Hyprop Investments Limited (HYP.JO) Earnings Call Transcript & Summary

Good morning, and welcome to Hyprop's Annual results for 30 June 2025. Thank you to the shareholders for your ongoing support. And a big thank you to all the high performers for dedication and hard work. Hyprop is a specialist retail fund with one of the best retail portfolios in South Africa. Our why is creating spaces and connecting people. And how we do it is owning, managing and redeveloping dominant retail centers in mixed-use precincts and key economic nodes in South Africa and Eastern Europe. Looking at the agenda, I will give a bit of an update on the review of our last year's priorities we've put out, then we'll look at the headlines. I will also cover the operational performance of South Africa. Rabia will present the operational performance in Europe, break the financial results, and I will be handling the closing. As we communicated, we will focus on the following priorities for 2025. So how have we done? We exceeded the guidance communicated at the pre-close due to the 19 million additional shares that were issued in June with the accelerated book build, we adjusted our guidance to minus 1% to positive 2%, and we delivered 2.3%. [ Should you time weighs ] the additional shares, we should have delivered 5% growth in distributable income per share. We sold a 50% undivided share in Hyde Park Corner, and we also secured a put and call arrangement on our remaining 50% 2 years down the line. We are progressing well with all the CPs to implement the transaction in early November. We have worked hard securing new growth opportunities in Eastern Europe. Unfortunately, we had to walk away from the MAS transaction after the MAS Board refused to disclose the details of the DJV agreement. Rabia is busy with two other opportunities in Eastern Europe. We have implemented the 80% payout ratio and our total dividend for 2025 has shown a 9.9% growth from the year before. The group's LTV was reduced to 33.6% and our ICR improved to 2.6x cover. In September '24, we sold the rest of the African portfolio to Lango in exchange for Lango shares. The big advantage of this transaction is that we sold the whole historic Africa structure and were released from any commitments in relation of the in-country debt. To date, we have not made any progress with the disposal of the Lango shares. On the South African portfolio, we have taken a strategic decision to use our own capital to install on-site solar projects rather than power purchase agreements. These projects give exceptional returns, core to our business, and we also retain the flexibility for when we want to integrate it with Battery Solutions. On both the second phase at the Glen and CapeGate, we are still waiting for council approvals. We have already awarded the two tenders, procured some of the equipment and we'll start the installations as soon as we get the necessary approval. We have submitted the regulatory submissions for Somerset Mall and Canal Walk solar projects and also still waiting for approval. At Hyde Park Corner, we will only complete Phase 2 of Workshop 17 as soon as Workshop 17 achieved agreed occupancy levels in Phase 1. We are in the process of finalizing the terms with Pick 'n Pay on the right-sizing at the Glen before we can start with the Phase 1 of the master plan. We have made good progress with our anchor stores in the South African portfolio. All the Edgars stores are now rightsized in our portfolio and trading well in the reduced space. We would have liked to have made more progress with Pick 'n Pay and discussions with Woolworths and Game is doing well. On the Croatian malls, we have submitted the group application. Group application is the process to secure additional rights. And what is very positive Friday of last week, we actually got feedback that our groups were approved. The retiling of City Center one West is approved and in progress. The holdup on the solar in Croatia is due to the need to be registered as electricity supplier to sell electricity to tenants. There was a possibility that the legislation would change. It did not, and therefore, we have to go back to the drawing board to see how we can install the solar in Croatia. Now looking at the headlines. We had an excellent operational performance in both South Africa and Eastern Europe portfolios for the last financial year. The group's distributable income increased with 7.5% to ZAR 1.5 billion. The distributable income has increased by 2.3% to ZAR 3.788. The Board approved a final dividend in line with our 80% payout ratio. The total dividend is 9.9% more than the previous year's dividend. We have successfully strengthened the balance sheet, caught up with some CapEx and implemented the sale of the rest of the African portfolio. After the sale of Africa and the ZAR 808 million capital raise that was earmarked for the MAS transaction, the group's LTV reduced to 33.6% and our European portfolio LTV reduced to 43.4%. Our ICR improved to 2.6x. Brett and the team have done