Redefine Properties Limited (RDF) Earnings Call Transcript & Summary

Good morning, everybody. Welcome to Redefine's pre-close investor update for the half year ending 28 February 2026. So as per usual, we will follow the usual format where I will kick off with a strategic overview. Leon Kok, our Chief Operating Officer, will talk about our local property asset platform. I will then go through the Polish asset platform, and then we'll end with financial insights from our Chief Financial Officer and Ntobeko Nyawo. Okay. So if we just have a look at where we are in the property cycle, I think we all can tangibly for once see the strengthening real estate fundamentals coming through, renewed investor confidence, which is very, very welcome and accelerating technological adoption, all of which is converging. So if we have a look, our momentum now is really building, and we are transitioning from that recovery phase now into that building phase. And this anecdotally, you can see from stabilized vacancy rates, retail and industrial, in particular, showing rental growth, improved port and rail performance, which is very welcome from an operation Vela point of view, which I believe can add significantly to GDP in the years to come. Welcome news was the South African exit from the Financial Action Task Force gray list. We are having stable electricity supply, which is very, very good from a confidence building perspective. And then the sovereign credit rating upgrade by S&P last year bodes very well for financial markets. And let's build on this, and let's hope that SOA further adds to the momentum where we can see further improvements in our sovereign credit rating upgrades from the other ratings agencies. Cheaper borrowing costs, you'll see are coming through the numbers. And hopefully, we'll see some more interest rate cuts this year, which will further improve that borrowing cost. And this is one benefit when you have high levels of gearing when those cheaper borrowing costs do come, it does benefit the bottom line significantly, which you will see. Business confidence, as I said earlier, seems to be palpably better, much better than last year. And we have a feeling that this year, we have started 2026 far more optimistic and confident than we have been since the pandemic period. And then once again, better access to capital. This is both equity and debt capital markets. which is very welcome in terms of inorganic growth and improving that funding cost further through better access to cheaper margins. In terms of focus areas for 2026, I won't touch on all of them. I'll just touch on the ones that I believe are key to us in 2026. And you'll see here, we are looking at taking our momentum now and turning it into durable growth. For us, growth is the big, big focus. And if I just look at investing strategically from a focus area point of view, you will see that simplification of our offshore joint ventures is a key priority under optimizing capital, reducing our see-through LTV by recycling noncore Polish assets, very, very important. In terms of operating efficiently, yes, we want to restore that earnings base. And yes, we would want to get to a level far better than where we are guiding. But there, we've got certain headwinds and tailwinds, and Leon will touch a bit on that from an office perspective, which gives us some degree to be a bit cautious here, but I do believe that we are certainly going in the right direction. From a staffing point of view, in terms of engaging talent, we need to align our structures and responsibilities to our strategy. And this is absolutely critical. Execution of our strategy relies on people and it relies on pace of implementation given the evolving landscape in which we operate. And then from a growing reputation point of view, we will continue to leverage our market-leading ESG position. So for us, as we said, stability builds momentum, momentum builds value, and that's where we are focused for 2026. In terms of some emerging themes for this financial year so far, and it has gone very quickly, given that as we came back from the December break, we are already into reporting on our first half of 2026. You'll see under investing strategically, a theme that's emerging is that improving leasing conditions are supporting and driving asset value improvements this period. Capital rate compression, et cetera, is in the base, and that is not something we do rely upon. Simplification of Polish joint ventures. You'll hear this repeat a few times in the presentation this morning, is progressing well, and we'll give you a good update thereon. And we have seen a noticeable pickup in recycling opportunities. Funding costs are down. Investors who we turned away because of pricing before are now coming back with better pricing and we are looking at every opportunity to recycle noncore assets, so that we can deploy that capital more productively in the future. In terms of optimizing capital, our loan-to-value ratio, and Ntobeko will touch on it, but it is very pleasingly within our target range. Our interest cover ratio is improving. And we've refinanced a significant amount of debt totaling ZAR 6.2 billion in EBP's core. This is well advanced. It's not totally done yet, but we are very confident it will be done by the time we report in May on our interim results. In terms of operating efficiently, we are on track to deliver the upper end of guidance. Yes, we want to beat guidance, but we -- as I said earlier, we do need to have a measured approach to how we sustainably generate growth and keep that trajectory in the right direction. And we'll have a better update post the March MPC to share with you as to how we see 2026 unfold. In terms of group net operating profit margin, as we sit here now, we're seeing an improvement. And property fundamentals, you'll see throughout the presentation, continue to strengthen. And this is very, very important because we are relying on organic and sustainable growth, not once-off nonrecurring or inorganic actions to give us that growth going forward. In terms of engaging talent, we have been certified as a top employer for the 11th consecutive year. EPP has been recognized as a friendly workplace. And our employee retention levels are very high at 98.5% and 97.4% for Redefine and EPP, respectively. In terms of growing reputation, once again, we have been identified as a 2026 top-rated global ESG leader by Sustainalytics. And we've been awarded 3 badges. I don't think there are many REITs out there who can claim to 3 badges. In terms of awards from a retail perspective at the Shopping Center Council footprint awards, you'll see we earned 29 awards in South Africa and EPP won 7 Polish Council of Shopping Center Retail Awards as well during the course of this period. And then just lastly, we are very proud of the fact that our logistics property at the [ Kuka ] Special Economic Zone is the first 5-star Green Star rated building in such a zone in South Africa. Okay. Just in terms of looking ahead, so what we are going to focus on is what we can manage and on what matters most. And as we have been alluding to, the shift has to come from a position of opportunity-led decision-making now as opposed to defensive positioning. So from a direct influence point of view on value creation, we will continue to build a quality diversified portfolio that is capable of delivering sustainable risk-adjusted returns throughout market cycles. We will remain focused on conservative balance sheet management to enable that sustainable growth. We are looking to accelerate new data and digital platforms to lift that operating profit margin, and Ntobeko will touch on that. From a team point of view and a cultural point of view, we need to invest and transform our human capital to empower creativity and drive innovation. And then lastly, but very importantly, from a stakeholder experience point of view, we are looking to embed ESG as an operational imperative across the business through fostering a good understanding of every stakeholders' needs through a collaborative approach. So with that, I'm going to hand over to Leon now, who's going to take you through our local property asset platform.

