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

Good morning, everyone, and welcome to Hyprop's interim results for 31 December 2024. I want to use this opportunity to say thank you to the shareholders for their long -- for their ongoing support. A big thank you to the South African and the European teams for their dedication and hard work. If we look at our agenda, I will be handling the progress and the headlines.  Wayne Abegglen will be giving us an update on the operational performance of South Africa, Yvette Van der Merwe on the operational performance of Eastern Europe, Brett Till on our financial results, and I will be handling the closing. We started as a management team more than 5 years ago. Hyprop is a specialist retail fund with one of the best portfolios in South Africa. Our why is creating spaces and connecting people. And how we do it is owning and managing and redeveloping dominant retail centers in mixed-use precincts and key economic nodes in South Africa and Eastern Europe. We set ourselves the following key strategic priorities. It's repositioning our South African and Eastern Europe portfolios to ensure it's dominant and maintain our relevance, strengthening the balance sheet and simplify the capital structure, protecting the value of the African investment whilst pending -- whilst taking the exit, annual portfolio reviews to evaluate the case for recycling assets and finding new growth opportunities. During this period, we had several challenges, and the teams have done excellent work achieving our priorities. We implemented the Hystead liquidity event by Hyprop acquiring the 4 core Eastern Europe centers. The centers we've identified as noncore were sold at market value or even above. These sales included Atterbury Value Mart, the 2 Delta City centers in Puerto Rica and Belgrade. We are actively marketing other assets we have identified as non-core. In terms of strengthening our balance sheet, we reduced the consolidated loan-to-value from a peak of 52% in June 2020 to 36.3%, increased our unencumbered assets from ZAR 2 billion to ZAR 5.6 billion, and settled all the dollar equity debt. We reduced our euro LTV from 86.2% to 47.2%. And with that, we also reduced the euro equity debt from EUR 403 million to EUR 87 million. We implemented the sale of the remaining assets in Africa to Lango. And with this transaction, we canceled all guarantees and commitments relating to the in-country debt in Africa. In terms of our capital allocation framework, we acquired Table Bay Mall in the Western Cape, plus we started the Phase 2 extension of Somerset Mall. Various repositioning initiatives were completed with our South African and Eastern Europe portfolios. On the South African portfolio, we improved the tenant mix by securing Checkers FreshX as a new anchor tenant. We opened the first Zara within the Hyprop South African portfolio at Canal Walk. To increase the dwell time for the shoppers, we upgraded our restrooms. We reduced the energy costs with the installation of solar plants at all our Gauteng centers as well as Table Bay Mall. We're busy with the installation of a battery solution as well as a gas generator at Rosebank Mall, which will be completed at the end of March. We have full backup power at all our centers in South Africa. And what is a big advantage with all the work we have done, the effort ratio in the South Africa portfolio reduced from 11.3% to 7.9%, and that gives us scope for positive rent reversions going forward. On the Eastern Europe portfolio, as part of a 2-year project, we improved the dominance of Scorpio City Centre in North Macedonia. At the Mall in Sofia, we completed the hyperconversion. This mall was increased to 61,000 square meters, and we upgraded the food court as well as the restroom. We recently completed the increase and the refurb of the food court at City Center One West. The focus in Eastern Europe is securing new opportunities. In Africa, Valhallam concluded the sale of the remaining 4 centers with Lango, and this was implemented in September 2024. The historic Africa structure was also sold as part of the transaction, and this will give us some corporate savings in the future. The last step is selling the Lango shares. It is great that we have dealt with the sins of the past and can now focus on our core portfolio in South Africa as well as Europe. Looking at our headlines, we had an excellent operational performance -- sorry, I'm going back. Sorry about that. We had an excellent operational performance for the last 6 months and on track to meet the upper end of our guidance. The group distributable income increased by 14.5% to ZAR 765 million. Our distributable income per share increased by 14.4% to ZAR 2.01. We have successfully strengthened the balance sheet, caught up with CapEx, and implemented the sale of Africa. Therefore, we have decided to increase the payout ratio for this financial year to 80% of our distributable income of South Africa and Eastern Europe from the current 75%. The Board declared an interim dividend of ZAR 1.13 per share, which is 95% of our distributable income from South Africa compared to the 90% before. After the sale of Africa, the LTV reduced to 36.3%. Our ICR improved to 2.6x compared to 2.5x, and we are at a healthy liquidity position with ZAR 807 million of cash and ZAR 1.1 billion available bank facilities. On our South African portfolio, all the operational performance looks positive. Our tenant turnover increased by 4.9% and trading density by 4.9 -- 4.4%. We are busy rightsizing some tenants, for example, Edgars, and therefore, our vacancy increased slightly to 2.4%. The benefit of this rightsizing, we can see very clear at Canal Walk, the reduced Edgar store had the same turnover on half the space. Our vacancy, I still -- I believe, is still well below the market norm and creates the flexibility to improve and optimize our tenant mix. We had positive rent reversions of 4.4%, and Wayne will unpack that in more detail later. We made good progress at Hyde Park Corner with the completion of the first phase of Workshop 17 and securing Checkers FreshX for the old Pick n Pay store. We opened the first JD Sport at Canal Walk, and it traded exceptionally well. At Somerset Mall, we started the Phase 2 extension. Now looking at Europe. Our tenant turnover increased by 8.8%, Trading density increased by 7.1%. Vacancy remains low at 0.2%, and we had positive rent reversions of 7.5%. The independent property values increased to EUR 620 million on the back of good income growth. Now I'm going to hand over to Wayne to give us an update on the South African portfolio.

