Octodec Investments Limited ($OCT)

Good morning, ladies and gentlemen, and a warm welcome to the Octodec 6 months Half Year Ended 28th of February 2026. I am joined this morning with our joint CEO, Riaan Erasmus, as well as our Chief Operating Officer, Rob Gibson. I will start off with a brief introduction. All I want to do this year or for the 6 months is a very brief commentary on how I see the results. I'm then going to hand over to Rob Gibson, who will talk about the detail. Then I'm going to leave the rest for Riaan Erasmus to handle, after which we will handle our Q&A and look forward to hearing from you guys. All right. Octodec at a glance, not much more to add. We know this, except to say that it has approximately just over 50% exposure on average in the CBDs of Johannesburg and Victoria, relying obviously on the influx of people into the CBD as part of the investment case. There, we've got the people that are -- we run Octodec -- thank you. Let's go into the results, an increase in revenue of 2.1% distributable income up by 11.1%. Dividends per share up to 64.5%, which represents -- ZAR 0.065, which represents a 4% increase in distribution. Cash generated slightly down at ZAR 240 million. Net property income up by 1.9% and like-for-like growth, this is an important consideration given the number of properties that we've sold, up 3.4%. Once again, total distributable income after tax up 11.1%. Portfolio value staying constant at approximately ZAR 11.2 billion. LTV, pleased to announce coming down a little bit to 37.3%. Net asset value up slightly to ZAR 25.49, previously ZAR 25.21. The all weighted cost of funding down quite nicely from 9.4% down to 8.7%. Core vacancies, pleasing to note down from 13.7% to 13.1%. Disposal of noncore properties, and I want to talk a little bit about this, 10 noncore properties sold -- by sold, I mean transferred cash in the bank and properties outside our books. Exiting represent 10 properties, representing ZAR 89 million and an exit yield of 7.6%. Now when you study the income statement, I want to make this point. It is obvious that the bulk of this pleasing increase in distribution comes from the good hard work done by treasury. As an investor, and I speak for myself here, it's not good enough to purely rely on the work done by treasury. It's pleasing to note that the treasury team has brought down our cost and achieved these savings. More important for me is the is the top line. Let's just talk about this. I'm on record as having said, well, Octodec has a tail approximately 30% in value of our assets and the remaining 70% is good. Let's start off by talking about this tail. In the last 18 months, we've sold 28 properties, the value of about ZAR 250 million, excluding Killarney Mall. Killarney Mall was also sold during this period. When I say sold, certain conditions are still yet to be met. I have been spending a lot of time with these guys. I think my view, if you had to ask me the sales, these guys know what they want to do with the asset, an element of sadness to having sold an asset that we've battled with for so long, but decision has been made this building is going to be sold. They seem to have an idea of what they're going to do with it, strong ideas as to how to unlock value in this property. What I'm saying to you, I guess, is that we are committed strategically to sell these assets, and we will continue to sell them as aggressively as we possibly can. In addition to this, there's another way we can, although it's not going to be a major way of Octodec doing -- achieving its stated strategy of selling all these small non-profitable non-growth assets is by changing the asset in terms of its use. It was for this reason that way back when a year or 2 ago, we came up with the Yethu City, our first pilot project, very successful with the first Yethu City, still enjoying full occupancy and showing attractive yields. Currently, we're on our way to hopefully launching a second one, but there's some 1 or 2 little design issues, I think, that need to be finalized and tweaking the feasibility to a point where we ready to push the button and get Yethu City 2 sorted out. Yethu City 2 is planned or in the thinking at this stage to go into Capital Towers North, a building that was previously occupied by the city of Tshwane CoT. That would get rid of 11,000 square meters of office space, something that's going to dramatically impact on the results of Octodec. I suspect given that the yield, the commencement yield on a cash basis like-for-like is cash positive. Let's turn now, however, to not only focus on the negative stuff on the 30%. I would like to spend a little bit of time just talking to you guys about the remaining assets. I think we are definitely starting to see a turnaround there. We are working with a wonderful team, motivated team. We have got in the office new software