Octodec Investments Limited (OCT.JO) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the annual results presentation for the year ended 31 August 2025 of Octodec Investments Limited. Before I start, I want to make a little announcement and that is -- I'm joined here by our Financial Director as well as the joint -- Financial Director and the joint CEO, Riaan Erasmus, who unfortunately has quite a severe bout of laryngitis and can't talk. He will, however, remain on screen to listen to the discussion as well as answer any questions that you guys may have. Should you guys have a question during our Q&A session, Riaan will type out his answer. Alternatively, if it's a slightly more detailed answer that is required, he will be sending an e-mail to all of those that have attended this webinar. All right. Let's get into it. I will do the overview -- initial overview. I will call in Charlene Conradie to do a portfolio performance analysis. And then I will come back with the financial results and capital management, a slot previously allocated to the Financial Director. And then I will continue with the outlook, some thoughts over there and then move into question and answers. I look forward to engaging with you together with the Octodec team. Thank you, IIona. Octodec at a glance, we always present this slide. Most of you, I'm sure, know this slide, only too well. But for those of you that are new to Octodec, perhaps the most important part is that Octodec is a REIT that operates in the -- in all sectors, namely retail, industrial, offices and residential, exclusively in the Gauteng region of this country. The team has -- is experienced and have been doing a lot of this kind of work for a long, long time. Thank you, IIona. Another short announcement I would like to make besides that of Riaan is that this is Charlene's last presentation as Chief Operating Officer. She is moving on to join Riaan and setting up an asset management team so we can concentrate a little bit more on asset management and free Riaan up to do other work. And in her stead, we are bringing in Rob Gibson, a man that I've known for the last, I guess, 10 years. Man certainly shown that he's up for the job. I want to take this opportunity to thank Charlene for her contribution and good luck for her new role working with Riaan. And I want to wish Rob Gibson the best of luck in your new job and look forward to engaging with you on a regular basis. Thank you. Performance highlights, a different picture to what we've been showing over the last few years, increase in revenue, up 4.6% distributable income after tax, up to ZAR 456 million from ZAR 421 million. Distributable income per share at ZAR 171.50, which represents an 8.2% increase in the distributable income per share. Dividend per share up at ZAR 134.5 cents per share, which represents a 7.6% increase on prior year. Cash generated from this business, ZAR 480 million compared to ZAR 432 million in the past. Portfolio stable, perhaps must be read in conjunction with the number of properties that we have sold. This is net of those sales. LTV moving in the right direction, previously 39.2%, now at ZAR 38.2 -- the all-in weighted cost of funding starting to fall as interest rates in this country also fall from 9.5% to 9.1%. Core vacancies, and for me, this is a big one because it's kind of future looking, core vacancies at 12.3% as opposed to prior year of 14.9%. Collections strong, averaging at 99%, disposals, 17 properties sold at a value of ZAR 156.7 million. If I may pause there for a little bit, I'm sure one of the questions on your minds is, are things turning for Octodec, perhaps are things turning for the property industry in general? For me, this is a big indicator that things are improving. Previously, I think there were 9 from memory, 9, I don't even think there were 9 buildings that we sold. Now there are 17 at an exit yield of 9.5%. So very happy with that. I am on record of saying it's Octodec's intention to sell. Last year was extremely difficult to move it. This year, it started happening. This year, we launched Yethu City that you guys know about it, which is a 200-room residential block, housing 200 beds, shared accommodation doing extremely well. There is a pilot project, but maybe a little bit of that a little bit later. Like-for-like performance, rental income would have increased by 5.2%. Distributable income after tax would have increased to -- by 9.7%. However, the buildings that we sold, very happy that they've gone. We, at no stage, ever sold a building because it was a fire sale or it was a building that we just wanted some cash for. It was the right buildings that were sold. Thank you, Ilona. Rental income analysis, not much to say. Safe to highlight that the CBD versus non-CBD, a lot of people think that this is a CBD-orientated portfolio. Well, I guess there is a fair amount of CBD in it, but it's only 54%. The remaining 55%, 56% is non-CBD geographically. Tshwane versus Johannesburg, we give the split, 70-30, very happy with the split because Johannesburg, I don't want to conclude that Johannesburg is doomed. I personally think that Johannesburg has a lot of life in it. But at the moment and for the foreseeable future, I guess, Johannesburg is going through some tough times. There we have the split of rental income by sector with residential at 34.5%. It is not our intention necessarily to bulk up this residential, [indiscernible] opportunities that Yethu City does provide, I would like to see this percentage reduced slightly. However, this, I think, could be done by increasing our exposure to 1 or 2 of the other sectors. Thank you. And with that, those comments, I want to hand over to Charlene, who's going to talk us through the individual sectors.