Thank you, Morne, and good morning to everybody. Hyprop's South African portfolio constitutes the bulk of our business operations. The portfolio, which predominantly consists of regional and super regional assets constitutes 68% of our investment property and also 59% of our distributable income and equates to 78% of our total GLA. The SA portfolio consists of 7 large regional malls, 1 small regional center, and 1 super regional mall, which is located in key economic nodes in Gauteng and in the Western Cape. The size of the assets range from about 38,000 square meters to 154,000 square meters, which is our flagship super regional in Canal Walk in Cape Town. Over the past 6 months, we have welcomed more than 45 million visitors to our shopping centers. If we start looking at our SA operations from a rolling 12-month basis, key trading metrics for half year 2025 were positive, barring a slight increase in vacancies to 2.4% if we exclude the Pick 'n Pay vacancy at Hyde Park Corner, where we have secured Checkers FreshX as a replacement. Despite the marginal increase in the vacancy rate, this remains well below market norms and allows us the opportunity to enhance our offering and also to develop better experiences. Key trading metrics for the half year 2025 are as follows: Tenant turnover increased by 4.9%. The effort ratio improved by 0.3% down to 7.9% and trading densities grew by 4.4%. The average monthly foot count showed stable growth of 0.4%, resulting in an increased spend per head of 4.5% to ZAR 328. Very strong trading growth was recorded in August, October, and November of 2024, mainly due to improved consumer confidence, 2 pot retirement fund withdrawals, new store openings, and also Black Friday sales. If we consider our operations in terms of 5-year trends, the following graphs show the trends in key metrics, and this excludes Table Bay Mall. Positive turnover growth from tenants remains and considering performance on a year-to-date basis, we anticipate that this trend will continue. The upward trend in rental income growth continues at 4.4%, and this coupled with good growth in turnover rental at 10.5%. The weighted average lease escalation shows a positive trend, slightly up at 6.5%. Focusing now on our leasing activity on a year-on-year basis. Overall reversion rates are positive at 4.4%. The total renewal reversion rate shows growth of 1.5%, strongly supported by new deal reversion rates of 8.6% for retail space and at least 56% for office space, resulting in a total new deal reversion rate of 18.3%. Retail vacancies, which now include Table Bay Mall, equates to 3.1%. If we exclude the Pick 'n Pay vacancy at Hyde Park, now led to Checkers, this reduces the number to 2.4%. Office vacancies are 22.1% as of December 2024. However, we must be noted that 17 Baker Street was a strategic acquisition for us and subsequently mothballed. If excluded from the vacancy factor, office vacancies are reduced to 17.7% and total vacancy reduces to 4% from 4.3%. The lease expiry profile for 2025 is 11.1% of GLA. This could potentially support our repositioning strategies and opportunities for growth should current demand and trends continue. Looking at our SA leasing workload for the financial year 2024 is about 285,000 square meters. The workload balance as of the 31st of December is 210,000 square meters. Deals under negotiation currently equates to 102,000 square meters and expiries 79,000 square meters. Total expiries for our 20 -- in terms of our full year 2024 apologies, is 183,000 square meters and very good progress has been made in this regard. Having a look at some of our new tenancies in our South African portfolio, there were quite a few new tenants who partnered with us during the past 6 months, of which some of the highlights are depicted on the current slide. I would like to make specific mention of the following tenants in terms of our repositioning and asset management strategy. At Canal Walk, we were very proud to have the first JD Sports opened in South Africa. Silki, an online brand with its first stand-alone store in South Africa, focusing on body care products opened. Baseus, a leading international electronics brand opened a store, and we also welcomed Shift Expresso Bar with a flagship offering. Chatogitto, Refinery Jr., Seaweeds, a very fashionable swimwear brand, White House also opened new stores at Canal Walk, and the iStore Pre-Owned opened to complement the iconic iStore flagship offering in the shopping center. At Somerset Mall, we welcome Faithful to Nature, Hitech, Steve Madden, and Sato Gato. In Cape Gate, we welcomed Okleggers, enhancing our food journey, Pet Science, Yoki Co, and there was also a substantial expansion to the P&A store, which is now a flagship offering and Computerania relocated and also expanded. At Clearwater Mall, Continental Linen opened, Sato Gato opened a Croc store and McDonald's conducted a full revamp. Anchor tenants such as Pick 'n Pay and Woolworths have started to perform really better due to collaboration and asset management initiatives with them. At the Glen, new motor dealerships opened in Amoda and Jku Haga opened a new kiosk, and we welcome Port and Craft into the mix. At Woodlands, Wellness Wareouse opened their doors, Cururvedgear and Selini. At High Park Corner, Kitchen Sumarai opened, specializing in knives, wet stones, and accessories, a very unique offering. Avenue 2A is an international fashion brand store, Graham Contemporary, Cube Gallery and Society 1840, a luxury salon and dayspall was also opened. Workshop 17, which offers dynamic workspaces commenced trading in October last year. And we are also very excited about concluding a deal with Checkers FreshX, which is scheduled to open in July of 2025. Moving on to Table Bay Mall. We welcome Skechers, which is trading extremely well, and Kontempo, T-awesome, and Hungry Line was brought in to enhance our QSR offering. At Rosebank Mall, Cable & Co is the first store in Gauteng for the brand, a premium fashion offering. Azman, the