Morning, everybody. If we can get going. We will try to start on time as we obviously have quite a few people logging in online and we'd like to get going, if that's okay. Everybody's seated, everybody got their drink. Fantastic. Awesome. Welcome all, and welcome to the year-end presentation for 29th February 2024 of Equites Property Fund. Obviously a great pleasure to see some good shareholders here with us and that have sort of followed the journey with us over the last 10 years. Believe it or not, next month, 18th of June, will be our 10-year anniversary. Obviously very excited. Quite interesting that we had Bruce Whitfield with us earlier in the year at one of the functions that we had for the Broker Network.
I'll never forget, on the day we listed, he spent 20 minutes basically telling me that I was wasting my time and that we should why did we even bother coming to market, that we won't exist in 6 months' time. Obviously it was a hell of a pleasurable experience to spend a morning with Bruce telling him that we've lasted 10 years. On that note, let's get going with the business at hand. I think, you know, we start with this. I'm a bit puzzled by the fact that my team have decided to put a photograph of me on this particular slide.
Be that as it may, I mean, it really does speak to, I suppose, our message that has been almost monotonous over the last few years. Logistics does remain the prominent sector of the commercial real estate property market. Notwithstanding what's happened in the last 18 months in terms of the global economic conditions, it still continues to experience incredible momentum. What I can tell you is, you know, over the last 6 months, we've engaged with a lot of third-party capital from across the globe. The one consistent theme across all capital is logistics and real estate is the number one theme. Number two, lots of different things. Some have got data centers, some have got student accommodation, some have got healthcare. The one consistent thing is logistics remains number one.
Equites, obviously we continue to remain committed to the space. You know, we really do operate at the top end of the market. We really do try and operate to create the best space that will stand the test of time, and will afford our tenants a supply chain advantage that is not to be underestimated. I think real estate plays a really important part in that decision-making process. Before I sort of highlight the year in review, if you like, I mean, you know. We'll go into more detail. I mean, I think the one thing I would like to put across is that I think the messaging from Equites to the market has been consistent, it's been concise, and it's been executed upon.
I mean, I think last year when we stood here and we presented the numbers going into a very difficult year, there was many a person that presented us with a doomsday scenario for our business. The reality is that the numbers that we present today are a testament to an incredible team that have done incredible work, but also to a strategy, a business strategy that has afforded us the opportunity to be a relevant business in the twenty-second century. More importantly, you know, we take great pride in the fact that our messaging has been consistent. We communicated that we were closing out cross-currency swaps, and there was gonna be an impact, and we was very clear with that.
You know, Laila and Warren will take you through some of the detail of the impact of that to the business. We communicated it very clearly. We communicated to the market that we were looking to sell the Newlands development platform. We were not looking to get out of the U.K. We were very clear and precise in that communication. Notwithstanding that, we obviously had a lot of question marks around that. Our balance sheet health has remained absolutely critical to what our business is and how we go forward. I think the metrics that Rian will present later will talk very clearly to that.
Development remains a very integral part of our DNA and what we believe does differentiate us and allows us to create product which will stand the test of time. Just to add the little cherry on the cake, ESG obviously is very important. We are very proud in the last week or 10 days, we've had quite a lot of press on our first wheeling project in Cape Town with the City of Cape Town, and Warren will talk to that in a little bit more detail later in the presentation. Just before I sort of actually go into the detail of the year in review, I mean, I noticed an article in the press this week, where obviously with Amazon having gone live, a lot of press for Amazon.
I quote Robert Koen, who's the MD of Amazon Sub-Saharan Africa. He claims that the difference that Amazon are gonna bring to the South African market is the delivery experience. Now, how can you create the delivery experience if you don't have the commensurate real estate to afford you and the commensurate technology to afford you to create that experience? There's absolutely no chance. That's why Equites remains relevant in real estate today. That's all I'll say there. In terms of our business, DPS obviously at 131. Payout ratio at 100% as we communicated on the 29th of February at our pre-close that the payout ratio was gonna be 100%. It is 100%. Very pleasing to the Equites team.
