Octodec Investments Limited (OCT) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Octodec results presentation for the six months ended 29th of February 2024. Before I continue, I want to use this opportunity to welcome Riaan Erasmus to the group. For those [who know he picked up] SENS announcement recently, he'll be taking over from Anabel [indiscernible]. Anabel will have the responsibility of still presenting this financial statement due sometime in November, I guess. And there afterwards Riaan will be in the driving seat. So, Riaan, a warm welcome to you and good luck. Let's move on. Octodec and -- my next slide I have is the agenda. We move on a little bit next, right. I will do Octodec at a glance portfolio analysis for some detailed commentary on these results. I will give a hand over to Charlene. I will come back however, for the -- for some commentary on our shopping centers. Thereafter, Anabel will come in and she will present the financial data for this period. I will come back thereafter and attempt the outlook section. And after that, we hopefully will engage in some Q&A, some questions and answers. Octodec at a glance, I don't want to speak to much time here. But I know that there are always some new people here. So just half a minute or so about Octodec. Octodec diversified by way of the number of tenants that we have. I think there are about 13,000, 14,000 tenants within the Octodec portfolio. And deals in as investments in all the sectors, namely residential, retail, shopping center, industrial and offices. Strategically, we still think that the CBDs, which has about -- which is about -- Octodec is about a 50% investment in -- is still a viable alternative for investment opportunities because of the incredible influx which we still see today of people from the rural areas into the Metropolitan U.S. The Metropolitan area that Octodec concentrates on is a hurting. We move on -- right, I don't want to spend time, but they are the details. I'm sure by now most of you have seen the SENS announcements, but there it is. Anabel will come back to these numbers in a little bit more detail. Perhaps the most important one, we've managed to maintain are a distribution of $0.60 per share. Next, I want to spend a little bit more time on this slide because it deals with where the income comes from. The biggest sector, you can see there by far is residential -- which comprises, call it, 34% of the total income. I think that this is significant because it underpins the sustainability of Octodec. Charlene will get into it a little bit later, but this has been one of the sectors that we've seen growth over the last few years. And there's nothing to -- that we are aware of at this stage of the game anyway that would stop this growth for continuing, albeit maybe at a slightly lesser -- to a slightly lesser degree. Yes, the next one is retail. I have always liked the retail, specifically in the shopping center in the sense that there's been demand for OSB demand for retail in the CBD. This class of asset is not our shopping centers, which I'll comment on a little bit later, but rather the inner-city core, which I would divide into two, those that are the shopping -- the shops that are located in the core areas within the CBD and those outside the core area. And those within the core area are trading strong. We don't present it. But if I look at our vacancy list, very low vacancy factor in this portion of retail and slightly bigger outside this area. The right-hand slide, the right-hand pie chart indicating 33%, 34% of total income in residential versus the 66% on the balance. I think that this balance is right, depending on what happens into the future with regards to cost with interest rates. And I guess, to an extent, unemployment, we would like to maybe increase this one slightly. Next CBD versus non-CBD rental income, I think this is also important because they are the numbers. I think we've presented before where 54% is the CBD, I think, to a large extent, judging from my conversations with a number of new people as well as other investors. They view Octodec as being a CBD portfolio. There're the numbers. It's not quite there. The other one, the chart on the right-hand side which splits Pretoria and Johannesburg, Pretoria having 70% of the income, rental income in Johannesburg City. I think that this number is also significant because Johannesburg CBD is tough. We have got a greater problem with the municipality, I think, in Johannesburg that we have in Pretoria and Johannesburg has had this the gas explosion and council on our typical council fashion. Haven't yet quite given us clear indication as to when this will be repaired than it has had a damaging effect on some of our Johannesburg portfolio. So at this point in time, that's a very high overview of some of the areas in which we operate, but I'm going to hand over to Charlene, who's going to get into some of the commercial and residential [indiscernible] the residential data. Over to you Charlene.

