Growthpoint Properties Limited (GRT) Earnings Call Transcript & Summary

All right. Good morning, everybody, and welcome to the interim results presentation for Growthpoint Properties for the 6 months ended December 31, 2020. I'm happy to announce that we've got pretty much the full Growthpoint ExCo here in this meeting room here today. So we brought in all the reinforcements that we need. If there are any difficult questions, hopefully, we'll be able to get the appropriate answers for you. Just on that score regarding questions, I know there's a facility to send questions, and we will deal with questions after the presentation, if that's okay. We'll go through the presentation and then deal with questions after. Just to advise as well that here in Johannesburg and in the Sandton area in particular, we are experiencing load shedding. We are meant to be load shed here at the Sandton office. We do have, obviously, backup generators, et cetera, and we hope that we won't have any interruptions. But should there be any interruptions, please be patient with us. We would probably need a couple of minutes to get everything back up and running. And -- but yes, hopefully, we don't experience anything untoward. And with that, I'll get going onto the agenda. I will deal with the first 4 items on the agenda, the strategy update, group salient features, some insight into the financial results, touch on the international investments. And then Estienne will do sections 5, 6 and 7, and then I'll do the conclusion again at the end. And as I said, if we can keep questions till the end, please. Right. Just updating on strategy. I think fair to say that the last 6 months, we've been very busy focusing largely on the liquidity and liquidity management, strengthening the balance sheet and basically trying to put us in a position whereby we can continue to operate quasi normally and still pursue our strategic initiatives, all of which we still believe are relevant in this current environment. We did raise ZAR 4.3 billion worth of equity in November last year, at ZAR 12 a share, which was 2.7x oversubscribed. We had about a 43% take up on the DRIP that we offered our shareholders also in November last year, which raised ZAR 577 million. We did reduce the payout ratio to 80% for the year, effectively thereby retaining ZAR 827 million worth of cash after paying tax of ZAR 154 million. And then in relation to this dividend that we've just declared now, we will again be retaining ZAR 499 million, applying a similar payout ratio of 80%. Now if you aggregate all of those 4 items, you get to a number of about ZAR 6.2 billion of liquidity management that we have undertaken in the last 6 months. And certainly, we believe that, that has enabled us to position the group in a very stable position, very defensive position, and able, hopefully, to withstand whatever further shocks might still be coming our way in terms of any impact of the COVID-19 pandemic and possibly economic fallout resulting from that. Touching on the internationalization strategy. We continue to focus on refining our approach to international investments. Clearly, we have GOZ and Globalworth and Capital & Regional. And we are attempting to refine our approach to those investments. Perhaps we are too exposed to too many different geographies. And it's quite a lot of work being done from a strategic perspective to refine our approach to international investment. Currently, about 40% of our property assets by book value are offshore. And just over 1/4 of our earnings before interest and tax is earned from offshore. In relation to the South African portfolio and optimizing and streamlining thereof, clearly, the domestic market remains very challenging from a liquidity perspective, but we remain committed to selling our noncore assets. And in that regard, we were able to sell just under ZAR 500 million worth of assets. That were 5 properties. And at balance sheet date, we had another 2 properties valued at ZAR 55 million held for sale. Since adopting the strategy of streamlining the SA portfolio in 2017, we have cumulatively sold ZAR 7.5 billion worth of properties. In relation to the strategy to generate new revenue streams, in the first instance on the trading and development side, we've had a close look at that particular part of our business. And we do believe that the significant expertise that we have built up in that business does create a competitive advantage for us, and it's something that we continue to deem appropriate for our business. We have suspended all speculative development for now. And in the period, we managed to earn ZAR 128 million worth of third-party trading profits, development fees as well as rental income from trading and development assets. In relation to the funds management initiatives, we have circa ZAR 12 billion worth of property assets under management now in the funds that we manage. We believe that this capital-light strategy is particularly attractive and particularly relevant in the current market environment. We earned just over ZAR 16 million worth of asset management fees from the Manco from the Healthcare Fund. And we earned ZAR 62.2 million worth of distribution from our co-investment stake in the Growthpoint Healthcare Property Fund. We earned a maiden dividend of ZAR 3.7 million from our investment in Lango. And our Lango is the changed name of the former Growthpoint Investec Africa Property Fund. It's now been rebranded and renamed Lango, which means gateway in Swahili, and sort of highlights the purpose of the fund, which offers effectively investment into gateway cities in Africa. And we do expect to earn our first maiden distribution from the Lango Manco before the end of June 2021. And as we sit here at the moment, some of our colleagues are in the process of raising capital for a third fund, which we're launching, which is focusing on investment into purpose-built student residential accommodation. And we hope to update you, obviously, at the year-end results with the outcome of the -- and progress in relation to launching this fund. Looking at some of the salient features for the period under review. Revenue increased by 12.5% from HY '20 to ZAR 6.6 billion. It seems a little bit out of line, I guess, if you look at the rest of the performance, but it clearly is a highlight of this particular set of results, which is the inclusion of Capital & Regional for a full 6-month period, Capital & Regional being the U.K. vehicle that we invested in. And the comparable period only had about 2 weeks' worth of income statement effect in the comparable number. So you're talking 6 months versus 2 weeks. And so a big chunk of that increase in revenue is driven by that situation. We managed to earn ZAR 2.5 billion worth of distributable income for the period, which is a 21.6% decrease on the comparable period. We earned ZAR 0.731 of distributable income on a per share basis, which is a 31% decrease from HY '20. The reason for the higher decrease on a per share level clearly attributed to the equity raise that we did in November. So we've got more shares between the equity raise and the DRIP. We issued circa 408 million new shares at -- during the period, November, December. Group property assets decreased in value by about 5.8% to ZAR 157 billion. Our group LTV is at 40.7% and that has decreased from 43.9%. That movement at the consolidated group LTV is directly attributed to the ZAR 6 billion-odd worth of liquidity management that I referred to earlier on in the presentation. And anecdotally, had we not raised the equity or the DRIP or cut back on the dividend payout ratio, that 43.9% would probably have been up by about 1% or so. So as management, we're certainly feeling a lot more comfortable with group LTV sitting at the 40.7% compared to closer to 45%, where it would have been had we not undertaken those interventions. Net asset value per share decreased by 7.6% from FY '20 to ZAR 21.32. On the financial results, what we try and do on this particular slide is give you a bit of a sense of what drove the result. As mentioned before, distributable income is down 21.6%. That's a total downward adjustment or movement of ZAR 688 million. And on this slide, we try and give you a sense of where the underperformance manifested itself. The South African portfolio or the South African business had a net property income line, and with the impact of a few minor moves in the, let's say, interest sort of income was down ZAR 247 million, very significantly impacted by the ZAR 161 million worth of discounts, deferments, bad debts and bad debt expenses and write-offs through the income statements in relation to provisions for bad debts, et cetera. So $247 million from the South African business. South African finance costs is about ZAR 100 million move, and that is directly linked to, and significantly impacted by the fact that we had made the investment into Capital & Regional in December 2019, and borrowed ZAR 3.5 billion to make that investment. So the higher interest costs almost directly attributable to that investment. Our income from the V&A decreased by ZAR 176 million. V&A Waterfront very significantly impacted by COVID-19 and the various lockdown regimes. Obviously, linked to the lack of international tourism and business travel to Cape Town. And so pretty -- almost 50% less contribution from the Waterfront compared to the prior comparable period. Growthpoint Australia, our dividend from Growthpoint Australia was about ZAR 47 million less. That's combined impact of a lower dividend per share, where we receive AUD 0.10 per share in this period compared to AUD 0.118 in the previous period. And it was impacted by the dividend withholding tax as well, where this particular period we had 11% withholding and the comparable period was 7%. The dividend from Globalworth is down ZAR 148 million compared to the comparable period. That's -- the dividend per share was EUR 0.15 in this period compared to EUR 0.30 in the prior period. Capital & Regional, we had received ZAR 87 million of dividend in the HY '20 period. And we did not receive any dividend in this period, so that's about ZAR 87 million adjustment. Two small changes with the Healthcare Fund and Lango, ZAR 7 million and ZAR 4 million. And then right at the bottom, we received about ZAR 120 million worth of trading and development income, net of some expenses. And that's the balancing figure. So whilst we try to reconcile for you the large movements in rand terms here, on the next slide, we try and do that for you in percentage terms, where the only difference is that we've allocated the bulk, I guess, of the interest costs to the Capital & Regional investment, the increased rand interest cost to the Capital & Regional. So the 21.6% downward adjust -- or downward move in distributable income, 7-odd percent was South Africa, 5.3% Capital & Regional, 5.1% V&A Waterfront, 4.8% Globalworth, GOZ was just under 3% and then the Lango, Growthpoint Healthcare and the Funds Management quite small, and then trading and development was obviously a positive move by 3.8%. So that should give you a pretty good sense of what drove this particular set of results, and where we suffered decreases in contribution from our investments and also, at a high level, what the South African business did. Moving on to the distributable income and calculation of distributable income in the SA REIT FFO, quite a busy little income statement. I'm not going to go through every single line. I think you should have got a pretty good sense from the previous 2 slides of what drove the numbers. But at a very high level, as indicated before, property income up by 12.5%. South Africa was down. GOZ was up 11.5%, mainly through currency movement. GOZ' actual dollar revenues were slightly down, just about 2% down in Aussie dollars. Big impact from Capital & Regional, as you can see, the Healthcare Fund is pretty stable and then trading and development, ZAR 132 million of profit compared to ZAR 8 million in the comparable period. On the expenses side, South Africa, up 7%. GOZ, up 27%. Again, that's almost exclusively due to currency movement. The absolute amount of dollars expense or dollar expenses in Aussie has remained pretty stable. Capital & Regional, big impact, the 6-month versus 2-month -- 2-week play there. Growthpoint Healthcare, again, not much to talk about and trading and development quite small. So that leaves our net property income number on a consolidated basis, up 3% at ZAR 4.6 billion compared to the ZAR 4.489 billion in the comparable period. Our other operating expenses was up 12%, again, significantly impacted by Capital & Regional. We were able to manage South African costs quite nicely and brought that down by 9.3%, and GOZ as well, considering the previous comments on currency movement and the impact that has had on the GOZ numbers, the GOZ other expenses coming down quite nicely. On to the next slide, at the top there that where we're at is sort of net property income after operating expenses, up 2.4%. Our finance costs: South Africa, up 8.6%; GOZ, again, up 21%, that's driven by the currency once more; and Cap & Reg, the inclusion for 6 months. On the finance and other income line is where you could see the impact, as I mentioned on those earlier slides. V&A Waterfront down 50% in terms of the contributions we received from them. Investment in Globalworth, down 44% from ZAR 334 million to ZAR 186 million. Capital & Regional down. Other finance income also down marginally or 37%, but the numbers are much smaller. And then the funds management income from Growthpoint Healthcare net down from ZAR 18 million to ZAR 16 million. We then have the line for the adjustment of the noncontrolling interest in the subsidiaries, both GOZ and Cap & Reg, some foreign exchange profits, antecedent dividends and tax. And that then leaves us with our distributable