Thank you, Jeffrey, and good morning, everyone. Right. So in this residential overview, as you can see, we are very proud to highlight that we've achieved a 5.7% rental income growth for the year. And this was mainly due to a decrease in vacancies from 9.2% to 8% as well as an increase in our rentals. If you look at the section on total core vacancies, you will see that our occupancies in Hatfield, where The Fields are situated and improved materially. And this was due to the time years pre-approval of our NSFAS students. During the year, the University of Pretoria also continued to administer the rental payments on behalf of NSFAS, and this had a very positive impact on our collections. We also anticipate that this arrangement with the university paying the rentals will continue in the 2026 academic year. Then over the last few years, I've reported on various value-added services and initiatives that we've implemented at The Fields to enhance our student community living. But for this year, we have completed a solar installation. And this will be beneficial to the landlord as it will result in electricity cost savings for this property. The reason is because we charge tenants rental, which is inclusive of utility, so we don't recover that separately from them. Then just lastly, on this slide, our Johannesburg portfolio was impacted by the unrepaired damage on Lilian Ngoyi Street, especially in terms of vacancies. But the street has been reopened on the 12th of September and that we believe that occupancies in this portfolio will improve going forward. Next slide. In this slide, we show our top 3 residential properties. And I think the photographs highlight the quality of the accommodation that we offer in our portfolio. These 3 properties are also 3 material properties in the sense that it represents 11.3% of the total value of Octodec's property portfolio. Next slide. Our traditional residential accommodation consists of apartments ranging from bachelors to 3 bedrooms as well as sharing units. Our rentals also range between ZAR 4,150 and ZAR 7,200 per month. Our buildings are also equipped with modern facilities like play areas, dry facilities. We've got Wi-Fi and cashless laundries. And over the last few years,I've reported that we've individuals who have to travel far distances to work. However, during the year, we found that this Yethu City was occupied by students. So [ 2,622 ] vacant office space, which was previously very difficult portfolio value. It was impacted negatively by the Johannesburg portfolio as the retailers there were impacted by, and we believe that this will translate in an uptick of trade going forward. Next slide. Here, we show you 3 different street shop buildings, which forms part of a mixed-use building and that these street shops form a very, very important part of the CBD ecosystem in that it creates convenient shopping for our tenants that live, work and play within the CBDs. Next slide. Here, we can just see a list of the quality national retailers that we have in the buildings across our portfolio. Next slide. Right. The office sector, as you all know, remains a challenging sector, especially from a vacancy perspective. However, we did achieve very good rental income growth of 4.9% and 8% on a like-for-like basis. This was achieved due to a decrease in vacancies and due to annual escalations that we received on our government leases. Our government leases, as you can see, represent about 56% of the income, sorry, in the office portfolio. As I've said, we've achieved 8.0% like-for-like rental income growth, but this includes some net adjustments on leases on the government side. And if this is excluded, a 5.9% rental income growth was achieved. We are currently receiving 1-year lease extensions from DPW on all our leases that expired. This is while they are busy assessing their own internal processes based on their lease renewal process. Then lastly, just to note at the bottom, as we've reported previously, City of Tshwane vacated 12,086 square meters of office space. This represents a ZAR 17.9 million annual loss. And we are actively exploring this building specifically for Yethu City concept. Next slide. Here, we have 3 different office buildings. And what's interesting is they have 3 different types of tenants. On the left-hand side, we've got Louis Pasteur Hospital, which consists of a hospital as well as medical suites. In the middle, we have an office building who is occupied by a government tenant. And then on the right-hand side, we've got premium towers, which consists of more traditional smaller offices suitable to young professionals. However, what is interesting is we have repurposed some of these offices to cater for young entrepreneurs, small business enterprises. And you can see in the photograph, we've created salons, which are in quite some demand. And where we have implemented this, it's been very successful, and it's helped us to reduce some of the vacancies in the office portfolio. Next slide. Our industrial portfolio consists of small warehouses and many industrial units. This portfolio experienced good demand for these units. And you can see we've achieved rental income growth of 6.1%, and this was due to a decrease in vacancies from 10% to 5.6%. In this portfolio, we also had a material vacancy in the sense of a tenant that occupied 6,873 square meters who vacated at the end of August, and this represents a ZAR 10.1 million annual loss. We are currently busy in conversations with potential tenant or buyer for this property. Next slide. In this slide, you can see 3 of our industrial parks, just to give you an idea of the quality of our parks, which also include 24/7 security. If you look at the occupancy percentages in those tables, it will give you a sense of the good demand that we have for our industrial spaces. Next slide. Here, you can see our lease expiry profile. Most of our leases are short term and consist of periods with periods of 12 months, especially in residential. However, despite the short while on the right-hand side, you can see our tenants remain in occupation for quite a significant time. Next slide. In this table is a list of the material leases that we've concluded during the year and which is very pleasing to note is that it was done at good escalations, as you can see in the comments column. There was only one lease, the South African Police Service lease that was concluded at a negative rental reversion, but with an annual escalation of 6% thereafter. Next slide. This lists the leases expired and hasn't been renewed yet. However, 3 of the 6 leases we've received 1-year lease extensions from DPW, as I've explained before. The top lease is currently under business rescue and on a monthly tenancy. And the second lease, as I've mentioned, the City of Tshwane, who vacated at the end of October. Next slide. We've achieved collections of 99% for the year, which is very pleasing, and it's a solid performance and strong and remain in line with historic performance. So quite positive to note. Next slide. Right. And that concludes the overview on the operational side. I just want to take this opportunity to thank all the operational teams for your support during my time as COO, I would also like to thank those teams for their commitment and hard work in managing the property portfolio and delivering value for our shareholders, but also for our other stakeholders like our tenants and the communities in which we operate. Thank you, team. I also want to wish Rob well and great success in his role as the new CEO. Thank you, everyone. Okay. Jeffrey, back over to you. Thank you.