excellent work on the group's capital structure and then increased our unencumbered assets to ZAR 8 billion, which is about 19% of our gross assets. We have a healthy liquidity position with ZAR 1.2 billion in cash and ZAR 2.5 billion available bank facilities. As mentioned, we are on track with the sale of the 50% undivided share on Hyde Park Corner. All the operational performance on the South African portfolio looks positive. Our tenant turnover increased by 5.5% and trading density by 6.8%. We have rightsized some tenants, for example, Edgars and Pick 'n Pay and therefore, had an increase in our vacancy. Our vacancy is still well below the market norm and creates flexibility to improve and optimize our tenant mix. We had positive rent reversions of 4.2%, and I will unpack that in more detail later. At Hyde Park Corner, we completed the first phase of Workshop 17 and Checkers FreshX, which opened in August. We opened the first JD Sports at Canal Walk, and it's trading very well. At Somerset Mall, the Phase 2 expansion, bathroom upgrade and retiling are on track. Now looking at Europe, the tenant turnover increased by 6.6% and trading density increased by 6.1%. Vacancy remains low at only 0.1%, and we had positive rent reversions of 9.1%. The independent property values increased to EUR 638 million on the back of good income growth. We completed the extension and the upgrade of the food court at City Center one West as well as the upgrade of the Cineplex at Skopje City Mall. Hyprop's South African portfolio constitutes the bulk of our business. The portfolio constitutes 67% of our investment property, 60% of our distributable income and equates to 70% of our total GLA. The South African portfolio consists of seven large regional malls, one super regional mall and then one small regional mall. They are all located in the key economic nodes in Gauteng and the Western Cape. All the key trading metrics for the financial year were positive, except for the increase in vacancy to 4.2%. This is mainly due to the rightsizing of the Edgars stores and the Pick 'n Pay at Woodlands Boulevard. Key trading metrics for the financial year are as follows: tenant turnover increased by 5.5%. The effort ratio improved by 0.4%, down to 8.2% and trading density grew by 6.8%. The specific categories that performed well on the portfolio was motor-related sales and services by 65.9%. This was helped with some dealerships opening in the portfolio. Entertainment, which grew by 16.1% and department stores by 9.9%. The average foot count showed stable growth of 0.1%, resulting in an increase in spend per head of 5.4%. Strong trading performance was recorded in August, October and November 2024, mainly due to improved consumer confidence, the two-pot retirement fund withdrawals, new store openings and the Black Friday sales. The following graph shows the trends in key metrics over a 5-year period. We exclude Table Bay Mall, which was only acquired in March 2024. The tenant turnover continues to grow. The upward trend in rental income growth continues at 2.9%, coupled with good growth in turnover rental of 5.8%. The weighted average lease escalation shows a positive trend slightly down at 6.3%. Focusing on the leasing activities, overall reversion rates are positive at 4.3%. The total renewal reversion rate shows growth of 19.9% and was strongly supported by new dual reversion rate of 16.3% for retail space and 46.9% for office space. Office vacancies improved from 23.3% to 15.7% at the end of June 2025. The WALE on the portfolio is 3.9 years and with 30.3% of the GLA only expiring after 2030. The leasing workload at the beginning of the financial year was 284,000 square meters. The workload balance as at 30 June 2025 has been successfully reduced to 93,000 square meters. The total expiries at the beginning of the financial year was 183,000 squares and good progress has been made in this regard. Deals under negotiation reduced from 78,000 square meters in the beginning of the year to 58,000 square meters. There were a few new tenants who partnered with us during the past 12 months as highlighted on this slide. Canal Walks keep on performing well. We opened JD Sports, Silki, our online brand with its first stand-alone store in South Africa, focusing on body care products. Home, Tech and Sleep, which merges three grand brands, namely Rochester, HiFi Corporation and Sleepmasters. They were one of the tenants that filled the takeback space from Edgars and then a flagship Jet store. Demand at Somerset Mall remains strong with vacancy of only 0.6%. New stand-alone stores that were secured were Hi-Tec, Steve Madden and Samsonite. At CapeGate, the tenant turnover increased by 10.1%. We opened Bootleggers to enhance our food journey as well as stores for Skechers and Vaperite. At Rosebank Mall, the trading density increased by 9.3%, and the effort ratio improved to 6.1%. This is a good indication for further rental growth. Ajmaan, the only [ modest ] fashion store in the center, Steve Madden, John Craig and Edgars were