only modesty fashion store in the center, and we also welcomed Steve Madden, One Stop Travel, Ribs and Wings, and we're very happy to announce that Soka District is now fully let since inception. It's trading extremely well and is a strong differentiator for the mall. If we move on to some of our completed projects in the portfolio and those that are currently in progress, I would like to give you a brief update on them. At Hyde Park Corner, Workshop 17 commenced trading in October in 2024. Phase 1 GLA is approximately 3,000 square meters with total GLA at completion of about 5,000 square meters. We secured a 10-year lease with the tenant. We also opened the forum in October 2024. This is an exclusive events venue. The size of the premises is about 600 square meters, and they also have about 400 square meters of external area. We also secured a 10-year lease with this tenant. They host exclusive events like the Discovery Foundation Awards, the Johnnie Walker Lunch, and the Living Mask Awards, just to mention a few. At the mall offices in Rosebank, we conducted an entrance upgrade, a 4-year upgrade, and we also invested capital in upgrading our HVAC plant and equipment. At Hyde Park, Clearwater, and Woodlands, we initiated a water backup project. This allows a 3-day potable water backup supply for continuous trade. The first phase of this project for the portfolio was completed on the 4th of December 2024. The Glen and Rosebank installations have also commenced and will be completed by June 2025. The total investment in this equates to just over ZAR 15 million. Moving on to Somerset Mall. This is a substantial mall expansion for the center and it also consists of retiling of the existing mall and also a bathroom upgrade. The project consists of an expansion of the mall from 70,000 square meters to about 75,500 square meters. We are also introducing approximately 50 new tenants with a focus on athleisure and mono brands. Leasing is progressing well with offers under negotiation on all the major spaces. The project includes the downsizing of Game from 6,000 to 4,000 square meters and the relocation and downsizing of Edgars from 4,000 to approximately 2,900 square meters. We will also be establishing a new food experience in the existing or at least the ex-Edgars space with a family entertainment venue. Section 1 will be completed in November 2025. The athleisure and fashion component with Section 2, the food and family entertainment experience will be completed by July 2026. The retiling of the existing mall and columns is earmarked for completion by July 2025, and the bathroom upgrade and refurbishment has commenced and will be completed by November 2025. In terms of projects that are in progress at CapeGate, we have looked at the land parcels around the center and have started with satellite office developments. The North side has been sold to Mediclinic, where they will be developing GLA of approximately 4,800 square meters. We have also included minimum restrictions by when this development needs to commence. We have concluded an office development agreement on a leasehold basis with [ Son and Gefler ] on the southern side parcels of the asset. There are 3 development opportunities as depicted in the rendering on the bottom right of the slide. The anticipated GLA to be developed will be as follows: Site 1 will be just under 5,000 square meters; Site 2, just under 3,500 square meters; and the third site, just under 5,700 square meters of office space. Mediclinic has not indicated when it will proceed with its development, but will consist of medical consulting rooms. The launch of the Son and Gefler sites has been very well received in the market. Several international and national blue-chip office tenants have expressed interest and timing is subject to securing tenants. Having a look at Hyde Park Corner, I've already touched on the Checkers FreshX project, which is currently in progress. The project will be completed by July 2025. The GLA equates to about 4,000 square meters and includes a mezzanine level. The development will also include a Checkers liquor store, and we've secured a 10-year lease for with this tenant. At CapeGate, we are currently in progress with the refurbishment of the roof and the installation of solar panels. The maintenance of the roof is now complete to receive the solar panels and the size of the plant will be approximately 5.3 megawatts. Approval of the application to proceed with solar is imminent and commencement of installation is targeted to be in June 2025. Lastly, at Rosebank Mall, we have commenced with the gas generator and battery storage installation. This is comprised of energy storage or at least battery energy storage for the mall. Practical completion is earmarked for the 30th of April 2024. Capacity will be about 6,000 kilowatts and the benefits here include uninterrupted power supply and electricity that can be sold to tenants at lower rates during load shedding and straight diesel generated tariffs. If we move on to the impact that we're making, our investment in sustainability and the environmental impact on the various projects undertaken over the past few years has resulted in the following: our reduced electricity consumption now equates to 29.6%. Increased solar capacity is 396% and our reduced water consumption equates to 10.2%. In closing, the South African portfolio has delivered a good set of interim results. As can be seen, we are continuously investing in our assets and looking at repositioning the portfolio for growth and for defensive purposes. We will remain focused on driving our operating income and asset value and staying true to our purpose of creating spaces, connecting people and making sure that every experience is memorable. We have amazing teams and people in our business and through collaboration and being innovative together, we will make it happen. I would now like to hand over to Yvette Van der Merwe, who will take us through the Eastern European portfolio.