Thank you, Charlene. Next slide, please. We have a commitment to environmental stewardship. The world is changing. Octodec must respond accordingly. Here are some high-level pieces of information that reflect this change in our commitment to environmental issues. a total installed solar capacity build generating 4,469 kilowatts of power, 8 buildings equipped with smart water meter readers. Not only does this improve our -- our recovery from tenants, but also forces them to be a lot more -- use water a lot more sparingly. Tonnage of recycled waste, 1,100 tonnes of waste is being recycled from our premises. Next, please. Just some pictorial evidence of some of the solar panels have been installed in a number of our buildings, 11 panels on -- panels have been installed in the fields, the park, Odeon Forum and a number of others. The rest is there for you guys to read at your leisure. Next, please. Social, there's a strong commitment to social development. Here are some evidence of some of the events that we take over, we get involved with. Proud to say that it's virtually fully -- a full commitment from all the staff working on these buildings, and they all get involved in trying to make life a little bit different for those that need assistance. Next, please. Maintaining exemplary corporate governance standard. This is an important slide. I want to wish our 2 new directors who have now joined us, namely Sanjay Bhikha and Robin Lockhart-Ross, who report -- who were appointed as Independent Nonexecutive Directors from the 1st of September 2025. I want to thank Pieter Strydom, who has, for a long time, been on our Board and will retire at the next Annual General Meeting. Richard Buchholz, who's been with us a few years, has been appointed as a Lead Independent Non-Executive Director. These changes are done to address some of the concerns raised by investors about the company's external management model and succession planning for myself. The Board appointed Riaan Erasmus as Deputy CEO and Financial Director effective 3rd November 2024. The Board formalized an Ad hoc committee, subcommittee to independently assess the merits of internalization of the asset and management company currently provided -- services currently provided by City Property. Next, please. Moving on to some of the numbers. Our income statement or FFO, funds from operations, revenue up by 4.6%. Property operating expenses slightly up at 5.2%. Net financing cost fairly flat at ZAR 397 million. Distributable income per share, ZAR 171.5 cents compared to last year, ZAR 158.5, an increase of 8.2%. There on the next -- thank you, Ilona. Next slide, please. On the next slide, we have an analysis of where the money went to, how it was spent. It's a fairly neat bar chart showing what -- how we spent it. It also gives the differences in expenditure between this year and the prior year. Perhaps the big one they're showing is the increase in utilities. This is in line with the amount charges put through by council. The increase in bad debt is a little bit concerning. It has been impacted by tenants exposed to Lilian Ngoyi Street. It was there that we had the gas explosion and one large tenant currently under business rescue. Next, please. The abridged condensed consolidated statement of financial position. Our fair value kind of flat, up by 0.6% disposal, I mentioned this before, and I think it's important, disposal of 17 properties for a total consideration of ZAR 156.7 million. Net consideration after deducting costs, ZAR 152.3 million. All this cash at this stage has been gone to repay debt at this stage. Subsequent to year-end, post balance sheet, we have sold 5 buildings at a total consideration of ZAR 48.4 million. Increase in current assets, mainly due to an increase in cash balances from disposal of assets. Arrears have doubtful debt provisions at an acceptable level with arrears at 4.5% of gross revenue. Next slide, please. Borrowings decreased to ZAR [indiscernible] billion through the disposal of assets when you look at the balance sheet. Be mindful that some of the -- when comparing some of the decreases are as a result of a swap or rather a reclassification from current liabilities to noncurrent liabilities. LTV, pleasing to see starting to come down from 19.2% to -- sorry, 38.2% from 39.2% -- 39.2% I apologize 39.2% to 38.2%, a trade payable stable and includes tenant deposits of ZAR 94 million. Next, please. Another important page, I think the approach to dividends. We want to retain sufficient funds for defensive capital spend and development and acquisition opportunities as and when these arise. The