Hyprop Investments Limited (HYP) Earnings Call Transcript & Summary

Okay. Good morning, everybody, and welcome to the Hyprop pre-close operational update for the 4 months ended 31 October 2025. By way of introduction to those online, I'm Mahir Hamdulay, and I'm Head of Financial and Property Research at Absa Investment Bank. It gives me a great pleasure to be facilitating the update today. And I would like to introduce the management team. We have Morné Wilken and Brett Till, who will be taking us through the 4-month update. Just in terms of the format. So Morné will be going through the presentation as well as Brett. And thereafter, I'll facilitate the Q&A session. [Operator Instructions]. Morné, I'd like to hand over to you to present your operational update. Thank you very much.

Thank you, Mahir. Good morning, everyone, and thanks for joining us today. And Mahir, thank you for you and Absa hosting us. As Mahir said, we will look at the operational update for July to October 2025. It's very much a summary of the information we did disclose in the SENS earlier today. At the end of the presentation, as Mahir has said, we will actually open the floor for some questions. We started as a management team in 2019 and the why for Hyprop is creating spaces and connecting people. And the way we do that is by managing, owning and redeveloping dominant retail centers in mixed-use precincts and key economic nodes in South Africa as well as Eastern Europe. In 2019, we set ourselves a number of priorities we wanted to achieve. We want to reposition the South African portfolio as well as Eastern Europe to ensure it remains dominant and relevant. What we do in our portfolio is we do annual portfolio reviews to actually ensure we identify recycling opportunities as well as reinvestment opportunities, protecting the value of the Africa investments while we were working on an exit strategy and then strengthening our balance sheet. We have made excellent progress in all of these. If we look at South Africa, over the last few years, we have been working -- making good progress with our repositioning strategies and meeting our shoppers' needs. We secured Checkers FreshX as a new anchor tenant at The Glen, Rosebank Mall, Woodlands Boulevard, Somerset Mall as well as Hyde Park Corner. We reduced the energy cost on our portfolio by the installation of solar plants at all 5 Gauteng centers as well as Staple Bay Mall. We have secured full backup power at all our centers in South Africa. We implemented the first fully integrated solar generator and battery solution at Rosebank Mall. We also have installed 3 days of backup water at all our Gauteng centers as well as started with that in Gauteng. All of these changes has improved the tenant's performance, increase in tenant turnover as well as reducing the cost of occupancy. The effort ratio on our South African portfolio has reduced to 8.1% compared to a height of 11.3% in June 2020. From this slide, it's clear that these repositioning strategies are starting to work. Tenant turnover has increased by 5.4% for the last 12 months up to October, and our annualized trading density has increased by 8.3%. That was mainly due to the rightsizing of a number of stores in the portfolio. Foot count has increased by 0.7% and vehicle count has increased by 2.5%. On this slide, we see the last 4 months trading performance compared to the other 3 -- compared to over a 3-year period. We see nice growth in tenant turnover as well as trading density. In July and August, we see the biggest growth in the trading density, which was 10.6% as well as 9.2%, respectively. The rightsizing of the tenants are working quite nicely for the improvement in trading density. For example, we have rightsized all the Edgars stores in our portfolio, which included Canal Walk, Clearwater Mall as well as Woodlands Boulevard. In September, we have seen a reduction in vehicle count as well as foot count. And I think it's mainly due to the fact that we didn't have any school holidays in September this year compared to the year before. The positive rent reversions are continuing. Looking at the table on the top left, we can see positive rent reversions in our retail space as well as our office space. The overall reversions was positive 8.5% and then new deals on the retail shown positive growth of 32.8%. Some of that is from a 0 base. If you normalize that, it's about 13.8%. Overall retail portfolio growth was 8.7%. Now looking at the graph on the top right, we show what was the reversions in terms of GLA. We had positive reversions of 51% of those reversions after renewals, 23% was flat and 26% negative. The table on the bottom left shows the vacancy. We've successfully reduced our office vacancy to 13.6% and our retail vacancy from 4.9% in July was reduced to 3.8%. Our weighted average lease expiry has increased to 3.9% -- 3.9 years. Now looking at the completed projects. At Hyde Park Corner, we have converted the old Pick n Pay store to a new Checkers fresh eggs as well as the pet shop science. The store started trading on the 1st of August of this year. Checkers are still optimizing their tenant mix to cater for the Hyde Park shopper, and we have seen positive growth in their turnover over the last few months. What is very beneficial of this store, it has increased and had a very positive impact on our