Thank you, Wayne and good morning to everyone. Despite elevated levels of global uncertainty, investor sentiment towards our region remained positive. The region is well positioned to evolve to its cost competitiveness, improving economic conditions and strong investment appeal, which is primarily driven by strong consumer demand and consumption. Generally speaking, the economy is performing well. Wages have continued to grow, inflation is calming down, unemployment has decreased and the forecast is for further growth ahead. The regional average GDP growth for the CEE countries was 0.6% in 2023. It accelerated to 1.8% in 2024 and is expected to reach 2.8% in 2025. This good economic growth benefited from the declining inflation, which allowed central banks to cut interest rates. It must be noted that while the inflation seemed to be under control, the potential for further significant decrease is limited due to raising prices of services and food products. The same goes for the interest rate forecast. Further reduction, if any, is expected to be more modest than the previous reductions. In 2024, retail showed a recovery pattern across the region, not only on the performance side, but also on the investment market appetite and new development schemes. The retail sales rebounded strongly in 2024. Investment activity seem to be more on the optimistic side, considering the low interest rates and more pipeline project development, which is currently dominated by retail park projects, partly reflecting the consumers' preference for convenience and proximity while also allowing developers to have smaller financial exposure. The normalization of the construction cost is also contributing to unlocking more of these retail park opportunities. ESG remains a focus for developers, tenants and lending institutions. E-commerce is still on the increase, but brick-and-mortar physical shops are expected to remain the main sales channel, while some retailers will optimize their physical store presence, by example, closing down certain locations to improve sales in the remaining ones. Technology integration and data-driven approaches are expected to play a key role in guiding international retailers to make more informed decisions on expansion strategies. We move on to the slides. We look at the macroeconomic and retail environment. The real GDP growth in Bulgaria is 2.3% in 2024 compared to the previous year. Expectations are for steady economic growth, revolving around 2.7% from 2025 onwards. Similar to the trend in the Eurozone, inflation in Bulgaria has started to decrease reaching 2.8% in 2024 as opposed to 8.6% in 2023 and is predicted to further slowdown to reach 2.6% in 2025 and to even reach the ECB target of 2% in 2026. The unemployment rate in Bulgaria remains one of the lowest at 4.3%, which is lower than the European average. The total shopping density in Sofia is 300 squares for 1,000 inhabitants. Eurozone preparations for Bulgaria are on its way to adopt the euro as official currency after being tied to it in a currency board for about 25 years. The euro currency adoption has been postponed due to the lack of a stable government but remains a priority for the main political parties. On the other hand, the preparation for the country's full membership in the Euro schengen area on land borders reached finality during 2024 and starting 2025, Bulgaria is a fully fledged Schengen member. Croatia exhibits similar trends to Bulgaria with relatively stable GDP growth of 3.4% in 2024, and it is expected to have a moderate growth of 2.9% from 2025 onwards. The inflation pattern resembles the one observed in Bulgaria, however, with less fluctuation. Unemployment is forecasted to remain healthy at 5.6% and the shopping density in Zagreb is the highest within the portfolio with 590 squares for 1,000 inhabitants. North Macedonia has stable GDP growth in the range of 2.2% to 3.8%. Like the other economies, inflation peaked in 2022, reaching 14.2% and declined to 9.4% in 2023 and further dropped down to 3.3% in 2024, approaching the target rate of 2% from 2026 onwards. The unemployment rate remains high at 13% and the shopping density in Scorpio is high due to the entry of new shopping centers in the last couple of years at 326 squares per 1,000 inhabitants. On the next slide, we look at our trading performance. Good performance can be observed when comparing the current period with the previous 6 months. The turnover increased by 8.8% compared to the previous financial year. The trend continues in January with a 7.2% increase. Due to the improved turnovers, the asset ratio decreased by 0.3% for the 6 months ending December and into January, the improvement continues with a 0.2% decline. The trading density increased by 7.1% compared to the previous financial year. In January 2025, the trend is similar with an improvement of 5.6%. On the next slide, we continue with the trading performance. The footfall for the first 6 months remained fairly flat with a 0.8% increase compared to last year and a slight negative growth of 0.1% in January. Since the 1st of July 2023, the law in Croatia has changed, and we are only allowed to trade 6 Sundays per calendar year, and we are further not allowed to trade on public holidays. This puts strain on our footfall growth at our Zagreb assets. However, the positive news is that despite the low footfall, we had more than 8% turnover growth, and we expect this trend to continue. The spend per head is 7.9% higher for the 6-month period compared to the same period last year. This is due to the good growth in turnover, while the footfall growth was low. In January, the spend per head increased by 7.3%. On the next slide, we look at the 5-year trading trends. Our turnover reached 8.1% growth in 2024 compared to the previous year, and our rental income improved with 7.5%. The indexation movement follows the inflation curve reaching 6.1% in 2023, while in 2024, it started to decrease to 4%. A major upside is observed in the turnover rental income in the past 3 years with a 20.8% increase compared to the previous financial year. On the next slide, we look at our leasing activities. During the financial period, the renewal reversion rate was 6.8%, which relates to 3.7% of the total GLA. Our new deals reversion rate was almost 12%, which relates to 0.6% of the GLA. Combined, the total average reversion rate of new deals and renewals is 7.5%, which relates to 4.3% of the total GLA. During this period, our retention rate of tenants was 85%. Further breakdown of the reversions for all deals concluded in the past 6 months include flat reversions of 27%, followed by positive reversions of 53% and only 20% with negative reversions. The total occupancy rate is 99.8% with only 0.2% vacancy in the [indiscernible]. The lease expiry workload over the next 4 years is fairly smooth with the highest expiry of 34.8% of GLA in 2029 and beyond. We continue with our leasing activity on the next slide. The lease workload at the beginning of the financial year was 17,718 square meters. And by the end of December 2024, the workload reduced to 9,642 squares, of which 320 squares were vacant. Tenant movements in Scorpio City Mall, M House Roastery Cafe has opened successfully, enhancing our food courts offering. The former ATM area that was relocated is now leased to Mtel and Grand, creating additional revenue with a service offering. Our new fashion tenant, Gerry Weber opened their doors at the end of February and Swarroski has completed a full upgrade. In Bulgaria, the mall welcomed several exciting new stores in Sofia. Food lovers can now enjoy the famous Belgian chocolate brand, Jeff Debruge and the local Bulgarian specialty store, Alenski Bulganski, featuring cheese and meat delicacies. Other new stores that opened are Styleazina, Sunday Abit, and Intesa. Sports fans are thrilled with the opening of Bulgaria's first Foot Locker store and enlarged premises of Intersport and the Dunk Shop. Several stores undergone refurbishments, including Bakers, First Investment Bank, LC Waikiki and Spanish fashion brands, Springfield and Butterfield. The famous German fashion brand, S. Oliver, opened a new store in City Center 1 East together with 4 F, a Polish sports mono-brand concept offering high-quality sports equipment. In City Center 1 West, our new stores that opened in the last 6 months were jewelry store Zas and Levi's store. Europa 92 and S. Oliver were relocated so that we could rightsize them and H&M underwent a complete renovation. The following 3 slides show some of the projects that were completed recently. At the Mall in Sofia, we built a new staircase, connecting the food court to the first floor to improve our vertical food flow and access for the adjacent ETC office workers. The next slide shows the expanded and upgraded food court project at CCL West that was completed in September last year. We introduced 5 new food operators, which are trading exceptionally well. From September to December, the food court turnover increased with EUR 1.4 million compared to the previous year. The last slide shows the renovated Cityplex movies at Scorpio City Mall that was completed in October last year. Cineplex has completely renovated their foyer and upgraded all their cinemalls with the introduction of reclining chairs in 4 of the halls. It is worthy to note that Cineplex in Scorpio City Mall is the only cinema in North Macedonia. I would like to take this opportunity to thank our European management teams as well as our Hyprop head office team for all their efforts, commitment, and dedication. This concludes the Eastern European part of the presentation, and I will now hand you over to Brett, who will take you through the financial section of our presentation.