maintaining of a strong balance sheet with acceptable LTV, medium- to long-term objective of 35%. So a little way to go from the 38.2%, maintaining a healthy interest cover, medium- to long objective of 2.5%, not very far away from where we're going, but we're going in the right direction. Maintaining a distribution of at least 75% of distributable income in order to maintain our our REIT status. All this is -- whilst all this is going on, we are fully cognizant of taking shareholder expectations into consideration. The 2025 dividend, the total dividend for the year is ZAR 1.345 per share compared to last year of ZAR 1.25 per share, an increase of 7.6%. An interim dividend was paid in May of this year of ZAR 0.62. A final dividend of ZAR 0.725 per share will be paid in December. This final dividend represents an increase of 11.5%. Our payout ratio in calculating these dividends is at 78.4%. Next page, please, Ilona. Stable investment property valuations. Fair value increased at 0.6%. Like-for-like value, we have an increase of 1.4% to reflect an increase -- an average price of ZAR 50.5 million per property. External valuations performed in line with JSE listing requirements. 79 properties representing 27% of the portfolio with a carrying amount of ZAR 3 billion were externally valued. On the next slide, please, Ilona. I think this is also an interesting slide. I think it's a new slide that we never presented to you guys. I want where it shows us breaks up the multi-use buildings, residential and street shops, offices and street shops, offices and shopping centers and other, and it separates that from a single-use buildings, residential shopping centers, street shops and offices and industrial. What is interesting for me on this slide is if we overlook at our first resident -- our single-use building residential, you're seeing there an expense ratio of 35%. We regard this number as being fairly high. And consequently, we have -- that's why I remember -- I mentioned earlier on, we need not necessarily be focusing on increasing our residential portfolio, but putting some capital elsewhere where our expense ratios are slightly less. It is however worthwhile mentioning at this stage, the numbers are showing that our expense ratios at Yethu City are materially lower than the 35% as indicated over here. Next slide, please. I think I've mentioned this stuff before. Asset recycling and redeployment. We've sold and transferred 17 properties at ZAR 156.7 million at an exit yield of 9.5% and actively pursuing Killarney Mall. I can't talk too much. I feel a bit embarrassed because every time I stand before you, I tell you that Killarney Mall over the last year or 2 is getting closed well. My comment is exactly the same. I don't think it's going to take that long for this deal to be concluded. But due to the sensitivity, I don't want to spend too much time talking about this asset. However, let's focus a little bit on the 17 properties for sale at ZAR 156.7 million. I think that, that besides the reduction in our vacancies is singularly the most important piece of information on this entire production -- in this entire presentation. Why do I say this? Because we really struggled in past year to sell some of those assets. And this year, for some reason, maybe it's the new joint CEO who's assisted us to move so many properties over the line, we've been able to sell them. Added to this, I want to say the following is that these sales were monitored very carefully and not one of these sales were buildings that I think we were -- we tried just to raise cash. These buildings were sold because the future of these assets no longer serve the needs of Octodec. Secondly, I would like to see REIT at strategically with the Board, the number of buildings in the Octodec portfolio to come down substantially and rather get them replaced with less buildings at a slightly higher value. The number being bandied about at this stage is ZAR 100 million, but there are exceptions, obviously, as and when these buildings arise. Subsequent to year-end, we have 5 buildings that were sold at an average total price of 48.3%. Next, please. Thank you. Here, we have a slide that gives the deployment of capital for the financial year ended August 2025. I think it's self-explanatory, not skimping too much on capital in terms of maintaining it, biggest amount going into Yethu City as well as tenant installations. I think the money that we spend in tenant installations is indicative of our intention to replace some of Octodec's lesser tenants with slightly more sophisticated tenants, but also it reflects the competitive nature