income number of ZAR 2.495 billion, 21.6% down on the ZAR 3.183 billion from the comparable period. The bottom of that slide, we try to -- or we make the -- what we call company-specific adjustments in line with the current guidelines on SA REIT FFO and the calculation thereof. So I'm not going to go to individual adjustments there, but the bottom line of that is the SA REIT FFO decreased by 27%. And on a per share basis, decreased by 36.5%. And right at the bottom of the slide, our distributable income per share, ZAR 0.731 compared to the ZAR 1.06 on the comparable period. Dividend per share at the 80% payout ratio, ZAR 0.585 compared to the ZAR 1.06 in the comparable period, which was obviously still based of 100% payout ratio, and therefore, the decline 44.8%. Briefly touching on the balance sheet. You can see the South African portfolio, total property portfolio value dropped by 5.6%. The South African portfolio decreased by 3.2% to just over ZAR 71 billion. Write-downs in the South African valuations amounted to about 3% -- just short of 3.5%, ZAR 2.4-odd billion. In GOZ' instance, the movement in GOZ is again attributable to the currency movements, where, for balance sheet date, we actually had a stronger rand compared to the comparable period. And whilst GOZ' property valuations were actually written up by -- I think it was about 3.5% on a like-for-like basis, when converting to rands, it's down by 3.9%. Capital & Regional down 23%, pretty much driven by the actual write-down of the Capital & Regional property portfolio by 27.5%. Cap & Reg announced their results yesterday. So -- sorry, yesterday, yes, yesterday. So -- no, Tuesday, I beg your pardon. So yes, obviously, again, the rand impact there, but in absolute pound terms, it was down by 27.5%. Equity investments, investment in the Waterfront down by 6.1% to ZAR 6.7 billion. Waterfront properties have also been written down over the last 2 reporting periods. Our investment in Globalworth, down 10.4%. Again, there's currency -- predominantly currency movement at play there, but Globalworth also wrote down their property values by something like EUR 116 million, which, percentage-wise, I think, I stand to be corrected, was 2% or 3%. Other investments, ZAR 59 million. We then have our listed investments, which essentially is comprised of the investment that GOZ has in ADI, the Australian-listed APN Industrial REIT, 15% investment there. And at December 31, the value of that was ZAR 1.021 billion. Our unlisted investments valued at ZAR 825 million, and that compares to the ZAR 922 million at FY '20. And then on the debt side, our nominal borrowings have come down from almost ZAR 70 billion at FY '20 to ZAR 61.8 billion. There's a few factors at play there, predominantly the impact of the equity raise. So if you look at the South African debt, it's gone down from ZAR 43.3 billion to ZAR 37.8 billion. That is largely driven by the -- by about ZAR 4.4 billion worth of cash that we paid to the banks in reduction of debt on the one hand, and there's about a ZAR 1.2 billion movement in there, which is a currency movement on our euro bond and the -- again, the impact of the rand strengthening at the year-end date. GOZ debt down from ZAR 17 billion to ZAR 15 billion. That's almost entirely currency. And Capital & Regional, similarly, almost entirely currency. So leave us at the bottom of that page with shareholder interest or NAV of ZAR 68.3 billion compared to the ZAR 67.8 billion at the previous year-end reporting date, which was June 2020. Quickly take you through the various international investments, conscious of time. I need to leave Estienne a bit of time as well, but he did say to me that he'd appreciate if he didn't have too much time to talk about the South African operations because of the challenges we're facing here. But I'll try and work through these. Our investment in GOZ is still 62.2% of the shares that we own. The cost of that is ZAR 9.6 billion, and the market value is about ZAR 18.9 billion. I mentioned before, the dividend was down a little bit. GOZ remains a core investment for us. And Australia remains a core investment market for us. We've been operating there. We've been investing there now for -- since 2009. And we do think that, that particular business and the geography that it's in does hold good prospects, continues to offer good prospects. Balance sheet is very strong. Gearing is below 30%. Significant liquidity, over $400 million worth of available facilities. NAV increased by 4.7% to $3.82. So GOZ is trading at quite a big discount at the moment. Share price, I think, closed today about $3.21. So there's about a 15%, 18-odd percent discount to NAV. Net finance costs were down 4.8%. 66% of the debt is fixed for 4.7 years at an average interest rate of 3.3%. We have a very defensive, well-positioned quality portfolio in Australia. Occupancy is at 95%. Subsequent to year-end, it's slightly higher at 97%. And in the period, we signed long-term leases in certain instances, 10 -- one particular property, 10-year lease and another 5-year lease as well. Weighted average rent review 3.2%. The weighted average lease expiry is 6.2 years. Secured Bunnings as I was -- sorry, Bunnings, one of -- certainly Australia's largest, what do you call them, homeware, it's almost like a homeware DIY-type company. Their National head office is now at Botanicca 3 building in Melbourne. On the disposal and development side, pretty quiet, $16 million on development and CapEx and $46 million of commitments. We did sell a building, one of the old Woolworths facilities for $50 million. Interesting that an empty warehouse can fetch $50 million in Melbourne. We also agreed the sale of 2 -- the Quad properties, 2 properties in Sydney Olympic Park, outside Sydney towards the West for $66 million, which happened post the year-end. And I think this is just some bragging rights for the Aussie management. 18.6% IRR on the Botanicca 3 development. That was our first greenfields development that we undertook in Australia and notwithstanding COVID in a difficult letting market, a particularly good outcome on that particular development. COVID-19 impact in Australia is very limited. We had 97% of the tenant base is weighted to large corporates and government, and we don't really have any retail exposure in Aussie. 98% rent collections through the period. And the earnings -- the sort of abatements and rent concessions that we had to give was only point -- not even $0.5 million. Touching on Globalworth. We own 29.3%, cost of ZAR 8.4 billion and the market value is ZAR 8.3 billion. So the share price, obviously, down quite a bit from where we invested, but the rand movement has helped us. So the current rand value is pretty similar to what we paid for it. Significant dilution in the dividend, EUR 0.15 compared to EUR 0.30. That financial performance of Globalworth is quite heavily impacted by the fact that it's sitting with over EUR 520 million of cash. Now you'll all be familiar with the fact that cash, in euros, the banks don't pay you interest, you pay the bank probably about 0.5% to keep your euros for you. And the opportunity cost of having that money invested in assets yielding 6% or 7% is clearly driving quite a big drag or creating quite a big drag on the FFO and earnings of Globalworth. The balance sheet is very strong. The company issued its first green bond, raising EUR 400 million at a coupon of 2.95%, and it was a 6-year bond, which was very well subscribed, over 2x oversubscribed. The proceeds of that bond, 40% or some of it -- rather EUR 227 million of it was used to buy back 40% of Globalworth's June 2020 Eurobond at a premium of just over 2%. And the remaining EUR 323 million of that Euro '22 bond matures in June 2022. Again, the difference, the EUR 400 million minus the EUR 227 million is about EUR 170 million of additional cash from that liability management exercise, which the company is currently sitting on, and that's included in that EUR 527 million of cash at December 31. In addition to the cash, the company has EUR 215 million of undrawn revolving credit facilities. It remains conservatively geared. LTV net is about 36-odd percent. The portfolio is still in good health. It's valued at about EUR 3 billion, 64 properties, 33 (sic) [ 38 ] of them in Poland and 26 in Romania. The Polish assets valued at about EUR 1.6 billion and the Romania at EUR 1.4 billion. Occupancy is just about short of 91%. It has increased a bit and predominantly driven by the lower occupancies on some of the newer developments that were completed during the period, where leasing up during COVID has been a bit more challenging than originally anticipated. On the development side, 3 quality properties of about 62,000 square meters was completed in the period July to December. 18,900 A grade office building called Podium Park II in Poland. And then 2 high-quality industrial properties, 1 in Bucharest and 1 in Constanta, both of these are in Romania, about 43,000 squares. At the moment, there's only 1 asset under construction, about EUR 42 million asset -- office asset, about 29,000 squares. And on completion -- hoping to complete that in -- before the 30th of June. COVID impact, again, pretty limited in Poland and Romania. Numerous measures adopted by the authorities in those countries. The portfolio is very defensive and almost a 99% rental collection rate during the period. Once again, limited exposure to retail, only 3 assets have got exposure to retail. These are not predominantly retail assets, they're mixed use, and these are in the process of being repositioned and making them more exposed to office rather than the retail. Building CapEx is focused pretty much only on essential elements such as health, safety and maintenance. And then the new investment activity for the period was pretty much suspended. Touching on Capital & Regional quickly then. We have a 52% interest in Cap & Reg. Our cost was ZAR 2.9 billion and market value at 31 December is ZAR 819 million. Obviously, a significant decrease in the share price as well as NAV of the company off the back of particularly challenging times in the U.K., COVID-19 was severely impacted our investment case. I think we were quite prepared to deal with Brexit, and we were quite prepared to deal with the challenges that retail is generally facing in the U.K. from online and various structural challenges to retail. But the COVID-19 impact has been much more severe and wasn't clearly foreseen by ourselves at the time of making the investment. As a particularly strong management team that we fully support, and we continue to support their strategy. And sadly, no dividend for us in this particular period compared to the 11p per share that we got for the half year 2020 period. The COVID 19 impact, I mean, has been, as I mentioned, very severe. All aspects of the company's operations have been materially impacted by government's measures to manage the pandemic, putting significant pressure on income, valuations and leverage. The shopping centers all remained open. But only about 30% of retailers were able to trade throughout the year and are currently trading. 98% of the stores were, in fact, open and trading by mid-December, or in mid-December, before the further lockdown restrictions were announced in the U.K. 80% of rent was collected during the period, and CapEx projects have been limited to strategic projects, those with short-term income impact. Company is still impacted by CVAs and administration during the period. Over 17 companies were either went into CVA or administration. Net property income impact of that was GBP 4.4 million. And it's mainly impacted the department stores in the fashion category within the centers. We have 3 Debenhams stores that remain in occupation, but they will be vacating imminently. And all -- we do have offers on all 3 of those stores with terms agreed on 2 of them. The portfolio comprises 7 dominant, in-town shopping centers. These are well positioned within their communities and act as community centers. And the focus is -- a very high proportion of the offering is towards nondiscretionary retail. Only 19% of contracted rent is from fashion operators. The net rental income was down GBP 15 million due to the pandemic and the associated rent collection shortfalls. We saw a dramatic 27.5% decline in portfolio value in the 12 months from December '19 to December '20. 27.5% write-down in the property values. The occupancies are at 92% based on expected rental value. And we did exchange conditional contracts with a JV partner for -- and as well as first stage planning approval was obtained for a 500 residential unit -- residential development at Walthamstow. And then in advance -- we have very advanced discussions with the -- to let the entire Debenhams store, almost 10,000 square meters at Ilford to an international retailer. And we have agreed terms with a national health service for a health care facility in the Ilford center as well. 63 renewals and new leases were signed in the period at levels above previous passing rentals. Balance sheet. High cash reserves, we've got GBP 80 million of cash on the balance sheet, which is equivalent to more than a year's gross rental. Net LTVs at 65%. That has deteriorated from the 46% of December '19 post these very aggressive property write-downs. Average cost of debt is 3.4% and the maturity -- debt maturity is 4.4 years. The earliest loan maturity is February 2023. And we have signed waivers for all current income covenants. Just the last word on Cap & Reg. It's like a story. It's a -- the operational side of things don't sort of almost talk to what you see on the balance sheet. So whilst operationally, the business is actually doing quite well, the balance sheet clearly remains the challenge. I'll hand over to Estienne now to give you an update on the South African business.