that's assisting us and making quite dramatic an impact on the business. For example, Yethu City, we let in just over 2.5 months, 200 beds. The field, this is probably the biggest accolade that we can see for this new software that we're playing with. We let 1,440 beds in exactly 2 months. I think this was well done with the team that I work with. Given that this was new software untested, we've had time now to tweak it to a point we're ready to roll it out on the rest of our business, probably in the residential sector, probably having to want to do one more building as a test as a pilot before we roll it out across the portfolio completely. I guess a little bit about the sectors in which we operate. I think that residential showing good growth, showing 5% already in March, to a large extent, prompted by -- or aided by the performance of Yethu City as well as the field once again, the Octodec's biggest asset. Yes. At the moment, what we're seeing now, even without the asset, a reduction in our vacancy rate for residential. Shopping centers doing extremely well, virtually safe for Killarney Mall. I've spoken enough about Killarney Mall, but as for the rest, we certainly have 0 vacancies. If there are 1 or 2, it's very temporary in nature, announced right now that we just concluded a nice deal in our Woodmead Value Mart that just continues to deliver the goodies for us. Yes. That's the shopping centers in a nutshell. The other one where we've been seeing good progress, and that is in industrial, not only our vacancies low, but we're now starting to see a fairly definite increase in our rates per square meter, which I'm happy about. Then lastly, I don't want to make a big thing of it, but our vacancies in our office sector. Office sector, as you all well know, is approximately 50% occupied by government, which has its challenges. The rest is the small entrepreneurs, not traditional offices that you would find in traditional office areas. These are offices within the CBD, predominantly in Pretoria that are starting to enjoy or express demand for space, small serial offices. It's not material at this stage, but we have earmarked 3 or 4 buildings where these vacancies are falling away quite aggressively. Not yet in the numbers. I think this is something fairly new that we're experiencing now, maybe not new, maybe we're starting to set up and take a good look at it. Once again, not yet fully in the numbers, but it could be material in the -- its contribution towards improved rental. That's really all I wanted to say for those of you that are new to the portfolio, Octodec having -- there we give the various sectors in which we operate. Sorry, go back a slide, please. Thank you. Nothing changing there, perhaps a small uptick in the percentage of residential that's a result of the increase in value of the field as a result of the good work that was done there. I don't think it's our intention to -- and I think that I'm going to leave it to Ron to talk to what now we can't just sell and just let this portfolio fade away. We need to start coming out a little bit more aggressively in terms of what we want to acquire. I do want to say this, I think that Octodec has certain competitive advantages, and we need to keep -- make sure that going forward that we stay within these -- of these competitive advantages. Anyway, back to the slide, rental income divided up by sector. Next on the right-hand side, we've got the split between CBD versus non-CBD. I think over the years, I don't know, we may have got this sense amongst many people that Octodec is a CBD portfolio. Yes, it's true with approximately 55% being in the CBD of both Johannesburg and Pretoria. Outside that 55, the 45% is outside the CBDs. Tshwane versus Johannesburg, Pretoria versus Johannesburg, fortunately, we're showing the kind of ratios that we show there, 30% in Johannesburg, the balance in Pretoria. Why I say this is obvious, Johannesburg continues to be quite challenging, but I've seen things over the years, the 40 years that I've been in this industry, things can change. Whether we're going to see a change in Johannesburg, I don't know. There's definitely a difference between Johannesburg and Pretoria strategically. If we can get out of Johannesburg relatively unscathed, I think that the team are going to decide to go that way. That's all I want to say from my side. I now want to ask Robert Gibson to -- let me express an opinion. I've become a lot more confident after having studied some of the details of these results. I think we are moving because of our strategy, which we are sticking to quite permanently, we are moving forward, and I hope to be able to produce at the end of this financial year some better results, where the top line starting to grow. I'm now going to ask Robert Gibson to come in and go through the detail of the various sectors. Over to you, Robert.