opened. Clearwater Mall's trading density grew by 6.2%. We opened stores for Continental Linen and Crocs. Anchor tenants such as Pick 'n Pay, Woolworths has started to perform much better due to collaboration and asset management initiatives. At the Glen, the tenant turnover increased by 7.2%. Omoda and Jaecoo Motor dealerships opened, Häagen-Dazs as well as Porter and Craft. At Woodlands, we rightsized the Pick 'n Pay store and secured a franchise operator, which is trading well. We opened the following new stores for Wellness Warehouse, Curve Gear, Ouhout and Handelshuis. At Hyde Park Corner, we opened Kitchen Samurai, Avenue 2A, an international fashion brand store; Society 1840, a luxury salon and day spa; Workshop 17 and then Checkers FreshX. At Table Bay Mall, the tenant turnover increased by 8% and reduced the vacancy from 3.5% to 2.1% and opened new stores for Skechers, Contempo, Kingsmead as well as Hungry Lion. I would like to give an update on some of the recently completed projects and projects that's in the process. At Hyde Park Corner, we secured a 4,000 square Checkers FreshX with a new 10-year lease. The store caters for the Hyde Park Shoppers and the feedback from the shoppers have been very positive. Since the store opened on the 1st of August, we have seen a 10% increase in foot count as well as vehicle count. We improved the food court area at CapeGate by removing the old central bridge, which improved the view lines between the two floors as well as making the food court bigger with more seating space. The change also improved the traffic past the QSR stores and therefore, improved the trading of the new stores. This project is one of the largest commercial hybrid energy systems that has been commissioned in South Africa. The system includes 4.5-megawatt inverter, a 7.2 megawatt battery storage system and a 3-megawatt dual-fuel gas and diesel generators. The system was commissioned in July and the benefit of the system is around ZAR 1 million per month to the bottom line. We are investigating with our partner, [ Blend ] to roll it out on more of these on our portfolio. At Hyde Park Corner, we completed the upgrade of the North office tower for Workshop 17. Workshop 17 signed a 10-year lease. The redevelopment included the upgrade of the external facade. The old steel windows were upgraded to aluminum frame windows with performance glass. We raised the decks over the unsightly mall services and include landscape gardens that can be used by the office tenants as well as shoppers. The new office users add to the foot count and improve the trading performance of the center. The Phase 2 expansion at Somerset Mall is progressing well. We will add additional 5,500 square meters of GLA. The expansion will improve the flow in the center by creating a new link through the current Edgar store to Game store. Edgars will be rightsized and relocated as the anchor in a new section of the center. We will also rightsize Game to improve the trading density. The new tenants to be introduced to the section would be affordable luxury and athleisure stores. The existing Edgars will be converted to an entertainment offering and a new food court. As part of the project, we will upgrade the bathrooms and replace the tiles of the mall. This phase will be opening in two sections. Section 1 will be completed in November 2025 and Section 2, that is the new food and family entertainment experience in the old Edgars stores will only be completed in July 2026. The retiling will be completed next month and the bathroom upgrades will be finished in April 2026. At CapeGate Precinct, we have been working on a master plan to expand the mall and to develop surrounding satellite sites. Our key requirement were to ensure we keep control what is being developed on these satellite sites as well as securing annuity income. The site opposite Mediclinic were sold to Mediclinic for a day hospital and consultation rooms and the final design needs to be approved by Hyprop to ensure it fits into our master plan. The bottom three sites, we secured a 24-month exclusivity agreement with SOM and Giflo to develop three office buildings. The deal has been done on a leasehold basis, and the intention is to secure tenants and develop top structures. Similarly, at Mediclinic, the final designs need to be approved by Hyprop and in line with the master plan. The development risk and the ongoing ownership of the top structures will be the risk of SOM and Giflo. Hyprop will make no risk on these developments and will get an upfront land payment and ongoing land rental when the developments are completed. Our investment in sustainability is definitely paying off. We reduced our electricity consumption by 12.9% in the last financial year. We increased our solar capacity by 647% since 2019. We reduced our water consumption by 4.8%, and this is equivalent in the water being used by 14 Olympic-sized swimming pools. We increased our recycling rate to 77%. I'll hand over to Rabia now to go through the Eastern Europe portfolio.