Okay. I think we're good. Thank you, Yvette, and good morning, everyone. Distributable income for the period increased by 14.5% to ZAR 765 million. This equated to an increase of 14.4% in distributable income per share from ZAR 1.76 to ZAR 2.014 in the current period. In terms of performance of the individual portfolios, distributable income from the South Africa portfolio increased by ZAR 6 million from ZAR 448 million in 2023 to ZAR 454 million. Excluding Table Bay Mall, revenue increased by ZAR 49 million following a 4% increase in rental and other lease revenue. Total expenses decreased by ZAR 7 million due to a reduction in utility and backup power costs as a result of the lower levels of load shedding compared to 2023 and savings in utility costs from the solar plants installed in prior years. The largest increase in expenses was in the depreciation charge, which increased 18%. The cost-to-income ratio for the portfolio reduced from 45.5% to 44.3% in 2024. Table Bay Mall performed in line with our expectations and delivered ZAR 60 million of operating income. Interest costs increased by ZAR 110 million, ZAR 80 million was due to the purchase price for Table Bay Mall being fully debt funded and the balance as a result of increases in the average cost of borrowings from 8.9% in 2023 to 9.5% as well as a general increase in borrowings to fund capital expenditure. The Eastern European portfolio delivered an excellent result. Distributable income increased by 34% from ZAR 229 million in 2023 to ZAR 308 million. In euros, revenue was up 11%, mainly due to strong growth in turnover rentals and favorable indexation adjustments early in 2024 before inflation in the region started to decline. Operating costs in euros increased by 9%, following increases in minimum wages across the region, which impacted cleaning, security, and other property costs, as well as an increase in electricity prices and recoverable electricity expenses, particularly in Bulgaria. The cost-to-income ratio for the portfolio was stable at 37%. Net interest costs reduced from ZAR 188 million to ZAR 150 million in 2024, and that's for the European portfolio. This is in line with the reduction in borrowings from EUR 351 million in December 2023 to EUR 319 million in December 2024 and the reduction in the average cost of borrowings from 5% to 4.7% in December 2024. The results of the Sub-Saharan Africa portfolio were included up to 30 September, when the portfolio was sold to Lango. A small profit of ZAR 4 million was made. I've spoken before about cash flow and that distributable income must be underpinned by cash generated from operations to support the dividend payment. At its most basic level, this starts with the cash collections each month from tenants. For the period, we collected 100% of the net billings in cash from tenants in the South Africa and European portfolios. The graphs on the left-hand side of the slide reconcile the cash generated from operations to the distributable income, while the graphs on the right-hand side track the cash flow movements from the cash flow statement. The top 2 graphs are for the 6 months ended December 2024, and the bottom 2 for the year ended June 2024. Looking at the top left-hand graph for the current period, we generated ZAR 1.37 billion of cash from operations. This was used primarily to pay interest for the period of ZAR 555 million and tax of ZAR 48 million, leaving ZAR 771 million of available cash. This compares to the distributable income for the period of ZAR 765 million and the dividend declared of ZAR 431 million, which obviously excludes the income earned from the European portfolio. If you look at the top right-hand graph, you see a similar story with ZAR 740 million of cash generated from operating activities after paying the opening accrued interest and the current period interest and tax. The negative item in the December 2024 reconciliations is the increase in working capital of ZAR 96 million, mainly due to the increase in accrued rent -- sorry, accrued income from turnover rentals, which are calculated at the end of the calendar year in Europe and settled by tenants in the first quarter of the new calendar year as well as accruals for the recovery of municipal costs in South Africa, which were billed in January. The working capital position was very similar in December 2023 and is temporary as evidenced by the favorable working capital change in the June 2024 graph of ZAR 23 million. For the year ended June 2024, cash generated from operating activities was ZAR 1.6 billion compared to the distributable income of ZAR 1.4 billion and the dividend of ZAR 1.06 billion, which was only actually paid in the current period. The excess cash represented by the difference between the cash generated from operating activities and the dividend for the period is being retained to fund capital expenditure and manage borrowings. To comment on some of the other items in the results, the increase in fair values of the South African and Eastern European portfolios were ZAR 376 million and ZAR 201 million, respectively. These were mainly due to improved net operating income of the portfolios as there were no changes to the discount and cap rates applied by the valuers. I will explain the reduction in the carrying value of Ikeja City Mall in a moment. Capital expenditure for the period was ZAR 253 million, of which ZAR 201 million was incurred in South Africa. A further ZAR 145 million has been committed to approved projects, Major projects during the period include the Workshop 17 installation at Hyde Park Corner, the subdivision of Edgars at Canal Walk and Woodlands, the dual fuel generator project at Rosebank Mall, preparations for the solar installation at Cape Gate and various water sustainability projects in the Clututeng centers, many of which you've seen in the previous slides. The fair value of our derivatives decreased by ZAR 134 million due to the reduction in interest rates. The tax charge of ZAR 83 million relates mainly to the income tax and deferred tax on revaluation of the investment properties in the European portfolio. I jumped ahead of myself there with the slides. Before talking about the accounting aspects of the sale of the Sub-Saharan Africa portfolio to Lango, it's useful to remember some of the reasons why we wanted to exit the portfolio for some time. One of the key reasons was to mitigate our exposure to the debt in the portfolio. The deterioration of trading conditions in Ghana required the group to invest nearly ZAR 400 million in AttAfrica over the last three years to reduce the AttAfrica Group's debt. Over the same period, we received no dividends or cash returns from either the Ghanian or Nigerian investments. With the disposal, all of the borrowings were transferred, and the group was released from all guarantees and commitments to the lenders to the Sub-Saharan Africa portfolio. In addition, executive management time has been freed up to focus on the core South African and European portfolios. 