Thanks, Jeff, and good morning, everyone. Overall, our portfolio continues to perform well. As you've noted, vacancies have trended downwards, particularly in the residential portfolio. Performance across the core asset base remains stable despite the very mixed sort of operating environment in which we find ourselves. If we look at residential, this remains a key contributor to our performance. There's sustained demand for our portfolio, which is well located, affordable and secure and which we actively manage. I need to just emphasize that point. Rental growth of 5.5%, and I think the like-for-like is 5.7% is underpinned by declining vacancies, which reduced to 7.7%, and that's reduced even further since and continued positive rental growth. As you've mentioned, Jeff, the field saw significantly improved occupancy levels at close to 100% as a result of the implementation of a new software system, which is helping us streamline our leasing process and making that more frictionless and more efficient, and the finishing of the D-block units. I think it must be noted, there's a lot of noise about [Nest] that the University of Pretoria administers our rental payments on behalf of Nest, and we have a really good relationship and long-standing relationship with the University of Pretoria, and there's good cash flow in respect of the Nest accommodation. As you've alluded to, Jeff, Johannesburg vacancies in the residential sector remain under pressure due to the continued city infrastructure issues that we experienced and the periodic continued repairs to Lilian Ngoyi Street, which was subject to the gas explosion. Next slide, please. Okay. Here's a snapshot of our quality offering. I think the only thing to point out is the improved rental at the fields, again, brought about by the improved occupancy levels and the furnishing of Block D units where we were able to achieve higher rentals. Next slide. Okay. Our Place brand continues to be recognized for clean, safe and well-maintained accommodation. We invest in this brand on an ongoing basis to ensure its attractiveness and relevance to our tenants. The newest sort of attractions and new things that we've added to these buildings are our retail delivery boxes, which support online retailing and the vending machines in the reception areas. We continue to invest in common area backup solutions and also water security solutions at selected buildings. We've detailed the profile of our typical place tenant there, which hasn't moved substantially from prior years. Okay. Next slide, please. Okay. Yethu City. It continues to demonstrate strong demand and operational success, which really reinforces its role as a strategic platform for our future growth and for potential use or redevelopment of our office stock. Yethu City – On Sisulu, the first pilot project, as Jeff mentioned, was let fully let within 3.5 months and has sustained near full occupancy levels since we last reported. The development was recognized as the best new affordable housing development at the 2025 API Summit Awards and is actually up for 2 more awards has been nominated for 2 more awards in the current year. We look forward to seeing what happens there. Its success has really been brought about because of an integrated offering, which combines co-living design, smart technology. We really have tried to leverage technology to make the building as efficient as possible and also just always be mindful of a community focus when we develop these projects. Octodec is actively progressing opportunities to expand to Yethu City. Conversion of some of these buildings is not easy and not simple and the feasibility work continues to ensure scalability of the model. We engage with funding and development partners to support future rollout of this product. Okay. Next slide, please. Retail shopping centers. I think maybe just to note that Casino City, which was previously classified as a shopping center is now reclassified as industrial as it's wholly occupied by Medipost. You'll see some nice pictures of that later on in the presentation. If we exclude that, shopping centers delivered a like-for-like rental growth of 7.7%. If we exclude Killarney Mall, as Jeff mentioned, we are effectively fully let on shopping centers, where Killarney Mall is concerned, there is a signed contract of sale for that asset as was previously announced and it is subject to certain conditions. Okay. Next slide, please. I think this slide just reiterates the point that our shopping centers have exceptional occupancy levels, and there's a very strong rental growth in most instances, double digit. Okay. Next slide, please. Our retail street shops in Tshwane and Johannesburg offer retailers visibility and accessibility to high footfall areas in the CBDs. The portfolio is showing encouraging signs of stability or stabilization with the street shops performance beginning to recover in key nodes and including Johannesburg, which is supported by improved footfall and improved trading conditions. I think trading remains particularly resilient in Pretoria with Johannesburg still recovering from the effects of the Breeze Street Lilian Ngoyi explosion. Next slide, please. This just gives you an idea of some of the quality retail street shops that we have. Next slide, please. These are some of the brands that we serve in our portfolio that'd be familiar to you. Okay. Next slide. Offices, the portfolio remains broadly stable. The bulk of the like-for-like rent reduction is attributed to the City of Tshwane vacating 12,000 square meters at Capital Towers North, as Jeff has mentioned. This is very much being considered for year 2, but we have also tendered it for Paris Bail leases. Maybe just on that point, at present, we have tendered for collectively 25,000 square meters of leases across our portfolio and across several buildings. Then I think the point was made earlier that we do continue to assess the portfolio for disposal and/or conversion or repurposing or reimagining. Okay. Next slide, please. Just a snapshot of our varied office offering. All of these buildings that must be noted reflect good rental growth despite slight decreases in occupancy. I think that just talks to the work that we've been doing on the leasing front to push rentals and to really evaluate our rentals and stick by them. Okay. Next slide. I think one of the other areas in which Octodec has performed is in industrial. It continues to deliver steady growth with rental income increasing by 6.8% and this is supported by the continued demand for the small warehouse and mini industrial spaces, sometimes referred to as mini factories. The vacancies of 9.1%, which reflects the 6,800 square meters vacated at the Talkar building. It's really only one building that really brings about that vacancy percentage. We are in discussions with numerous tenants to take up pockets within that larger space and we are also in discussion with numerous purchases for that property. I think also just to note is Casino City is included in these numbers now as it's now classified as an industrial property. Okay. Next slide. I think this slide just reiterates my points where we have excellent occupancy levels at our industrial parks and also really good rental growth. Again, some of the parks showing double-digit rental growth, which is very encouraging. Okay. Next slide. Lease expiry. Most of our leases are short term in nature with lease periods of 12 months. I think that's typical of residential leases and also leases with small to medium enterprises. With that said, we are actively managing our lease terms to increase the WALE and this is very much in line with Octodec's strategy to increase the WALE. If you look at the leases expiring within 12 months, this has reduced to 47.6% from 54.1% as reported in February of '25. Really doing well there. Then our average lease length or length of state profile remains largely unchanged. That also just talks to the fact that in spite of the lease terms being short in nature, tenants typically stay quite long in our properties. Okay. Next slide. This is just a slide of the material leases concluded during the period. I think the biggest one there is the Medipost lease, which is close to 16,000 square meters that were secured. Yes. Then we continue to get the 12-month extensions or we've got the 12-month extensions on our DPW leases. Okay. Next slide. Again, these are material leases that have expired. I think the only point to note here is that the new hotel, we've since concluded a renewal for that particular lease. Also, we only have 5 outstanding DPW or Department of Public Works leases, all of which we expect to receive shortly. Okay. Next slide. Jeff, you touched on this. Collections continue to be strong at 98.5% of our billings collected for the 6 months, split residential 95.9% and commercial 99.3%. The residential collection percentage has also improved to 98.9% since, and that's following really good receipts from UP in respect of the Nest accommodation at the field. Okay. Next slide. Just with regards to our solar investments, we obviously continue to invest in PV solar. We have invested ZAR 76 million in capital in 12 solar projects to-date. For the 6 months ended February 26, that is ZAR 4 million of a full-year budget of ZAR 6 million. I mean, this is really showing fruits with ZAR 5.2 million in savings approximated for the period. Okay. Next slide. These are the CSR projects, which we supported during the period. We invested about ZAR 1.5 million in supporting local suppliers and businesses, ZAR 1.8 million was spent on social upliftment efforts and a further ZAR 400,000 was spent supporting cleaning efforts in the Johannesburg, in the Tshwane CBD, Pretoria CBD.