Thanks, Norbert. Hello, everybody. So the contraction in the South African economy last year is well reflected in these results. And certainly, if you look at the salient features, it's evident that property fundamentals across all 3 of the sectors that we operate in remain very difficult. In the time, we did manage to recover ZAR 125 million or 68% of all the deferrals granted in the previous period and in the current period. And we saw collection rates move up to 97%. So a little bit -- significantly better than through the lockdown period in April and March. We managed to let 633,000 square meters of space in a very difficult environment. And vacancies did increase to 10.3% in this time. Unfortunately, due to the surplus supply of space in pretty much all 3 sectors, renewal growth rate was under pressure, and we saw that deteriorate to just under 14%. Our arrears improved marginally. And we saw that number reduced to ZAR 494 million, which includes the deferrals, and we saw the bad debts on the income statement that write-off was ZAR 67.2 million. Renewal success rate improved marginally to 68%. There is a huge amount of focus in our business on retaining our clients in this environment. But the dynamic in this retention process is quite difficult, and I'll touch on that when we get to the 3 sectors. With all the work that was done on the balance sheet, we managed to reduce the LTV of the South African balance sheet to 35.5%. And that was probably 5% less than it would have been if we didn't raise the capital that we did through the DRIP and the accelerated book build and the retention of distributions. The interest cover ratio is conservative at 3.8x, and we managed to contain our expenses at 32% ratio, which includes the group overhead. Sales, we have been slogging away in a difficult market, and we managed to sell ZAR 497 million worth of property. That effectively financed the development and CapEx spend in the period. We've got a further commitment in terms of development CapEx of roughly ZAR 484 million. And we only made 1 strategic investment in this time, which was part of a larger letting transaction at Woodlands. The property valuations remained under pressure, and we saw valuations reduced by a further 3.6% on the South African portfolio. And if you go and look at the full 12-month or a 12-month period, that has translated into a 13.3% reduction in valuations over this time. So if you recall, we indicated earlier about maybe a year ago that we believe that valuations probably would reduce between 10% to 20% over a 2-year period. And certainly, those reductions have come through a little bit quicker, given some of the fundamentals playing out in the economy. If we look at the specific impact of COVID, certainly this slide is accountant's delight. But in terms of the specific impact, we have set out the discounts granted, and we have done so from the start of COVID. So the total discounts granted from the start of COVID was ZAR 368 million, of which ZAR 91 million was in this 6 months. On the deferral side, we have granted ZAR 184 million of deferrals, of which we have managed to collect ZAR 125 million. ZAR 25 million of those deferrals was in this period, with ZAR 108 million being collected in the period. Obviously, there's expenses, additional expenses incurred to ensure a safe environment for our tenants. And in aggregate, that's added another ZAR 10 million expense to the income statement. Then we've obviously written off some debts. We've made additional provisions. And if you aggregate all of those, the total impact from the start of COVID is ZAR 681 million and ZAR 161 million in this current period. Total arrears in the period is ZAR 994 million (sic) [ ZAR 494 million ], as earlier mentioned. The split between the deferrals and normal arrears was ZAR 435 million and ZAR 59 million. What we've also provided for you here is just a movement in the provision, so that everybody can just understand how much we have provided and actually how much we have written off. So we have a ZAR 249 million provision currently against our arrears, of which ZAR 180 million is against the normal arrears, ZAR 14 million is against the deferrals and then the estimated credit loss provision is ZAR 55 million. We have written off ZAR 71 million in the current period. And if we take that off the provision, it gives you a net ZAR 67 million. And in prior period, that number was ZAR 236 million. So I think the trend is generally positive, but it is really tough out there. And the level of liquidations and business rescues that we have seen over the past, I would say, 8 to 9 months, has been unprecedented in all 3 sectors, to be honest. Vacancies in retail have ticked up slightly. If we exclude the kind of core vacancies in some offices on some of the retail facilities, that number is around the 4.8% level. Some of the vacancies are pretty stubborn in some of our noncore properties. So we are obviously trying to dispose of some of these noncore properties, but liquidity in the market remains quite difficult. The renewals have improved. The success rate has improved quite a bit, but it has come at the expense of a lower rental level. So negative reversions certainly are the order of the day. And we're also experiencing continued pressure on the escalation rates on new transactions and on renewals. Arrears have remained reasonably stable at ZAR 219 million. As I mentioned earlier, it's like every day, we try and have a look first thing in the morning, which new business rescues come through the door, or which company has gone into liquidation. But there has been, as you can see from the previous COVID-related slide, we have tried to manage certainly our SMMEs in these shopping centers and even some of the larger tenants. And if we look at the Edcon nightmare, if you'd like, that has been totally written off and is effectively out of the books now. We do have Ster Kinekor, which we have a 21,000 square meter footprint, which is currently in business rescue. There is ZAR 11.2 million that has been fully provided for. And then further, we've also got arrears in some of our shopping centers, which are slightly overstated at Watercrest and Hillcrest, where those arrears are subject to insurance claim. And hopefully, we'll be able to resolve those pretty soon. The like-for-like income level has also reduced to negative 2.2% (sic) [ 2.1% ]. Obviously, the impact there of relief provided, the increase in bad debts that we have provided for, ZAR 37 million. Leases that have been restructured to ensure sustainable rentals for our clients going forward and the increased vacancies have all had an impact here. And clearly, in this environment, there's been much less income from parking and advertising space. We've, in fact, brought in a specific resource now to dedicate to looking to try and bring in additional income in some of these nonrental sort of areas. And we're hoping to see some of the benefit of that going forward. Trading density is clearly impacted by lockdown. We've seen that reduced by 3.4%. And certainly, December hurt us in the coastal areas, where we're expecting the benefit of the holiday trade to come through. So the smaller centers seem to have performed slightly better than our larger centers. And I think, hopefully, as the country moves to better vaccination that, that will improve over time. We have seen quite interesting dynamic in the online retail. Clearly, that trend has increased somewhat. It still remains relatively small in the scheme of things when it comes to trade. But what we have seen is an area of last mile, so the OneCart of the world, the personal shopper kind of online service where that trade actually remains within our shopping center has increased significantly. And certainly through lockdown, those 1-hour, 2-hour delivery services have seen incredible increase. And I think that, that will be an area which will grow possibly quicker than some of the other online services, given the fact that the distribution is effectively off the current distribution platforms for most of the retailers. So we have a close relationship and investment in OneCart, and we have been obviously working together with them to roll them out to several of our centers. Retailer performance has been reasonably robust. And certainly, up until December, we actually saw trade improving quite strongly. And then clearly, that the lockdown in December didn't serve us very well at all. But we have seen certain categories outperform and home decor and electronics have been strong in this period as well as value fashion. Valuations, we've written the property is down in the retail portfolio by 3.2%, which equated to ZAR 828 million. And the drivers of that reduction was effectively the assumptions on vacancies that clearly, the periods we're assuming are slightly longer if something goes vacant. And then the market growth rates on rentals have also been turned down in these valuations. Office, clearly, the 18% vacancy number is quite evident of a very, very difficult market. I would argue that is the highest vacancy rate we have ever seen in our careers in this business. And the sad part is that it's actually spread pretty much across the whole portfolio. Specifically, Sandton has a very high rate of vacancy given the high density of professional firms and financial firms, which have certainly moved to work from home specifically, and we've also seen quite a lot of distress in some of the smaller clients in these areas. We do have multiple initiatives that we are undertaking to try and bring that number down. And we have brought in additional letting resource. We are looking at incentive programs for new clients as well as our existing ones. And a lot of focus is on the renewal success rate. Now here and there, we have had a couple of that specific rate of 55.9%, which is marginally up, was particularly negatively impacted by 1 or 2 large clients that have left our portfolio. But at the same time, we have managed to do quite good letting on some of those transactions and specifically to be mentioned is the ENS building in Cape Town where we've got the Department of Education moving in at the moment. The renewal success rate speaks very closely to the renewal growth rate in rentals. And as you can see, at 14.3%, that is particularly negative. Escalation rates also remain a big negotiating item as part of the transactions that we are doing at the moment. Arrears have come down somewhat to ZAR 126 million. And the improvement, certainly, is a factor of the result of some of the lockdown periods that we have had to face. Like-for-like growth, negative at 7.5%. So that was significantly impacted by vacancies and negative renewal growth. And it was also increased by the electricity and utility charges as well as the relief that we have been providing in the form of discounts and deferrals to