Thank you, Morné, and good day to everybody. Before the slide, I would like to start with high-level market overview. Following the peaks recorded in the previous year, the inflation rate across the region has eased in 2025 down to 3% to 4%, the interest rate has improved as well. In June '25, the European Central Bank, the ECB cut interest rates by additional 25 basis points, lowering financing costs. Regional GDP growth in '25 remains positive, supporting retail between 2.5% to 3.5%. Prime shopping centers with international brands, food and entertainment anchors maintained strong occupancy and footfall rate, while secondary centers faced weaker brand attraction and rising vacancy. Retail sales and footfall were temporarily hit by boycott and protest across the region in early 2025. Price sensitivity is still high. Consumers were still cautious to cost of living pressures, although the [ disposable ] income is improving as inflation is slowing down. Online retail continues to rise across the region, pressuring and repositioning traditional retail format. ESG compliance has become a key investment standard, assets with strong certificates such as the BREEAM or LEED achieved higher valuation. That being said, the investor sentiment for the region remains positive but cautious towards retail with focus on prime shopping centers, tourist-driven retail and ESG compliant assets. Secondary malls are facing weaker tenant demand as many investors are exploring investments in retail parks, which have become very popular. And even though just recently, the region witnessed few retail transactions, there is still a gap in price expectation between sellers and buyers. Now moving to the slide, macroeconomic and retail environment. The GDP growth in Bulgaria was 2.8% in 2024 and is expected to remain in the range of 2.5% to 2.7% from '25 onwards. Like in the Eurozone, also in Bulgaria, the inflation declined to 2.6% in '24 as opposed to 8.6% in 2023. It is projected to increase slightly above 3% in 2025 and then to reach the [ ACV ] target of 2% in '28. The unemployment rate in Bulgaria remains one of the lowest in the Eurozone at 4.2%, which is lower than the European average. The total shopping density in Sofia is 300 square meters per 1,000 inhabitants. It's worth noting that Bulgaria will officially join the Eurozone from 1st of January 2026 and that the country has already been a full Schengen member. In Croatia, the GDP growth in 2024 was 3.8% and is expected to increase at a moderate rate of 3.1% from 2025. Inflation declined to 4% in 2024 and is expected to further decrease to 3.7% in 2025. Unemployment is forecasted to remain healthy at 5.3% and the shopping density in Zagreb is the highest in our portfolio at 590 square meters per 1,000 inhabitants. North Macedonia has stable GDP growth in the range of 2.8% to 3.2%. Inflation declined to 3.5% in '24 and slightly down to 3.4% in '25, approaching the targeted rate of 2% from 2027 onwards. Unemployment rate remains high at around 13% and the shopping density in Skopje is high at 326 square meters per 1,000 inhabitants due to the entry of new shopping centers in the last couple of years. Going to the next slide, we look at our trading performance for the rolling 12 months. Looking at the turnover, there was 6.6% increase compared to previous financial year. This trend continued in July with 5.7% increase. Due to the improved turnover, the effort ratio decreased by 0.2% for the 12-month period. The same trend continues into July. The trading density increased by 6.1% compared to the last financial year. July recorded a similar improvement of 5.3% increase. On the next slide, we continue with the trading performance. Despite the increase in turnover, as we just mentioned, the footfall for the full 12 months remained mostly flat with a minor decrease of 0.8% compared to last year and a similar negative growth of 1.3% in July. That is mainly due to the nontrading Sundays and the early year boycott we just mentioned. The spend per head increased by 7.5% and in July, it increased by 7.1%. On the next slide, we look at our 5 years trading results. The turnover movement recorded an aggregate increase of 56% in the last 5 years, while in 2025 alone, the increase in turnover was 6.6% year-on-year basis. The rental income recorded an aggregate increase of around 61% in the last 5 years, while in 2025, the increase was 5.9% year-on-year basis. The indexation peaked in 2023, reaching 7.2%, then down to 4.6% in '24 and further decreased to 2% in 2025. The major upside in the turnover rental income in the past 5 years, it has almost tripled, while in 2025 alone, it increased by 20% year-on-year basis. Going to the next slide, we look at our leasing activity during the financial year. Renewal reversion rate was 10.3%, which is 8.7% from the total GLA. Our new deals reversion rate was 5.1%, which is 2.6% of the total GLA. The total average reversion rate of new deals and renewals is 9.1%, which is 11.2% of the total GLA. The breakdown of the reversion of all deals includes flat reversion of 29%, positive reversion of 54% and only 17% were negative reversion. During the period, our retention rate was 76%. The total occupancy rate is 99.9% with the 0.1% vacancy is in the mall of Sofia. The lease expiry workload over the next 4 years has moved with the highest expiry of 41.6% of the GLA in the year 2030 and beyond. On the next slide, we continue with the leasing activity. The lease workload at the beginning of the financial year was 22,000 square meters, while by the end of the financial year, it was reduced to 948 square meters, of which only 133 square meters were vacant. On the next slide, we look at our new tenants and completed projects. At City Center one West in Zagreb, we delivered a fully redeveloped and upgraded food court with modern and inviting design, including five new restaurants, which have quickly become a key customer hotspot. We had the openings of the exclusive jewelry brand, Zaks as well as Levi's mono-brand store. We also did a full refurbishment of H&M store and repositioned s.Oliver and Big Bang store. At City Center one East in Zagreb, we had new openings during the period, which include John London for s.Oliver, JD Sports, Harissa and Nespresso. Big Bang was rebranded as Sancta Domenica. C&A completed a full refurbishment to the latest store specification. At the Mall in Sofia, we had the opening of Jeff de Bruges, Stilna Jena, Jack and Jones, Palm Jumeirah, Elenski Balkandzhii and the Sunday Habit. We also had the repositioning of US Polo, Lilly store, Senior Burrito and Andrews store. Our Anchor Peek & Cloppenburg, iSTYLE and Yettel have commenced their reconstruction work at their premises. At Skopje City Mall, we had the completion of [ Setec ] project, delivering a larger premium electronic store. [ Perfa ] is also undergoing an essential enlargement to upgrade to the newest concept. We are also relocating City Fashion Women to the ground floor to create space to welcome flying Tiger store who is opening this fall. That's all on my end. I will hand you over to Brett, who will take you through the financial section of our presentation. Thank you.