Thank you, Rob, and good morning, everyone. Just move to the next slide. Thank you. I'm going to start off with our distributable earnings for the period. If we can start there at the top of the slide there, you'll see the revenue. We had a growth of 2.1% to just shy of ZAR 1.1 billion. Most of that revenue coming through from the residential and the shopping center sectors. As mentioned, the residential sector grew by 5.5% and even better on a like-for-like basis, the retail shopping centers that increased by 7.7% on a like-for-like basis. Then if you break the revenue down into the recoveries and rental income, rental income itself increased by 1.4%. Now it is below the inflation, but it also takes into account that we have sold 10 properties during this 6 months period. Then you also have to take into account the 17 properties we sold in the prior year. The impact of that is quite material. On a like-for-like basis, if you remove all the noise, the rental income grows in line with inflation by 3.4%. On the recovery side, that is quite a significant part of our revenue line that increased by 4%, and that is really the assessment rates and all utilities that we recover from our tenants. On the property expenses, well contained with an increase there of 2.2%. Our doubtful debt sitting there at 2.3% is in line with the prior year. We would like that to improve. We still have one large tenant that's under business rescue. This particular tenant, we hope to solve the challenge there. Then, of course, we do have the tenant on the Lilian Ngoyi Street that's still recovering from the impact of that historic gas exposure. On that administration and corporate expenditure, that was well contained at an increase of 0.3%. The big contributor there to that small increase there is, of course, the executive directors forfeiting their directors' fees. We've canceled the past practice of paying board retainer fees to those executive members. On our joint venture income decreased by 18.7%. Looks material on a percentage point of view, but when you look at the actual numbers, it's small, and that's really related to some one-off costs in that particular property as well as income tax expenditures there. I think the big story of Jeffrey will see, as Jeffrey has mentioned, with the significant decrease in the finance cost of 9.3% or almost ZAR 19 million. We've done very well there. Of course, it was supported with the lower interest rates, but we've done well on the refinancing of our facilities at lower margins. You will see that later in the slide that our overall cost of funding is coming down. The net result here, our distributable income growing by 11.1%. Can we move to the next slide? On this slide, we've just provided a breakdown of our property expenditure. I think there's 2 items I want to highlight on this slide. The first item there's assessment rate on your left, you see there's a decrease of -- from ZAR 84 million to ZAR 77 million. We've done well there in terms of objecting to municipal valuations. We were successful there, and that credit came through in the current period. That's a positive impact. Related to that is the increase in other costs. You can see there's the increase from ZAR 64 million to ZAR 71 million. It's not all related specifically to the assessment rates, but a big part of that increase relates to professional fees that we incurred in the objection of the municipal value at these 2 large properties where we were successful. Then there were some costs related to the consolidation of homes within our portfolio. Next slide. On this slide, I would like to spend a little bit more time. This is our like-for-like performance in our portfolio. When you exclude the disposals that we've mentioned, which is about 27 properties in the last 18 months. There at the top, you can see residential performed very well with an increase of 5.7% in rental income. That is supported by the new software that we introduced at the field, reducing the vacancies to almost 0. We've also converted that block D apartments at the field into furnished units. The full effect of that is not yet in these numbers. We'll see most of the positive impact of that coming through in the second half of the financial year. Our street retail that's performed in line with inflation. On the shopping centers, again there, you can see the very strong performance on a like-for-like basis of 7.3%. Offices and industrial, I think this is where you can really see the impact of those 2 large vacancies that we've reported at year-end. It's quite significant on our numbers. If you look at the office, we've decreased by 2.2%, but if you exclude Capital Towers or the vacancy thereof, the income would have grown by 0.9%, not where we would like it to be, of course, it's below inflation, but it also speaks to the depressed market that the office space finds itself in, particularly in the CBD areas. On the industrial side, there, we've shown a like-for-like decrease of 1.7%. It includes the [Telco] vacancy. Of course, if you exclude that Telco vacancy, you can see the growth being 5.8%, which I think points to a very strong albeit small but strong industrial portfolio performance. On a net property income, our like-for-like performance there was a 3.1% increase year-on-year. If you exclude those 2 large vacancies, our NPI growth was 5.1%. Next slide. Here, we are looking at our summarized balance sheet. On the balance sheet, our portfolio remained fairly stable with the investment properties at ZAR 11.2 billion. It includes the disposal of the 10 properties in the current period. As I've mentioned, the 17 properties in the prior comparable period, . and then if you calculate the weighted average value of our properties, this has increased by 6.2% to the ZAR 53.7 million, which I think is in line with what our objective is to get the average value of our assets to the ZAR 100 million level. On the current assets, you will see that, that's increased quite significantly. It's really because of the elevated cash balance there. Our cash ended at just shy of ZAR 214 million for the period, and it's because we issued a corporate bond right at the end of February and then because of timing, it was still sitting in our bank account instead of in the RCF where we normally park our excess cash. At the bottom of that slide, you can see the valuation inputs. I think that's all stable apart from the long-range vacancy factor that increased because of those 2 large vacancies. I think the point for me here is that our cap rate remaining at 10%, which I think is quite conservative for the portfolio. Next slide. Again, here, we're looking at our equities and liabilities. Our borrowings are stable at ZAR 4.3 billion and in line with our year-end borrowings. The big item here to mention is the reduction in our loan-to-value. We have restated the prior year year-end LTV to 37.9%. Previously, it was 38.5%, and it's really because of the changes in the best practice documents for the REIT sector. Another item just to mention, which I think is very positive is the reduction in our short-term interest-bearing borrowings, and you'll see that the long-term side of that increased nicely by ZAR 148 million. We're moving in the right direction of increasing our long-term borrowing, short-term borrowings. Next slide. We're talking to our dividend policy. I think we haven't changed our policy in the last couple of reporting periods, but