footfall. For October '24 to October '25, we have seen a 12% increase in footfall. This is the fifth Checkers fresh eggs in our portfolio. At Cape Gate, we have improved the food court by removing the old central bridge that was going through the food court. What we achieved by that is we've improved the view lines between the bottom section and the top floor. We've made the seating area bigger, and we also have forced the flow past the stores, which has improved the trading. On the 22nd of November 2025, we opened the first Walmart store in Africa. This is a great achievement by the Clearwater team. The new Walmart is performing as a real anchor. The store is 5,200 square meters and the trading area is 3,660. On opening day, the foot count to the mall was close to 86,000 people. Normally, on a Saturday, it's around 37,000 people. Walmart has confirmed it has achieved its target by 2:00 p.m. for the opening day, and they had 13,000 people going through that store on opening day. The foot count for the last week has been above 36,000 squares -- 36,000 people. And what is also quite positive, we've seen a report from Business Tech where they have indicated that the average basket by Walmart is the lowest compared to any of the other retailers. Part of the project, we also have upgraded the bathrooms at Clearwater. At Somerset Mall, the Phase 2 expansion at Somerset Mall is going very well. We opened the first section on the 20th of November 2025. And with that, we also retailed the whole mall. The expansion improved the flow from the old Edgars store to the new [ Edgars ] The Game store and creating a new racetrack. We added additional 5,500 square meters of GLA with a focus on affordable luxury as well as athleisure. Edgars had been rightsized and they have been moved to be the anchor on the new section, and we also have rightsized Game, which will improve their trading density. As part of the second section at Somerset Mall, the remaining old Edgars store will be converted to a new food court as well as the entertainment offering. And we also are upgrading the bathrooms in a phased approach. The new food court, the entertainment area as well as the bathrooms will be completed by July 2026. One of the priorities in Canal Walk is to integrate the mall much better with the bigger Century City. We are planning a food court upgrade. With that food court upgrade, we want to activate the Canal Edge, and we're looking at 2 new connections for the shoppers across the canal. We are busy with the Otter Bridge, which will be completed by the end of June 2026. Our investment in sustainability is paying off. We increased our solar capacity by 647% since 2019. We are currently delivering 13.5% of our total electricity consumption. We will further increase that when we complete the last 4 remaining solar projects, and those are the second phase at The Glen, Cape Gate, Canal Walk as well as Somerset Mall. What is very positive about the solar plants is they add to the bottom line about ZAR 1 million per month. So when we complete all 4 of these, that will add about ZAR 48 million. We started both the solar projects at The Glen as well as Cape Gate. We have also improved the second battery integrated solution at Hyde Park Corner. And with this project, we will also increase some of the solar. AquaIntell and AQUAffection is a training and water monitoring plan, and that is definitely paying off. Over the last 11 months up to the 31st of October, we have saved or reduced our water consumption by 68,000 kiloliters. Now just to put it in context, that's the same amount of water used by 27 Olympic-size swimming pools. The benefit in rand terms was about ZAR 6 million. The further positive is the 4 Western Cape Malls were only on that program for month 10 and 11. So the whole impact of the Western Cape has not seen in these numbers. We also received net zero waste certificates on 5 of our 9 malls. Over the last few years, we've completed the 2-year redevelopment project at Scorpio City Mall in North Macedonia. At the Mall of Sofia, we completed the hyper conversion by increased the mall to 61,591 square meters. We have also upgraded the food court as well as the restrooms. We also further have upgraded the food court at City Center one West in Croatia. This repositioning strategy is definitely paying off. The tenant turnover increased by 4% for the rolling 12 months until October. The effort ratio on this portfolio has reduced to 9.8% compared to 10.9% in 2022. Footfall has been negatively impacted due to the non-Sunday trading in Croatia as well as some store boycotts due to the rising food prices. Vehicle count has increased by 4.1%. Now looking at the 4 months trading over 3 comparative years, we can see growth in tenant turnover as well as trading density. As mentioned before, there's a slight decrease in the footfall and vehicle count. The table on the top left-hand side shows the rent reversions. On new deals, we had positive rent reversions of 1.7%, although it was on 7.8% of the total GLA. On renewals, we see positive reversions of 13.5% on only 0.6% of total GLA. Combinedly, we've seen an increase of 2.6%. Retail vacancy is 0 at this point in time. We have a WALE of 3.7 years and 25.1% of our leases expire after 2029. Now I will hand over to Brett to give us an update on the treasury. Over to you, Brett.