Thank you, Rabia, and good morning, everyone. To start, I would like to thank our on-site and regional teams for keeping our centers operational, keeping our tenants happy and producing the results that we report today. Also a big thank you to our finance teams for their hard work in preparing the results. Thank you, guys. Now on to the financial results. Distributable income grew 7.5% from ZAR 1.4 billion in 2024 to ZAR 1.5 billion in 2025. This is ahead of the original guidance given in September 2024 of an increase in distributable income of 4% to 7%. Net operating income for the South African portfolio before the rental straight-line revenue accrual increased by 11%. This includes the results of Table Bay Mall for the full year compared to 3 months in 2024. If Table Bay Mall is excluded, rental income grew 3% and turnover rent increased by 5.8%. The like-for-like growth in net operating income for the remaining portfolio was 5.1%. Backup power costs decreased as a result of the reduction in load shedding with a consequential increase in utility power costs. The rates expense and recoveries reduced due to refunds received from councils, while the depreciation charge increased from ZAR 71 million to ZAR 91 million, given the CapEx and tenant installations over the last few years. Table Bay Mall continues to perform in line with our expectations, increasing its contribution to group NOI by ZAR 98 million to ZAR 130 million for the full financial year. Net interest costs of the South Africa portfolio increased to ZAR 176 million, of which ZAR 118 million is due to the cash and debt funded acquisition of Table Bay Mall in March 2024. Net interest costs were approximately ZAR 40 million below the original budget due to the reduction in interest rates, borrowing margins and hedging costs. As a result of the increase in interest costs, distributable income for the portfolio reduced by ZAR 11 million to ZAR 900 million. The European portfolio performed exceptionally well. Rental and other lease revenue increased 5.9% in euros, ahead of inflation and indexation and includes turnover rentals, which were up 20%. Property expenses other than utility costs were up 4% as a result of increases in minimum wages across the region, which impact cleaning and security costs in particular. Utility costs increased 12% and were compensated by a 20% increase in recoveries revenue. The overall result was an increase in operating income of 7.1%. Interest costs for the portfolio reduced by EUR 3 million, following a 1.8% decrease in Euribor and lower borrowings. Distributable income in euros, therefore, increased 24% from EUR 25 million in 2024 to EUR 31 million. The average rand-euro exchange rate strengthened by 2.5% with a resultant 20.5% or ZAR 103 million increase in distributable income from the European portfolio to ZAR 607 million. As previously mentioned, distributable income grew 7.5%. This was ahead of the original guidance given in September 2024 of an increase in distributable income of 4% to 7%. Distributable income per share is calculated using the net number of shares in issue at the end of the year. As a result of the issue of 19 million shares in June 2025, equivalent to 5% of the total issued shares, DIPS increased by 2.3% to ZAR 3.78. This exceeds the updated guidance of negative 1% to positive 2% growth in DIPS given in the pre-close presentation in June 2025. To better reflect the economic reality of the group's performance, we've calculated a weighted average distributable income per share based on the weighted average number of shares in issue during the year. This follows the same principles as earnings per share calculations and the antecedent earnings adjustment in the REIT FFO calculation. Weighted average distributable income per share increased by 5% from ZAR 3.78 in 2024, which has been recalculated on the same basis to ZAR 3.968 and mirrors the REIT FFO share -- REIT FFO per share calculation. A final dividend of ZAR 1.943 was declared, bringing the total dividend for the year to ZAR 3.07, an increase of 9.9% from 2024. This slide shows various cash flow-related reconciliations for 2024 and 2025. The group remains highly cash generative with cash generated from operations for the year of ZAR 2.9 billion. After paying interest and tax, cash flow from operating activities was ZAR 1.67 billion. This compares to the total dividend declared for the year of ZAR 1.2 billion. The remaining cash after deducting the dividend is ZAR 465 million, which we used to fund capital expenditure and manage our debt levels. Another way to look at it is that we distribute 80% of our distributable income. The remaining or retained 20% equates to ZAR 302 million. Add to this the depreciation charge of ZAR 156 million and you get a total of ZAR 458 million of cash from operations not paid out to shareholders. Either way, roughly ZAR 460 million of cash generated during the year has been retained to reduce