Good morning, everyone, and welcome to Emira's pre-close update for the interim results period. I'm Pranita Daya from SBG Securities, and with me today I have the CEO of Emira, Geoff; the COO, Ulana; and the CFO, Greg. Thank you all for joining us this morning to have this discussion. I'm sure it will be fruitful as always, and I look forward to all the insights we'll be getting out of the session today. For all of you that have dialed in, just in terms of some housekeeping, please feel free to post your questions to the chat, and we'll address them in the relevant section as we go through our discussion this morning. Without too much further ado, let's kick off with you, Geoff. If you can maybe give us an introduction to our discussion today and just a general overview on what the business has been doing over the past six months. Yeah. As you're all aware, it's our half year now at the end of September, and we're on track to releasing our results on the 14th of November. Important in terms of a pre-close, just to sort of share a bit of where we are. The last five and a half months have been very busy as normal with Emira, and there's also been a lot going on in South Africa, the country. Let's just talk about just that macro setting first. We've come through elections successfully. We've got a Government of National Unity, and we're starting to cut interest rates. Those are all good macro signals in terms of how the macro environment is going to affect our performance. Having said that, all the actions that we've been taking have been long in the making. For example, under our sales side, we continue to sell. We've done close to ZAR 450 million of commercial sales in the last five and a half months. We've done another close to ZAR 150 million of residential sales, so that's delivered us ZAR 600 million. We've got a pipeline that's pretty much unconditional in terms of sales of close to ZAR 1.9 billion. You can see a lot of cash coming in, and there's a lot of hard work that's gone into that. At the same time, we've taken our first step into Poland, where we've made a 25% equity investment into a Polish company, which we're very excited about. I'll unpack in a little bit more detail later on. Lastly, certainly from our portfolio, you can see in terms of our vacancies, you can see in terms of our operational metrics, we've been continuing to work hard and maintaining what we've got. All in all, we think we're in quite a happy space, in regard to where we're going to land for the half year results. Perfect. Thanks, Geoff. I think you've given us a good segue into our next session. Just in terms of maybe, Yolande, if you can unpack for us just the SA operations, you know, some of what you're seeing on the ground in terms of the various sectors, commercial and residential. Okay. I think firstly, the past five months have still been tough. The environment and the operating environment very challenging. Absolutely agree with Geoff. You know, after elections a bit more positive sentiment. Everyone really liked the GNU that was established. There's positivity, but in the five months we're still waiting for that turn to come through. I think on all three sectors with everything that's happening, pressure, but let's start with offices. Offices definitely still under pressure. In our portfolio, our vacancies dropped from 10.9% down to 9.1%. Despite the economy not growing, you can definitely see that there is new leases coming. Is it consolidations? I think there could be a part of consolidation. Mm-hmm ... I also think there could be a part of new businesses coming out. There's two in our portfolio. For part of that vacancy to drop, firstly, Standard Bank in Hyde Park, they vacated about a year ago. They had their building. Mm-hmm. That was 1,700 sq m. We've let that space to a single tenant. One of the new businesses that were formed out of King Price, King Price Life, they took 1,000 sq m at MCP. That old ex-Santam space that we lost Santam just after COVID, they took that. There is definitely still big tenants out there. What is the sweet spot? It is probably around about 200, maybe 250, maybe 300 sq m. I think on the office sector, what we can see in our portfolio, definitely a little bit of green shoots ahead. Mm-hmm. A bit of positivity. If you look at vacancies, not only in the Emira portfolio, but also at the moment in the country, starting to reduce. Retail. Consumers under pressure. Consumers stayed under pressure the past five months, and I think they're still under pressure. If you look at Stats SA results that just came out for August. Mm-hmm Turnovers or sales improved with 1.5%. Our trading density's mostly flat over the past year. If we just look at the vacancies increased slightly, but it's because we sold 90,000 sq m occupied macro- Mm-hmm That had an impact. If we strip that out, we probably would've been less than the year end. What can help the consumer, as Geoff also said, there's a lot of things. Load shedding. No load shedding at the moment. Low interest rate, low inflation. It feels to me I've missed one. Two-Pot System. I'm not on the Two-Pot System yet, the lower fuel cost. I think if you combine all of that, it should show that consumers would do better in the medium term. Let's see first what the impact of that will be. Mm-hmm. That's on the retail. Our biggest vacancy that we've got in one store is in Tramshed. That's where the City of Tshwane vacated. Very difficult pocket to let. Deep space. It was their offices where you could go and pay your accounts and so on. That's one of the vacancies. Mm-hmm. Industrial, doing well. Our vacancies did increase slightly, but that's because we evicted a tenant at Highway Business Park of about 2,400 sq m, already busy with finalizing a lease. On the industrial side, I'm not that worried. Mm-hmm. Okay. Do you want me to go in a little bit more on the other metrics, or just a little give you a little bit on resi? Let's go to resi- Okay ... and then- Okay. Resi very similar to end of March. Vacancies did increase slightly. It's not an issue to us because as we are selling units, and we sold 163 units over the past five months. Mm-hmm. I'm