Thank you, Jeffrey. Right. In this slide, you can see an overview of the performance in the residential portfolio. And you can see that we have achieved a rental income growth of 5.1%. This was mainly due to tenant retention, and we also increased our market rentals on average with about 5%. If you look at the vacancies, our vacancies have increased slightly from 6.9% to 8%, and this is mainly due to the increase in vacancies in Tshwane and Johannesburg. These two portfolios are our biggest in the residential portfolio, and they contributed 87% of the GLA in the residential portfolio. Jo'burg in terms of as Jeffrey said, in terms of vacancies there, the increase in vacancies are mainly due to the gas explosion in Lilian Ngoyi. And during the repeat time that they're busy with, we have experienced a lot of power and water outages and that has affected the vacancies in this portfolio. Next slide, please. Our occupancy at the fields, which is situated in the Hatfield student area have improved materially. We have also seen a decrease -- a further decrease in vacancy subsequent to February and we have a 7% vacancy at the end of April. This was mainly due to the increase in the [indiscernible] allowance for the 2024 academic year. We still invest in our initiatives that we've started to create a thriving student community at the field. And we believe that this, together with our close proximity to the University of Pretoria has given us the competitive advantage and allows us to retain our position as the leading accommodation providers in this student area. As usual, you can see some detail on our tenant profile analysis at the top. But I would like to highlight our prospects -- we have completed the refurbishment of common areas and amenities at Vuselela Place. We have been doing this for a number of years now. You can see in the [final graph] what it looks like now. We have a similar upgrade planned for Ricci's Place which we'll be starting soon. We also continue to invest in our value-added services like Wash Bars, Wi-Fi and generators to our buildings. And then we have mentioned before that we have started our new product, targeting the lower LSM market and this brand will be called Yethu City, which means our city. In conclusion, on the residential portfolio, I just want to show you a very, very short video just to show you what I've been talking about in terms of value-added services, some of the improvements that we've made to the portfolio. And this is all to remain competitive and to ensure that we can attract quality tenants to our accommodation. Thank you. I hope enjoyed that. Now over to the commercial portfolio for a brief overview. In this slide, you can see the performance on the retail street shops portfolio. As Jeffrey said, we distinguish on retail between two different types, street shops and then the shopping centers, which Jeffrey will touch on a little bit later. The decrease in GLA that you see there was due to a sale of a property in this portfolio. We've also achieved a rental income growth of 1.7%. This was mainly impacted by some negative rental reversions experienced, and you will see the numbers in a later slide in this presentation. If we can move on offices. In our office portfolio, as we've reported previously, we have also two types of tenants. About 55% of the portfolio is here to government tenants. And the remaining portion to your smaller to medium enterprise tenants. We have seen an increase in our vacancies in this portfolio, and it was impacted by a large college who vacated one of our office buildings in the Johannesburg portfolio. And this, together with some negative rental reversions resulted in the income reduction of 1.4%. Can you move on -- in our industrial sector, we've also seen an increase in vacancies in the Silverton portfolio. And this impacted on the rental increases that we did manage to achieve in this portfolio, and that has offset the rental increase resulting in the rental growth of only 24% in this sector. Next slide, please. I just want to highlight a few achievements since February 2024, in terms of retail street shops. We finalized a deal with a national retailer to occupy 951 squares. This is in a heritage building, which was previously occupied by Nedbank. We have also secured a lease agreement starting on May with a tenant for one of our office buildings and that is for 2,689 squares. And this building was previously vacant for 21 months. You can see a picture of the particular building. Then as reported, HealthConnect has been completed, and we have commenced with letting at that property. And then in terms of solar and industrial, we've completed the solar project at Sildale Industrial Park, and we have similar projects planned for some of our smaller industrial buildings. Thank you, and that's where I conclude. I'm handing over to Jeffrey to take us through the shopping centers. Thank you, everyone.