Good morning, everybody. On the South African side, we've had a fairly busy first 5 months of the year. And as you can see on the scorecard, we are very proud of what we've achieved so far, and we certainly look to continue this trend up to year-end. So from an occupancy point of view, we posted 93.9%, which represents a vacancy of just 6.1%. As you can see on the right-hand side, again, as usual, we try and indicate what the value of that vacancy is. And as you say, I think that graph illustrates clearly the point we make that we've seen a flight to quality. So for instance, in our office sector, whereby GLA, were 11.8% vacant. If we translate that into GMR value based on the rates that we're advertising, it's only at 8.8%. So again, it highlights the point that for us, we've really seen that demand within the quality spaces and where the focus would like. Particularly in the office side, yes, there is opportunity, and we certainly look to convert that vacancy into revenue. But in the other 2 sectors, the opportunity is less so. In terms of the renewal reversions, we'll touch on in the office sector, that certainly it's only dragged by office. We're very pleased with the fact that our retail and industrial portfolio showed positive reversions. Tenant retention and renewal success rate, very pleasing high 90s, but I must caution that's for the first 5 months. So as the year progress, we would expect those numbers to trend slightly down as we have more leasing activity for the year. And then on weighted average lease escalation at 6.4%, principally driven by our industrial and office sector, still at a very healthy level, and we certainly would see the benefit of that coming through as the year progress. And the weighted average unexpired lease term at 3.4 years, again, indicative of a very healthy leasing activity undertaken in the first 5 months. You'll see there on the lease expiry profile, again, a fairly smooth profile, and we don't foresee in the next couple of years, any undue spikes. For instance, we see in FY '26, only 9% that represents 6 months of leasing. So for the full year, it was probably around 18%. So you can see consistently how that is being managed. On the renewal reversion analysis, in terms of number of leases, about 88% of our leases were at flat or positive reversions and that negative drag there at the bottom at 45% is principally in the office sector, some marginal small retail renewals. But it's those big boxes in the office sector, they continue to drag a bit. But again, I think the indication there is that there is decent activity. And yes, we certainly do see some positive reversions coming through, speaking to a fairly healthy demand within particularly retail and industrial sectors. On the sustainability front, as Andrew said, there certainly is operational imperative and particularly on the environmental front, where our core focus is around energy, water and waste management. On the energy front, we're very pleased with our solar PV footprint. So once we have those installations in progress, we will roughly have 68 megawatt peak installed capacity, which is roughly a 22% increase since last year February. That, on an annual basis, would have resulted in electricity savings of 71 megawatt hours. You'll see that solar PV penetration of 13.1% would appear to be relatively low, but again, it is slightly diluted by our office sector where our solar PV penetration is relatively low, given that the office sector doesn't necessarily lend itself nicely to on-site generation. And that's why we are so focused on solar wheeling because we do believe that will allow us to, particularly in the office sector, increase our access to renewable energy. So as we've mentioned before, we've concluded a power purchase agreement for 13-megawatt peaks, which will come online in 2027. And for us, the next big opportunity is to explore virtual wheeling, which will give us access to buildings that are supplied by municipalities. And we are fairly well advanced with 2 work streams on that front. And hopefully, in the next 6 months or so, we'll be able to make an announcement in that regard. That certainly would for us be an opportunity to increase that 13% penetration to going up to 20% and potentially even up to 25%. In terms of our Green Star certifications, as you can see, again, we've been very busy, and that certainly for us from a leasing point of view, puts us in a good position to attract those tenants that are seeking those certifications, particularly in the office sector. We're very proud of those 9 net zero certifications in our office sector. And we continue with our efforts on the water efficiency front to reduce consumption as well as on the energy front. And as you can see, waste management, which we're fairly high, the penetration on that. The cost as with that though is where the barrier is because we can only recycle waste in those buildings that we internalize the waste management through private needs. On to our retail sector. Again, a very good first 5 months, as you can see on the scorecard side of things, all metrics trending positively. For us, in the retail sector, the growth will come from our positive reversions, managing our operating costs, particularly the benefits of our sustainability initiatives coming through and then working on getting our average weighted lease escalations up. As you can see, it dipped slightly from 5.9% to 5.8%. That's simply as those high escalating leases that were concluded at above 7% were renewed. Our current renewals is down between 6% to 6.5%, and that's kind of where we're hoping that it will land. But that certainly will drive our net profit income growth within our retail sector. As you can see on the tenant turnover growth, that has dipped slightly at 2.9% versus in August 2025, we showed 4%. That's driven principally by 2 factors. Firstly, we've had those large cinema spaces that we converted into alternative tenancies. As you can see, there were large work periods that did not report turnover. So in the next 12 months, we will certainly see the benefit of that coming through. And then secondly, in December '24, we had that large spike in turnover. And so against that high base, it dipped slightly. But for us, we are still very comfortable with the trading density growth of 3.5%. And certainly, our rent to turnover at 7.7% is still on a very healthy side. And we do believe it's an indicator that we are able to continuously negotiate those renewal reversions to trend positive. So for us, the focus going forward on the retail sector is certainly is to look at those renewal reversions to convert those vacancies that we do have, although it is coming at a relatively low revenue uptick and then to look at particularly on our fashion side, where we do believe there's opportunity to reconfigure certain of our stores to optimize in terms of driving that turnover and also to upgrade certain other stores. On the office sector, a bit of a mixed bag. The one aspect that we're very pleased about is that improvement in occupancy at 88.2%. So we're touching on a vacancy there at 11.8%. Now we set ourselves a target to go below 10%, and the team is relatively confident that we should be able to achieve that coming in principally through leasing. And there's certainly also some noncore properties with high vacancies that is on the disposal list that we're confident we'll be able to be sold before year-end. Then the renewal reversion negative at 16.8%, driven largely by 2 leases, as we mentioned at [ Rania ] and Alice Lane. And as the year progress, we anticipate that the impact of that will be diluted, and we're forecasting the end of the year to be roughly about negative 1%. Just on the renewal reversion analysis, again, as you can see, and that's the point we're trying to make is that we don't think the entire office sector is recovering, but we certainly do see certain nodes and certain grader buildings showing better signs of recoveries than others. So we'll have a disproportionate recovery, and we can see that in our renewal reversion analysis. Where the bulk of the leases have been a positive is just some of those large boxes, single tenant buildings that have caused a negative reversion. But it's an area we continue to focus. And for us, at least the pleasing aspect is we have seen market rental growth in certain nodes we're asking rentals continue for the last 3 quarters now to be increased. And then over to our industrial sector, again, another sterling performance and this is a sector that continues to perform very well for us. As you can see in our occupancy at 97%. We've managed to lease Cato Ridge on a short-term renewal for the tenant vacated that they resigned for the first 6 months. So Toyota is in there until end of July. So that certainly will boost the property growth and maintain that occupancy, but we're actively looking at Cato. That's our single biggest vacancy we've got in the sector. But apart from that, we are fairly confident that we should be able to continue this performance. So that renewal reversion at 3.7% speaks to very healthy demand within the, particularly logistics space, and we will look to continue that positive trend going forward. Tenant retention, renewal success rate, all exceptionally good. And our weighted average lease escalation at 6.4%. We certainly would look to maintain that because that's kind of the level that we are doing new leases. And at an unexpired lease term of 4.2%, we do believe that's a very defensive quality within this sector, and it doesn't pose any renewal risk for us going forward. For us, the opportunity within our industrial sector is to convert some of that developed land we've got. As you can see, we're busy with 2 projects at Sky Park, the old Golf Park and also at S&J, and we would look to seize additional opportunities such as that. And then certainly also to look to dispose some of that excess lands we do have, particularly in S&J, we certainly wouldn't look to develop all of that ourselves. And then the opportunity is also to look at strategically redeveloping some of those very well-located assets that we've got. And with that, I'll hand over to Andrew to deal with Poland.