This is always a very key metric in terms of our business moving forward and moving in the right direction. NAV growth and obviously really pleasing like for like portfolio increases in both SA and the U.K., which is obviously very pleasing. As I said earlier, balance sheet health 39.6, slightly lower than last year, but it really talks to how we've managed to recycle our capital at a time where no equity capital was truly available in the marketplace for us. Then the final sort of part of that jigsaw comes to the liquidity.
We sit on a wonderful pile of cash, and obviously the treasury team have done a really incredible job in terms of ensuring that we have that liquidity available to us so that we continue to operate on a day-to-day basis. Warren will talk to that a little bit later on. Again, now we go into property specific metrics. We still remain with a 0% vacancy, and that really does talk to the underlying quality of the real estate. Rian will take us through the detail of some of the transactions that have been concluded this year, some of the renewals and the ability for us to potentially have tenants that decide to move on from our real estate.
Because our real estate remains relevant, we continue to be able to refill it at market-related rentals, which obviously have moved in the right direction for us in recent years. We've spent ZAR 3.7 billion on acquisitions and developments in the year. But obviously that goes hand in hand with the ZAR 4.8 billion in disposals. Notwithstanding that recycling of capital, we come out at the back end of the year with a portfolio of ZAR 28.4 billion, which is slightly bigger than it was last year. Again, talks to the team's ability to be able to make strategic decisions in terms of what real estate to sell and where to reinvest that money into new product. Then the final element, as I said earlier, the ESG element.
We've broken the 20 MW of capacity and obviously that is incredible. You know, this didn't happen overnight. I mean, we started the ESG journey probably 5 or 6 years ago, and it's been a process and it's been a learning process and obviously the market has come to us and also legislation has come to us, which has made it slightly easier. We see this as a very important segment of our business going forward. Let's talk about strategic focus. In South Africa, we sold about ZAR 1.2 billion of our portfolio. The assets that were generally sold were some of the slightly older assets.
you know, we've always spoken to the fact that the assets still were relevant in today's world, but the ability that those assets potentially have of creating disproportionate rental growth over time is probably lesser than would be in a brand-new ESG compliant building today. Notwithstanding the fact that we sold ZAR 1.2 billion in a very difficult market, we basically sold it at book, which is fantastic. Got another few assets that will transfer basically before interims in August. We've identified probably about another ZAR 1.8 billion of assets that we will look to sell out of the SA portfolio, in the coming year. The UK, we disposed of 4 assets, GBP 90 million.
Those were obviously Hinckley, which is the Tesco's, which is the very first building that we bought when we went to the U.K. in 2016. The two Peterborough assets, DSV and Coloplast, which were actually the assets where we were introduced to the Roxhill team, which then became Newlands. Obviously a very historic legacy assets which were important to us. Then we sold the DPD in Swansea. All those assets were sold, and these were sold at discounts to book. The book that was used in the comparison obviously was book. The two Peterborough assets were sold at discount to book, should I say. The comparison obviously was off the highs off the back end of 2022.
Probably not really a good comparative base because the market turned very dramatically against us, as you all know. I mean, this time last year, we were presenting the fact that we had lost about GBP 100 million in value on our U.K. portfolio at the time. We were very pleased with those sales. The intention is to retain the rest of the U.K. stabilized portfolio. We will, if the right offers arrive at the right valuations and the right price, and should we have areas where we can deploy that capital, which will give us better returns, certainly consider selling assets on a piecemeal basis. The intention is to retain the U.K. portfolio. As we said, cross-currency were terminated last year.
I think some of the interest that was generated in the cross currencies, that has not been distributed, that has been retained. Effectively what we have done is we've removed the synthetic gearing, and we have given the benefit of the rand weakness that has been experienced in the last year to the shareholder. I suppose that can be seen in the valuation of the U.K. portfolio in as much as the U.K. portfolio was up just shy of 3%, but in rand terms, it was actually up about 10%. That really talks to the currency. The ENGL platform, so the Equites Newlands platform. We have spent the year obviously trying to sell it. We spoke to a lot of different parties of capital that were interested.