sure some people would thought that we are slowing down. We're not slowing down. With that increased slightly, but other than that, we are comfortable with our resi and the performance at the moment. Okay. Perfect. I think just on resi then, just if you can give us some insight into the dynamics you see playing out in that market. Are they, you know? Are some of these consumer factors you've mentioned also impacting the residential sector? Of those 163 odd units that you've sold, you know, sort of what's been the thinking behind which units you've sold or, you know, which you've put out for disposal versus those that you've kept? Mm-hmm. I think there's two markets. There's your individual market, but then there's a big investor market. I haven't analyzed the 163, but probably that 163 would be mostly in investors. I don't know if you agree, Geoff, Greg. Yeah, I agree. Okay. So that those things that I mentioned, again, one needs to see how that will impact. Mm-hmm. Because will your, the tenants that are letting at the moment, will they suddenly now start buying because of a 0.25% interest rate cut? I'm not sure. Sure. That's why we're not worried about the vacancy. We will let it. Now, if I can just add to that. I mean. Please I think it's important in terms of the direction of interest rates. Mm-hmm. We've only had 0.25%, and there's an expectation that there will be more, and that will certainly give a bit of a tailwind. Just taking a step back, sure, we've only sold 163 units, but from our strategy perspective, it's important to sell assets which we think are more fully priced. Mm-hmm then utilize those proceeds and invest into something that's more undervalued. Mm By selling off individual sectionalized units on an individual basis, we get a better price rather than selling it overall the whole block. Okay. It does take more time, it is more intensive, but hard work doesn't scare us. Mm-hmm. It just takes a little bit more time, and we'll continue to do these sales. That's why on top of last year and the year before, this has got good momentum, and there should be a bit more tailwinds coming through now with the lower interest rates. Perfect. On the Bolton, I would assume a large part of that's also been sold off at this point. Absolutely, yeah. Yeah. Perfect. Great. Just maybe moving to the commercial sector. Yeah. Just in terms of reversions and escalations, the dynamics you see playing out there. You know, we've seen a lot of property companies reporting positive reversions in the retail sector. You've already seen some positive- Mm-hmm Reversions in industrial. Mm-hmm. Just in terms of when, you know, timelines, do you expect to see positive reversions coming out of any of the other sectors, of course, not office, but perhaps retail? Mm-hmm. Escalations, what have those discussions looked like as well? In our portfolio, round about -3%. I think that's probably where we will end at year-end as well. Okay. I'm still of the opinion that without economic growth and annual escalations, there is a mismatch between those two. I think on a more portfolio level or on a total level, I'm surprised that people will suddenly coming from a 7% annual escalation over five years. Mm-hmm then after that still get a positive reversion. I do think it depends on the length of your lease. If you had a two or three year, and you might have a 5.5% or 6%- Mm-hmm Maybe that could be different, and that we are definitely seeing. Okay. Escalations, we've done around 60,000 sq m of new leases and renewals. Mm-hmm in the five months. Mm-hmm. Our average escalation 6.7%. Mm-hmm. Our occupied portfolio 6.5%. That might show that there's a little bit of an increase starting to come through on the escalations. I think we've stabilized on reversions. I still think it's a little bit negative. Mm-hmm. I think on the escalations, slightly seeing that there could be an improvement on the escalations. Okay. Just overall quite positive. Just in terms of, you know, the load shedding that you've already mentioned, I think that's probably been a massive cost saving for a lot of property companies. Mm-hmm Is that, could you quantify that at all for us just in terms of what you've spent in this period versus Yeah ... the prior year, and, yeah, how material that number is to you? I think the biggest savings actually for the tenants. Yes. Which in a portfolio like us, we recover about 85%. Mm-hmm. There's maybe a leakage of about 15%. We spent last year ZAR 29.7 million, and the first five months only ZAR 1 million. Now you might say, "But Ilana, there's no load shedding. Mm-hmm. There's still power outages. Yeah. We still think that even with that small number of expense, we will probably still recover between 80%-85%. Mm-hmm. To answer your question, yes, a meaningful saving, and the saving is mostly for the tenants. Okay. Yeah. I guess you're still continuing with your outlay of solar. Yes. Just in terms of that, you know, what proportion of energy is currently covered with solar? Just Okay Maybe remind us. We've got 13 PV farms at the moment. We are busy with another four, and those would be operational by the end of March. On the farms that we've got, between 20%-30%. Mm-hmm is generated with the PV. It's not on our whole portfolio, it's only on the 13 farms. Okay. Why between 20 and 30? It's quite a range. It depends on your weather, and it depends on your efficiency of your system. Okay. Perfect. I think while we're in, you know, on this topic, perhaps I can just address one of the questions that's come through. Just are you looking to dispose of a substantial portion of your offices now as vacancies are still stubborn and have been since maybe 2016? Yeah. The desire to dispose of assets in certain sectors is one thing, but the second thing is there has to be an ability to practically execute under that. Mm-hmm. There are few buyers in regard to offices that are available at the moment, at prices that we expect to be appropriate. Sure, anyone can go and sell off anything at a very low price, but that would not be in the best interest of ourselves and all of our stakeholders. If I look at our ZAR 1.9 billion