debt and fund capital expenditure, thereby achieving one of our key objectives to maintain a strong balance sheet. To comment on some other items in the results. The fair values of the two property portfolios increased by ZAR 2.4 billion from June 2024. ZAR 1.1 billion is recognized in the statement of profit and loss as a change in fair value. The balance comprises the capital expenditure for the year and the ZAR 780 million increase in the rand value of the European properties as a result of the weaker year-end rand-euro exchange rate. Capital expenditure for the year was ZAR 587 million, ZAR 506 million in South Africa and ZAR 70 million in Europe. The largest two projects were the Somerset Mall Phase 2 expansion on which we spent ZAR 79 million and the Rosebank Mall Energy project on which we spent ZAR 70 million. If we exclude these two projects, the total capital expenditure for the SA portfolio is circa ZAR 350 million, which is in line with where our normal capital expenditure should be. The fair value of the derivatives decreased by ZAR 164 million due to the reduction in interest rates. The tax charge of ZAR 192 million relates to income tax and the deferred tax on revaluation of the investment properties in the European portfolio. The Lango shares received on disposal of the Sub-Saharan Africa portfolio have been valued at ZAR 401 million after providing for a 30% minority and liquidity discount. The gross value before the discount is -- sorry, ZAR 572 million. Total borrowings reduced from ZAR 15.8 billion in 2024 to ZAR 14.7 billion in 2025, mainly as a result of the disposal of the Sub-Saharan Africa portfolio. Rand borrowings increased by ZAR 500 million due to the additional capital raised in the bond auction in May 2025. Euro borrowings reduced from EUR 327 million to EUR 302 million in June 2025, following the EUR 10 million amortization of in-country borrowings and settling a further EUR 22 million of the equity debt. The outstanding equity debt in June 2025 was EUR 68 million with EUR 17 million of undrawn revolving credit facilities available. We have maintained our spread of lenders and the DCM paper held by independent investors, i.e., not lender banks, increased to 25% of total borrowings from 19% in 2024. Looking at the group's LTV. This reduced from 36.4% in 2024 to -- sorry, to 33.6% and remains well below our target of 40%. The main factors affecting the LTV are the disposal of the South African portfolio -- sorry, the Sub-Saharan Africa portfolio, the increase in the value of the property portfolios and the ZAR 806 million of equity capital raised in June 2025. The LTV of the rand portfolio remains stable at 29%. The LTV of the European portfolio reduced from 48.7% to 43.4%. We will continue reducing this LTV by amortizing the in-country borrowings, retaining distributable income in the European portfolio and paying down the equity debt when possible. If the annual amortization of the in-country -- sorry, the annual amortization of the in-country debt should reduce the European LTV by 1.6% per year with a target LTV of 40% achievable in the next 2 years. In 2025, we early refinanced ZAR 2.5 billion of facilities at margins between 17 and 85 basis points lower. The bond auction in May 2025 cleared at the lowest rand margins the group has achieved, 117 basis points for 3.5 years and 130 basis points for 5 years. Most of the ZAR 2.2 billion of borrowings and facilities, which mature in 2026 relate to bonds issued under the DMTN program. The bond of ZAR 502 million due in November will most likely be settled utilizing the excess cash raised in the May bond auctions or from revolving credit facilities. The remaining bonds will be refinanced either through the DCM or private placements where the current holders are lender banks. The group's liquidity remains strong with ZAR 1.2 billion of cash and ZAR 2.5 billion of undrawn facilities at the end of June. Unencumbered assets also increased to ZAR 8 billion following the reduction in properties mortgaged to lenders. The interest cover ratio for the year was 2.6x compared to 2.5x in 2024. The cost of funding for rand borrowings reduced from 9.4% to 9% in June 2025, and the average margin reduced from 1.6% to 1.5%. The average cost of borrowings in euros was 4.2%, which is down from 4.9% in June 2024. The average margin on euro borrowings was stable at 2.1%. 84% of the group's interest rate exposure on term facilities was hedged at the end of June. This has reduced to 75% post year-end following the expiry of some of the euro interest rate hedges. 66% of rand hedges are caps or collars, allowing the group to participate in the reduction in interest rates as is evident in the lower average cost of borrowings from 2024 to 2025. To end, just thank you again to all our staff for their huge efforts throughout the year. Our thanks also goes to our funders and shareholders for their support. I now hand you back to Morné to close.