our clients. The work from home trend, if you'd like, is obviously together with online shopping one of the key sort of talking points. And I would argue that our portfolio has probably been more impacted by the impact of the economy rather than the work from home aspect. We strongly believe that flexibility going forward will be a factor for offices. And we will be adapting the service offering for our clients and try to work with the clients to help them work through some of these new trends. But ultimately, we believe that office will come back in terms of demand and very closely linked to the activities in the economy, and that it's very difficult to run large businesses on a remote basis over the long term. Valuations have come under pressure, and we wrote down the properties by a further ZAR 1.3 billion based on the same metrics as in retail. On the industrial side, we saw vacancies increased to 8.2%. Those have been slightly impacted with some of the new developments that came to the market in this time. The property in Trade Park in Durban is a 20,000-square meter property. And in fact, I was there about 2 weeks ago, and the property is pretty much full now and we've had some good success with letting. Where the big pain is, is in terminations, and that is a result of many of the companies suffering in this time as it relates to their businesses being under pressure. And we've seen unprecedented amount of business rescues in this space. Renewal success rate remains a key factor, and we're actively trying to ensure that we retain all the tenants we can. As you can see, that has also had an impact on the renewal growth rate, which is negative at 11.8%. I think when we look at the escalations, that has been maintained. But every single negotiation is a package, and the initial rental is the area where we have been giving up a little in this process. Arrears, impacted by a couple of really large single tenants. And there we have one specific tenant which occupies in 2 buildings 60,000 square meters, that it's gone into business rescue and that alone was ZAR 27 million. The like-for-like growth was effectively 0, and that was impacted by the discounts and the bad debts in -- provided in this period. We are taking the opportunity in this market where there is still demand for industrial to certainly sell down some of our properties that don't meet our strategic criteria anymore, and we have managed to sell ZAR 239 million worth of properties. We have another property in the held-for-sales list. And then there's further discussions on 16 other properties to the extent of ZAR 350 million, which we'll hopefully be able to conclude over the next 6 months. Valuations also came under pressure, and we wrote down the portfolio by a further 3.1%. Our trading and development business had a pretty good 6 months. They have earned rental income of ZAR 21.4 million on some of our stock-in-trade. We've generated some fees on one of our turnkey developments of a data center, ZAR 1.5 million. We made a profit on a building that we sold of ZAR 106 million in the period. And then we are still quite active in that we have ZAR 674 million worth of projects of which Longkloof, which is on our balance sheet, being active at the time -- at this time. We have also completed quite a few projects. At Woodlands, we've completed the refurb for Altron, and they're currently moving into that building. And our T&D project, which was the Cintocare hospital, opened in December and is operating well. And the biggest project at the moment is the data center that we're working on in Samrand. If we look at the Waterfront, some highlights there is that we have completed the Deloitte offices, which is a 6-star Green Star-rated office building. The Makers Landing initiative, which is a 3,300-square meter kitchen incubator supporting early-stage businesses and entrepreneurs in the food industry, will create circa 130 jobs. And that was opened in December, unfortunately, right in the lockdown phase, but that was also substantially funded by the Jobs Fund. The 3,400-square meter Edgars box that we did not renew the lease with Edgars on has -- is in the process of being redeveloped and is substantially let to Zara. And then we've also approved the development of a 10,500-square meter building, of which Investec will be the key tenant at 6,900 square meters. On the financial side, as Norbert's pointed out, things have been pretty tough at the V&A. We've seen a 48% decline in the 6 months on net property income. Arrears have kicked up to ZAR 247 million. We have provided ZAR 85 million and a further ZAR 44 million for doubtful debts. We've collected -- the collections have improved to 85-odd percent, but it is a difficult environment there. And the effect of lockdown has been really tough on the retail and the hotel sectors and specifically, those sectors targeted at tourism. And we saw valuations, as a result, come down by 5.7% on the portfolio valuations. The visitor numbers have also reduced significantly in this period, clearly lockdown having an impact there, and we only saw 14.2 million visitors relative to the 26 million that we've been used to. Retail, as I mentioned, tough. We've seen turnovers decreased by 36%. Vacancies remained reasonably low. Certainly, a lot of effort is going in to looking after the small tenants and the tenants that are materially impacted by the lack of tourism. But we have seen certain categories like food and fashion -- value fashion do pretty well at this time. On the hotels side, most of the hotels were totally closed, and they have -- we have seen a phased opening over the past couple of months from October to December. And at the moment, the Cape Grace remains closed, and at a point, there was a 40% decrease in the hotel rooms available. The 5- and 6-star hotels are very reliant on international tourism. Nearly 3/4 of their revenue come from that space. And certainly there, we've seen occupancy levels drop to around 20-odd percent, and the rack rate also has come down by 70%. The V&A is assisting all these tenants at the moment with discounts and deferrals. And certainly, if we look at the Radisson Red where we actually have an operating arrangement there, that business did manage to get some of the COVID-related business and broke even in the time. And on the residential side, certainly, Cape Town, with a material oversupply in units in the basin, has -- we've seen vacancies increase there. But we have had good collection rates at 90-odd percent. Office remained robust with 63% of our tenants being blue chip, and they continue to pay. There has been no material lease terminations, and as a result, vacancies remained low at 3%. Rental collections have stabilized in this time, and rental relief is still being provided in terms of the gyms and the collaborative workspace clients in that area. On the marine side, clearly, those are essential, and they continue to trade normally. Two Oceans Aquarium, the boat and helicopter charter businesses are very dependent on tourism. And they have -- those have certainly been restricted in terms of the regulations and protocols, and they are finding it very difficult in this time. The strong growth in the cruise terminal activity that was anticipated was unfortunately halted by the COVID virus, and as a result, that activity has not resumed. In saying that casual shipping, yachting, et cetera, has been strong and supported the export -- supported by the export yachting build business. On the funds management side, Norbert already spoke about the health care fund, which is the one fund that we have operational, where we've already raised ZAR 973 million. And we have effective shareholding, which has reduced to 61.8%. We are still in negotiations with the IFC, and hopefully, we'll conclude that transaction quite soon, where they will be providing $80 million equity and convertible debt package. The fund continues to have a healthy pipeline of opportunities. And they are currently finalizing the acquisition of the Cintocare Hospital as well as the Busamed Paardevlei Hospital. Currently, on balance sheet, there are 4 hospitals and one medical chambers building worth ZAR 2.7 billion. The distribution growth for the fund outperformed substantially the rest of the South African portfolio at 7.5%. And in the quarter, there hasn't really been further dispensation granted to the tenants in terms of discounts and deferrals. We continue to discuss the acquisition of a 15% stake in the Manco with Kagiso, and that hopefully will be completed in this year. And the ongoing raising of capital for this fund is a key focus going forward. We have benefited from the Manco to the extent of ZAR 16-odd million. And as Norbert mentioned earlier, we received a distribution of ZAR 62 million from the fund. Lango itself, we have a shareholding of 16% with ZAR 778 million. Significant growth in the NAV there to ZAR 330 million. The portfolio is of quality. It's worth ZAR 638 million and has 11 prime offices and retail facilities in Ghana, Nigeria, Zambia and Angola. The Angolan assets are -- is land and, I think, potentially, probably will be sold in the future. The countries had differing impact as it relates to COVID. And as Norbert mentioned earlier, we had our maiden distribution from the fund, and that brought ZAR 3.7 million to Growthpoint. There is an exciting pipeline of opportunities. And capital raising remains a key focus at the moment to take these opportunities. The U.S. dollar liquidity in Nigeria remains a bit of a challenge. But those pockets of liquidity that do arise, we have been exchanging out of naira into dollar. The damage experienced by looting at our Circle Mall will probably lead to the mall being out of commission for this year. We are busy working on reinstatement plans. And the asset is comprehensively insured both for the premises reinstatement as well as the loss of income. On the capital management side, I think we pretty much covered most of the commentary here. I think just to add that there's roughly ZAR 3.4 billion of debt maturing in this year, of which ZAR 1.9 million is bonds. 59% of our debt is unsecured. Moody's unfortunately downgraded our global scale rating in line with the sovereign, but we have maintained our AA1 rating on the national scale rating. We have got significant liquidity available to us with ZAR 5 billion worth of available facilities on top of the ZAR 1.1 billion of cash we have in our bank accounts. And we have hedged 84% of our interest rates at 8.1%, and if we include our foreign debt, that reduces to 5.8%. We have also reduced our exposure to foreign exchange-related debt. So GOZ has an LTV of roughly 54%. Globalworth has reduced to 90%. We have settled all the foreign-denominated debt on Capital & Regional at this point. And Lango is geared to the extent of 83%. Norbert will conclude for us. Thank you.