80% of the Lango shares that we received to settle the sale price were received on implementation in September, with the balance anticipated to be received by the end of March 2025. The Lango shares and sale proceeds receivable are accounted for at fair value. The fair value for accounting purposes has been calculated based on Lango's IFRS net asset value with their investment properties carried at fair at independent valuations, and we've deducted a 30% discount from the net asset value as a result of the minority interest we hold in Lango and the reduced marketability of the Lango shares. This principle was applied in September 2024 on implementation of the disposal and December for reporting. We have grouped all of the items relating to the assets held for sale and the Lango shares and sale proceeds receivable together on the right-hand side of the slide. The carrying value of the assets held for sale were adjusted to the fair value for accounting purposes of the Lango shares received and receivable in September. The reduction in value is reflected as a change in the fair value of Ikeja City Mall of ZAR 169 million and an impairment of the shares in AttAfrica of ZAR 85 million. On derecognition of the assets sold, the foreign currency translation gain of ZAR 193 million was transferred to the statement of comprehensive income. The fair value of the Lango shares for accounting purposes was negatively impacted in December, primarily due to the termination of the Lango asset management contract, which resulted in a reduction in the Lango net asset value per share at 31 December and an impairment of the carrying value of the Lango shares and sale proceeds receivable by ZAR 105 million. The Lango shares and proceeds receivable are carried at the fair value of ZAR 441 million in December 2024. Turning to the group's treasury and borrowings. Total borrowings reduced from ZAR 15.8 billion in June 2024 to ZAR 14.9 billion in December, mainly as a result of the disposal of the Sub-Saharan Africa portfolio. ZAR 750 million of rand facilities were refinanced early at lower margins with a further ZAR 250 million refinanced post the period end, also at lower margins. The euro debt reduced from EUR 327 million in June to EUR 319 million in December due to the amortization of the in-country borrowings by EUR 5 million. We continue to work with a variety of lenders in South Africa and Europe as well as debt capital market investors. The 19% of total borrowings reflected as DCM in the pie charts relates to bonds issued under the DCM program, which are held by investors as opposed to bonds which are held by banks in terms of bilateral funding arrangements. The group's LTV reduced marginally from 36.4% in June to 36.3% in December and remains below our target of 40%. Positive factors that affected the LTV are the disposal of the Sub-Sahara Africa portfolio, the increase in the fair values of the South African and European property portfolios and the profit for the period. Payment of the 2024 dividend had the largest negative effect on the LTV. The LTV of the European portfolio reduced by 1.5% to 47.2%. We will continue reducing this LTV by amortizing in-country borrowings and retaining distributable income in Europe, subject to the increase in the dividend payout ratio. The group's debt -- sorry, the group's liquidity remains strong with ZAR 807 million of cash and ZAR 1.1 billion of undrawn facilities on 31 December. We intend refinancing the bonds which mature in the next 12 months via the DCM and are planning an auction for early April. Details of the auction will be announced shortly. The unencumbered assets are ZAR 5.6 billion, which is nearly double the value of the bonds issued under the DCM program other than those held by banks. Sorry, that's the unencumbered property assets of the ZAR 5.6 billion. We are evaluating various proposals to refinance the EUR 20 million term loan due in July 2025, and we'll conclude the refinancing of this facility before the financial year-end. The interest cover ratio for the period was 2.6x compared to 2.5x for the year ended June 2024. The cost of funding for rand borrowings increased from 9.4% in June to 9.5% in December despite the reduction in the average margin from 1.6% to 1.5%. The reason for the increase was the expiry of historic cheap hedges and their replacement at current rates. The average cost of borrowings in euros was 4.7%, which is 0.2% below June 2024. The average margin on borrowings increased to 2.2% due to the higher margins on the revolving credit facilities. The benefit of utilizing excess cash to pay down the RCF outweighs the additional margin on these facilities. 85% of the group's interest rate exposure on term facilities was hedged at 31 December. 62% of the rand hedges are capsule collars, providing protection against an increase in rates while allowing the group to participate in any reduction in interest rates. The guidance for the 2025 financial year of a 4% to 7% increase in distributable income per share remains, and the group expects to meet the upper end of this range. The Board has also resolved to increase the dividend payout ratio for the 2025 financial year from 75% of distributable income from the South Africa and European portfolios to 80%. In line with this, the interim dividend has been increased to 95% of distributable income from the South Africa portfolio, an interim dividend of ZAR 1.343 was declared. Before handing you back to Morne, I would like to thank our funders for partnering with us, all finance team members for their hard work in preparing the results and all operations and support staff for their ongoing efforts to ensure our centers remain the leaders in their markets. Thank you, everyone.