Thank you, Morné, and good morning, everyone. My focus today is on the group treasury as we've not published any detailed financial information with the pre-close operational update. Before we start with what has happened over the last 4 months, I'd like to take a moment to look back on what we've achieved and where we've come from over the last few years to get to the strong financial position that we find ourselves in. We reduced our consolidated LTV from 52% in 2020 to 33.6% in June 2025. We improved the ICR to 2.6x for the 2025 financial year. We increased our unencumbered property assets to ZAR 8 billion and our total unencumbered assets to ZAR 10 billion in June 2025. We settled all of the dollar equity debt that was related to the Sub-Saharan Africa portfolio. And with the disposal of those investments to Lango in September last year, we were released from all guarantees we had provided for the in-country debt in Ghana and Nigeria. We've reduced the euro equity debt from EUR 403 million to EUR 87 million in June 2025. In conjunction with this, we reduced the European portfolio's LTV from 100% to 43% in June and have a plan to reduce this even further to below 40% over the next 2 years through the ongoing amortization of the in-country debt. We've also improved our corporate credit rating. These actions have significantly strengthened our balance sheet and improved the group's credit metrics. Now turning to the period under review. Our borrowings by lender and by currency have remained largely in line with those in June 2025. We have maintained our exposure to a variety of lenders in South Africa and Eastern Europe, with the largest lender bank being Erste Bank, who have funded the properties in the Croatian subsidiary in the European portfolio. Our listed DCM funding equates to roughly 25% of the group's total borrowings. 58% of our borrowings are rand denominated with 42% being euro denominated. The euro equity debt represents only 10% of our total borrowings, and we are comfortable that the risks associated with the cross-currency guarantees provided from South Africa for this debt are manageable at this level. GCR has reaffirmed our national long- and short-term credit ratings of A+ and A1 in October 2025. They also maintained their stable outlook based on the expectation that the group's LTV will remain below 35% and the ICR between 2.5 and 3x. The group's LTV ratio has increased slightly over the quarter from 33.6% to 34.3%. This is mainly due to the payment of the final dividend for the 2025 financial year of ZAR 776 million. The full effect of the dividend was mitigated by profits generated during the period, an improvement in the rand-euro exchange rate and the capital expenditure, which is added to the asset values. In line with the increase in the overall group LTV, the LTVs of the 2 portfolios also increased, with the European portfolio's LTV sitting at 43.8% in October after it paid its fair share of the dividend back to South Africa. We are confident, as I mentioned before, that the European LTV can be reduced below the 40% group target LTV over the next 2 years by continuing to amortize the in-country debt at the run rate of EUR 10 million per annum. Looking at the borrowings maturity profile and our liquidity. Cash flow and liquidity have always been key focus areas for the group. The group's liquidity remains strong and is underpinned by the outstanding cash collection rate of 102% and 97% in the South African and European portfolios in the 4-month period. At 31 October, the group had ZAR 873 million of cash and ZAR 2.3 billion of undrawn facilities. This is after payment of the ZAR 776 million dividend for 2025. The borrowings maturity profile is virtually unchanged from June. The ZAR 502 million listed bond, which matured in November was settled from available revolving credit facilities and cash. Our intention is to refinance the bond or the listed bond, which matures in April of ZAR 240 million via a public auction. The ZAR 740 million of unlisted bonds, which mature in quarter 3 of FY 2026 will most likely be refinanced via a private placement subject to pricing. We've received proposals from multiple lenders to refinance the EUR 70 million of equity debt facilities, which mature between April and July 2026. Our plan is to complete these refinancings before the end of the financial year. We are also in discussions with the lender bank relating to the EUR 70 million facility used to fund the Mall in Sofia. This facility matures in December 2026, and we're optimistic that we can conclude the refinancing also before the end of the financial year. Looking at the group's interest rate profile. With the easing in the interest rate cycle and reduction in base rates over the 4 months, the all-in cost of rand borrowings reduced from 9% in June 2025 to 8.8% in October. Similarly, the all-in cost of the euro borrowings reduced from 4.2% in June to 4% in October. This was mainly as a result of the expiry of some older and more expensive interest rate swaps. Currently 77% of the group's interest rate exposure is hedged. Approximately 2/3 of the rand hedges are caps and collars, which provide us with protection against an increase in rates, but also allow us to participate in some of the savings in the softer interest rate cycle. Finally, just a comment on our dividend policy. The policy remains to distribute 80% of distributable income from the South Africa and European portfolios. This is achieved by declaring an interim dividend of 95% of the South Africa portfolio distributable income with the group's half year results. A final dividend is declared at the end of the financial year to bring the total dividend for the year to the 80% of consolidated distributable income. We have indicated that the Board will review the dividend payout ratio from time to time with the intention of increasing this over time. Any changes in the payout ratio for the 2026 financial year will be communicated with the group's interim results, which are scheduled to be published in March. With that, I hand you back to Morné.