We probably couldn't have picked a worse year to try and sell a development platform than 2023. Notwithstanding that, we've survived the back end of 2023. We managed to get Newport Pagnell spade ready, and we managed to do a deal with Panattoni, which obviously is gonna generate, apart from obviously giving all our working capital back, but it will also generate some meaningful profit for us, which is great. We have a couple of other land parcels which will be, in our opinion, probably spade ready if everything goes according to plan, let's say by the end of the first quarter next year. Planning remains complicated in the U.K. It's tough.
We believe we've got a team that knows what they're doing and have got the ability to get that planning through. We will have some successes. They won't all be successes, but we will have some successes. As we bring those successes to market, Equites will not be looking to develop those platforms, but we will be looking to either do forward funding deals with speculative liquid capital in the U.K., which there is plenty of, or else potentially just outright sales of the land. In doing so, the intention obviously is to maximize the value for the Equites shareholder. The final element obviously is the alternative revenue, which comes to the solar side. You know, we continue to deliver more and more solar.
The one benefit that we have with our solar, obviously, is that it's inside the urban edge, so the transmission of it to another consumer and the process of wheeling becomes that much more viable and that much more efficient. Having concluded our first wheeling project, it will be, in our opinion, the first of quite a few to come, and obviously very excited about the extra revenue that this particular part of the business can deliver on. Let's talk maybe a little bit to the various markets in which we operate. First one obviously is SA. The vacancy level of A-grade facilities in Cape Town, Jo'burg and Durban remain in terms of ESG compliant, top quality real estate at all-time lows. There really is very limited availability. I mean, in Cape Town, nothing. Durban, almost nothing.
Jo'burg maybe a little bit more than the other two, but still nothing to write home about. What we're seeing is more and more operators to remain competitive in the 21st century, if you like. You certainly need to have real estate that affords you to be efficient and to cut out costs and to get your orders out on time. As I mentioned earlier, you know, everything is in the delivery. Everything is ensuring that you get the product out. Over the last couple of years, you know, we've seen 30% increase in rentals, and we are negotiating rentals now at ZAR 85 and even north of ZAR 85 in certain locations. Obviously this bodes well for the existing portfolio.
Does that mean that we won't have reversions in some of our properties? No, it doesn't. I mean, there will be some reversions. But we own those reversions. We still feel that the real estate is high quality. But ultimately, a ten-year lease, which has been escalating between 8% and 8.5%, will suffer some reversion. The positive thing is that the reversions that we were looking at maybe 3 years ago are gonna be significantly less than what they're going to be in reality. Market rentals are expected to continue to grow. You know, the research that's come out of SAPOA is that there's an expectation in our sector that it will grow at about 5% this year.
Ultimately, this is also as a factor of constraint existing A-grade supply, but also the fact that we have seen noticeable construction inflation. Now, please understand, within the realms of developing a logistics warehouse of, let's call it institutional grade, which is where Equites operates, about 45% of the cost, if you exclude land, is made up of steel or steel-related products. So any movement in that steel price is gonna have a notable impact on our construction costs. The benefit of having very low vacancy obviously then translates into the fact that very few developers. I don't think any developers are gonna do developments that are gonna result in them making a meaningful loss on that development.
Consequently, what we're seeing in the marketplace is it's not just Equites that's pricing developments at ZAR 85 or ZAR 90 per sq m, it's, that's where the market is. Obviously that bodes well for the market. Because equity capital has become so scarce and so valuable, what we're seeing is also the quantum of speculative build that's happening in the marketplace now having been significantly reduced. That can change, and as supply side obviously remains tightly constrained, there will be players that may decide to take a little bit more risk into their portfolios. As we stand at the moment, there is very little supply side on the speculative side.
If we go to the U.K., 2023 was an interesting year in that I suppose we came out of three years of COVID where I think we hit a record year of take-up of about 55 million sq ft, which is an all-time record. We've sort of settled now basically back at ± what we would define as pre-COVID levels of approximately 30 million sq ft. Notwithstanding the fact that we have seen some notable increase in vacancy in the U.K., the vast majority of it is space that has been returned. It's not first-generation space as what the English would define as gray space.