Thanks, Leon. Okay. Moving on to Poland. As you will see from an EPP market overview perspective, I think the standout point to make here is that there are no new shopping centers currently under construction. That speaks to the strength of our core portfolio. From an operational update point of view, you'll see footfall across the EPP portfolio increased by approximately 1% for the past period. Our like-for-like turnover has increased by 0.5% compared to the prior period. Our rent collection remains pretty stable at 98.4% for both offices and our retail properties. Our occupancy across the retail portfolio is stable at 98.2% for the entire portfolio. Where there is pressure is on the office portfolio where it has declined from 84.2% to 82.9%. And then from a rent to sales as well as an occupancy cost ratio perspective, you'll note that we are trending in the right direction at 7.2% and 10.2%, respectively, for the past period. And if you just have a look there at the ESG outcomes, you'll see that EPP is doing great work in terms of their sustainability in action program. Moving then on to just some priorities for EPP. But before I do the priorities, just touching on the EPP core portfolio outcomes, you'll note there a very healthy active occupancy at 99.4% and all the other metrics trending positively. I think what really, really pleases me is to see that rent-to-sales ratio at 8.1%. I think from an indexation point of view, we just want to make the point that in January, at the back end of January, the EU published their inflation outcomes for the calendar year 2025. And you'll note that these numbers are for last year, but they will start coming through in the reporting cycle that at the interim stage, where you'll see indexation will come through at approximately 2.6% for EPP's retail portfolio. Coming back to the priorities for EPP, and this is for the entire retail portfolio as well as offices. Improving that operating profit margin is a priority. We wanted to get to 80%, assessing our options to simplify joint ventures, we'll talk about, but it's a continuous process for us. It's a top-of-mind issue, optimizing our debt funding profile to eradicate debt amortization is well advanced. And with that comes reduced margins as well. Unfortunately, in a number of cases, our base rate comes off a very low almost 0% to the current 2-odd percent, which to some extent does offset that. But even with that, we are seeing savings on our overall interest rate cost. And then just lastly, upping the cash distribution from EPP is a priority. We want it to be as close to Redefine's current payout policy of between 80% to 90%, and we're working very actively on ensuring that going forward. In terms of the joint ventures, I think you'll note here that the active occupancies are stable. However, I must stress that in the EPP communities case as well as in Henderson's case, there are office portfolios there that do drag down to some extent the occupancies and similarly renewal reversions. You'll see EPP community, for example, the offices reverted at 10.7% negatively and the retail was minus 0.6%. But having said that, there were 2 very, very big boxes in that portfolio, a cinema of 5,185 square meters at Zakopianca, for example, in Tensa, there was a media expert, a home appliance store of almost 900 square meters that did put pressure on that retail line. Otherwise, it would have been a lot better. And then similarly, if you look at the Horse portfolio, it is slightly negative, but there have been very big relets or renewals there in the form of -- at Z, there was a AAA auto car dealership of 19,500 square meters that was renewed. -- that's coming through that line. And at Dam, there was a media mark of about 3,200 square meters. Moline, you'll note is trending the right way. It is positive now from a renewal point of view. But sitting in there was a huge office renewal for intercars of just over 5,700 square meters, and that's upstairs. There's an office component to the retail outlet. And if you just look at all the other kind of fundamentals coming through, all trending positive. I just want to stress one last thing. The like-for-like footfall, although it doesn't look like it's going or growing very well. Poland this year had its coldest winter in 10 years. Many nights were well over 20 -- minus 20 degrees. So it tells you that weather does play a part in retail, unfortunately. And then you'll see there the rent to sales, very, very healthy, all trending in the right direction across the portfolio. And that's what we like to see. Our tenants are doing well, and that means that we have a sustainable tenant base, and we are able to negotiate better rentals going forward. Okay. Just moving on to ELI -- from a market overview perspective, I think the standout point to make here from a market overview point of view is that supply and demand for space is balanced. So there isn't excessive supply coming to the market and demand is mopping up whatever there is, which strengthens our ability to grow market rentals, and that comes through on renewal reversions and so forth. From an operational perspective, we are very pleased that the vacancy rate now sits at 1.2%. And that's a significant improvement from 2 years ago where it was almost at 10% when we split from the Madison arrangement. If you look at lease renewals, we've had a very busy period. And we are renewing well over EUR 5 a square meter, rental growth of 2%, more or less in line with -- if you look at the Eurozone inflation rate as well, which tells you that it supports the earlier point about demand and supply remaining balanced. First-time lettings of 8,700 squares were recorded in the period. 