Thank you, Brett. Just on this slide, what we are looking at is looking ahead and our progress to date. I think you can't actually see it on the slide, but the little ticks, the red ones is we haven't made any sufficient progress. The blue ones is to say we have done good progress, and the green one is completed. Over the last few years, we have repositioned Hyprop back on a growth path. After the first quarter, the new financial year, we are on track to meet the guidance of 10% to 12% growth in our distributable income per share. There's one CP that's outstanding on the sale of the 50% undivided share in Hyde Park Corner, and we think we will implement that transaction in the beginning of 2026 calendar year. We have made very good progress with another disposal in the Gauteng portfolio, and that will be communicated as soon as we have finalized the necessary agreements. To date, we have not made any progress with the sale of the Lango shares. We are currently looking at 5 new opportunities in Europe, and we want to conclude at least one of those transactions in this financial year. On the South African portfolio, we have made very good progress with our organic growth opportunities. We started the installation of the solar, which is the second phase at The Glen as well as Cape Gate. And we are still working on some regulatory approvals for the solar at Canal Walk as well as Somerset Mall. We will continue our discussions with Pick 'n Pay Game as well as Woolworths to upgrade and rightsize their stores in order to improve their performance as anchors in our portfolio. We have made very good progress with the design of the extension of CC1 East in Croatia. The tiling project on CC1 West has started, and we haven't find a workable solution yet for the solar in Croatia. Now looking at some future projects. The first one is Somerset Mall. Just to give a little bit of history, what we have done at Somerset Mall. We call it Phase 1, 2 and 3. Phase 1. We took the old food court. We converted that to a Checkers FreshX. What we also did was improve the food offering, which is supporting the cinemas. Then Phase 2, we improved the flow in the mall. So we linked through the old Edgars store into the old Game store and that we added 5,500 square meters, which we call Phase 2. And then what we are looking to do is Phase 3. In Phase 3, we will connect the Pick 'n Pay entrance and the Woolworths entrance. And by completing this, you will further improve the flow throughout the mall as well as we will increase the size of the mall to 91,000 square meters. We have made very good progress with Pick 'n Pay to rightsize the store at The Glen. This talks to our master plan at The Glen. So what we want to do with that rightsizing of Pick 'n Pay, we want to add in some new line stores and thereby increasing our income in that form as well as improving our tenant mix. With these changes, you will actually also improve the flow in the mall of forming a new racetrack and that you can see with the green arrows on the plan. We further want to improve the flow from the parking decks into the center, and that can be seen with the red arrow in the plan. And that will go right through to the escalators in the back and thereby also improving the vertical flow. In terms of the new view lines as well as improving the racetracks, I think the navigation of the center will improve quite a lot. As a Phase 2, we will improve the escalator or vertical connection between this level and the ground floor, which is anchored by Checkers as well as Woolworths. At Cape Gate, we also finalized our master plan to develop the satellite sites as well as the extension on Cape Gate. Our key requirement in terms of the satellite sites was to keep control, what happens on those sites also and to secure some annuity income. The site opposite Mediclinic was sold to Mediclinic, and they will develop a new hospital, a day hospital and consultation rooms. What we have as a requirement, any plans must be approved by Hyprop on a final look and feel. On the 3 bottom sites, we've secured exclusivity with Giflo and SOM to develop 3 office buildings. And similarly, those office buildings need to be approved by Hyprop. We have structured the deal with these 3 developments on a leasehold basis. So we'll get an upfront payment plus annuity income down the line. Hyprop will not take any development risk on these developments. As part of the expansion, we want to add about 9,700 squares to the mall, and that will focus on casual and formal dining, new national fashion tenants as well as showrooms. At CC1 East, we've taken 6 years to secure our extension rights. Although it's negative for us, what is positive, it makes it more difficult for competition to actually secure rights and to do new malls. We want to finalize the planning in this financial year, and we are planning to expand that mall by 14,000 square meters, and that's on the back of tenant demand. The project will most probably start towards the end of the '26 calendar year or early 2027. And that's my end of my presentation. We can open the floor now for some questions.