that we've got unconditional of those assets, there are two offices, both of them down in KZN, totaling about ZAR 70 million. Mm-hmm ... that are disposals of offices, which are very close to what our book values are. For me, that makes business sense to dispose of those ones, in that particular sector, and to the extent that it makes business sense, we'll continue to do that. It's not. I can't wave a magic wand and change that. We've got offices and at some stage, with the Government of National Unity, with the lower load shedding, lower interest rates, and increasing confidence, our economy should start to work again. When our economy starts to work again, you're gonna see an uptake of business growth- Mm-hmm You're gonna see an uptake of space, and that will then change that particular dynamic that we're facing now with offices. Perfect. Thanks, Ulana and Geoff. I think that's given us a lot of insight into the direct SA portfolio performance. Perhaps we can now move on to the offshore investments, and I think that's probably where Emira's been getting a lot of attention, you know, recently. Especially with the announcement of your Polish deal. If you can perhaps take us through, you know, what you're seeing on your U.S. investment, as well as e xplaining this new Polish investment to us. Yeah. Let's just kick off the easy one in terms of on the operational. Operationally, yeah. Operationally, still doing well. Very good relationship with Rainier, our partner in the U.S. Still meeting with them often. Vacancies remain the same. We didn't have a lot of expiries in the first five months. 98% retained of those. Mm-hmm. What is the concern? Conn's in the U.S. have filed for bankruptcy. We've got two of them, Summit Woods Crossing and Wheatland. The total square foot is about 80,000 sq ft, so it is big. Okay. They haven't vacated. They're still paying their rental, and Rainier is quite positive that they can backfill those. At the moment, no issues that we're aware of. As soon as Conn's coming vacant, then they need to fill it. Yeah. There's certainly, I mean, our partners tell us that there's certainly demand for that space. Mm-hmm. Mm-hmm. Mm-hmm. In fact, what's happening recently is that certain big retailers actually look to go and take those stores out of those potentially bankrupt parties. Sure. We actually probably won't have any break at all in terms of income. Also just to contextualize, if I just use square meters, we're looking at close to about 20,000 sq m that's let through to Conn's under those two. Mm-hmm Out of a total portfolio of around about 350,000 squares. You can just sort of see what that particular proportion is. Sure. Just something else as well is that, and it talks to our offshore investment, is that we continue to look in the U.S. in terms of deploying funds there. Okay. We just haven't managed to achieve the IRRs or the expected returns that we feel are necessary for the risk that you're taking. Mm-hmm. We continue to look, we deal with our partners, they continue to invest on a very selective basis. From our side, it just hasn't ticked all of our boxes. That's why we've then actually found something else in Poland, which we think is better for us. Mm-hmm. We're not trying to exit out the U.S. We still think it is the world's strongest economy. Mm-hmm. It's doing well. Sure, they've got the elections coming up, and sure, they're starting to cut interest rates as well, but there's nothing wrong there at all. In fact, it's just ticking over at this stage. Okay. Yeah. Okay. Just moving in onto the Polish investment. We've been looking at investing into Poland since about April or May of last year. We eventually have concluded this deal with a company called DL Invest Group that are headquartered in Luxembourg. It's a Polish property company, it's a development company, and they own their own properties. It's predominantly logistics, around about 70% logistics, high-end logistics. It's about 15%, about 20% of retail parks and about 10% of offices. This company has a land bank. They are great developers. We've seen their product, and they let for their own use. They don't look to sell off. We're dealing with a developer that's also an owner. The beauty with that is that you're then getting in at a development cost side rather than buying it as an offtake from a developer who's then on selling it to you. Mm-hmm. That's one of the first things. The second thing is just in terms of that market. Poland has been growing at a 6% GDP growth rate over the last 20 years, second only to China. Mm-hmm. The expectations are they will still be one of the top four performers in terms of GDP growth going forward. The logistics market there is still a very strong and vibrant market, and they really service the entire Central, Eastern, and parts of Western Europe. We certainly believe that there's a lot of tailwinds happening under the logistics side. Importantly, we've only got in now, when cap rates have moved out. Mm-hmm ... from those exuberant years of a couple of years ago. Mm-hmm When cap rates were 4% and 5%. Now we're getting in there when cap rates are close to 6.5%, and we're getting into a development portfolio where the yields are closer to the 8%-9% in terms of those cap rates on those properties. Mm-hmm. We think it's a much better time to get in. Okay. I think those old cap rates were driven by very low interest rates. Mm-hmm. EU's interest rates have obviously increased, and they're starting to get into that cutting cycle. From a cycle perspective, we think we've done well in terms of getting into that. Typically the Emira way is we don't need to own the assets and to control them. We would rather co-invest with partners on the ground. We've learned a lot from our U.S. investments and from our other local JVs. Mm-hmm. The way this one was structured is quite complicated. We've taken an initial 25% stake in DL Invest. For our 25% stake, we've invested EUR 55 million into the company, not to pay owners out, but to invest into the company to be utilized for their development pipeline. That EUR 55 million that we've invested will deliver us an income return of 7.2% per