NDC ] Squared. It's 50,000 squares, roughly 28,000 to Notino and 24,000 to Oriflame making up the 50,000. It's really in the heart of Poland on the intersection of 2 highways. But I think the central Polish market has got quite a lot of supply. So we're going to just be cautious with rolling out the next development. We can do another 30,000 square there. I guess, which is a little unlike Zabrze where we've had a lot more tenant interest in terms of this location. This was developed by our team in Warsaw. We have a very good development team there. I think 2 of them came from Panattoni and one from the developer who we acquired the original assets from. We did 22,000 squares here for one tenant we left another 11,000 squares and that tenant now need to double the space. So we will roll out another 22,000 squares, which is the same as that box you see there, 11,000 spec, 11,000 pre-let roughly we can do about 78,000 squares there. If you look in the background on the right-hand side, you'll see the M1 center owned by EPP. So it's just a summary, we're only in Poland and Romania. At the moment, we have one park in Bucharest called ELI Parks also performing very well. I think the location is excellent. And as they roll out infrastructure in Romania, the new ring road will change the logistics landscape in and around Bucharest and probably be a lot more favorable to our park there. In the process of getting BREEAM certifications for all our assets, we've done all the income-producing ones in Poland. And I think probably more pronounced in Europe, the tenants and certainly the large multinationals need those certifications to come into your buildings. That's just also a depiction of our logistics pipeline, what we had at the beginning in the parks in which we acquired some income producing some land. We did then buy land -- just pure land in Lodz and Zabrze which we've rolled out quite a lot, have 164,000 squares in the pipeline. And I think we'll take a slightly more cautious approach in terms of rolling those out further. On the environmental side, I think everybody has forgotten about load shedding. That seems to be a thing of the very, very distant past a little bit like COVID. But it is still there. And I think our, well, the threat is still be our renewable energy plans haven't changed. I think if we look back on what we did probably 12, 18 months ago and certainly [ Russo ] and his team kind of plotted this course for us. It wasn't going full scale into batteries. It was really a generator-led backup system with a ramp-up of our photovoltaic rollout that alongside just smart meters. And what the smart meters have done, it's interesting, the tenants have near real-time access to their power consumption and just that moderates their behavior and actually lowers their consumption requirements because they can see what's on and you get it on a tablet and the guys then start to manage their consumption and demand a lot better, which means we need to supply less. So I think our approach was let's see how we can manage the demand side, get tenants more efficient and then add the supply to that. And I think that's proved a pretty good choice for us. The generators are a good backup but they're very, very expensive to run all the time. So where there's no load shedding, it's not like we've spent a lot on these very, very expensive complicated battery systems, which I think we can add, but at the moment, the feasibility just doesn't justify that. The last bullet point there is something that we've done for the retail, where we've got Eskom connections. We've signed a 10-year wheeling agreement with Discovery Green. The constraint on our retail is that we don't have enough roof space to do photovoltaic to supply all the power for the center. So we're always going to be a net consumer from the grid, and we quite like Discovery's offering where they're going to go and buy renewable power. And because they have different sources, different users, they can supply that on a far more consistent basis, and it's not a take-or-pay agreement like a lot of the PPAs that we shied away from where, and it allows us to buy green power into our retail, which we can't supply on our own, and it's also a better price than Eskom. So it was a no-brainer, and we hope that they roll it out and get all their approvals done. On the social side, our latest B rating unchanged B level 2, which is great. And I think in terms of our CSI projects, we still getting more focused on the ones that we see as really moving the needle and also being more focused on our communities in and around our rural shopping centers, Food & Trees for Africa, the educational programs that we support and nearly 1,300 children in early childhood development and school programs, 77 student bursaries for tertiary education. I think that's -- it's really great, and it's having an impact not only on our industry, but hopefully more broadly on employment and skills in the country. And also nice to see that some of the enterprise and supplier companies, which we support are now supplying us. I think that's the whole idea. On the governance side, you would have seen the sense yesterday. I'd really like to welcome Nonhi and Herman to the Board. Nonhi has got a long history in property at the bank just up the road here is on Ukukhula and Herman, a long history in banking, corporate finance, financial markets and is currently the Chairman of OUTsurance, so welcome. I think it's going to be exciting to work alongside both of you. In terms of the outlook, Ian touched on the forecast. I think it's really driven by the new developments and by NII growth. And I think that's a very positive position for us to be in. We're not looking to add derivative income or pay out noncash-backed distributions to enhance that. It's really just a stable business. And I think the way you look at the balance sheet, where you're not borrowing to pay dividends, it's amazing to see the stability in the LTV ratio, and that comes through over time in far more sustainable and healthy NOI growth, ZAR 1.47 per share as our forecast for next year. Thanks. So that's it from us. There's some portfolio stats for you to consume and put into your spreadsheets. If there are any questions, maybe we should take from the audience if there are any questions online. Ryan, if you want to shoot some of the online questions?