What we're seeing is notwithstanding the fact that the gray space is coming back, some of the gray space obviously is not probably suitable to be relet at market-defining rentals in an ESG world that we currently live in. The consequence of this constrained supply, and especially in certain locations in the East Midlands being quite a strong location, is that we still saw a market rental increase of circa 7% in the year. I'd say prime logistics yields in the U.K. at the moment somewhere between 5%-5.25%. Again, as I said earlier, there is a mountain of capital that's wanting to buy and just struggling to be able to press play in terms of deploying capital.
The general feeling in the U.K. at the moment is very much everybody's waiting for that first interest rate cut. I think when it comes and when the messaging and the signaling around what the potential cutting cycle will look like, I think will have a massive influence in terms of where those yields go. Ultimately, I think if anybody's got illusions that we will return to the 3% yields that we saw during the COVID period, I think that's an illusion. My personal opinion is that we will probably stabilize somewhere between 4.5 and 4.75 on the prime yields as interest rate costs do come off. I think that rental growth really talks to some of the reviews that we've had.
We've got eight properties in our stabilized portfolio. Two of them are index-linked, so one of them is linked to RPI, one's linked to CPI, but the other six are all linked to open market value. The first rent review that came through the system was the GXO in Coventry. As you'll see there, we got a 39% uplift in our rent, and that 39% uplift in that one property resulted in the whole U.K. portfolio growing by that 5% full year, which is obviously very encouraging for our portfolio, which is so massively reversionary coming through the system. Post-year-end, we settled a rent review with DPD in Burgess Hill.
Now, Burgess Hill is just south of Gatwick Airport, on the, I think it's the A23, sort of going down to Brighton from the M25. There, the reversion we got 68% increase in rental there. That really is a function of us having been the very first warehouse on that park when it came, and effectively rentals in the Southeast have actually moved to that degree. We believe that there's probably a little bit in that rental, you know, Panattoni have bought the rest of the park that we have DPD Burgess Hill in, and they're asking rentals there are between GBP 16.50 and GBP 17.50.
If history is anything to go by, Panattoni would tend to stick to achieving their rentals rather than discounting to get letting because valuation is much more important than income to them. The consequence of which is what I can tell you is that the Burgess Hill transaction was done at a market rental of GBP 14.35. You can see that notwithstanding the fact that we've just done that rent review, there potentially within the next year, there will potentially be another sort of north of 10% in that rental already. If you look at the rest of the portfolio, we're currently in negotiations with DHL in Reading, and we're currently in negotiations or we're starting negotiations with Puma up in Castleford, Donington.
We've got DHL in Leeds that's gonna be coming up for review next year. We have Amazon Peterborough and DPD and Roche and Burgess Hill, which are the two index-linked, which will also be coming through in the next 18 months. The consequence of that is that if we were to apply what we believe are market rentals as per the research that we tend to follow Kevin Mofid's research at Savills quite closely.
If we were to look at his evidence, then the reversionary yield on our portfolio in the U.K. at the moment is probably about 6.1%, which obviously speaks to the quality of that portfolio, and the fact that the next couple of years ahead are gonna result in meaningful rental growth coming out of that portfolio. Then finally, the development world. As I said earlier, we will not be funding any developments in the U.K., but we are very happy to be involved in forward-funding developments with capital and that will result in Newlands doing the development on behalf of the capital and us basically in our joint venture benefiting together out of the process.
You can see that we've completed a few developments in the pipeline post the period. I mean, obviously the Encore building was PC'd about 3 weeks ago. The Riverfields Shoprite was PC'd last week. Meadowview site 3B and 9 and 10, they will only PC later in the year. Those are basically 3 buildings that we decided to develop speculatively on the basis that we've got no vacancy in the portfolio. What's positive is it would seem that we've got a heightened level of interest on all 3 of those buildings, and there is a very strong possibility that all 3 of those buildings may even be let prior to PC.