Thank you very much, Brett. Now in the closing, looking forward. We all set for good growth going forward. As mentioned before, and Brett also mentioned, we are on track to meet the upper end of our guidance. We have increased the payout ratio to 80%, and we will be reviewing the payout ratio again at the end of this financial year with the intention to increase it further. We would like to sell the Lango shares and recycle at least one of our South African centers. We are in discussions with some of our Gauteng assets, but the deals have not been finalized. We are actively looking for new opportunities in Eastern Europe. On the South African portfolio, we want to pursue some further organic growth opportunities, specifically at Somerset Mall and Cape Gate. Both these centers are located in very strong development corridors, and there's a big tenant demand at these 2 centers. We are busy with a few projects on the South African portfolio. We want to implement the 2 PPAs at The Glen and Cape Gate, secure solar solutions for Canal Walk as well as Somerset Mall. The solar solutions will be a combination of on-site solar as well as a wheeling solution. We have rightsized all the Edgar stores in the portfolio and made good progress agreeing terms with Pick n Pay to rightsize and upgrade some of their stores. At Hyde Park Corner, we want to complete Phase 2 of the Workshop 17 and complete the new Checkers fresh eggs at Hyde Park. The focus will now be on GAI and Woolworths to see how we can improve their operational performance in our portfolios. On the Eastern Europe portfolio, we want to finalize the solar installation at Croatia and retail CCO One West also in Croatia. Looking at the next slide, specifically at The Glen. At The Glen, we agreed with Pick n Pay to reduce their store and this creates an ideal opportunity to improve the flow within the center and secure some further line stores and improve the tenant mix. This is in line with our master plan. As part of the project, we want to increase the size of the back stores and activate the end of the center, which was not trading well by improving the flows as well as improving the view lines. You can see that it's indicated with the green arrows on the plan. We also want to improve the flow from the parking deck to the escalators in the back, and this you can see with the red arrow on the plan. Phase 2 will focus on improving the vertical flow from this level of the center to the ground floor, which is anchored by Woolworths and Checkers FreshX. Looking at Somerset Mall, we've got 3 phases happening at Somerset Mall. Phase 1, we opened the new Checkers FreshX and improved the food court supporting the cinemas. Phase 2, an additional 5,500 square meters, as mentioned by Wayne, will be added. It is to improve the flow, rightsize game as well as Edgars as well as replace the food court, which was used to develop the Checkers store. Phase 3 will add a further extension of about 15,700 square meters and will link the current Woolworths entrances and the Pick n Pay entrances. 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. The extensions will further enhance the flow within the center. After the completion of Phase 2 and 3, the center will have a total size of 91,000 square meters. At Cape Gate, we finalized the master plan of the Cape Gate precinct. The priorities at Cape Gate is, firstly, to improve the look and feel of the center, improve the sense of arrival and to improve the offering of 2 of our anchor stores. As mentioned by Wayne, we secured a deal with Som and Gifflow to develop 3 office blocks on the satellite sites on a leasehold basis. We sold the site on the Northern side to Mediclinic for new doctors' rooms and potentially a day clinic. Parallel with that, we are planning an extension of about 9,700 square meters on the southern side, which will complement the office development. The focus and tenant mix will be casual and formal dining, new national fashion tenants as well as mono brands and further showrooms. The final design and layout of all these developments must be in line with our master plan and approved by Hyprop. Thank you very much. We will open the floor now. On this slide, we actually just show some artist impressions of what the offices would look plus the extension. But with that, we're at the end of the presentation. So we will open the floor now for some Q&A. Thank you very much.