Perfect. Thanks, Steve. Maybe just a question for Ian. Just on the option of taking the NEPI shares as part of the dividend, just the thinking around how you got to that ratio because it does seem it's quite a high premium or discount that you're offering to investors to take the NEPI shares. How do you think about doing it this way versus seeing a placement at a slightly lower discount to then get the shares unbundled quicker.

Okay. Just if I could touch on that as a concept quickly. When we -- so we haven't sold the NEPI shares. We still think it's a fantastic investment. We think there's a lot of value and growth there. So we would much rather give those shares to our shareholders. I think that's a far smarter move for us than to sell it and redeploy that cash into other alternatives. I think the question is not from a Fortress question. Well, from the question we need to ask at Fortress is what can we afford to give to our shareholders. and looking at LTV and other things, do you want to touch on that?

Just going to add on to that. It's the question in reverse. How much could we give without impacting the business. Ironically, even with that premium if, let's say, everybody takes that up. It actually has a positive impact on the LTV because you're giving away the asset side and retaining the cash almost applying a premium to the cash retained. So one way could look at it -- one way could be a look at it at the same, what is the premium you assigned to the cash, alternatively is, well, how much can we afford to give shareholders of the asset that we really like.

And so I mean, obviously, we needed to add a buffer because that market risk is not -- is in the hands of our shareholders because we've set the ratio. There will be some withholding tax for those that some of our shareholders in a small 25 basis points STT. So we needed to make a bit of a buffer there.

One more question, if I can. Just given the rating that Fortress has now in the market, I mean, are you finding other acquisition opportunities either from a portfolio asset by asset basis or portfolio opportunities in SA. I mean post-elections, it does seem that there's more optimism around our market rate cuts coming through in the second half. Are there any other acquisitions that are attractive to you here?

Chris, I don't think we're actively looking to acquire assets in SA. As I mentioned, would more be opportunistic. If we always keep a look out on what's happening on the retail side. When we look at our, I guess, our core logistics, what do the acquisition opportunities look like there compared to rolling out on our existing land. And we just can't compare that to -- I think it's even if you take all of our holding costs on the land and we're getting 8.5%, we're probably finding similar assets at 8%, sometimes 7%, 7.5%, that kind of range. So I think it just our focus still remains rolling out on the existing land bank. And then we can decide whether we want to use that Eastport North option. I still think we're adding value in terms of what we're developing as opposed to what we see acquisition yields at. So we are still at a discount to NAV. So I think it probably the cost of capital is still a little too high. Thank you for the comment on the rating to go after and get into sort of a full-scale acquisition mode.

Perhaps I can just add to Chris' question around the distribution. So going forward, if you are intending to use NEPI as an option related to the dividend the ratio that's been spoken about now, is that precedent for the future, the premium is implied?

No, I don't think we can read into that. There's too many dynamics in how we choose that. Obviously, if NEPI is at a higher price, we can afford to give away more because we give away less earnings and whatever we retain is now also at a higher price. So if it's at a low price, we may decide not to do it, it depends on our situation and the market dynamics. So we don't want to, I guess, guide to everyone that this will be a certainty in terms of what we do. But if the situation is more or less what we have now, where we have a pretty stable outlook, NEPI is well rated. It's at a pretty good price. In fact, it's trading more or less at its NAV. Then we can see what we can afford to offer shareholders. But I think if -- let's just say, for example, NEPI was sitting at ZAR 80, we would probably rather retain it than try and send it out the door because it becomes too expensive in terms of the earnings that we might give away. So -- but I think we would like to offer certainly a decent premium and a buffer to our shareholders on any scrip alternative in the form of NEPI shares.

Just 2 questions. Firstly, what proportion of your energy needs are currently being covered by solar on the retail portfolio? And then secondly, what are the margins you're currently being charged for new facilities right now [indiscernible].

Retail 14%. So our penetration rate is 14%, meaning that 14% of what we use from energy we get from our solar plants that will grow as we expand into the -- as we expand the plants and do more of the retail assets.

Yes. And then margins on new facility is 150 in the 3 year to about 170 in the 5-year.