Thank you, Estienne. So yes, just in conclusion, I'm not going to read through all of these comments on the respective slides. Whilst I conclude on each one of them, Estienne is going to quickly look at the -- what seems to be an increasingly long list of questions. And we do have -- as I said, we've got the ExCo here. We've got a roaming mic. So we feel the appropriate asset manager or fund manager would be best placed to answer the questions, we'll defer to them. But just to try and wrap it up, I think enough said about the South African market, everybody understands how tough South Africa is. This week, the GDP number for 2020 was printed at minus 7%. I think it's a fair comment that it's going to take a couple of years, 2 to 3 years before we even reach pre-COVID levels again in terms of growth should we achieve the kind of growth that's projected for next year and the year thereafter. We -- fortunately, for us, I think, now having done what we've done on the balance sheet, we feel pretty confident that the business from a financial perspective is in a pretty solid and stable position. But we still remain very cautious on the outlook for South Africa, in particular, with lots of talk about a third wave of COVID coming. Whether that brings more lockdown provisions, all of that is uncertain and unknown. I know that earlier this week as well, business confidence numbers were printed. The, I think, RMB Business Confidence Index showing that we've gone backwards from where we were in the last quarter of 2020, and that doesn't really bode well for confidence and investment in the South African context. Waterfront is very much a story of international tourism. And whilst we expect the Waterfront to benefit from domestic tourism and maybe we didn't quite get the benefit we wanted or we're looking for there in December given the lockdown provisions that we introduced again, hopefully, domestic tourism will improve from here going forward. But the well-being of the Waterfront is very, very much linked to the well-being of the Western Cape economy, which is very much linked to tourists, international tourists, conventions at the Cape Town Convention Center, business travel, and the cruise liner industry. Cruise line industry at the moment is still pretty much closed, and we expect to -- and we hope to see some of the cruise liners arriving back in Cape Town, probably only towards the end of the year. Very much all of the South African, both Waterfront and South Africa prospects, linked to our own COVID rollout in the country. It's fair to say that South Africa is lagging in terms of the vaccinations and the rollout of vaccinations. And it's not a good situation if internationally, in the U.K., in the U.S. and all over the show, people have had their vaccinations, but they can't come travel to South Africa where we haven't made much progress in that regard. Looking at GOZ, literally, probably the easiest and most stable of the investments that we have. The Aussie economy and the way in which the -- Australia have handled the entire pandemic has led to significantly less impact on their economy. And whilst the work-from-home dynamic, I guess, is impacting the share price in as much as there's uncertainty on how that might impact office occupation in the long run, the business is in great shape with a very strong balance sheet and, in fact, pretty reasonable prospects. We are also in that particular business looking quite actively at branching out and expanding into funds management. Globalworth, not too dissimilar to GOZ except to say that I think Poland and Romania were probably a bit more affected than Australia was, but very similar in terms of a strong balance sheet, no financing concerns or constraints. And the opportunity, I guess, would be whether we can be confident enough to consider investing some of the cash, the significant cash balance that the company has at the moment. And then Capital & Regional. There, again, to try and be positive on cap rate. The U.K. have started coming out of the restrictive lockdowns. I think on the 8th, which was earlier this week, children were allowed back to school. There's a 4-phase opening of the U.K. economy towards the summer. 30%, if not more, of the U.K. population have already been vaccinated. So is it the bottom? Have we hit the floor? We'd like to think that if not, we must be very close and that as the U.K. economy opens up again, certainly, we've seen the government make a very aggressive statement vis-a-vis infrastructure investment and the ability to -- or the initiative to get that U.K. economy firing again. We do feel more optimistic about the future for C&R off, obviously, a very low level where we're at, at the moment. And then just in conclusion, again, given all the uncertainty, the Board has decided not to provide any specific guidance on our dividend -- distributable income per share or dividend per share. Safe to say that we want to retain and are committed to retaining our REIT status and that we intend to continue to pay a dividend twice a year based off at least 75% of our distributable income. And we believe that the work that was done on the balance sheet puts us in a position to make -- to take that position. So I'll conclude there. I'll defer to Estienne to maybe just try and summarize some of the questions or sift through some of them. There might be some common themes. And...