annum escalating by CPI that's floored at 2%, capped at 4% over the next five years. The way we've structured that is that that's an interest return coming on our overall equity investment. Mm. That's got a first claim to the income that's coming out of there, of the profits, and they need to settle that 7.2% on that EUR 55 million. Secondly, we got in there with our 25% stake. We've acquired that equity at a discount to what its net asset value is. That's a significant discount, where the net asset value of our initial investment is EUR 101 million, and we've paid EUR 55 million for it. Typical in terms of like the South African retail trading at discounts and so on. We've invested that. Recognizing that, this is an unlisted company, and you've got a controlling shareholder. Mm-hmm. What we wanted to do was to try and create a liquidity event. We've done that. We've included a liquidity event that at the end of five years, Emira and our partners in DL Invest both have what's called a redemption right, a call option, a put option, where we can sell our equity to them at the original net asset value, the EUR 101 million, escalated by CPI or the floor of 2.4% over the five-year period. What that will all mean is that the 101 million will grow to approximately 115 million. Mm-hmm. that will be a liquidity event that we have the right to exercise, to sell them our shares back, our 25% shares back. Okay ... at that EUR 115 million. At the same time, they have the right to call that, in that they believe that the net asset value will be much higher at that stage. Mm-hmm. To offset that, our right to sell to them, they have got the right to buy that from us at that same value. What's really interesting is that we've invested on a long-term basis into property, but we've created a liquidity event, something we learned from our U.S. partners in that if our partners decide to sell, then we need to sell with them. If our partners decide to hold, then we need to hold with them. Mm-hmm. Often, if you're with the right partners, that's collectively the right decision. In this particular case, we've got this defined liquidity event, and we can then decide what we're gonna do. Yeah. We've got a seat at the table. This group called DL Invest, they've got currently 40 assets that are operating at the moment and with a meaningful pipeline still to add to, predominantly logistics. Mm-hmm. I think what's really important here is that we've got minority shareholder protection rights so long as our shareholding is a minimum of 25%- Mm-hmm We have a seat around the boardroom, and so I'll certainly be sitting on that board. We'll be able to influence strategy, help them and guide them in terms of the experiences we've had here in South Africa, and make sure that this pipeline is developed properly. What's great about that is that we've got minority protection rights starting at 25%. Mm-hmm. There's no actions that they can take that would then undermine us or put us under pressure. That was important for us. In addition to that, we've got a second tranche where we are entitled to subscribe for a further 20%, taking up our 25% up to 45%. Mm-hmm ... for an additional EUR 45 million. There's a circular that's being prepared at the moment. It's a Category one transaction when you aggregate the two, and that will be coming to shareholders probably around about the middle of November for shareholders to vote on. We think it's a fantastic deal because if you work it out, we'll have a 45% stake in a growing company that's co-invested with us that are skilled at this, developing in the logistics market, which we see lots more room, developing at below market cap rates. Mm-hmm. That's also important. Then we've got a liquidity event. We really think that from that liquidity event, the question people should be asking us is, that's a lot of euros coming in in five years' time. It's significant. There will certainly be preparations in anticipation of that will then come. In a nutshell- Mm-hmm ... even though it was a complicated deal in terms of how we had to put it together, that's what we've done. Investing EUR 55 million, getting 7.2%, and then having this predefined liquidity event at 115, and you put that into an IRR calculator, we're getting a 7.2% yield, we're getting 13% or 14% capital growth. Collectively, that's 21% in euros. Got you. Yeah. Great. I think you've actually answered a lot of the questions I had on that. Especially with regards to the minority stake and I think some of the opportunities you're seeing in logistics. Maybe just to touch on the office and retail side, is that a smaller portion, you know, of the business? Maybe what opportunities? You're seeing in those sectors outside of logistics. Yeah. It's certainly much smaller. Okay. They've got these small little retail parks, little convenience centers, smaller than the neighborhood centers, which are around 5,000-6,000 sq m. Mm-hmm. You know, to the extent that you find a great location that you can develop it out, you're developing it out to 8% or 9% in terms of a cap rate should mark to market at closer to the 6.5%. Mm-hmm. We know what's in our pipeline. The majority of what's in this pipeline, and it's a EUR 200 million-EUR 300 million pipeline, which our equity will be utilized for, and obviously not all things in terms of a pipeline actually happen. You've still gotta make sure it works. It's predominantly logistics, and it's high-end logistics. Mm-hmm. As I said, Poland is a central distribution hub. Also what's just interesting under that one is that they do have a small proportion of offices between 5%-10%. Their offices are pretty much well let. Mm-hmm. There's no challenges that they've got. Most of it is for small space. It's not for the big corporates at all. We're not anticipating adding to that at all. Why? Because the market at the moment, we think is in the logistics side, maybe with a little bit of a smattering of the retail parks. There might be one or two other small little things that then get added onto that. Yes. The majority, 90% of that plus is in the logistics space, which we like. Mm. They do all their leasing in-house. They've