it's just a reminder of how we base our dividend payout ratio. As before, we require about ZAR 100 million in terms of our capital spend requirements. That would include both defensive and yield-enhancing investments. Also, it's our strategic objective to reduce our LTV to 35% and lower in the longer term and increase our interest cover ratio to a minimum of 2.5x. Consequently, we have increased our distribution per share for the interim period to ZAR 0.645 per share. This is a payout ratio of 70%. We do intend to, of course, continue to pay 77.5% at the end of our year. The whole reason here for the 4% increase in our distribution per share as opposed to the 11% based on income statement is simply because we are balancing the dividend payouts that we will do between interim and year-end. Next slide. Here, we are looking at our investment property portfolio. We have spoken a little bit about this. I think the 2 items here to highlight simply there is the bullet #3. We have externally valued 59 properties, which makes up almost 11% of our portfolio. Those valuations really were aligned with what we have done internally. Of course, as at each reporting period, we internally valued the whole portfolio. Next slide. This is quite a detailed slide. We introduced this at our year-end results. This provides all the inputs for the valuations of all the different types of our properties. I don't want to spend too much time on this, but the highlight on this slide for me is there at the bottom where we speak to the mothball and land. We've got 10 properties sitting within this space, but the value of these 10 properties is ZAR 99 million. That makes up less than 1% of the value of our balance sheet. I think it's quite important to highlight that it really is a small portion of the value of our portfolio. Next slide. On the capital allocation, so we continue to dispose of our noncurrent assets, especially those properties that are sub ZAR 10 million in value. Our focus and strategy remains to invest in properties that are worth ZAR 100 million or more. Of course, we are exploring and investigating a number of assets, but we are very disciplined. We follow this disciplined approach quite diligently, and we want to make sure that it's yield enhancing when we decide to invest in a particular asset. For the period there, you can see, as we've mentioned, we've sold 10 properties for ZAR 88.7 million at an exit yield of 7.6%, and as also mentioned in the last 18 months, we've sold 27 properties and the total value of those 27 properties with the proceeds that we have generated from those disposals was ZAR 245 million. We also just post or after our reporting period, we sold another property for ZAR 12 million. Also, as previously announced, we've signed the sales agreement on Killarney Mall for ZAR 397.5 million. It is going through its normal process of conditions that we need to address on both sides. We almost completed the due diligence process and following on that, the process with the Competition Commission approval will start. Next slide. On this slide, we're just presenting some detail on those 10 assets that we sold. I think as you can see there, most of the assets or 9 of the 10 assets were below the value or were sold for below ZAR 10 million, but they really are sitting in that space and disposing these assets really frees up time for management to focus on the larger assets and strategic matters we would like to. We've also calculated that the net impact of this is positive to Octodec. It improves our covenant metrics, both on our LTV and ICR level and distributable profit, taking into account the finance cost that we will save is a positive amount of ZAR 1.1 million per annum. On this slide, we're just addressing the capital expenditure that we've incurred for the first 6 months. We spent ZAR 71 million and of that ZAR 41 million related to that accretive for enhancing projects. The first one really to highlight is obviously the field we converted the unfurnished units into furnished units, and that was really successful in the letting process as well with that block being fully let out. Then we've also introduced shared office space at Killarney, through the Regus brand and then the biggest item there is the Casino City upgrade where we spent ZAR 27 million, and we will continue to do so in the second half. We've also got defensive spend there. As you can see, some of those are lease related and some of them are related to fire life and safety or compliance. That's really where regulations have changed over time, and we are upgrading the buildings to be compliant. Next slide. On this slide, just a couple of examples of where we spent the money year-to-date. I think the first 2 items there, the water silo and the Dynamic Office Park, the Park silo project there really speaking to compliance. where we have to install these massive water silos to address the water issues and the fire-related risks at the various properties. I'm sure you've seen them all over the country or all over Gauteng at least in the various shopping centers. The second one there Dynamic, that's really an upgrade within the building where we are upgrading the office space and it's really tenant related. On the right-hand side, those are 2 of the yield-enhancing projects. The first one, of course, being the field and what it looks like now inside the Block D units. Then, of course, on the far right, you've got the Killarney shared office space and what it looks like now. Next slide. For the second half of our financial year, we are planning to spend about ZAR 121 million. Altogether, that makes up the full-year budget of ZAR 192 million. Again, here, at the bottom of this graph, you can see the spend we will be doing at Casino about ZAR 35 million. That includes the solar that we've completed this project on this property as well. We're also planning to spend ZAR 18 million on 4 other solar projects in the second half that already started. Then at the top, you can see the large spend there is the Louis Pasteur Hospital. We are planning to upgrade the facade of the building there. The building is 50 years plus old and to remind you, about 2 years ago, we redeveloped the [indiscernible] upgrade this façade so that our connect building where the doctors are situated and the hospital faces are aligned with each other in terms of the look and feel. Next slide. On this slide, we're just showing what it looks like at casino now. We're not quite there yet in terms of the completion of this project, but you can see it is starting to look really nice in terms of the work we've done to date. Next slide. This is slide just speaking to our cash flows. As you can see there, really performing strongly in terms of generating cash from our portfolio. We've generated the ZAR 447 million from our portfolio of properties. If you exclude the finance cost or net of finance cost, we've generated ZAR 244 million. I think it really speaks to how well we are managing the cash flow taking into account some of the profits or dividends that we've returned to our shareholders. As at the end of the reporting period, we ended up with ZAR 239.9 million in cash. Normally, this balance wouldn't be as high. You can see when we start off with the reporting period, we were ZAR 136 million. Post this reporting period, most of that cash goes into our revolving credit facilities to manage our finance costs. Next slide. On this slide, we're