Okay. So I'll run through them, if it's all right with you, Norbert. So the first question came from James Tucker at Metope, who was complaining about the vacancies in office and wanted to know just some of the strategies. I think, hopefully, James, I've covered some of that in my presentation. So I don't think we're going to spend more time on that. Then [ Sam Shlongiana ] from Gartner. I hope I pronounced that right. What are some of the technology initiatives Growthpoint is implementing for growth? So pause. I mean, certainly, in our management -- property management side of our business, we have, over the past year, implemented a new system for our -- enterprise system for our whole business. And it is a SQL-based open platform business, which will give us the opportunity to be able to link in various different applications in the future. And that can -- runs right across the business, whether it's from letting right through to the financial accounts and consolidations, ultimately, as well as potentially in the future and even currently improving on automation in some of our repetitive processes. Then within the portfolios, I mean, Growthpoint has, for many years now, been working tirelessly on improving the technology in our buildings and bringing down operating costs for our clients as one of our key strategies to nearly defend the margin, if you'd like. And then we do have an innovation side to the business, which looks at small investments and initiatives to bring into the business where we believe it will add value to the bigger picture, and maybe OneCart would be an example of something like that. Then...

What I would add to that is I think most of the investment has gone into, let's say, sustainability and Green Star-rated buildings. Nowadays, we don't really progress on anything unless it's a 5 or 6 star Green Star-rated building. From a development perspective, we continue to own the largest portfolio of green-rated properties. And then just on a more direct tech, I guess, the whole phenomenon of proptech and fintech, which was the -- it was almost as hot as Bitcoin a few years ago...