And that margin is increasing?

So it has. It definitely has come off in the last couple of years. The 5-year margin, if we go back sort of 3.5 years ago, 225. So that gives you a sense of the reduction.

Just one comment on the solar. I mean, this is just a solar income for the year at 45.4% last year, 23.9%. Last year there was a lot of load shedding in the second half of the financial year, which lowered that the second half of this financial year, there was less load shedding, which means we get more solar income. It's a little bit counterintuitive, but that's just how it works because it's good time. This year, we spent ZAR 185 million on solar in terms of CapEx. That gets us a return of about 21% on an IRR basis. And actually, the solar guys because they're engineers and they like to do sums, they look back 6 years. And actually, what we've done over the last 6 years gives us just over 20% return and they're forecasting about that for the coming years. So I think it's pretty reliable figures. But conservative because what we've modeled in terms of tariff increases only 4.5% and as we've seen, the tariff increases have been a lot more than that. So the solar CapEx, I mean, it's tax deductible, which is important in our world, and it gives us a really, really good return.

We'll go to the webcast, and we can come back to the floor if it some further questions. Next question from Nazeem from Investec. A question for you, Ian. What is the tax assumption included in the FY '25 guidance given?

It's about ZAR 60 million to ZAR 80 million on top of the ZAR 175 million. I have mentioned that it's very difficult to forecast the tax because we've got a number of moving parts. Some of them are currency related and so on, but it's about ZAR 60 million to ZAR 80 million.

You've answered some of the questions around NEPI and [ Preeti ] just have a follow-up question from SBG. What's your long-term strategy with NEPI, using it for multiple avenues of liquidity, the dividend and the collar what is the lowest level you're willing to reduce your shareholder to?

I think it's quite dynamic. It's a great investment over the long-term, does it make sense for us to use it judiciously to try and decrease the gearing on the rand portfolio, probably. I think that's what we've certainly indicated we wanted to see what the scrip dividend was like. So I think that's probably the longer-term. But I think as we've said, at this price, given our outlook on NEPI and the fact that we still think it's a great investment. We would rather that those shares land up in the hands of our shareholders than us making that sell decision on their behalf. And I think when you look at the scheme of arrangement, and I think NEPI was at ZAR 125 when we did that, that's turned out to be a pretty -- quite a wise move in terms of generating total shareholder returns. So I think it's probably better for us to have more than 10% just in terms of the tax situation, then we can get -- there's no withholding tax on the dividends that we receive. So that is -- that's probably the next most important threshold.

A question from Fayaz from Sanlam. Were you up for scrip dividend from NEPI on your current shareholding?

We haven't made that decision yet. So we'll need to see what the economics look like when they announce them.

Just a follow-up question on the tax from Anton at Coronation. How sustainable is the low tax charge you just report to?

No, I think it is pretty sustainable. When you break up the earnings in that simplified distributable earnings statement and you look at the NEPI dividend that we received, which is, at this stage, either tax exempt or a return of capital. And we've still got a lot of sort of runway on the capital leg of that holding, given its original it scheme price, which was around ZAR 176 I think it's now floated down to about ZAR 155 million. In the SA portfolio, the developments give us a massive shield in the Section 13quin. And those have 20 years to run so there are a number of moving parts, obviously, given the size of the portfolio and the various companies and so on. But it's pretty sustainable provided, nothing changes in the act.

[indiscernible] Investments. He just asked what's the actual ROE on SA logistics portfolio? And your target ROE this portfolio, once all the projects have been completed?

I mean I guess we showed the return on assets, 12%. We target north of 15% in SA. So that's kind of the minimum. We're hoping to get 16% plus obviously, but that's what we target on an asset level return. We don't really look at the return on our equity. We just kind of -- we manage the balance sheet risk, but we're more focused on what are the assets giving us as opposed to an ROE on an asset-by-asset level.

Mo from [indiscernible]. He says congrats on solid results. Now the structure is simplified, are you looking to convert back to a REIT?

No, not at the moment. I think that sort of what are the questions we need to ask ourselves, are we paying a lot of tax as Ian just mentioned, it's really not a material amount of tax. The REIT structure is very constraining in terms of, for example, offering this NEPI alternative. I think that will be very difficult under in a REIT structure. So I think at the moment, there's really no compelling reason for us to convert back to a REIT. You can't take the Section 13quin. So as long as we can get that tax down to an immaterial amount, the non-REIT or the real estate investment company structure gives you a lot more flexibility in terms of what you can do unlocking value, unbundling or offering alternative shares that we hold, for example, NEPI as a scrip dividend. So for the time being, it still makes a lot of sense for us to not be a REIT sorry, but to maintain a dividend payout ratio as we have done, not dissimilar to our associate NEPI, who's not a REIT, but they have a firm 90% payout policy every 6 months.