just speaking a bit about the treasury side of things. As you can see there, our bank funding sitting at ZAR 3.8 billion and our DMTN funding at ZAR 0.5 billion. In total, our borrowings sitting at ZAR 4.3 billion. Total liquidity increased by ZAR 300 million to ZAR 1.1 billion and the increase there coming from a corporate bond we issued in October of ZAR 200 million as well as the disposal of properties, which generated about ZAR 89 million in cash for us. Our covenant ratios there, those are the bank fund covenant requirements or LTV calculations, if you will, that remained at 38.9% when you compare it to the August LTV levels. As I've mentioned before, our cash is elevated. If you bring the cash into account, the LTV covenant there would reduce to below the 38% level. We do performing quite well in terms of our interest cover ratios there, and that increased to just shy of 2.4x. Overall funding costs increased or rather decreasing -- sorry, from 9.1% at year-end to 8.7% and that is as a result of the reduction in the interest rate overall as well as the improved margins that we've been managing to secure in the refinancing of facilities in the last 12 months. Next slide. On this slide, we're just showing the different sources of funding again per institution. Again, you can see the DMTN program there coming through. We've issued -- rather, we settled ZAR 80 million in corporate bonds as at the end of February. Then we refinanced the same of ZAR 80 million with the issuance of ZAR 100 million at the end of February. That ZAR 80 million corporate bond that expired was priced at a margin of 205 basis points. You can see the nice reduction there to 173 basis points that refinance. Of course, I've mentioned the ZAR 200 million issuance in October. You can also see there, we've seen a nice reduction to 175 bps. The last issuance before that one was issued at 190 bps. A continuous reduction in our margins on our funding. We're also currently working on the refinance of 2 large facilities, one being with Standard Bank that's maturing at the end of June of ZAR 234 million. Of course, with Nedbank, we've got ZAR 500 million maturing end of August. Both of those agreements are currently under review. In both instances, we've also managed to reduce the margins on the facilities. Then we've also negotiated longer. You can see there 4 years for Standard Bank and 5 years for Nedbank, and that really speaks again to our strategy of extending the tenors to between 3 and 5 years on our debt facilities. Next slide. On this slide, speaking to our loan expiries and our hedging. Again, there, you can see our loans -- our tenure there is sitting at 2 years as of the end of February. It has decreased, of course, from the 2.3 years as of the end of August, but that's before you take into account the refinancing of those 2 large facilities that I've just mentioned. That should increase appropriately. On the hedging side, we are sitting at 69%. Our policy is to be hedged between 70% and 80%. Post-February, as we obviously generate our cash and we deposit the cash amount into our revolving credit facilities, that 69% increases into the [70%] levels. We continue to look at opportunities to enter into new swaps. The market is currently elevated in terms of the pricing of the swaps. We don't want to enter into new swaps too quickly, but it is something that we continuously monitor and will place swaps when the time is right. Next slide. On this slide, we speak a bit about the outlook. The following slides are on that as well with a bit of strategic direction. Of course, I think in South Africa, we have really felt that business confidence have improved. I mean the politics seem to be stable. Of course, there is the risk at the end of the year of what happens with the elections, but we'll see how that goes. It does fall outside of this financial year, of course. I think the one big risk factor for us as a country and as a company, of course, is the interest rate outlook. There's the possibility of inflationary pressures coming through as a result of the war in the Middle East. I think we shouldn't forget about the war between Russia and Ukraine, that's also playing its part. In the meantime, we are continuing to focus on what we need to do as a team in terms of our strategy. We continue to focus on simplifying our portfolio through disposals. We have a clear view of where we want to take this portfolio. We need to sell the assets or the tail end of the assets that we have identified and recycle those assets or proceeds into new assets that we believe will be generating sustainable earnings for after debt. I think the last item there, I also want to mention for now is we've spoken about the Yethu City concept. We continue to work on the feasibility of that. We've got a pipeline of buildings we're looking at, and we need to make sure that we match the feasibilities in the cost appropriately. Next slide. On our guidance, so you'll recall at the end of our financial year 2025, we did mention that our distribution per share growth will be between 0% and 4%. We have upped this guidance to between 3% and 5%. We've got the normal assumptions there that we've listed. We have assumed no further disposals necessarily in our forecast because it is very difficult to determine the exact timing of disposals. We've also not assumed any changes in the interest rates at this point in time. Next slide. Here, we've included a bit of a road map for the next 36 months as to what we want to do and what we want to achieve. I think as an ongoing matter there at the top, you can see there we're mentioning that we want to accelerate the disposals of noncore assets. I think we are trying to be more aggressive in disposing of these assets and taking an aggressive look at opportunities to exit. Assets, we continue to look at the Yethu City concept, as I've mentioned. We are very disciplined in that thinking process. We want to make sure that the feasibility really work before we start deploying the capital. Currently, we're looking at 2 buildings in terms of the feasibility and spend and you're looking at our capital outlay of about ZAR 350 million for us. It is really important to make sure that those feasibilities work and that we will deliver the returns on that investment. Speaking into the next 12 to 24 months, I mean, I think the rollout of that Yethu City concept is where we want to start the process. We have also signed NDAs with a couple of interested parties that want to provide both equity and debt. Then I think the item that I want to highlight there in the, call it, 24 to 36 months column there is that where we see this fund going is to really transition the portfolio into a 3-pillar portfolio, if you will, comprising of residential properties, our mini warehouse industrial. We typically like the small industrial properties in terms of sizes, so where a tenant can lease between 200 or roughly on average 250 square meters. We can go to 1,000 to 2,000 square meters, but that's typically the space we want to operate in. We know it very well. Then, of course, the convenience retail centers. Our centers are all doing extremely well. We want to focus on expanding that portfolio aggressively within the Pretoria node. We will look at opportunities, of course, outside of Pretoria, but that is really the area that we are dominant in and we would like to focus on that. With that, thank you. That's my slides.