4 developments. These were keen rentals, but we are filling space, and we are generating cash flow at EUR 4.11 per square meter. From an ESG perspective, as you will also see, our portfolio being newly developed is compliant from an energy perspective, which is absolutely important from an EP ordinance perspective as well as from an energy performance as well. Moving then on to the priorities for ELI. Yes, we're going to continue to actively pursue asset management opportunities as well as securing pre-letting arrangements for 2 undeveloped land plots adjacent to existing developments. We are well advanced in selling Targovek, which is vacant land with low development projects. It's adjacent to M1 Marqui and improving the dividend yield to 6% is a focus area for us, and we are making good progress in this regard. In terms of self-storage, I think the standout market overview point to make is that Poland remains underserved in the European self-storage sector. And this is our opportunity in the larger cities where we can command good rentals and similarly good demand. But from an operational point of view, we have the technology platform and the executive team in place to drive the tenant acquisition and to ensure operational performance is at the level we expect it to be. Our leasing performance at our new facility, which just opened in Krakow about 6 months ago is in line with expectations. During the reporting period, we did dispose of some containers. I'm not a fan of the containers. They do generate cash flow, but those that are not, we are closing. As you'll see, there were 3 where we canceled leases for the land, and we've redeployed those containers to other sites. And then just in terms of the total NLA of that active portfolio, the operating assets sits just under 29,000 square meters spread across 18 locations. And as I said, those containers will whittle down as we build up the internal units through development activity. Our average occupancy stands at 66.5%, but you'll see that the internal units are where we are doing well at 69%. Now it does seem a bit low given that we should average out at about 85% to 90% on a stable level, but there are developments coming into the next year that is dragging that percentage down. And then from a development activity, we are very, very busy. You'll see that we have completed a development in Warsaw, and it opened just last week, totaling an NLA of 4,890 square meters, called Warsaw Bova. We have 3 developments located in Warsaw, Kraków and [ Rsaw ] that are under construction. They will be complete by end of this year that will add a further 13,900-odd square meters of net lettable area. And then we are looking at 2 new developments in Warsaw and Gdansk, which will add a further NLA of about 9,600 square meters. Once we've done these developments, we will have exhausted our EUR 50 million of equity, and we will now seek an equity partner to -- like we did with ELI and Madison, we'll do the same with this portfolio going forward. So from a priorities point of view, the usual complete developments on time and within budget goes without saying, divesting from the underperforming container sites and redirecting those resources to larger developments is ongoing. Sales and marketing to not only build a recognized brand, but to boost occupancy and income is absolutely imperative. This is a very active management sector, and you have to run this on a daily basis. You have to have your finger on the pulse, daily, on the hour to ensure that you are charging in a dynamic environment, rentals that can adjust according to demand and supply. And lastly, creating an institutional investment grade self-storage platform to attract that equity partner is very, very important to us. Just from a last slide from me from Poland, Simplifying our joint ventures, as I said, is absolutely a key focus to reduce complexity. And a byproduct of that also is reducing our see-through LTV. So from the Horse Group, you'll see that we have been very busy. We've sold surplus land at Krakow and Wood, which is subject to rezoning, it's underway. We are making good progress to simplify this joint venture. And we hope that in May, we will have a transaction that we can announce to you. And we are in the process of selling Power Park Hilser and Power Park Tech as well. EPP community for now is a medium-term hold. And that joint venture, we will extend beyond March 2027 when it comes to a review. Henderson is an office portfolio that we would love to dispose of. But like we make the point at the top there, large-scale institutional commercial real estate investment activity remains subdued. So yes, it is a bit of a slow process. We are marketing Malta Office Park to see how investor appetite sits, and we'll let you know in due course how that goes. And Galeria Mlociny is an asset that is now starting to stabilize and provides us with optionality. We have a partner who's a developer, so he's not a long-term holder of his 30% interest. So we are buyers at an NII yield of 7.5%. That translates into an equity yield of circa 11%. But similarly, we are sellers at an NII of 6.5%, and we'll see how that unfolds. ELI, given that we are now split from Madison, we also have optionality here or flexibility as we like to call it. Given that we have a very attractive asset profile and a long weighted average unexpired lease term. So for now, we will focus on improving that equity yield and then also optimize the assets that we believe are capable of either disposal or those that are unproductive such as [indiscernible] that we spoke about earlier. So with that, I'm now going to hand over to Mr. Ntobeko Nyawo, who's going to take you through financial insights as well as very importantly, the outlook.