Thank you, Charlene. Pleased to report that most of our shopping centers have done well. The one that's perhaps [indiscernible] trying very hard towards this [center at]. I think the big thing at this stage is we remain focused on trying to identify who the market is that we need to attract to come into the center. And hopefully, yes, we will make an announcement if we want to go ahead and refurbish the possibility of a sale is also obviously on the cards. But let's focus on the positives. And the other shopping centers have all done exceptionally well. In recent months, all the centers [indiscernible] which was completed in the previous financial year, have undergone some significant improvements to the tenant mixes and this bodes well going forward for the financial year remaining it's only six months. So only a portion of the six-month period will be included in this financial year's results. But I don't want to read to you the results that there for everybody to see except to say it's -- I consider this to be a fairly high performing sector of Octodec. Move on and -- so I just want to go back one slide. We've got vacancies there. If I had to take out [indiscernible] I think we'd see a completely different situation. Let's move on -- once again, they are the details I want to read to you, but about what we really disclosed to you. I don't think from a risk perspective, there's any one tenant that's posing a great risk to us or performing well one or two images of what the centers look like. For me, a great indicator of the quality of our tenancies is the occupancy of our parking lots and all these centers during most of the day are pretty full. Next, same story, but this is on the Johannesburg section. I guess our Woodmead Value Mart continues to be the star performer. One of the benefits when you're dealing with quality retail. It can be tough on the tenants. When you don't have the quality, there's no demand should I say, on the space. Well, then the cat is the tenant and the mouse is the landlord, but in the situation that would be fairly [indiscernible] and most of the genders Pretoria tenants it's the other way around. We are the cats and the mouse. And we just need to handle that in a very sensitive manner, I guess. Next -- Vacancies as a percentage of total lettable area split up amongst the various sectors. It's all there. I don't want to go through it, perhaps talk a little bit about the total where there is a creep from the 15.1% to 16.2%. Some of it is difficult stuff, but we just have to deal with this and get it back down to a figure below 15%. Next, please lease profile. For those of you that are new to Octodec the obvious question here is why has Octodec got such a short well. And it's something that Optodec as a portfolio has always lived with. The thinking behind that is as follows, is that if a tenant is not making, especially in today's times, well, it doesn't help nursing him because once he's two, three months in arrear all that tenant has blown. So rather than giving an opportunity to just move out, get the unit back and try to relet. I think in tough times like today, people need space, whether it be retail offices or industrial. One of the things that's going to hold them back is the threat of a lease hanging around the neck. And so the leasing people when they find these kind of tenants. And I think that there are material in number. They are happy to negotiate with us on a monthly or the short-term lease main full well if it doesn't quite work out, well, it's not quite the end of the world. If we were tougher on some of our tenants, then we wouldn't do the deal in the first place. This kind of thinking is obviously not true with the national tenants. And that's pressure coming from both sides. No national tenant wants to put in a significant amount in terms of shop fitting and/or stock and risk being given notice from he's landlord that he's being kicked out. Similarly, when we do a big tenant installation typically associated with the national tenant, we want to secure his tenure for a reasonable period of time so that we show return on the amount invested in this tenant. Included in this slide at the bottom there, we have some data, which I think supports what I've just told you. And that is the period of time that our tenants remain in an office despite what our lease term would -- or in this case, our lease expiry profile will perhaps indicate where retail shops at 45.2 month shopping center guys staying 76.5 months offices at 38 months and industrial tenants staying for 45 months. Once again, the conclusion in terms of my argument that I'm presenting here is that if those guys are trading reasonably well and they're earning a living, well, then they're going to stay. If they're not, it doesn't matter what is written in their lease. They're going to want to move out. Next, please significantly expiring leases under negotiation. Well, I don't want to spend time on this either, but to disclose it to you guys. I think that the point here is that this does pose risk to the business, whether that risk materializes or not, your guess is as good as mine, but we have no knowledge at this stage to indicate that there's abnormal risk associated [indiscernible] with -- in this coming financial portion of the financial year that we [read]. Next, I'm yes, that's just a continuation of the previous slide for your information. Some of these tenants that we displayed there. It's not that we are -- allow them to lease or it's because we don't care or it's not to manage, but it's that it's very difficult despite efforts from the team to get this done. That is the kind of tenant that's just not going to entertain a lease negotiation. Next reversions by sector, I think the one maybe that needs explanation is I'm [pointing] retail centers and shopping centers. I'm not quite sure what that point reason for that number is. But it's quite possible that, that is under a new lease, some of our leases because they are -- we've allowed them to -- they've remained in occupation in a long time. So, their rental has way outstripped that one of the incoming tenants. And so sometimes, we've taken a small net there. On reversions, I have a different story. And on average, we are certainly moving forward. Next, please -- Collections, I think for me, the high-level commentary on our collections is that the tenant base that we are working with is sustainable. It's not that we are not collecting our rental. One or two sticky tenants and that perhaps cause a gap between the amount build and the amount collected. But with time, I'm sure this will be sorted out as well. Next, Ilona results of capital management, financial results of capital management return to the numbers of this presentation. And so I'm going to ask Anabel to handle this the current [indiscernible].