Thank you, everybody. I'll start with the first couple of questions, which are closely aligned on Yethu City and did address it somewhat. From [indiscernible] and both [indiscernible] from Anchor Stockbrokers. The first question is well on a solid set of results. Yethu has shown to be a good proof of concept. Management mentioned continuing to investigate vacant spaces for possible conversions. What is the target yield for these projects? Roughly how much does it cost to undergo this conversion? Then the second question related to this was the Yethu City project is it only for Tshwane or are you also looking to implement it in the Johannesburg CBD?

I'll leave this one to you.

Thank you. Yes. Brian, thanks for that question that came through. Yes, as we said, we've looked at 2 properties for the year 2 conversion so far. The estimated cost there is about ZAR 350 million. It's interesting to see the cost coming through for the 2 different buildings. The building is doing 11,000 or cost about ZAR 11,000 per square meter to convert where the other one is at ZAR 15,000, but it's really because of different things that we need to work on the buildings. We are targeting yields of at least 10%. I don't really want to start or invest in the project if the starting yield is not at least 10% for us. We might also look at combining properties to achieve that. That's not a problem for us, but I think that is -- we will take it on a case-by-case basis.

Another question from [indiscernible] Anchor Stockbrokers. A couple of questions. One is your upgraded guidance still implies a softer second half run rate in the first half. Is that primarily conservatism? Or does it reflect expectations that the first half funding cost benefit moderates while vacancy pressure becomes more visible through the income statement? Second question, how much of the remaining weakness in retail street shops reflects temporary disruption in the Johannesburg CBD versus more structural pressure on smaller local tenants? Then thirdly, to what extent is the pressure in office portfolio being driven by vacancy and negative rental reversions versus the fixed cost burden of under-occupied buildings?

Riaan, I'm going to leave this one to you as well.

Okay. On the first question there in terms of the second half performance. I think so we do believe that the benefit of lower interest rates will carry through to the second half of the financial year. Of course, I am a conservative guy by nature. I do make sure that the enough headroom in the income statement. The important thing to take into account here is that if you go back a couple of slides, you'll see that the capital expenditure, most of that comes through in the second half of the financial year. The impact of that really coming through. It means I'll draw down more facilities or deposit less cash into my facilities to manage the funding cost. Yes. Then, of course, there's the other item, which is repairs and maintenance. Normally, in the first half, we spend about 1/3 of our R&M where most of the R&M that comes through in the second half of the financial year.

Question from [Ante] from Coronation. Regarding your 24 to 36 months road map, where does the street retail segment fit into the 3-pillar, call it portfolio focus? Is it your intention to enter new urban nodes?