Thank you, Brett. I'm not sure if anybody in the audience has any questions. Otherwise, we'll -- can we get the mic now. Maybe while we're waiting for the mic, I'll go first. Just touching on capital allocation. So you've indicated that you are looking at potential opportunities in Eastern Europe, 5 assets you mentioned. Maybe if you can give us a sense of how big or what the sort of pipeline size is for those assets in total and sort of on average as well as indicative yields in terms of where the market is trading.

No, I think you're still getting a higher from 8 to a higher 8s in terms of yields. And the asset sizes vary from about EUR 60 million to EUR 170 million.

Okay. And then just from a CapEx perspective, so you disclosed in the update just north of EUR 800 million for this year in terms of capital projects. If you can perhaps just touch on the mix in terms of expansion, solar, defensive CapEx, so we can get a sense of sort of the types of returns as well, the CapEx is going to be spent?

So we had the detailed numbers at the time we did the year-end results presentation, and they're not in the top of my head. But roughly ZAR 250 -- ZAR 300 million of that related to the Somerset Mall project and because the largest part of the work has been done this year as well as some big TIs that are necessary in Rosebank Mall plus the Workshop 17 project at Hyde Park Corner. Those 3 or those 4 together made up ZAR 300 million. That left us with roughly ZAR 500 million of regular CapEx that we have to spend. I don't want to give you a number that I quoted in September, but I can come back to you on the mix of what's yielding and non-yielding.

We'll go over to Francois.

Yes, it's a nice venue. Thank you for that. Just a quick one on the City Center one East development, 14,000 square meter also maybe just if you can give a sense of the internal rate of return on that investment, that opportunity you've got. First question. And then if you just can give some more numbers around the Somerset West. I'm sure we're going to get quite a lot now during the tour as well, but maybe give us for the wider audience, how much you've spent, how much GLA was added and the impact you expect that would have on obviously, the direct income from that additional GLA that you expect, but also just a sense of the impact you expect that would have on trading in the rest of the mall. I know my family has been out here since that addition has been made. So it is certainly drawing, I think, footfall beyond just the regular footfall, right?