Thank you very much, Brett. In closing, over the last few years, we have been working hard to get Hyprop back on a new growth trajectory. The guidance for growth in the distributable income per share is between 10% and 12% for the next financial year. We are actively pursuing recycling opportunities. The sale of the 50% undivided share in Hyde Park Corner, we would like to implement it before the end of November. We also would like to sell the Lango shares and secure another strategic sale on the Gauteng portfolio. We are actively looking for opportunities in Eastern Europe, and we want to secure at least one or more deals in the next financial year. After the sale of Hyde Park Corner and the accelerated book build, of last year, we have ZAR 1.6 billion available for new transactions. On the South African portfolio, we want to pursue some further organic growth opportunities at Somerset Mall and CapeGate. Both these centers are in very strong development corridors. We are busy with a number of projects on the South African portfolio. The four remaining on-site solar projects are a key priority, and we would like to implement at least Phase 2 at the Glen and CapeGate solar this financial year. The major delay on these projects is required regulatory approvals. The potential upside per site for solar is about ZAR 1 million per month, and that's about ZAR 48 million per annum if we can install the solar at all four centers. We will also install further integrated battery solutions on the portfolio like the one we did at Rosebank Mall. We will continue our discussions with Pick 'n Pay, Game and Woolworths to upgrade and rightsize the stores in order to improve their performance as anchors in our portfolio. The recent media release for Walmart Africa is very promising. On a European portfolio, on Friday, as I mentioned before, we secured our group applications for the authority to expand those two malls. We need to finalize the design and the extension of these two malls in the next financial year. We also want to complete the retiling of CCO1 West in Croatia and find a workable solution how we can install a solar in Croatia. Now I want to look at potential future projects. Phase 1 at Somerset Mall, we opened a Checkers FreshX and improved the food court supporting the cinemas. Phase 2, as I unpacked earlier, was additional 5,500 square meters. Phase 3 will be a further expansion of about 15,700 square meters and will link the current Woolworths entrance and the Pick 'n Pay entrance. All of this is done on the back of additional tenant demand. The tenant mix will focus on new fashion tenants, home and furniture tenants as well as casual and formal dining. This extension will further enhance the flow in the center. After the completion of Phase 2 and 3, the center will have a total size of 91,000 square meters. We would like to finalize the plans and get the necessary approvals in place in this financial year. At the Glen, we're still negotiating with Pick 'n Pay to take a reduced size store. This will be the catalyst to implement Phase 1 of our master plan, which will improve the flow and secure some further line stores to improve the tenant mix. As part of the project, we want to increase the size of the back stores, activate the back end of the center, which was not trading well. By doing this, we will improve the flow as well as the view line. This can be seen in the green arrow on the plan. We also want to improve the flow from a parking deck to the escalators in the back. This can be seen in the red arrow on the plan. Phase 2 of the master plan will focus to improve the vertical flow from this level of the center to the ground floor, which is anchored by Woolworths and Checkers. The priority at CapeGate are to improve the look and feel of the center, improve the sense of arrival and to improve the offering of the anchor stores. We want to extend the mall by 9,700 square meters on the southern side. The focus on tenant mix will be casual and formal dining, new national fashion tenants and mono brand as well as some showrooms. We will now give an opportunity for questions. Just give us some time to gather your questions, and then we will address them thereafter.