Thank you, Jeffrey, and morning, everyone. I'm going to summarize what Jeffrey and Charlene have said during their presentation reading financial terms. Just to give you the results for the six months ended February 2024. So, our revenues grown from ZAR 974 million to ZAR 1 billion for the six months at 3.1% really on the back of the increased residential performance. That said, our property operating expenses have unfortunately grew at 8.1% to ZAR 544 million, resulting in a net property income of ZAR 460 million compared to ZAR 471 million in the prior year. The same applies to administrative and corporate expenses, which have also grown above the growth in revenue as well as inflation, up from ZAR 46 million to ZAR 52 million. And I'll give some more context to that in the next slide. That gives us distributable profit before finance costs of ZAR 418 million and represents a 3.6% drop on the prior. However, we've been very -- managed our interest rate expenses to maintain about ZAR 190 million, in line with the prior year, but that has translated into distributable profit, which after small provision for tax has amounted to ZAR 219 million compared to ZAR 234 million in the prior year, so an increase of 6.4%. As Jeffrey alluded right at the beginning that the Board has declared a dividend of ZAR0.60. So this is also in line with the guidance that we provided at the end of 2023 when we presented our results then. The Board did consider the liquidity of the group and was quite comfortable that despite a decrease in distributable income, we were comfortable in paying out a dividend of EUR 0.60. Turning to our statement of -- I'm going to actually give you some context on property operating expenses as you noted, these have grown considerably with property operating expenses growing at 8.1% and admin costs at 12.3%. So, the contributors to our property operating expenses is mainly our administered costs in terms of assessment rates, electricity and water. This contributed ZAR 234 million to the total operating expenses. The rest is made up of collection, commission fees, repairs and maintenance and cleaning, which increased by 8.8% from the prior year. And this is also impacted by a weakening rand because that impacts the cost of our supplies into repairs and maintenance, followed by security costs and then also a couple of other property costs of ZAR 111 million. This includes things like our insurance, building salaries, a little bit of our [indiscernible] in our provision for ECL, which amounts to ZAR 18 million, provision of Wi-Fi and generators to our buildings. So, all that compounded added up to 8.1% increase on the prior period. In terms of administrative costs, the asset management fees at ZAR 34 million, our CSI expense has grown from ZAR 1 billion to ZAR 6 million. So, we've spent considerably a bigger amount in the first six months compared to the prior period. That should phase out in the second half of the year. And in other corporate costs is also increasing from ZAR 12 billion to ZAR 14 million, and this is really taking care of our regulatory and compliance costs, including our head office salaries. Looking at our statement of financial position, it's really represented by investment property. That has dropped slightly by ZAR 9 million, but the biggest impact on our properties is the write-down of the value of our properties, up 0.9%, and that was driven by weaker property fundamentals, of which the major move there was the increase in our weighted average expense ratio, which climbed from 50.2% to 31%. So that talks to our increase in property operating expenses, with the other inputs really remaining quite stable, moving up by one decimal point, both in terms of the capitalization rate and the vacancy factor. Our income -- our investment in our joint ventures, just increased by our share of income of our joint venture. And then the movement in the derivative financial instruments, which represents our interest rating swaps, just a decrease from ZAR 10 million to ZAR 5 million as these interest rate swaps are approaching maturity. Our current assets have decreased from ZAR 343 million to ZAR 280 million, and they comprise of our receivables at the ZAR 163 million interest rate swaps at ZAR 40 million and our cash equivalents at ZAR 77 million, all of them decreasing slightly from the prior year. Looking at our equity and liabilities our equity has decreased. It has been impacted, obviously, by our decrease in our investment property, but also by the payment of our final dividend in November and our liabilities haven't really changed from