That's great. Thanks for those questions, Francois. If I just come to 14,000, we're adding in City Center one East. We're in the beginning stages of that. So we don't have the detailed numbers in terms of yields. Obviously, I think it could be quite accretive because you already got the land in and you're only paying for the extension. So I think it could be quite beneficial. In terms of the Somerset Mall expansion, we've added new GLA of 5,500 square meters. And I think we did disclose the initial yield on that development, but I can't remember what we disclosed.

I'm pulling it up, Morné, I'll tell you.

And then part of the project, what we did was actually the retailing of the whole mall. We're busy with the upgrading of all the bathrooms. And then as a Phase 3, as I said, we want to take the mall to a total of 91,000 squares. Roughly Phase 2 cost us about ZAR 300 million. And then I would say Phase 2 -- Phase 3 could be up to ZAR 600 million, but it will all be accretive in terms of yield. I think what will be beneficial for Somerset Mall, if we look at the stats and the growth in this area, we really do think it's going to be a super regional in time to come. But my view is super regionals should be around 90,000 to 100,000. I think the exceptions of the 140,000, 160,000 will become something of the past. But I think definitely, this mall has the potential to become a super regional.

So Morné, that yield on the Somerset Mall project, it gave us an IRR of 15.7% over 10 years.

Okay. I guess related to that as well, you're waiting for approval from the City of Cape Town for the solar on this mall and Cape Gate Mall. I think something like 11 kilowatts or megawatts that you can add. Two questions around that. Are you struggling these days to get permission for such large solar plants, a lot of red tape involved? Second one, just a sense of how much it will cost and the sort of return on that -- yes, that specific -- these 2 malls installations.

Yes. I think just to clarify that, we've got the approval for Cape Gate actually. That's in process at the moment. Somerset Mall and Canal Walk is -- we're still in process. To answer your question, it does take quite a long time to get those approvals. I think they need to look at what's the impact on the network and -- it's not really feeding back, but if your solar goes down and you pull out of the network again. So there's a lot of work to be done and to make sure you don't have grid failure due to plants you put into the system. So I think it takes long, roughly, and this is not detailed numbers, but you're looking at a plant anything from about up to ZAR 50 million, and you get proper returns on those IRRs for 20% to 22% on those IRRs. As I said, it adds to the bottom line about ZAR 1 million per month of benefit per plant. So if we do all 4 plants, which we're planning, we'll get ZAR 48 million in terms of -- for a whole year. This is just round numbers, Francois.

Anybody else from the floor? Maybe I could just touch on capital allocation again. So based on the narrative, it appears to me as though the focus is more offshore in terms of capital allocation other than the capital project that they have for the existing portfolio. Maybe if you can just touch on your strategy with regards to -- I mean, you previously spoke about increasing your exposure to the likes of the Western Cape. I mean, is that lower down the pecking order now because of pricing? I mean there's a potential to acquire a minority share in the likes of [indiscernible]. I mean just in terms of your other sort of capital allocation opportunities, it would be fair to say that it's sort of lacking -- ranking at the lower end given the potential returns?

I think from a capital allocation, the Western Cape and Eastern Europe is the preferred place we would put capital. In terms of opportunities available in the Western Cape for what we specifically look, most of those properties are in institutional hands, and therefore, it makes it difficult to get further ones. So the focus is very much organic growth in terms of Western Cape. And then obviously, we will always make sure our Gauteng malls operate also properly, and that's why you can actually see a lot of improvement in that. In Eastern Europe, we definitely want to buy more assets there. As long as the returns make sense, we're not just going to buy something for the sake of buying it. I think a lot of times, the question is always raised, you overpaid for Table Bay Mall, which we didn't do. Table Bay Mall, actually, if you look at the yield, it was a keen yield, but we know the potential where that rentals can grow to. If you compare that to something like Cape Gate, in terms of trading density, trading density is actually better in Table Bay Mall compared to Cape Gate. There's about a 40% difference in rental levels. So you've actually got a lot of upside in Table Bay Mall to come in the years to come. So I think that opportunity when it came across our table, it was in private individuals' hands, developers. We saw it as an ideal opportunity to buy that asset at a very keen price. You can't even replace that mall at the cost we paid for it. So it was a brilliant buy, I think, and we're going to see huge growth out of that asset in time to come. Tenant demand is good. We actually applied for a further 20,000 square meters in terms of that mall. So I do think there's big upside for that mall. And even all of the other ones in Western Cape, I think Somerset, you will actually see as we walk out here how much people are here every day and trading. And this mall is doing exceptionally well.