We have a question from Pranita at Truffle. On the payout ratio, you mentioned that you would be looking to increase it further over time. What is your target sustainable payout ratio? And over what time line would you expect this to materialize?

Pranita, we haven't put that out in the market. As I said, what we will do is we will actually look in the end of the year, financial year, whether we want to increase it further. The one thing which we want to get right is actually reducing our debt in Eastern Europe portfolio lower. It's currently 47%. We potentially want to bring that down. So every time we're going to review the payout ratio, we will take those calculations into account and what is happening forward in the market, and then we will make a decision what is the increase in the payout ratio.

We have a question from  Anchor. Property operating expenses reduced sharply relative to rent the last 2.5 years. Does this reflect lower levels of load shedding? And what would the impact of load shedding over the weekends at recent levels be in the second half of '25.

So I think it's a combination of factors. Firstly, we have been trying to manage the costs as best we can given some of the inflationary increases which get passed through. Secondly, we're seeing the benefits of the solar installations that we've done over several years and harvesting that solar power where the cost of that is effectively in the funding cost of the depreciation without being in the utility costs. Thirdly, you do have the benefit of no load shedding over the last 6 months. Remember, when there's load shedding, we underrecover the diesel and generator costs that we operate, whereas when there is no load shedding, we overrecover the cost of electricity that we pay to council and obviously, the cost of the electricity we generate through the solar ourselves. I think the current load shedding levels over the weekends are probably too small to actually quantify a difference and try and extrapolate that for the rest of the financial year.

Just maybe our budget has been done on Stage 2 load shedding.

We have a question from Nazeem at Investec. What are the key issues regarding monthly leases not yet signed? Is there a material divergence between the tenant and the landlord?

It's not necessary. I think each one will have its own unique opportunity. I think there's some that's still under negotiations. Others potentially want to move the tenant, and it's getting to a point where you can agree terms for the movement or you sometimes want them to upgrade their store and you need to talk to each other about how you're going to do that store upgrade. So I think there's a number of reasons why those leases hasn't been extended. Obviously, we also measure it on and look at it at our ExCo meetings, and we're driving the teams to actually make it fulfilled. But there's not one specific reason why they on month-to-month.

And can you please elaborate on the financial impact of the office development agreement at Cape Gate?

That deal is effectively structured. We've signed the option agreement with [indiscernible]. They will find some tenants. Part of the deal is there's an upfront payment and then there's a continuous ongoing payment from them on a leasehold basis. So we generate upfront payments plus a leasehold annuity income on the transaction we structured with them.

Question from Anchor. There's a big increase in CapEx plans. Can you give some color on these? Will GLA change as a consequence?

I think that is quite covered in the last slides. As I said, it's the future projects. The big GLA change on our portfolio would be the 5,500 that's under construction at Somerset Mall. Obviously, the offices that is being developed is on a leasehold basis. So we will get some passive income, but the GLA won't sit with us. That will be sitting with [indiscernible] effectively. But what is the benefit of that is you will create annuity income, which is passive, which you don't have to work for. And another reason why we also structured it on a leasehold basis was to ensure we keep control of what happens on those sites. It's key for us that we get offices and things that is complementary to the mall, and we didn't want to go and do things that is actually going to deteriorate or compete with us in terms of retail.

We have another question from Nazeem at Investec. What was the average decline in ZAR margins mentioned in the presentation? What is the proportion of the older debt on the balance sheet with upside risk to margins similar to recent refinances?

So I think I'm understanding the question. So the margin reduction we're referring to is the borrowing margin that the banks or the DCM add to the base rate. When the presentation is available on the website, if you have a look at Slide 74, there's a breakdown of what the margin is compared to the base rate that we pay on the various facilities we have. There's also a fairly detailed list of our facilities in the financial statements from last year that shows you the margin on the different loans. Why the margin is coming down? We're trying our best to negotiate with the banks where we can. We have had improvements in our credit rating over time, and I think that's been a factor. We're also using alternative products with the banks. For example, when the banks can fund using a DCM bond, they are able to provide a better funding cost than without the DCM bond because of the way that they have to hold reserves relative to those or for the bonds rather than the traditional term facilities. And thirdly, I think all issuers have benefited from the oversupply of sort of money in the DCM market. And I think generally, people's margins have been coming down over the last 18 months, I would say. Sorry, [indiscernible], what was the second part of the question?