of the property industry where tenants are demanding quality shops. They are demanding tenant installations if you want to do the deal. And I think that's what the slide for me shows. And also, you can see a fair amount going into solar production of electricity. This is starting to reflect quite strongly and has been for the last year or 2 in terms of our electricity recovery ratio starting to look a lot -- sorry, our electricity profitability ratio is starting to look a lot more positive. Next, please, Ilona. Here are some pictorial visuals of some of the work that we've done. Water in -- especially in our residential buildings is -- we have to find alternative sources of water. Here at Silver Place, we've had to build a giant water tank. This wasn't only to ensure sustainability of water supply into the block of flats, but also this was brought about by insurance companies, insurance playing a big role up to now in forcing us to upgrade our water supplies in the eventuality of fire. Yethu City, we've spoken enough about it, but there you can see some of the solar in the background fields, probably the biggest solar installation we've done. Charlene spoke about it. Rentmeester, it's one of the refurbishments of a big government tenant or quasi-government tenant. This building houses the SIU, and there's approximately ZAR 20 million going into the refurbishment of that building based on the lease negotiations where it was agreed that there's a certain upgrade to the building that is required. Next, please. Deployment of capital for the following year. There you can see how we intend paying -- how we intend spending our cash. I think the bar chart is self-explanatory, but this time, big money going into -- major money going into an upgrade to building we've done in Gezina, where an existing tenant advised us that he needed more space, particularly going upwards as opposed to necessarily going sideways. And we are spending approximately ZAR 70 million accommodating him as well as providing him with solar energy. His current energy cost is too high. So there's -- in part, some of those benefits will accrue to the tenant. The other one was talking 6. Next, please. Prudent capital management. I think this is also an important slide. Debt is carefully managed with internal targets set. Loan covenants, I mentioned before at 38.9%, interest ratio of 2x, 2.2x. Last year, it was 2.1x. Bank covenants are as follows: group maximum LTV ratio of 50% to 55% group minimum ICR range of 1.8 to 2. Sufficient unutilization of unutilized facilities and cash resources available for CapEx and maintenance commitments. Our weighted average tenure of borrowings is 2.3. Last year, 2.4. Our weighted average swap tenor at 1.3, down to 1, probably the right way to go given the potential imminent further reduction in interest rates. Global GCR, global credit ratings have given us long and short-term national scale ratings, which remain unchanged at A- and A2, respectively, with negative outlook, but this was issued in March 2025. I think that conditions have materially changed, not only in the economy, but hopefully, for Octodec as well. This will give those guys, Riaan in treasury an opportunity to be a little bit tougher when negotiating the spreads. Next, please. Diversified sources of funding. We made sure that we -- our sources of funding are diversified. Nothing to report there that's of material interest. Yes, move on. Thank you. However, just to go back one slide, please, Ilona. On that slide, you can see some of the work done by our treasury by Riaan, where you can see the benefits of having negotiated better rates for a number of these deals across the board, ABSA, Standard and Nedbank, where over the year, we've got slightly better deals. Profiles, if we go back to it. There, we give you the profiles. I mean this is a very difficult thing in reality to get 100% right because we don't know what the future holds. But there, we have Octodec funding expiry profile for you guys to look at. Not much to comment on. Yes. Let's move on to our outlook. At the outset, I want to say the office is definitely experiencing an improved trading conditions. I think this is being reported by our competitors in the listed sector, definitely improved trading conditions. Increase in business confidence supported by relatively stable political environment, lower inflation as well as interest rates. A word of caution. I'm not always sure that those of us in the property sector are like the lower inflation, really worried that the -- our tenants pick up on this and start reducing our increases in rentals. Hello?