got very strong leasing teams in-house. Okay. They run it full property management, leasing. Yes asset management from within the company. Perfect. Maybe while I have you, Greg, just in terms of the funding mix on this transaction, if you can take us through that just in terms of cash proceeds versus any new debt you've taken on and maybe what those margins look like as well. We haven't taken on any new debt, and I think as you've seen over the past, we've looked to recycle disposal proceeds from one investment to the other. Now, you can't always get your timing perfect. Mm-hmm. We've been building up our debt capacity by taking disposal proceeds, permanently settling debt which needs to be permanently settled, and then taking any excess and reducing down our revolvers. We had built up a good debt capacity. We had been lining up for a transaction like this, so we had built up good debt capacity. As at the end of March, we had about ZAR 1 billion of debt capacity. We've got the disposal proceeds, ZAR 400 million, that's come in for the last couple of months. We've got the ZAR 1.9 billion that Geoff has mentioned on the disposals which are imminent. That cash should come in before the end of the year. Really, you know, we've simply taken disposal proceeds, parked it into debt for a bit. Mm-hmm. We've drawn down on that to effectively pay out on tranche one. Right. Tranche two will also be effectively fully funded by the disposal proceeds. That said, I mean, we are working on putting in place just additional capacity. We always like to have good capacity. Sure To do it again. We're busy working on putting in place additional facilities to do that. What I will say is we have put in place. We see it that we've used our disposal proceeds, but they've been parked in our debt and come out of debt, is we have put in place cross-currency swaps. Okay to synthetically convert a portion of the funding, whether it's equity or debt funding, into the currency of the underlying investment. Okay. We've put in place EUR 45 million worth of cross-currency swaps, which have an average term of 4 years and have got a fixed rate of 2.86%, which if you then take that plus our average margin of about 1.8%, that EUR 45 million has a funding cost of about 4.65%, and then the balance of 10 on tranche one will be running at our local cost of funding at about 9.5%-10%. Okay. Okay. Thanks, Greg. Sorry, just to touch on the LTV linked to that. Yeah. The LTV, because of the timing and understand that we did anticipate a good portion of the ZAR 1.9 billion would have come in at the same time as this transaction. It's slightly delayed. You'll see our LTV has increased to 43.4%. Mm-hmm. Once the ZAR 1.9 comes in, that will reduce right down, and then it'll pick up a bit once we pay out on tranche 2, provided shareholders vote in favor, obviously. I would anticipate we settle slightly below 40% post that. Okay. Just from my end, before I go to some of the questions on this topic on the line, if DL Invest are unable to deliver the 7.2% coupon at any point, is Emira allowed to exit early? Is there anything guaranteeing its sort of initial investment? Yeah, it's a good question. We've structured this such that this is a 7.2% interest accrual that's coming out of our combined equity instrument. The first 7.2% comes to us, and DL need to settle that. It's a contractual obligation to do that. Mm-hmm. Failing which, we then have the right to accelerate our redemption. That EUR 101 million on day one, that net asset value, if they don't pay the interest servicing that's required now at the end of September, it's September and March. Mm-hmm are the interest cycles, if they don't pay that, then we can immediately accelerate our right in terms of that redemption right. It would be particularly onerous on them for them not to settle it. To the extent that they don't settle, we would trigger that, and we would then have rights to go in and start to sell assets of the company. When we sell assets of the company, you would be selling out the logistics properties, you would be settling the senior debt on those. There would be an equity proportion left. We would always get the first EUR 101 million of that, and thereafter, the balance would then go back to the other shareholders. We rank preference to the other shareholders in DL Invest. That was important for us. Yes ... in that to have that trigger event if interest is not serviced. There's another trigger event as well. If the net asset value drops below a certain level. Mm-hmm Again, we can get in. We can then trigger this early. It's not in their interest at all to breach at all. Life can happen, and if life does happen in that extreme, well then, as I say, we've got a preference right to getting our cash back before our fellow shareholders do. Yes. I think importantly. Mm-hmm Because of that structure, a lot of our due diligence on this investment revolved around the valuation of the assets and the net asset value of the company. Yes. Because effectively, we have got the preferred right to the first. Provided tranche two goes ahead, we've got the first right to the first ZAR 175 million worth, EUR 175 million worth of equity. It was very important for us to ensure that the value of the equity was. Okay. Was real. Mm-hmm. Sure. That's where the majority of our due diligence revolved around. Okay. Yeah, Pranita, just to- Yeah Just add to that. I mean, it's important that people know, if we haven't said this already, but we had done an extensive due diligence here. Mm-hmm. Which it started off from an original meeting back in April or May of last year. We were then significant meetings January, February, March this year, and we eventually only closed on the 8th of August. In between that, we engaged CBRE Poland. Mm-hmm ... to do a full assessment of the majority of the assets. That was important for us. It was important that we engage also with Deloitte, that could assess that balance sheet, could understand that from an accounting perspective, a value perspective, together with the tax side. Yeah. It's not something that we've taken lightly at all. Mm-hmm. It's a significant move