That really is, I think, a function of the fact that they're extremely well located in the Meadowview precinct, which is just off the M3 on the London road off-ramp. More importantly is the fact that there really is genuinely very little vacancy out there. In terms of the pipeline, that is coming through in the RLF joint venture. RLF being the joint venture with Shoprite, the Retail Logistics Fund, as we call it. We have PC'd already the Centurion upgrades that were done to the property that we already are 50.1% owner. Then the Wells Estate down in Gqeberha. We bought the existing, which was a very small, sort of 10,000 sq m Freshmark part of that property on a massive chunk of land.
We are basically upgrading that facility to become a state-of-the-art Shoprite facility to service the Eastern Cape. If their other developments and the ability that their supply chain has given them to win market share, well, I think the years ahead in the Eastern Cape will obviously be a very rosy years for the Shoprite team going forward. That particular facility will be just shy of 100,000 sq m, and we're expecting it to be complete sort of late August, with effectively the lease agreement basically commencing 1 October, potentially delayed into 1 November, depending on PC being met, and obviously. Where do we remain? We remain highly positive on the development front in SA.
The level of interest and the level of inquiries that we are currently achieving are at record levels or at levels that we've only seen at times when the market was really humming. Which bodes well. It bodes well for our land holding. We currently have approximately 40 hectares of land. Ultimately, if you wanna do these deals, you need the land. Without the land, you're not in a position to be able to negotiate those RFPs that are coming out. Really positive and very excited about the year ahead. Actually, the next two or three years ahead on the development front. That's me for now. Again, thank you for listening.
I'm gonna hand over to Rian now, who's gonna take you into a bit more of the detail of what's actually happening on the portfolio and the very specific property fundamentals against it. Rian.
Good morning, everyone. I think these property fundamentals is a reflection of the excellent health of our underlying business. The fundamentals are the product of a continued focus on always improving our underlying portfolio, and it's that portfolio and the quality of it that gives us a sustainable and predictable rental growth. It also enables us to access the cheapest possible debt on the debt capital markets. We're very proud of the fact that by year-end, all 67 of our properties were fully let. I think a great focus of the Equites team has always been the weighted average lease expiry profile. You know, when it's just shy of 13 years, it means that you only have a limited number of leases come up every year. Now, imagine when you...
If your lease expiry profile is 4 years and you've got 80 properties, it means that you've got 20 leases to renew every year. The approach with which you'll go into negotiation will be one of slight trepidation because you can't be bold. Whereas when you've got 3 or 4 leases expiring, you can be bold, and you can make sure that you achieve a proper open market value for the property, because 1 or 2 vacancies over a 70-property portfolio will not have a significant adverse impact. Importantly, this WALE will increase to around 15 years when the outstanding Shoprite developments come on stream this year. You also see that our in-contract SA rental escalation stands at 6.2%.
In the UK, we've had a like-for-like rental increase of 5% as a result of the very positive Coventry renewal. As Andrea shared with you, notwithstanding a ZAR 4.8 billion disposal program, we've still increased the portfolio value by 30%, and those disposal proceeds were invested in brand-new ESG compliant assets that'll be relevant for the next 20-30 years. Our A-grade tenant component is always increasing, and it talks further to the strength of the portfolio. We've decided to share the minutiae of our disposal program with you. As Andrea indicated, we sold ZAR 4.8 billion of assets over the past financial year. ZAR 1.2 billion of assets were disposed in SA over six transactions.
The disposals were in line with our book value, which also confirms that our independent valuations are a true reflection of open market values. In the U.K., similarly, we disposed in line with the book values, and the transaction that's not listed there is the disposal of the land on the forward funding transaction with Panattoni that Andrea referred to earlier. We will continue with our disposal program in the new year. Just a quick recap on the criteria that we apply in selecting potential sale assets. Firstly, the older non-core ones. Secondly, those assets that are not in industrial parks. Very importantly, those assets that we believe will not meaningfully contribute to net asset growth. Net asset value growth, those are always the assets that we target first. Now the portfolio split is ever-improving.