I can hear you, Jeffrey.

Can you hear me? All right. We continue. An increase in demand in potential buyers, I mentioned earlier on. I think this is significant that we noncore as well as smaller assets. On the negative side, we had a -- we lost a tenant from the council of Tshwane Metropolitan Municipality at the end of October. This was 12,000 square meters. Charlene spoke about it as well in her presentation. And recently in Telco, which is an industrial site measuring approximately 6,000 square meters. That tenant also vacated. I think that the tenant that vacated there was a subsidiary of Transpharm, a subsidiary of Checkers. And they moved to a location on the highway between Johannesburg and Pretoria. And when you look at that kind of accommodation, it gives you insights to the way the market is moving. Octodec must at some time work out whether it wants to join that route or to stick with our industrial sites. Our industrial sites are many factories. I want to remind you people of many factories. I think they performed very well. If you turn back to the presentation done by Charlene, you will see that our industrial sector has done extremely well of many factories. But once you start playing in the big with the big guys, things are a lot more competitive. Full year guidance for the 2026 year, distributable income and distribution per share growth of somewhere between 0 we can beat that 4% based on a number of assumptions. And the major problem for us, well, they were twofold. The one is that it shut down with the hoarding, it shut down foot traffic in the area. And number two, it also caused because the foot traffic couldn't walk there. It changed foot traffic patterns. The area, you correctly point out, is substantially better than it was before the explosion. Has the -- are people back there? Yes, they have. Are the trading conditions as good as they were? No, probably not in many of these kind of webinars. I've mentioned to you guys that the smart people are not the property people. The smart people are the retailers because the retailers know exactly what's going on in the ground because their tills are centrally located and the senior teams, they know exactly where they are good trading opportunities. And interesting to note that none of the bigger traders gave up their spaces. There's one a [ PEP ] who I think they jumped the gun, a site on [indiscernible], and they wanted to relocate their store. But as for the rest, everybody seems to have maintained the position. I think the challenge ahead is how to increase rentals of those people that now enjoy normal trade, but also enjoying the benefit of reduced rentals.