Thank you, Andrew, and good morning, everyone. I think on the financial insights, I think very clearly that our positive medium-term growth is driven by a stabilizing earnings base and improving property fundamentals. So if we look at the earnings outlook just from a sustainable organic growth, we continue to see that it's being supported by our portfolio's quality and its diversification strengths. And you can see that playing out in the first quarter of FY '26. In South Africa, the net operating profit margin, just very stable around 79.2%, which is an improvement compared to what we printed in FY '25 at 78.4%. Similarly, in our EPP directly held properties, slight improvement to 72% of our net operating profit margin. That compares favorable to the 71.4% that we printed in FY '25. From a group point of view, last year in FY '25, we printed 76.2% and that also in the first quarter, it's printing at 7.1%. Now the important factor for us, if you look at the quality of our earnings, we show you a journey from FY '25 where nonrecurring earnings were sitting at 4.2%. We always want to maintain those and reduce that below 5%. In last year's numbers, in our distributable earnings, that improved to 0.4%. And then in the first quarter, we're pleased to also report that there is no recurring items at this point, and we expect that to be a very immaterial number in FY '26 at distributable income quality. We always share with you on the right some of the sensitivities. The first 2, clearly, it is a function of both the euro interest rates and the ZAR interest rates if those change by 50 basis points, and that gives you the 05 and 0. Indexation, a 1% change will have a ZAR 0.4 impact. And then also in the SA admin cost movement of 5% will result in a ZAR 0.03%. And then the office reversion rate, if that varies by 3%, we have a ZAR 0.01 impact on our earnings. Just to move on to the balance sheet management. I think our consistent prudent risk management is really starting to anchor the long-term value creation. What is pleasing for us to report out of the first quarter is that our interest cover ratio improved to 2.3x on the back of lower interest rates as well as some strong cash generation that continued to be achieved, both in our South African portfolio as well as our Polish portfolio. On the liquidity front, I think very stable. If you look at our committed undrawn facilities and cash on hand in the first quarter, it's sitting at ZAR 5.3 billion. We continue -- I think we do expect -- we're busy now with our -- we value our assets twice in a year in this exercise that we do now for the interims, we expect the valuations to remain largely stable. And I think the point that Andrew touched on is really going to be driven the income assumptions driven by the leasing, they're very stable in terms of cap rates. Then I think our focus on sustainable medium-term growth from our asset platform that continues to be there from a balance sheet point of view. Then let's just touch on some of the weighted average cost of debt for the group remained stable at 7% compared to what we printed at 7% last year. We're pleased with the reduction that we saw on our rent-denominated weighted average cost of debt to 8.7% compared to the 8.9% last year. On the FX debt, that we've maintained our weighted average cost at 4.5% -- and then we're also progressing, I think Andrew touched on this point, really, we're progressing on the financing of EPP core debt. The focus there for us is to reduce debt amort impact and then lower the cost, which is the margin in that debt. Fairly hedged, I think if you look at our interest rate hedges at 82.1% in the first quarter compares at a very stable to the 83.2% that we achieved in FY '25. Then to move along, just to touch on some of our debt maturity and available facilities. I think our healthy liquidity levels and the low debt maturity risk profile continues to enhance our opportunity optionality. So if you look at a graph that we provide on our debt maturity profile as at the end of November 2025, we have largely dealt even with FY '26. We only got about 4% of our debt maturing now that we need to deal with in FY '26. That translates to about ZAR 1.7 billion, and we'll deal with that. Where we have a concentration, if you look at FY '28, we're dealing with that proactively, and I'll touch on that just now. But if you break down our ZAR 5.3 billion of liquidity with the cash on hand and the facilities that are committed but undrawn at ZAR 4.7 billion, fairly healthy liquidity profile as well as at the end of November. Let me first touch on the refinancing of our cross-currency swaps as well as our interest rate swaps. In the quarter of -- first quarter of FY '26, we had ZAR 45 million -- EUR 45 million cross currencies that expired at a rate -- at a fixed rate of 5.1%. Those were refinanced in December at a very attractive rate of 4% for a tenure of 2 years. If you look at our interest rate swaps, ZAR 2.75 billion of swaps that expired at a rate of 7% expired during