from our side as a company. Mm-hmm. What that will really mean is that together with our U.S. investments, that our total offshore exposure will now be sitting at between 30% and 40% of total assets sitting offshore. We like that. Sure. We still have our close to 60% plus of South African assets, but we're in business. That was why we just couldn't find the opportunities in the U.S., so we then needed to look elsewhere. We're in business first and foremost, and then in property. Mm-hmm. We needed to follow where those opportunities are. What's really great about this is we're sitting around the table with an upcoming developer and property owner in Poland that's- Mm-hmm That's got tremendous macro prospects together with the company itself is. We're very impressed with it and the people that run it. We've got a seat around that table, and guess what happens when you sit around the table? Further deals will happen. That's probably a path that you're going to see us sharing in the coming years. Sure. Just on that, Geoff, that 30%-40%, is that somewhere in your ideal range of offshore exposure, or where would you like that number to get to? You've gotta be very careful about waving a magic wand and trying to achieve that. Okay. It's gotta make business sense. Mm-hmm. At the moment, 30-40 is the right number, but that could change by 10% or 20% either way. Mm-hmm If the particular business opportunities make sense. If we can acquire something in South Africa that makes a lot of sense, well, then that's going to swing. If there's additional offshore opportunities, then that's going to swing as well. Okay. We just have a question that's come through just in terms of what are the yields that DL Investments have managed to generate in the past for developments? Yeah. From a development side, they've generated a starting cap rate yield of close to 8.5%. Why? Because they are developing themselves, developing at cost. They're not going out and buying someone else's development. Okay. At pretty much 8.5%. Their assets are marked to market at roughly around about the 6.25%-6.5%. Okay. That ties in terms of where we anticipate the market to be. CBRE did a lot of analysis under that one. Okay. Taking into account liquidity and so on, and we noticed that a couple of years ago, those cap rates were sitting in the fours and the fives. Okay, okay. Just another question that's come through is what are the restrictions on the capital funding within the Polish JV? I think you've answered some of these questions. Anything you'd like to add there. From our side, our minority protections are such that they can't go and invest into something other than what they are currently investing into, that they can't go and raise inappropriate debt, they can't sell assets inappropriately. When I say inappropriately, at more than a 5% discount to what their book value is. And t hat they can't gear inappropriately, they can't gear them more than 70%. Mm-hmm From our side, it was important. Which they're not geared at that level. They're geared at around 60%, so yeah, they're not geared, but. From our side, so important that we are not trying to tell them how to run their businesses. Sure. They've been running an unbelievably successful business for the last 17 years. Mm-hmm. We can see what that future's gonna look like. Mm-hmm We have added to their knowledge deck, their intellectual capital, their equity capital, and having a seat around the table. Okay. Luqman has a question. Just the Polish investment appears to be more of a structured product than a property investment. How is Emira placed to add value through this investment, and is this platform scalable? We do think the platform is scalable. If we had to bring DL Invest around the table here, and I've been in the company of financiers where they asked me this question. Why Emira and not a financier? Or what did Luqman say? A structured product. Yes. The way it was responded to by DL Invest was they said, We don't want a financier. We want a property group that's behind this. We want a REIT that's had experience across all the different asset sectors. Mm-hmm. Inside property has been a REIT. Because I think their longer term intentions include becoming a REIT and raising capital there in Poland. We see ourselves being able to add to how they do things, the operational reporting, the operational metrics. Mm-hmm. Preparing them for a future listing and really doing things the Emira way, which is always with excellence, always. We've seen that in terms of our U.S. partners, where that was a particular skill that we brought to our U.S. partners, and that sort of elevated us both. As I say, we're property people. We can properly comment in regard to the way warehouses and retail parks and many things, resi, offices, all of that. Sure. Our investments in the U.S. They're getting a really, and this is what they say, really, skilled and seasoned property investor that's running alongside them. That's the reason why this is still a property investment. It's secured by that. To the extent that we perform and add value. Mm-hmm. It just means that there's more net asset value at the end, which means that our position is even more secured. Okay. Thanks, Geoff. And just lastly on maybe this topic. Outside of the U.S. and Polish investments, are there any other regions that you're interested in or that you're willing to say you're interested in? You've gotta go and chase the best opportunity. Mm-hmm. If that best opportunity has to be in another jurisdiction, and it makes a lot of sense, well, then we'll go there. Having said that, there's nothing that we can see. It would have been preferable for us to go to the U.S., but the opportunities just aren't there in terms of what we've achieved. We've now got a base in Poland, and so it would make lots of sense to continue that with our particular partners there. It's unlikely that we're gonna be somewhere else. If something else pops up that is tremendously attractive, well, then we've gotta look at it. We're in service of our all of our stakeholders and at those sorts of IRRs and those sorts of risks and what we can generate, we're