Only 1%, as you can see, are now made up of non-core assets, with 77% of our assets being pure logistics assets and 8% in the held for sale category. Also very important, 6% of our portfolio value is land. Now, those of you who followed us over the past ten years will remember that we started with a very small ZAR 1 billion portfolio, which we've now grown to over ZAR 28 billion. During the past ten years, we've only had three significant acquisitions. The Meadowview in 2015 acquisition gave us some important scale. We did about ZAR 800 million acquisition of some assets in Waterfall, and then we bought the Pick n Pay in Durban, Nestlé and Simba in Johannesburg.
Our experience has been that when you acquire assets, they always come with legacy issues, and you end up spending a lot of money in implementing the acquisitions and also getting maintenance up to a standard. Whereas when you grow through pre-let developments, you have all the benefits associated with a tenant that has invested time and effort and money into the new facility. So the facility is 100% suitable for that tenant. It's at the back of a 10-year lease, and tenants normally have 20- to 25-year business plans associated with those properties because they invest so heavily in them. It is normally larger facilities where several leases have been collapsed and your transaction costs are much lower.
Through our experience, we've seen that where we've developed is also the properties that contribute the best to our net asset value growth. A very, very big part of our strategy going forward will be to continue on this path, and for that, we need land and key nodes, and we'll also later on talk you through how we've seen the benefit of the growth and value of those portfolios in those nodes. Our South African renewals is the next slide. Now, as Andrea intimated, it's obvious that if you have a 10-year lease escalating at 8%, that there'll be some reversion at the end of the period. FY 2024, we had three renewals, and by and large, we ended up in line with the previous rentals payable.
I would like to point out that the Waterfall and Meadowview properties at ZAR 82 and ZAR 72 are under-rented as a result of two short-term leases we concluded over the COVID period. There were 3-year leases where the tenant had the right to renew at the exit rent plus escalation. We can expect those rentals to increase at the next expiry, so there'll be some good rental growth there. Importantly, the renewals that we've done in respect of the current year, now you'll all agree that there are some reversion, but the encouraging part is when you look at the levels at which those renewals took place. The facility at Meadowview was renewed about 12 months ago at a very healthy ZAR 92/sq m.
Now, that facility isn't a brand-new ESG compliant box. It's an older facility with slightly less height. That's indicative of what our premier facilities in Meadowview will achieve in the coming period. I mean, the Waterfall Industrial Estate is a world-class environment, and multinationals are really keen to stay in that node. When you look at those renewal levels for facilities that have got a large warehouse component, it really bodes well for the future of Gauteng, and particularly the nodes we've selected. This is an interesting slide, and it's the first time that we've actually shared it, and I want to first refer you to the right-hand side, the Riverfields and Jet Park portfolios. Now, those were piece of land that we bought. I mean, we bought a building at Jet Park.
We knocked it down, and we created a portfolio of brand-new ESG compliant buildings. You can see the valuation increase in respect of that park. Similarly also on the R21 with Riverfields. I mean, brand-new facilities led to blue-chip tenants on long-dated leases and that's the contribution that we want to our portfolio uplift. The Retail Logistics Fund also very positively, obviously creating new facilities for Shoprite will stand us in good stead for a very long period of time. Our Meadowview Business Park, the growth's slightly lower, but as it is a result of the fact that many of those buildings were acquired in 2015. They're slightly older, and we've added some new buildings, but obviously the greater majority of the buildings are slightly older.
I think this also reflects the importance of landholdings, because going forward, we would like to create more of these parks that will really give us the growth going forward and ensure that our portfolio grows from strength to strength. That's all from me. Laila, I think it's your turn.
Thank you.
Okay, thank you very much. I like the way Andrea started his session off by asking what did we hope to achieve during the year, and I think from a financial perspective, I'd like to do the same. What did we hope to achieve? We said we wanted to close out all of our cross-currency interest rate swaps. We presented guidance to the market, and we said we wanted to come in somewhere between ZAR 130 and ZAR 140. We said that we really wanted to prioritize balance sheet strength, despite the fact that we had a big development platform. We said that we wanted to show some NAV growth as we expected U.K. yields to start stabilizing, and then lastly we wanted to manage the cost of debt. How did we do?