the period. We entered into new swaps of ZAR 3.5 billion, and those were entered at a very attractive rate of 6.6% for a period of 2 years. You start to notice that we're starting to take the tenor because the forward curve is starting to look attractive. Then let me just give you some of our debt refinancing. I think I've touched on the EPP. That refinance of EPP of EUR 3.9 million, which is a ZAR 6.2 billion in rent equivalent. And that we're achieving a 5-year at a margin of 2%, which results in a 56 basis point margin compression. That is quite pleasing. But moreover than that is that ZAR 5.1 billion of that really relates and us proactively addressing that concentration in FY '28. In the South African side, we refinanced ZAR 4.1 billion, which tranche as well in 4 years at ZAR 1.4 billion and ZAR 1.7 billion in 6 years and the remainder of ZAR 1 billion in 7 years at margins that are attractive, which if you put it all together, we're able to achieve a 16 basis point margin compression, but also proactively dealt with about ZAR 0.9 billion of FY '28 maturities there. In terms of the FX debt in SA, we had 2 facilities there. There was a EUR 10 million as well as the $47.6 million that we refinanced into a singular EUR 56.2 million facility for a 4-year period at a tenor of 2% that achieved a 65 basis point margin compression. We had 2 small notes that matured, which is the EUR 144 million as well as the EUR 55 million that were matured in September from our cash resources, we actually settled those. We will look into going into the market and as it is an optionality, and we're seeing quite attractive rates on the DCM market. Then just on the loan-to-value ratio, I think the large part of it is going to be on the -- if you look at where the rand strength, as well as the stable asset values, that will -- we expect that our LTV will behave and be firmly within our target range of 38% to 41% during FY '26. We do give you a glide path in terms of where we printed at the first quarter, but we expect that 41.4% to normalize to 40.9% by the end of the year. I think we must say that forecast of 40.9% exclude any assumptions in terms of the property values. And we are pleased, if I just look at the covenants, we are pleased that there were no -- all the covenants were fairly within that. If you look at our interest ratio cover, which was relaxed to 1.75x up to the end of the year, we've rebuilt from that, and now we're sitting at the end of the first quarter with an ICR of 2.3x, which gives us ample headroom in terms of our ICR. And then on the right-hand side, we do share with you which is these are the sensitivities just to give you in terms of some sensitivities. If you look at our property values in SA, if they were to move by 1%, which is ZAR 0.7 billion, that will have a 0.3% impact on the LTV. And equally also on the EPP side, a 1% movement, which will be ZAR 0.2 billion has got a 0.1%. And then also, we do share with you on the joint ventures in terms of the investments in the joint ventures that will have a 1% movement will have 0.1%. But really where most of this year, given the rent strengthening is the volatility in terms of where the rent depreciate or appreciate by 5%, you'll have a 0.5% impact on the LTV. Then from a see-through point of view, the focus, I think it is on that and then Andrew has touched on that. Just to close with our trading update for FY '26. I really think for us, it's pleasing that our medium-term growth profile remained quite robust. And I think it's on the back of the improving property fundamentals. So we do expect that the upper end of our guidance, which we gave of 4% to 6% in terms of growth in our distributable income per share. Some of the factors, if you look at the stability of the national -- government of national Unity as well as the later on in this year, there's local government elections here in South Africa, that will inform some of the pace that we've seen in the reform agenda in South Africa. There's a bit of untold. I think it continues to play out. But in terms of the geopolitical environment, its impact on inflation and probably where the pivoting of central banks in terms of the interest rate cutting cycle, that will also have an impact on that. From a focus point of view, I think simplifying our joint ventures and taking some opportunities to recycle capital out of our noncore assets, that will continue to be our focus. From an inflation expectations, I think in South Africa, even though the inflation is anchor at 3%, the rand strength and oil prices will be very central to where inflation expectations land in South Africa. But on that note, if you look at the euro inflation, we are pleased that it's quite stable to the target range of 2% -- then from an ongoing focus, I think our proactive asset management approach, our laser focus in terms of improving operating margins across the group really are the things that will drive our sustainable organic growth period through market cycles. Thank you. I'll hand back to Andrew.