Okay. We've got our first question from Nazeem at Investec. He's asking, what's the rationale to deviate from the SA REIT best practices regarding the antecedent's interest? Will the exclusion be consistently applied if you raise new capital going forward?

[ I can give black and white ] answer and I will give Brett also an opportunity to answer. I think that's always the way we've been doing it. And with the previous DRIPs which is technically accelerated book builds, we have also done it like that. I think it's a more conservative way of looking at it. And there is a possibility. We had a long debate at our Board meetings, which one we should use, and we have decided to use the existing one rather than what is being done by REITs. But Brett, maybe you can unpack a bit more.

Yes. Just I think we've disclosed both the weighted average, which comes to the same as the REIT FFO calculation, taking into account the antecedent earnings adjustment because that gives a better feel for what the actual result of the year is given that the capital was raised so late in the year. Our guidance and everything we've reported historically has always been based on the actual number of shares. So we wanted to remain consistent with that. I think going forward, we will report using the weighted average, but we will provide any update to the guidance that we've given based on that weighted average number of shares in issue. The guidance of the 10% to 12% increase is obviously based on the number of shares in issue at the end of the year because that's the base from which we work going into the 2026 financial year.

We have another question from Nazeem. You mentioned two opportunities in Eastern Europe. Can you provide more information regarding the size, yield, et cetera?

Nazeem, it is two shopping centers, but I can't disclose any further information.

We've got a question from [ Alex Hardman from Rezco. He's ] asking, has Walmart engaged you yet on any lease negotiations?

We are in discussions with the MAS Mart Group but I can't disclose any further information at this point in time.

Then we've got several questions from Francois at Anchor Stockbrokers. The first one is the DIPS growth guidance is set to incorporate the current interest rates. What would the impact be of 15 basis points lower interest rates by 31 December? Is the interest rate risk largely hedged for FY 2026?

I think Francois, if you have a look at the Note N3 to the financial statements, it deals with our interest rate risks. There is a description there of the sensitivity of the interest cost to the change in interest rates. It also sets out that roughly 1/3 of our rand hedges are swaps leaving 2/3 with some participation in downside risk. But I think you can probably rework the numbers from the sensitivity to adjust the percentage of the basis points we've used to the basis points that you want to take into account and also the half year position.

His second question. The Hyde Park Mall stake that was held for sale is included at ZAR 764 million on the balance sheet. Why is this lower than the sales consideration of ZAR 805 million?

So the main reason for the difference is in calculating the fair value that we put on the balance sheet, we've taken into account the maximum amount for the rental income guarantee that we've given to the buyer. That's ZAR 20 million a year, and we've deducted the ZAR 40 million in total. You'll also see that the ZAR 764 million includes some of the current assets and the cash which sits in Hyde Park Corner as well.

His final question. I think you said the normal CapEx of the SA portfolio is around ZAR 350 million per year currently. How much CapEx is required long term in the Eastern Europe portfolio in the current monetary terms?

Speaking a little under correction, the European portfolio generally has a much lower CapEx requirement than South Africa, given the age of those malls and also the ongoing annual spend. I think our budget for next year is roughly EUR 8 million in terms of CapEx. If you have a look in note E -- just give me one second.

While Brett is looking at it, I must say over the last few years, we have been spending quite a lot of money on the European assets. So I think they are quite up-to-date in terms of repositioning and looking after the assets. But Brett can maybe just unpack what the number is?

If you have a look at Note E3 of the financial statements, we detailed there the capital commitments. And our capital expenditure plan for Europe for next year is ZAR 160 million, which is roughly the EUR 8 million that I mentioned.

We've got a question from Mweishö at Standard Bank Group Securities. He is saying regarding the payout ratio with a 33% LTV, you have capacity to take the payout ratio to about 85% to 88% and still spend on solar CapEx. What is the long-term payout ratio we can model?

As we discussed before, we progressively will look into increase our payout ratio. Will we ever go to 100%? I don't think that is a possibility. And what we have communicated is that we will review it at our next cycle, and then we will communicate it as and when we will increase it. But we have said we will progressively increase it. To what level completely it will go to? We haven't communicated. But I think your 85% is maybe not an unfair view to take in terms of that. In terms of our retail portfolio, I think the capital you need to spend is a little bit more. So I think you must always look at the payout ratio given the portfolio which it underpins.

We have no further questions. So yes...

Thank you very much. I want to just in closing make a few remarks. I want to say our decision-making is driven to ensure optimal capital allocation. It's key for us to retain a healthy balance sheet, sustainable growth in distributable income. Obviously, not to repeat the same mistakes and focus on total return. Thank you very much, and goodbye.