Mahir, if I can maybe add to that. I think if you look at the quantum of what we're going to spend in these expansions of the Western Cape Malls, it's probably more than Hyde Park Corner is valued at. So there's significant investment going to be made through these organic initiatives.

From the trading perspective, it appears as though the momentum remains quite strong. Maybe just touch on the cost growth outlook or the sort of potential NPI outcomes. And maybe what you can talk to is whether or not you're seeing or you expect to see the positive jaws impact materializing because of initiatives like your investment, your sustainability investment in water, in solar or other sort of cost initiatives to optimize costs perhaps. I mean, what's your sense of sort of the cost growth relative to where the income growth is tracking at this point in time? I know we're 4 months in, but maybe just give us a sense, if you can.

I would rather answer it's in line with what we budgeted for it to be. The big negative still in terms of cost is rates. It's not really -- I think you can do a lot of things in electricity, you can do a lot of things on water to bring those costs down and make it more efficient and improve it. Rates is the negative. I mean rates are increasing substantially, plus you actually have to contribute for things that supposedly you will get through your rates and that service delivery is not there. I mean we have to put back -- 3 days backup water on our sites. If you just take that, that's about ZAR 5 million per opportunity. That's ZAR 45 million if you take 9 sites and putting up backup water. So those are the negatives that impacts us, and we can't control that cost. And unfortunately, the others are kind of control. Is it going to widen quite a lot? I don't think so. I think it's tracking in the right direction where it's at least not narrowing.

Just touching on lease escalations, particularly on the South African portfolio. Can you give us a sense of where the lease escalations are being negotiated now?

We get easily around 10% on our portfolio. No, I think there is more pressure on escalations. I think the big tenants, nationals, you must remember, it also talks to what's the term of the lease. So the long-term leases, we're still getting around 5% to 6%. Obviously, if you get a shorter-term lease, you get up to, I would say, even 7% depending on the term of the lease. The big thing which we try and do is actually getting your turnover rentals in because that's where you participate in the upside when the tenant starts performing well. And sometimes, if the escalation is too high, you will actually grow your income -- your rental will grow too much and then you will have negative reversion. So to have the right escalation is maybe not a negative thing.

What I was actually trying to get at there is about sort of lower inflation target, right?

I don't think that has had an impact on our lease negotiations as yet. I think if you see what happens at your house, I don't think that spend is increasing, but let's see.

Sorry, Trinity. There's a question that came in online from Trinity that I've sort of looked past there. Hi team, congratulations on the results with regards to your cash position. What is the yield on cash? I think that's the first question. Maybe, Brett, if you want to touch on that before I go into the next one.

We're currently getting just over 7% on cash. All of that's invested with the risk only with the big 4 banks. We don't invest with -- second-tier banks is where we put the cash. It's all sitting in money market funds with big 4 banks.

Okay. And then the second question, I'm getting this right here. Foot count is down 3.6%, yet trading density increased by 3.1% in Eastern Europe. Does this also reflect an increase in spend per head or just a general increase in selling prices?

There is definitely an increase in spend per head. But the big thing that has happened, and as I mentioned in the presentation, and then Croatia, you've got non-Sunday trading days. So what you are seeing is actually people won't come out on those Sundays, but they actually come in during the week and then they will spend more. But the frequency and the visits and the foot count will come down, but it's not spending less.

Okay. And then Brett, just touching on treasury. So we've had a recent interest rate cut. You indicated that the reduction in your cost of funding -- all-in cost of funding, specifically on the SA side was due to sort of expensive hedges rolling off. Maybe provide us with a sensitivity in terms of what the -- your participation is going to be in sort of interest rate cuts going forward given the structure of your hedges?