Yes. I think in terms of the street retail, so you will know that a lot of those street retail properties are attached to either office buildings or residential buildings. We're not planning to necessarily exit them. I think if that part of our office building, we will likely exit that property, which consequently means that you'll exit the street retail. When it comes to residential, it will remain in place. In terms of entering into new urban, I think the focus for us is because we've got a fund of 209 properties as of the end of February. We are trying to just focus on streamlining and rationalizing this portfolio into fewer number assets but higher value assets. We will look at new urban areas within the Gauteng region. I think we need to take it one step at a time and at least just get this portfolio repositioned into our long-term vision.

I'm not sure if you want to add or should I move on to the next question?

No, I'm supporting it. I will add if I think is missing.

Next question again from Anchor. Following the Killarney disposal and improvement in LTV and interest cover, what are management's medium-term target ranges for leverage and coverage metrics? How much of the disposal proceeds are expected to be allocated to debt reduction versus redeployment? Over what time frame would that occur? Also, would management prioritize reducing the LTV below 35% before pursuing meaningful acquisitions? Or do you see the deleveraging and selective acquisitions happening in parallel?

Yes. Jeff, I'll take that one again. I think when the Killarney disposal comes through and we receive the proceeds, of course, in the short term, I think in an ideal world, we would want to receive the proceeds and then redeploy them in selective assets. As I stand here today, we will take the proceeds and settle the debt and lower the LTV to below the 35% level. I think for us, we would like in the long term to operate between 30% and 35% LTV level, but the 35% is the, call it, target maximum for us. In terms of acquiring new assets because timing is never perfect. It doesn't mean that we're not looking at other assets. If the right asset comes along for us and we see the opportunity, we will execute and buy the asset, even if it means that we're increasing the LTV in the short term with the knowledge that we are disposing of assets to decrease.

A question from [indiscernible] Standard Bank. Obviously, Emira has taken a stake in Octodec and a question on -- around the strategic alignment between the 2 parties. Jeffrey?

Okay. Well, we only came out of the close period now. We haven't had much time to engage with them openly. I did speak to them yesterday. They kindly advised us of the SENS announcement that was released yesterday. We have made a time to meet and engage. I think that date is sometime next week. On our interactions that I've had so far, there's nothing that I think is concerning me personally. I think that we must treat these people like any other -- the same amount of respect as any other large shareholder, obviously, always operating within the said governance parameters.

Thanks, Jeffrey. I don't see any further questions, but perhaps we can give it a minute to see if any further questions come up in the chat.

Sorry, Bryan, I did see what is there's 2 questions relating to the Joburg CBD, I think.

Yes, that's correct, Riaan.

Robert, do you want to take that?

Yes, sure. I mean, with regards to the retail street shop space, I think Gauteng does remain a temporary disruption. While it's true most of the road is open sections to the East and the West are now closed and that again impedes traffic down the road. Is it structural, some of the changes? I think, yes. I follow that up by saying that I think we are moving our focus away from purely national filling up our large pockets to look at the next tier down, where we find quite a strong trader and quite a strong appetite for the space, which we offer in these high foot or high traffic, high visibility areas. On the question of office vacancies, I'd say it's a case of a tale of 2 cities where Johannesburg and Pretoria are concerned. In Johannesburg, you've got a glut of available space. I think there are issues with just too much space. We do periodically look at the cost burden of having those assets under occupied versus keeping them open. Where in Pretoria is concerned, I think there's much better demand, and we are seeing strong rental growth and vacancies in selected buildings come down. That's very much following on from our focus to get those types of buildings let and to manage, I guess, rentals across the CBD in terms of which buildings let for ZAR 100 a square, which let for 80 a square, which are the 40 square meters and making sure we don't muddle that up. I think we've been quite successful in executing on that.

Thanks, Rob. Just a final question come through from Trinity [indiscernible]. It's an open-ended question. Are you able to comment on Octodec's succession policy and executive plan? Riaan, I'm not sure if you'd like to address this or Jeffrey or perhaps Trinity can ask a specific question.

Perhaps, I could answer that. I mean I think today's presentation where the bulk of the work was being done by Riaan would indicate the intention to move Riaan into full-time CEO with me, with time taking a step backwards. I think that will achieve a lot of objectives. I think we have a new Chief Operating Officer in the form of Rob Gibson, who I've worked with a long time and very comfortable that operationally this man is strong to handle the demand of whatever this portfolio throws it to.

Thank you, Jeffrey. I don't see any further questions. Perhaps Jeffrey, you'd like to provide some closing remarks.

Yes. I've enjoyed reviewing the results. I really think that for a long time, for whatever reason, Octodec is starting to move forward. Johannesburg remains a concern as to whether Johannesburg CBD saves itself. I don't know. I don't have a crystal ball. Very comfortable in the areas in which we operate in Pretoria. I hope that you guys who is listening here is able to read or conclude in the same way as I am in terms of certain identified sectors in which we operate. I'm very comfortable that we are moving forward quite nicely now. Yes, I must thank the team that I've worked with. It's hard work. It's tough work. It's not easy. It's old style grinding the turnovers out. I'm pleased to report that they've been very loyal the team that we have, lot of new young blood coming through, take up the more senior roles. Yes, we're generally moving in the right direction. Thank you, guys.