the prior period, just with small movement from current to noncurrent. And that said, our NAV has decreased slightly by 0.5% from ZAR24.24 to ZAR24.11 per share. And we've managed to maintain our LTV at below our 40%, having increased slightly from 37.7% to 38.5%, and that is really on the back of weakening of our investment property portfolio. Giving you a quick synopsis on our cash flow, so we've started the year with ZAR 113 million range, and we've generated cash, including our movement in debtors and payables of ZAR 404.6 million, and we've applied those funds to pay our finance costs by ZAR 190 billion as well as our final dividend in respect of 2023 of ZAR 200 million. We then applied some of our funds to our developments to the tune of ZAR 90.8 million. A portion of that has been used to complete the development of HealthConnect, also applying some of that cash into our solar initiatives and the generators that we've provided our buildings with. In terms of funding activities, we've raised on DMTN note of ZAR 100 million to replace one that matured to the value of ZAR 50 million. So that, together with some movement in the balance of our loans has resulted in an increase of ZAR 34 million and final cash on hand at the end of February of ZAR 77.5 million. Added to that, we've got unutilized credit facilities of ZAR 640 million, which gives us a total of ZAR 750 million of unutilized facilities at the end of February 2024. Just looking at our borrowings, our borrowings comprise of bank loans to the amount of ZAR 4 billion and an unsecured DMTN program at ZAR 380 million at the weighted cost of 10.4% and with the benefit of our hedging, which is currently at almost 80% of the benefit is 1.2%, bringing our cost of borrowings to 9.2%. And that is in line with the cost of borrowings that was presented in August 2023. Our funding is mainly from the three larger banks, Nedbank, Standard Bank and ABSA Bank and the split amongst the banks has remained really largely unchanged from the prior year and with a small increase in our DMTN funding from ZAR 350 million to ZAR 380 million. During the current period, we've also refinanced two ABSA credit facilities with the amount of ZAR 350 million for a period of five years. Just looking at our expiry profile so if we look at our loan expiry profile, you will see that under 2025, we've got ZAR 1.5 billion. That comprises a loan of ZAR 845 million, which matures in June 2025 as well as the [indiscernible] facility of ZAR 650 million maturing in August 2025 and the DMTN notes of ZAR 100 million, which is maturing in February 2025. We anticipate to refinance all of these loans and we'll start engaging with our funders closer to the time. And that brings us to a weighted average expiry period of 2.9 years for our loans. So our focus with our funding is really increasing our DMTN program that is obviously price interdependent, and we want to use that program in order to drive our ESG funding, so specifically funding our solar installations as well as the conversion of our empty office spaces into residential accommodation, so impacting our social activities. We -- as I mentioned earlier, we are hedged of 79.8%. And as at the end of February, we had ZAR 3.5 billion worth of interest rate swaps. ZAR 500 million thereof is maturing now in May. So that we have helped by ZAR 250 million and extended the period by another year. Also post February 2024, we have been able to blend and extend a further ZAR 525 million worth of interest rate swaps at a weighted average cost of 7.42% and an average tenor of 1.5 years. So overall, we've extended our maturity period for 1.2 years. So, our strategy in terms of our hedging and is to really extend our interest rate swaps for obviously waiting for potential interest rate cuts for a period of 24 months. And as I mentioned, we did see quite a lot of funds in terms of our CSI spend. So, our allocation is spent in the first six months, and that was used to launch our ECD center swap Early Childhood Development, which we've run in partnership with Cotlands. So, we've launched this at one of our properties, and it's for the use of the chip community in the surrounding areas as well. We've also launched our community clinic in partnership with this scheme. So all those funds basically went into these two projects. And in terms of our capital expenditure, we've also spent it in terms of our sole initiatives. So, during the six months, we've completed the installation at two of our shopping centers and our industrial park Sildale Park, as you can see there in the picture. And we are continuing to