going to chase that wherever it might be. Certainly from a travel perspective, it's much easier flying up to Poland than it is to go westward to the U.S. We also reminisce back in terms of where we had our stake in Growthpoint, which was a small minority stake. We had no control, no influence at all. Yeah. We were just receiving what were pretty good returns. That's on the other side. Mm-hmm. Imagine if we had the U.S., Poland, and Australia. We don't. We just wanna keep it easier so that the three of us can travel more comfortably. Sounds good. Thanks, Geoff. I think maybe with that we can move on to some of the balance sheet aspects, the financials, so to say. Greg, if you can take us through- Mm-hmm. Just what you've done over the past six months in terms of LTVs you've touched on, but just, you know, any other aspects that you'd just like to touch on before we get to the questions on that? Yeah, I mean, it has always been a busy couple of months refinancing debt. We do have a lot of different facilities, smaller chunks. We're seeing very good support from our funders as always. It's been good to see that interest rates have started coming down. Mm-hmm. Which I don't think you will see a huge amount of benefit in this financial year and that, but you will see that come through through next financial year. There will be some of that, but what we have done is we've had a number of our. A couple of our cross-currency swaps, U.S. dollar cross-currency swaps that have run off. Mm-hmm. We've chosen not to restrike those at this point. You'll see from an income point of view that we would've lost that benefit and that will be partially offset by some of the lower floating interest rates coming through from these cuts that we've seen now. The reason for letting those run off is that the differential in the fixed dollar rates that were being priced versus what we were on previously and current JIBAR, that differential was just too narrow. It didn't make sense to strike those at this point. You know, we lose that benefit. We do lose the hedge on our balance sheet of that, but we will look to restrike those at a later point. You'll see a little bit of an impact to our earnings from that, but that will be offset by the impact of local funding costs coming down. In terms of the U.S., you're seeing rates starting to come down there as well. We won't get any of that benefit because as we've shared before, all our interest rates in the U.S. have been fixed. At inception on a long-term basis. We were protected when rates were high. Okay. As we start seeing rates being cut, we don't get that benefit because we fixed at our- Mm-hmm. our average rate at inception there. Okay. Just in terms of your interest cover ratio, you know, if you can- Mm. Where do you think that sort of settles at interim, and maybe your debt service coverage as well in the U.S., what does that look like? Debt service coverage in the U.S. still very much in line with what it was, previously. Understand that every single debt facility there stands separately. Mm-hmm. That's very much in line with what we reported previously in March. Is expected to be the same for the full year, and that sort of speaks to vacancies being low and very little movement in the underlying leases. Locally, interest cover ratio is still under pressure. Mm-hmm Because you won't see the full benefit of lower interest rates coming through in this year. We still, I think, we'll be around the 2.2x-2.3x cover for this year. Mm-hmm. You'll start to see that picking up next year, I think to the 2.5%-2.6% level. I think, you know, this has been a good period to stress test where companies sit in terms of their interest cover ratios that were set at inception of debt many years ago. For us as Emira, we haven't had to change any of those interest cover ratios. We've been able to get through a period of very high interest rates. And lo w rentals intact. Very, very happy with how we've managed to get through. Okay. Just in terms of some of the margins you're seeing from the banks. Mm Have those changed at all from, say, six to 12 months ago? We're certainly seeing those coming down. Okay. Yeah. Certainly, I mean, you know, up to 20 basis points on three-year debt, we've seen that over the last couple of months. That's been good to see. Whether that will remain as interest rates come down, I'm not sure. Mm-hmm. Certainly there's been strong appetite, and we've seen banks price that accordingly. Maybe just with interest rates coming down, you know, your outlook on sort of valuations from your own portfolio, do you expect to see any sort of big moves there? No. Yeah. Yeah. It's quite interesting in that since GNU and expectation of lower interest rates and more positivity happening in South Africa, our recent engagements with our valuers are that they're starting to see lower discount and lower cap rates. Mm-hmm. We perform our valuations on a six-monthly basis. I think it's right to expect that there will be some growth in our valuations on our local portfolio. Okay Now in September and potentially again in March. Mm-hmm. I think as Emira, we've always been very conservative. If you go back to even pre-COVID and so on, we moved discounts and cap rates straight away, whereas the market hadn't sort of actually done that. Yeah. I think you might see some unwinding of that. It's because of the positivity, it's because relative to where our peers are, that discount and cap rates should be low, which means that your local valuations should be high. You should anticipate some growth in that. I think, Geoff, I mean, it's almost proved by the success we've had on certain sales, so. Mm-hmm. That too. Yeah. Very much so, yeah. Okay. Maybe before I tackle sort of the last few questions on the line, if I can address that one question that surprisingly no one's asked yet, with regards to. I know you don't put out formal guidance. Mm Maybe your KPI target. Yeah Is that still on track? Yes Maybe even if you could give us a bit of insight into sort of what kind of interest rate cuts you've factored into those targets? Yeah, annually, we set that KPI target, which Greg, Ulana, and I are