Question from Anton at Coronation. Maybe, you can start. You just asked about the like-for-like NOI growth in the retail portfolio. This is pretty strong and relative to 1H '24 in specific. Can you give some details on that?

I think a lot of it has got to do with the timing of when our expenses hit us. A lot of the expenses, the large expenses hit us in the first half of the year. Notably, I could think of insurance some of the once-off R&M that we did last year in the first half, we had a lot of Air Con R&Ms that we did in that period. And also, I think some of the lettings that we did were on the latter part of the first half. So the second half has really benefited from a more stable rental income.

Johan Base. Just another question on tax. What's your tax treatment on profits on property sales? Could you exhaust your assessed tax losses?

Well, firstly, that assumes that we've got assessed losses in those companies, which is not necessarily the case. So obviously, there's CGT applicable. But capital gain tax applies to company, and that's the net position of various gains or losses of sales in that entity. So unfortunately or fortunately from a tax perspective, many of the sales that we've done, for instance, in the offices are values below their base cost. So we've got embedded historic capital losses rolled forward from the history pre sort of whilst the REIT things that we used to have, cross-currency interest rate swaps and so on, post-REIT data some real losses. So it hasn't -- so CGT is not yet an issue for us. As I mentioned on the NEPI position, which probably gives rise to the greatest part of our deferred tax asset being the difference between about ZAR 155 and the current spot price is the embedded CGT loss that would be there for us to use. So CGT is not yet a problem for us.

Johan has another question just around NEPI and executive incentives. The fact that this is sort of uncontrollable as is taken into consideration.

I can answer that. It is. So some years ago, in fact, we stripped a NEPI return out of the STR portion of the directors or the executive REM and it stays in though on the longer-term CSP on the basis that it's still a capital allocation decision. So it has been removed from the STI components of REM.

Messi from Stanlib. Just a question on our development yields and logistics. Have we seen pressure on these, given commodity prices and construction costs?

A little historically, but I think we are now certainly with low vacancy and generally low supply in the market, able to stand quite firm on our asking rental. So I think we have seen cost increases, but as you've seen, 8.6% for the year. So we've been able to push some of that in to the tenant in the form of a higher rental. So I think we're probably looking at yields that we were looking at 2 or 3 years ago, but with higher cost and higher rental.

Thanks, Steve. Mahir sent through a plethora of questions for his model, and you've answered most of them. There's 2 that maybe you could touch on. Development costs, either rand per square meter or total for the developments on that slide, we show Slide 35, the pipeline. just to give a sense of our sort of capital commitments.

Yes, it's about 12,000 to 16,000. That's kind of the range. Yes.

We do also disclose our capital commitments. So it's in the announcement if we have a look at the sort of funding and liquidity component. There's committed capital approved and committed capital contracted and approved, if that helps. Perhaps we could take it offline and deal with these questions directly.

Here's the last question. What have we assumed or included in our guidance with respect to cash versus NEPI election?

Sorry, Ryan, can you repeat that?

What have we included in our guidance with respect to cash or NEPI election?

So our guidance at this stage assumes that it's a fully settled cash dividend. But again, coming back to the earlier question, the pricing forward yield that we distribute NEPI at even if it was 100% in NEPIs, it would be earnings neutral. Given its implied yield versus the cost of funding at which the cash that's retained that doesn't go out the door and earns.

And last question from Francois at Anchor. It's a question around administrative and share-based expenses, which were lower in the second half of the year. He's asking whether you can assume 2H run rate is a better base than the 1H level, just the base forecast on.

I think you need to look at it for the whole year. I think splitting those type of costs by a 6-month period is probably going to give you a skewed answer side. So I suggest you looks at that for the whole year and uses that to forecast the whole of next year.

Here's question on CE. Can you indicate how much of the CE operations contribute to administrative expenses for the group?

I don't think we've got that number, but it's 10% our assets is probably a little bit more than 10% of our total cost, but I don't know that number. It's all included in the same head office cost line.

There's no further questions from the webcast. I don't know if there's any further up from the room?

Well, thanks, everyone. Please join us for coffee and tea and snacks afterwards. And we'll also be around if anyone wants to ask anything or ask any questions, but thanks very much for joining us. We hope to see you soon.