[ Otezla ] share price.

And the [ Otezla ] share price -- interesting enough, fintech seems to have made a lot more progress and a lot more new initiatives and developments there. But proptech remains relatively quiet, if you want, in terms of new technologies that have emerged in -- with specific reference to property and property occupancy.

Okay. Good. Thanks, Norbert. All right. The next one is -- and this one's for you. How do you see CapReg reducing gearing? Do you think the current -- do you think current pricing offers guarantee an opportunity to buy the remaining 47.9%? Given the London rules or [indiscernible] recognized that I've asked you the question.

Yes. I think the fact of the matter is that given the fact that it's listed and the very, let's say -- I don't want to call them draconian, but very strict laws around speaking openly and publicly about investment into listed entities, I'm going to not answer that. I just want to maybe make a point that we certainly do still very much support the management team of CapReg. We very much support their strategy, a strategy towards -- focus towards community-based shopping centers. And whilst -- I guess it's up to the Capital and Regional board to make decisions and decide. We -- whilst we're the controlling shareholder, we don't control the Board and we can't control the Board. It's up to that Board to come forward with initiatives on how best to reposition the business in an environment where, hopefully, we're going out of lockdown in the U.K. and to a much more normal environment. So I'll just leave it at that, Estienne.

Why did we pick up 80% payout ratio? And will that be the payout ratio moving forward?

I don't think there's any specific reason on 80%. I guess -- 75% is the minimum. We felt that we were able to afford "to pay a little bit more than the bare minimum". We understand that we have multiple shareholders and that Growthpoint is probably the most widely held REIT in the country and many of our investors, whilst we have a very big chunk of our shares, probably 50% of our shares owned by the -- a dozen or more of South Africa's large institutional investors. We have many thousands of individual investors who equally rely very heavily or certainly rely more heavily on the dividend perhaps even than the institutional investors do. So it was a number that the Board decided on. And I would think that whilst it's not cast in stone, if we're able to continue to pay out at that sort of ratio, it -- we would be looking to do that.

Good. Thank you. Then one for Gerald and the team. Why have you not included the tax on retained income for -- I presume it's 2020 or H2 '20 dividend in your distributable income calculations? I presume that must be the historic ZAR 154 million that was raised. Can we change that camera maybe? Is it possible? So Gerald [indiscernible].

I think I can give that a go. The tax obligation related to FY 2020, so it came out of that element of the distributable income that we retained. So if you look at our IFRS accounts included in the announcements of yesterday and in this pack, I think, and on the website, you will see we actually cash flow that item. You'll see it in the distributable income reconciliation. So it sits in the -- it's in the tax charge in the IFRS accounts. It's included there, the South African piece of that. And from a distributable income for this period, we add it back. It doesn't belong to this period. It belongs to the previous period.

Okay. Thank you very much. Can you give us a sense of just how things are going at the moment, so post? GOZ getting impatient. GOZ, you have to wait till August, right? But anyway, all the businesses just post...

Yes, look, I mean, I think that, certainly, we as an executive have started returning back to the office. And for most, I'd say, are enjoying being back in the office. I think that it remains very, very tough on the ground in the South African businesses. And it -- we -- there's no doubt that we're not at the bottom of the cycle. The real estate sector generally lags most other sectors in terms of when you either have an economic downturn or an economic upturn. We're not confident that we're seeing an economic upturn necessarily yet. Yes, in certain sectors, mining is obviously doing particularly well at the moment, but it's certainly not a broad-based economic upturn by any stretch of the imagination. So many of our customers are still requesting, whether it's less space or rent reductions or rent concessions of sorts. We're seeing -- as Estienne said, every day, we're seeing liquidations and business rescues. So the real estate sector is lagging. And yes, hopefully, or for a technically new low base, we can start seeing GDP growth. But you've got to appreciate that we're still at levels way below 2019 levels so when COVID set in or certainly March 2020 levels. But for most part, I think we're feeling -- we're certainly feeling a lot more optimistic and positive around the fact that we have restructured the balance sheet or certainly done a lot of work on stabilizing the balance sheet. We've got ample liquidity. And so we're feeling a lot more positive from that perspective. And I also think that if you look at some of the downward adjustments on performance, the dividend out of Globalworth, obviously, it's dropped significantly. But I feel it at a level where it's either going to stay similar or potentially start to increase. It's not going to halve again, that's for sure. Clearly, CapReg, we didn't get a dividend, so that shouldn't -- can't go lower. GOZ, we're confident that GOZ remains a very, very strong investment. And part of the reduction of the dividend from ZAR 0.118 to ZAR 0.10 per share was again some extreme conservatism on the part of the GOZ Board, just looking after liquidity. And -- well, I mean, that payout ratio is now below 80%. I think the payout ratio on the GOZ dividend was 79-odd percent, if I'm not mistaken. It was 74%, I think, [ Dirkje ] is showing me. So we think that, again, there's probably a floor or upside from there. And Waterfront. Waterfront remains critical. Again, massive 50% reduction, but can it go down another 50%? I don't think so. So maybe it sets a new floor, and we can at least stabilize things and, hopefully, eventually, start looking for growth.

Okay. Then we've got a question, quite a long one, but it includes C&R. So I'm going to exclude that part. There is a question around, has there been discussions around the shareholder structure at GWI? And do you have any further comments on potential disposal? What are the earmarked pipelines for the student accommodation fund? And then are any asset classes -- are there any other asset classes that you're considering? And what is the outlook for trading and development in the second half?

Okay. I'll deal with the first one first. So I mean maybe just a more broad comment on the investments, which is including Globalworth, Capital & Regional and GOZ. We made the comment that we are looking to refocus on our internationalization strategy. So again, Globalworth is also listed. So unable to really make any comments as to what our intentions are or not. We do -- it's fair to say that it's basically a technical listing with 84-odd percent of the shares owned by 3 shareholders. It's unlikely to be tapping the capital markets because of its position in relation to the amount of cash that it's holding. And -- but as a more broad statement, we would -- we are currently looking at the portfolio of international investments and where -- how best to sort of refocus our own attention. And we have previously received comments from investors on whether we ultimately are some sort of an investment trust because we've got these different stakes in these different entities and whether that necessarily makes sense. So we're reviewing that position. And hopefully, in time, we will be able to be more specific on what initiatives we are considering in that regard. On the funds management side, I think my student accommodation question was more directed towards the pipeline, et cetera. So the -- we currently have -- we're talking to the owner of a portfolio of student accommodation assets. I think they're about -- is it 7 or 8 assets mainly servicing [ carting ] in terms of UJ, Pretoria and -- UJ and Pretoria. And then prospects for that particular business would be further developments in the -- in, sorry, Cape Town, [ Vitz ], Broederstroom. There certainly seem to be ample opportunities to develop additional accommodation in that regard. Other asset classes?