measured against, and as a company, we're measured against. Mm-hmm. We go out of our way to disclose that to everybody so that they're aware of what we are targeting. They're not forecasts, they are not growth targets. Okay. That's got a different profile that we look at. We certainly do disclose that. At this particular stage, we're pretty confident that we will meet that and potentially exceed that slightly in terms of that particular KPI target of achieving our DIPs per share. Mm-hmm. That's helped because of the Polish deal, which should be accretionary, and the performance of our underlying investments. It's offset slightly by a slower expectation of interest rates being cut. Mm. In that we've only just experienced the first one of 25 basis points, whereas when we set that target, that was referenced off the first one being in June. Okay. having four in that year. Obviously the later it happens, the less that impact is. Yes. having said that, as I say, we anticipate that we will be achieving the majority of all of our KPIs, and certainly in regard to that particular one, we should be able to achieve that one. Perfect. Thanks, Geoff. Just to tackle some of the remaining questions then from the line. Just from an ESG perspective, Emira seems to be one of the few companies whose environmental focus is on biodiversity. Well done for that. Could you elaborate on your efforts? Well, I can't pronounce this. Spekboom. The spekboom bush. We just planted all our spekboom bushes in all our gardens. Okay. Because that's very important also for the eco- Mm-hmm And also for bees and butterflies and so on. Mm-hmm. That's just been done, and probably in a half year I'll share a few photographs of those. Okay. There was just a press release about two weeks ago also on that. It's very important to us, and as you say, you know, most of your companies don't really look at biodiversity. We think it's very important for the world. Yeah. Great. Thanks, Ulana. We have a question: Just DL Invest is a private Luxembourg company. What financial disclosure will Emira and all its shareholders have access to assess its underlying performance? There will be two parts. One is just in terms of the financial position that is driven in terms of what that balance sheet looks like, so you're aware of that. Secondly, there will also be operational feedback in terms of the level of occupancies, WAL, and all of those key operational metrics so that we and our fellow stakeholders can assess the, I don't wanna say recoverability, but the viability of this investment. We'll certainly be sharing those, both of those. Okay. What kind of assets do you choose to sell? If you choose to recycle the proceeds, what kind of assets do you plan to buy overseas, I'm assuming, which you've answered. Yeah. Okay. Yeah. Post the ZAR 1.9 billion disposal pipeline, what does the portfolio split look like by sector for the SA portfolio? Post the 1.9, we will still be having pretty much 85% of the local portfolio invested into commercial. I use commercial in the wider sense. Still the majority of retail. Okay. Second followed by offices, thirdly by industrial. Mm-hmm. Residential still making up 10%-15% of that. Okay. That'll be that split in terms of the local. Obviously from our offshore investments, it's retail only in terms of our open-air power centers in the U.S., and it's majority logistics in regard to our investment into DL. Okay. Final question. Again, I think you've covered this, but maybe it's more specific to Eastern Europe. Does Emira want to spread further into that region? As I said before, we like what we've got in Poland. We're backing our particular partner there, and that's most likely where we will continue to remain in. Having said that, if there's an exceptional opportunity elsewhere, we would have a look at it. Okay. Perfect. Well, we don't have any further questions on the line, but maybe just a final one from my side t o all three of you actually, if you'd like to answer? Mm-hmm. You know, with a lot of the risk factors that we faced maybe 12 months ago sort of dissipating at some point, you know, load shedding some of the political risks, et cetera, what's keeping you up at night now? Yeah. It's an interesting one. I mean, if you just roll back to where we were six months ago, pre-election, GNU, wars in the world, and there were lots of concerns. It's still hard. There's still a lot of work that's gotta happen under GNU. I have no doubt about that. The deal that we've done in Poland was complicated. It was difficult. We worked hard. There's more. But as much as it's challenging, we know that if you continue to work hard, you do the right things, you're eventually gonna come up with the right outcome. I don't think that there's anything specific that's keeping us up at night other than it's making sure we do everything with excellence. At the end of the day, we certainly believe that through the hard work, through the results, you're eventually going to see a recognition in our share price, which is frustrating that our share price doesn't represent our efforts. We just know that where our net asset value is, where our earnings are, where our DIPs is, the quality of our assets, what we're doing should all ultimately result in validation coming through the share price, we think. Perfect. Mm-hmm. Thank you so much. Yeah. I mean, with that, I think that's all from my end. I'd just like to thank you all for giving SBG Securities the opportunity to host you today. You've shared tremendous insights into the deals and the business, you know, the market as a whole. For all of you that joined us on the call, thank you so much. Geoff, if you'd like to give us some parting sentiments. We look forward to seeing you all again on the 14th of November when we release our results. Pranita and SBG Securities, thank you again for hosting this. We hope everybody appreciates our little pre-close conversations that we have in that we're all on the same side sharing the information, and we look to share a bit more on the 14th of November. Until then, thank you so much. Absolutely. Thank you. Yeah. Thanks so much. Thank you. Thanks, everyone.