Thanks, Ntobeko. Okay. So we'll move on to some questions now. If we can just start at the top. Okay. So all right. So the first one, Nazeem, straight off, first out the blocks. What is the catalyst for an equity raise? We ask ourselves that question every morning, Nazeem. And I think for us, the short answer is opportunity. We will raise capital when we have an investment that makes sense from both a capital and an income perspective. And then obviously, bearing in mind that we're still trading at a discount of circa -- it depends on where you pick a share price, but say, about 18-odd percent discount to NAV. So I think what we would rather do Nazeem to preserve that NAV -- for us, NAV is very important, maybe others not so much. But if we can do a transaction using our shares as currency, we can perhaps do a deal that is neutral on NAV and accretive on earnings. For us, that's better than a cash equity raise at this point given that, as Ntobeko said, we have quite a lot, in fact, in my view, a bit of a lazy balance sheet here in South Africa from a liquidity perspective. In terms of retail in-force escalations reducing by 0.1% since FY '25, what are the in-force escalations on renewed new retail facilities? I'm assuming this is a question for Leon, Nazeem.

Nazeem, as I indicated during my section, our new leases, we're aiming to achieve between 6% and 6.5% and that 0.1% reduction was simply some of those high escalating leases at 7.5 came off during the period.

Okay. So moving on, Mahir, and I see you need to match Nazeem here with some questions. The first one from Mahir is, can you quantify the potential proceeds on sale of land and assets in the Horse Group? Mahir, I don't have those numbers off hand. I don't think has either. But we did announce it last year. If I recall, it was around EUR 30 million was the Horse proceeds. There is more to come about another EUR 11-odd million from the Krakó sale. It's a little bit more tricky in that we have to develop a parade as well to replace lost parking, but it is EUR 11 million. So it's about EUR 40-odd million of proceeds. And then we will announce once we've committed pen to paper on Power Park and on Kilter, we will give you the actual disposals there. I can tell you that they are at book value. Okay. In terms of improving the ELI equity yield, yes, we currently -- we were at 4%. We're now at 5%. We're looking to go to 6%. Where is current gearing relative to FY '25? At the moment, it's circa 45 or so percent. That's where we are, and we don't want to push beyond 50% gearing on this portfolio. Lastly, do you consider the expected positive impact to be recurring or nonrecurring? Everything we're doing, Mahir, is recurring. No more streaky shots. We're not swinging for the fences here. We're looking to do recurring, reliable and also visible from a predictability point of view, earnings going forward. So it's all being driven off property. Is the Cato Ridge vacancy excluded from active vacancy? If so, what progress is being made on Cato Ridge reletting? You weren't paying attention here, Mahir. I just want to tell you because Leon told you that we've got Toyota in for 6 months. So it is actually occupied as we speak. All right. Mweishö from Standard Bank is asking Leon a question. Are you able to give us a sense of what the difference in solar PV yields in retail versus offices are?