Thank you, Jeffrey. The next question comes from Refiloe Modise of Northstar Asset Management. She's asked what your collection rate is on the government leases in the office sector?

Charlene, I'm going to ask you to handle that if you have that information available. For the background, maybe Riaan, you can give the exact number.

Yes, sure. So our government tenants, as they are sometimes challenging, as Jeff said, they do pay. They don't let the accounts run in arrears. The only exception at this point is City of Tshwane, who still owes us outstanding money at this point. And then 1 or 2 some smaller amounts, but generally, it relates to account query, which is resolved and then the tenants pay.

Thank you, Charlene. The next question also from Refiloe Modise is from Northstar Asset Management. She's asked if you could please provide more details or examples of repurposed or underutilized office buildings and what the achieved rentals are there?

So I want to comment as follows. I'm not sure exactly what the question is, but we have got a number of typically previously, I call them PWD cellular offices that were for a long period of time, vacant. We then converted those offices with a minimal amount of CapEx, but we converted them into smaller offices to attract the new emerging market. And those rentals went for about ZAR 80 -- it's anywhere somewhere between ZAR 65 to ZAR 85 a square meter. We're happy with that given that previously we were earning nothing. In recent times, the last, I don't know, recent 3 months, we've discovered that there's enormous demand for hairdressers, and we've built 50 hairdressers at those kind of rentals. So you can start doing the numbers. Each store is somewhere -- each hairdresser is approximately 20 square meters now rentals moving to ZAR 85 a square meter, and they're busy. So we've unearthed -- I don't know how long it will last, but we're certainly unearth with the new, but the office pleased to be a new opportunity and in the process filling up our vacancies in the office blocks.

Thank you, Jeffrey. The next question is from Patrick [indiscernible] Private. Do you foresee the gap between distributable income and distributions decreasing? If so, what factors would need to occur for this to be the case?

Can you just repeat that between?

So it's between your distributable income and distributions decreasing, so the gap between your distributable income and what you pay out as distributions.

I don't know. I think this is no real or there's no right or wrong answer. My view is that the period in which we've come out of everybody declared everything that they made, I think that, that's wrong. I don't think any business can survive by paying out all its distributions. When you have rising -- everybody knows when you have rising valuations, you can do this. But we've had a time now where valuations have not been increasing, and that's when you can get caught. But there are complications we have to stick with I won't say complication, but there are things influencing it like the REIT requirement that we need to pay out at least 75%. Maybe there were at times on argument that we should have withhold in Octodec a little bit more than that amount, but there are consequences to that, tax consequences, shareholders' aspirations, not an easy jumping to perform. But maybe we move back to a situation where valuations start increasing. And perhaps that's the time when we can start paying out percentage-wise a little bit more than we have in the past.

Thank you, Jeffrey. I see that Riaan has also contributed to that answer, if that's something you want to share. Can I read it out?

Please do.

Okay. Perfect. So Riaan has said that -- you will, for the foreseeable future, pay between 75% and 80% of distributable income out as dividends to shareholders. The objective is to decrease the LTV to 35% and increase your ICR to 2.5x. And once achieved, we'll consider increasing the distribution payout ratio. All right. Then the next question comes from Trinity Ngobeni of Anchor Stockbrokers. He's asked, what is the current average debt margin on your bank finance? And what debt margins do you think you will achieve on debt refinance in FY '26? Any chance of going back to the DMTN market?