investigate further solar installations. So, we're looking at rolling them out in the next six months. These obviously are the smaller installations, but we're hoping to conclude that by the end of August. And last but not least, it's also our investment in terms of providing water to our tenants. So with the water infrastructure phase that we are experiencing, specifically in our Johannesburg residential buildings, we've bumped for the option of drilling boreholes in order to provide water to our tenants. So these initiatives are really our contribution to our social and environmental developmental plans. And with that it brings me to the end of my presentation, and I'm going to hand over to Jeffrey to deal with the closing remarks.

Thank you, Anabel. My job here is to talk a little bit about the outlook. I just want to refer you to the [model] that you see on your screen right now. This relates to Yethu City. It's not something that we necessarily will settle on. But certainly, our designers have been given this as a brief to get close to. And what I'm referring to specifically is that we know in residential, that one of the impediments or rather one of the opportunities that we have is to provide accommodation to this market at a slightly more affordable pricing than the big brother, which we call places. So we've been able to, which is -- which started a demolition work started two weeks ago. We are providing shared accommodation to the residents of -- well, the first one starts in Pretoria. But in a way that they don't feel compromised in terms of the quality that Octodec has become so to use the word famous for. And that's the -- although they don't have their own bathrooms, their own kitchens, their own lounges, their own living rooms, but they will get our communal spaces but those communal spaces will be decorated and furnished in a way, quite similar to what you're seeing on your screen at the moment. A lot of work has gone into this product in making sure that we are as close to off the grid as we can get. We won't have -- we won't be reliant on council water and electricity if things work out the way that they planned. And I think that if this works out, given where current costs are and current interest rates are, the opportunity still is available to us to create more of these in one or two of Octodec's vacant premises. Let's move on. Outlook it's a tough economic environment in which we are operating. We haven't given up. I think that's an important to make. We continue to try to create a new product. We are looking after our tenants, and so we maintain a wonderful relationship and with our -- with our tenants a tremendous loyalty, which we have with our tenants. And I don't want to ever see that sacrificed. With regards to the prospects, I've mentioned to you Yethu City, which will be completed towards the end of the year and ready for the students because there will be a student uptake in this building to move in, in January, February, if this is positive, well, the opportunities is quite a big rollout of this. Hopefully, the elections will be passed -- will have passed, so we will enjoy a more favorable income -- outcome than it is currently spoken about at the moment. The other one that I think will start impacting on Octodec positively is the HealthConnect, which is an extension to the [indiscernible] Hospital, where doctors can hire rooms and have a link -- bridge into the hospital. It's still a large shortage of quality accommodation -- quality, rather not accommodation, but facilities for the medical facilities, for medical fraternity in the city of both Johannesburg and Pretoria. I've spoken to you about shopping centers. I think our shopping centers are very positive. Hopefully, next time we meet, we will be able to talk a little bit more positively about Killarney. I used to term my own personal [indiscernible] And I used to because I feel personally responsible for not being able to come to conclusions with the team earlier on. But one way or the other, we have to get this resolved. I spoke to you about the retail space. I've often mentioned to a gathering like this, that ultimately, the true determinant about success of a particular property, of the tenants themselves when the tenants are prepared to pay money on a regular -- on a monthly basis to the landlord. Well, then generally, you think that, that is a good -- is a positive indication that you've got quality property. When you have a high turnover of tenants within a building and high potential vacancies as well as area as you know that property needs to -- something needs to