When you look at obviously acquisitions, you can -- it's also a possibility.

Correct, and acquisition. We do see, yes, that play is more to -- if it's successful, we envisage that, that fund could be a consolidator, if you want, of the very fragmented ownership of student accommodation in the country. So that's the longer-term planning. And that would then potentially involve acquisitions going forward as well.

Our developments on the second half, I mean, there's ongoing -- we have some stock-in-trade that we're obviously trying to finalize those transactions and ongoing. There are different transactions that we're working on. In terms of actual profit that will come through in the second half, it's quite difficult to say. There's a whole bunch of timing issues that come into this business. And they're not quite as clear as collecting a rental check. So I don't think we're going to comment specifically on the quantums of timing. Then there's a question...

Sorry, there's one other piece to that question, which was other asset class.

Yes. Other asset class.

I think the only other one that we're currently exploring is more broadly, let's call it, telco infrastructure and data centers. Obviously, data centers being quite a unique asset class and certainly seems that there's a lot of growth in that particular segment of the market at the moment.

And what is the approximate value of the noncore portfolio that you're looking to dispose? I presume that's the South African portfolio. We're hoping we can realize another maybe ZAR 1 billion in this calendar year and maybe another ZAR 2 billion thereafter would be a rough estimate. What is your strategy? Okay, we've already covered that. Payout ratio. Yes. Was the payout ratio reduced at Globalworth? Should we expect ZAR 0.15 dividend to be the new base?

So Globalworth payout ratio is actually determined by the -- it's embedded in the memo and arts of the company. So when we invested, we rewrote the memo and arts to protect, I guess, ourselves so that we couldn't be in a situation where if there were profits earned and the company was in a position to pay a dividend where the Board potentially decided not to pay. And I think we are seeing that across some of the other listed REITs who have investments in jurisdictions outside of South Africa, where those offshore investments have not paid dividends, not because they potentially can't but because they may have liquidity issues. But the Globalworth dividend payout ratio is actually written into the memo and arts and it's set at 90% of FFO, which refers to EPRA -- effectively EPRA earnings. So I would think, I would hope that if Globalworth can continue to operate on a stable basis as it is at the moment, that yes, you could be working on a similar number.

Okay. And just another Globalworth question. Is this timing on deploying the cash in balance sheet? I don't think we can...

Again, yes, I'm not -- I can't comment on that. Clearly, there's a Board. I sit on that Board of Directors but only 1 of probably 7 -- 6 or 7, and the company and the management team there would need to come up with a strategy on opportunities. At the moment, I think everybody is a little bit gun shy. Everybody is a little bit uncertain. Again, there's the issue of work-from-home and how does that play out over the next year or 2. I think most corporates are currently still evaluating the work-from-home dynamic and whether that suits them or doesn't suit them. It's clearly much more suitable to certain industries. I think we've all done it. We've all spent pretty much most of 2020 working from home. So we can do it. It's -- you're able to do it, but do you want to do it? And do you want to do it long term? My answer to that is categorically not. So what you're going to have to offer is flexibility. There's no doubt about it. Some companies are saying 2 days a week staff can work from home. Other companies are saying 2 days a week staff must work from home. That will depend -- determine how much office space they need. So I think it's going to be a very interesting time over the next 12 to 18 months as corporates, in my mind, will all ultimately adopt a work-from-home policy. And that policy will ultimately then drive what space they need and the nature of that space. So it's going to be interesting. But the longer short of that is there's a bit of uncertainty, and therefore, the inclination to rush out and invest is not there.

Okay. Then there's 3 questions. They're all kind of capital related. Okay. The first one says why the obsession with a 40% LTV? Surely, a temporary rise above these levels is perfectly acceptable in times of unique distress, like we're currently in. Or is there a desire for LTV to be in the region of 40% driven by the demands of debt funders? Can you explain the thinking behind the issued equity in 2020? But paying a dividend now, it seems to be value dilutive to shareholders to issue equity at a deep discount to NAV having -- and whilst paying cash dividend. And then the last one, which spoke -- also talks around the dilution on the share issue and the proposal. Wouldn't the placing of the GOZ stock be less dilutive?

I'm just conscious of time as well. So I think if we make this the last question, I'll answer it as best as I can. So I mean we spend a lot of time engaging with investors, certainly, post the equity raise on all of these questions. It's fair to say that the Board fully appreciated the dilutive nature of the equity raise. I mean it's not our proudest moment to go and issue equity at a 50% discount to NAV. But in the midst of the lockdown, in the eye of the storm, the priority for the Board was liquidity and balance sheet management. The -- we all -- we made the comments that we saw asset values going to decrease by between 10% and 20% over a 24-month period. Now if you did nothing, if the LTVs were already 45% or, let's say, 40% -- north of 40% and asset values are going to drop by 20%, you don't need to be a genius to work out that before you know it, you're going to be at 50% or 55%. Before you know it, you're going to be breaching your debt covenants. And before you know it, you insolvent or you don't pass the solvency and liquidity ratios, and you can't pay a dividend. And many of our competitors are currently in that position. So the Growthpoint Board felt very strongly that it didn't want to be there, and as a consequence, embarked on the capital management strategy that it did in the form of multi-pronged approach: the equity raise, the DRIP at the time and the -- and reducing the payout ratio. So what all of that allowed us to do is to put the company in a stable position where we can, in fact, look at the cash earned, and I can give you the assurance that we are much more focused as a business on the cash-generating nature of the business on the one hand, the development expenses and capital requirements on the other hand, and the trading and development, the demand for capital from the trading and development business to ensure that we can be sustainable or self-sufficient, if you want, without the need to be rushing out and raising more debt or rushing out and raising more equity. So we've curtailed the business. Our development activity has been reduced by almost 2/3 compared to what it used to be. And if you consider the level of asset sales, as Estienne pointed out in his presentation, asset sales covered CapEx pretty much, and then we retained ZAR 500 million of this dividend, which essentially will be to reduce debt and provide flexibility. So we wanted to be in a position where we continue to have the flexibility to not only be a REIT but to also continue to follow our strategies that we've set for ourselves and really focus on being sustainable in every sense of the word. I mean we understood prior to embarking on the exercise what the financial impact is and will be in terms of the dilutionary impact. But not -- having considered all of that, the Board still felt that it was in the best interest of the business in the long term to raise the equity at that time to stabilize the business, ensure that we've got liquidity going forward. And I think where we're sitting today is what we were hoping to achieve, and I think we've achieved it. And talking to the management team over the last couple of days, certainly, we feel a lot more comfortable where we are as a business today with our balance sheet in the shape that it's in compared to where would have been had we not done it. And I'll stop there before I make a long statement.

No, that's perfect. Folks, thank you. There are people that have got questions here that we haven't answered. We will revert to you in person. Lauren will get on to that. And then just a reminder that there are 53-odd little annexures to our presentation, which we would love to have taken you through over the next 4 or 5 hours, but maybe you can spend your time at home going through those. And if you have any questions, please do send them through to Lauren or to any of us, and we can -- we'll try and help you. But thank you very much for your time.

Thanks, everybody, and goodbye.