Certainly, Mweisho. The point though to make is that the application of solar and office is a bit more complicated than retail. Whereas in retail, you've got a rule of thumb yield of between 16% to 18%, given that in the retail environment, you've got a consistent electricity demand for 7 days a week, and you've got access to large reasonably well-located roof space and very little shadow pollution, whereas in office environment, your limitation -- limiting factor is the size of the roof given the height of the building. And often, you are -- you have to compete with shadow pollution in that you are in an environment where there's lots of over space and such like. So the yields in office is far more difficult to have a rule of thumb yield. The point to make though is that the opportunity is less given that it doesn't have a consistent 7-day a week demand, particularly in daytime, only got a 5-day typically and that those roof spaces are often not conducive to us. That's why the penetration in office typically is so much lower. In the office environments where we have deployed it, obviously, we've managed to deal with those issues. And the yields in specific applications are similar to a retail thing, but you cannot apply a rule of thumb yield within the office environment.

Okay. Moving on, [indiscernible] from Standard Bank is asking a question, how much are your energy needs covered by solar in the retail portfolio.

So, in the last 12 months, our retail portfolio was supplied or 25% of the demand come from solar, and we expected with those installations currently in progress to rise up to about 28% of the demand in retail will be supplied by solar.

Okay. Mweishö who's got another question for Leon. What discount or premium to book were the De Beers and Rosebank Corner disposals done at?

Rosebank was done at a 6% discount to book and De Beers done at a 50% discount to book. Both of those were the residential conversions. We suspect that De Beers will also be a residential conversion.

All right. Another question from Mahir. What is the current NII yield on Moline? It's roughly 6%. Nazeem is asking Leon a question. Are you seeing any changes to office tenant requirements on the back of AI, potentially less space required due to AI efficiencies? Any specific segments in office of concern?

Nazeem, we certainly haven't seen anything of that. We've heard from our colleagues in Poland, for instance, that AI may have had an influence on some of the call center applications in that environment. We certainly haven't seen that play through in this space. However, that is a factor that we are aware of. And again, the point to make there is where we manage then rather to be scared of AI is rather to be more alert to certain sectors where you've got potentially concentration risk. For instance, within the call center environment, we manage that and sort of monitor that quite clearly.

Okay. Thank you, , for that question. Moving then on to Mweishö, perhaps a question here for Mr. [indiscernible] Can you please explain why you converted the USD 10 million facility into euros, please?

Mweishö, remember that USD 10 million facility was really relating to our investment in Lengo, which over the years has became very immaterial in the group asset. I mean I think if I look at where Lengo is, it's less than -- it's about 0.2% of our group property asset platform assets. But combining it and changing it to euros actually also was -- resulted in a 65 basis point margin compression, which achieved a material saving on.

All right. Nazeem, I'm not too sure I understand your question, yes. because the question for everybody's benefit is following on from the equity raise question, 18% discount to NAV implies that your earnings yield would need to get to 6.7%. Is this realistic? So Nazeem, we're currently at a NAV of discount of that price. So it's not been unrealistic or not. Can you raise shares at that? Maybe that's the question. And that's why we're not looking to raise capital at this point in time, but to rather use it as currency. That would be my preference here. And then from Ridwaan, would you look at reducing the cost of cross currencies given Xa strength at present? Or would you need to match it with the JV disposal or restructure? I will just preempt Mr. Na's response. I know he's got one red one. If we were looking for once-off nonrecurring benefits and to shoot the lights out from a outcomes point of view for 2026, we could close out all our cross currencies that are well into the money now, but then we would have problems next year. We're in the sustainable business. So we need to obviously balance and Ntobeko, what is your response?

Yes. And you're right. I think, yes, we are in the money, Ran, given the rand strength. But I think we'll have to look given that we need to make it a sustainable outcome. We will have to look and match it with either a material JV disposal or restructure offshore.

And I think this is important. Those cross currencies are actually supporting equity positions that we have in these various offshore investments. So you're quite right. As you dispose of an investment, you naturally would need to also settle debt along with that. Okay. So that seems to be all the questions. Thank you very much for joining us this morning. We always enjoy interacting with you. Please reach out if there's anything that you think of that we haven't touched on that you may need clarity on. You can reach us through many, many avenues. You'll see them at top there and follow our LinkedIn pages, please, if you don't, we are now on Instagram as well. So please share follow live if you don't, please, we just need your support in every respect. And I just want to say thank you for your confidence, your patience with Redefine. I think we are finally now translating our opting for the upside to the upside of us where we can actually see tangibly all of that optimism translating into momentum, and that is what truly builds value. So with that, thank you. We look forward to seeing you in May for...