be done. The other one that we -- I want to speak about a little bit is our industrial sector, industrial sector vacancies are a little bit higher than I wanted them to be. This arose as a result of the vacating of one or two of the bigger units given the size of Octodec's industrial portfolio. When you lose one or two of our big tenants, well then that materially increases the demand -- that materially increases the vacancy factor, the percentage increase of percentage vacancy factor. But I'm sure within a short period of time, this will -- this too will be resolved. I'm aware of at least one of them in the process of being let out to a new tenant. So in summary, I still believe in the Octodec investment case, things are very tough, but we will continue to find solutions despite this tough environment in which we're working. Perhaps two minutes to talk about costs. Costs coming from the administrative cost and I spoke about it, are very difficult to manage. And what compounds this problem is the fact that under normal circumstances, which I believe one day, they will return that we can't pass these costs on to the tenant due to affordability issues. And that's really all I would say about our prospects and our outlook. And I look forward to engaging with you guys on some questions, if any of you have any. Thank you -- thank you for your time.

Thank you, Jeffrey, and thank you to the team. The first question is from Charles from Titanium Capital.

Thank you for your presentation. Jeff, you made an interesting comment on Killarney Mall about trying to identify the target market. Please could you provide some more detail regarding your thinking.

Thank you, Charles. I think that the market is moving. One of the issues that I've had to deal with is that the relationship between people and the Killarney Mall as well as the people living -- the relationship between the residents of Killarney and Killarney Mall for whatever reason hasn't been positive. We've done a lot of community building. And as a result of that, we are starting to see and feel what the real needs from the people of Killarney. It's painful to think that people that have a shopping center, such as Killarney Mall on their doorstep, they're not all shopping in our area, but rather moving off to Rosebank. And the cause of this is too numerous to deal with. I don't think this is the right forum. I'm happy to deal with this with everybody on a one-to-one basis. But that's where a lot of the work is going into. We've had one or two additional people doing market research and try to get deep insight in what the market really wants. I don't want to produce a -- assuming Octodec could afford it, which I very much start. But I don't want to agree to Octodec going ahead with some redevelopment based on some feasibility. But the feasibility itself, the rental that we think we can get all the type of tenants we can think is not based on solid market research. We have an opportunity to actually engage with many of the residents within Killarney -- start doing that. There's a park and they often I meander up and down the park, and you engage in. You start getting a sense of really what the people of Killarney really want and I hope that if anybody out there here today is from Killarney. They'll have experienced a change in the way, which the management team is working with economics. I have answered two questions.

Thanks, Jeffrey. The next question is from Yesh Pillay.

Why is like-for-like rental income down in the retail sector? He refers here to, obviously, a combination of street shops and shopping centers.

Thank you, Jeffrey. So, the rate of like-for-like in street shops in fact, has increased by 1.7%. It is a small increase for our street shops, but that has been impacted by some negative rental reversions specifically in new leases. When we look at shopping centers, -- the rental like-for-like has increased by 2.7%. So, it hasn't come down, but it's 2.7% up. And again, you look at our reversions, we've had some negative reversions there in the new leases at 0.8%, which we believe is quite small, but the 2.5% on renewal. So, it's quite positive. I'm quite confident about the sector. Just looking at those figures on the reversion that we show on our Slide 34, that is a comparable period from March 23 to February 24. So, it doesn't completely with the figures that we've reflected on our slides, returning deals with six months. But when we look at our new leases and our renewals, the reversions are overall in total positive 5.3% on new leases and 0.9% on renewals. I answered your question in that regard.