I think just to start off, we came in at 131.12 cents, which is in line with guidance. We maintained our 100% payout ratio. Our balance sheet strength, we're still at 39.6%, so we're under that 40% mark, which seems to be some sort of golden rule, but we're very comfortable with where we're at. We have ZAR 2.3 billion in cash and undrawn facilities. We showed that NAV growth, 3% NAV growth from Feb 2023 to Feb 2024. We concluded ZAR 4.8 billion of disposals during the period. I think Rian spoke about it, but I think just to reiterate how difficult it really is to enter into these negotiations and to conclude them within a 12-month period.
Lastly, just our funding costs have come down from August, so we're at 9.14% in South Africa and 3.94% in the U.K. I'm going to leave this for Warren to talk about because I think it's been a phenomenal year from a treasury perspective, and we'd like him to talk about that in his section. Okay. If we look at our distributable income statement, I think the first line really is just looking at the net property-related income. Now, we had like-for-like rental growth of 6.4%. However, if you look at our net property-related income, which is the top line minus the property and operating expenses, we get to the growth of 4.6%. There was a degree of non-recoverable expenses for the period.
Some of these relate to legal and professional costs relating to those properties. Then there were vacancies in the period, and naturally, when there are vacancies, there are going to be non-recoverable expenses. That's what took us to the 4.6% growth in the net property-related income. From an administrative expenses line item, this is the distributable portion of our admin expenses. Now, there's been quite a jump from 2023 to 2024, but I think we have to paint some color. It was a period of increased legal costs, particularly with regards to the U.K. There were a number of moving parts. We said that we were attempting to sell the U.K. platform. We'd embarked on a process with advisors, but at the same time, there was a number of legal and professional costs ongoing.
I think that really led to the increase in some of those administrative expenses. Another element is that if you look at the actual breakdown in our financials, you'll see that the percentage that we've capitalized has decreased significantly. It went down. In the previous year, we were capitalizing about 16%. In the current year, we're capitalizing about 10%. We believe that this is probably a more sustainable level of capitalization of these admin costs. If we go to below operating profit and we just look at net finance cost, the higher net finance cost is simply driven by a tighter monetary policy during the period, along with the marginally higher cost of debt, which was used to fund developments.
Even though our cost of debt is coming off, it's still higher because of the base rates that have been increasing. Current tax expense and other income, I just want to talk about that current tax expense. For the first time ever in our ten years, we have a current tax expense in South Africa, which is actually payable, and this is because of that cross-currency income related or cross-currency interest income, which we're not distributing. Because of that income, it's resulted in a ZAR 11 million tax expense in South Africa. This is not expected to be ongoing. This is non-recurring, a once-off tax expense in South Africa. Sorry, let me just talk about the antecedent dividend. Again, it's a negative antecedent dividend because of the shares which we bought back.
We have the non-controlling interest, which is predominantly related to Retail Logistics Fund, as well as the DSV joint venture with EPPF. That takes us to our distributable earnings divided by the number of shares, and that takes us to our distribution per share. If we look at the bridge, I think if we look at what's actually contributed to the movement for the period, we had a strong like-for-like rental growth in South Africa, which contributed ZAR 0.061 to the distribution movement for the period. The UK portfolio, as Andrea said, we had an exceptionally positive rent review at the GXO facility in Coventry, which contributed ZAR 0.018 to DPS.
I think it goes without saying, the biggest detractor from DPS for the period, or the DPS movement, was the exclusion of the cross-currency interest rate swaps. In the prior period, we had ZAR 205 million relating to cross-currency interest rate swaps, which we've simply. It no longer forms part of our distributable income. That's a ZAR 0.26 decrease in the distribution per share. The next item is just the higher interest rate and the rebalancing of the U.K. LTV. Now I just wanna touch on that a little bit and explain in detail what we did. When we disposed of U.K. assets, after we had settled any debt associated with those U.K. assets, GBP debt, what we also did was we looked to settle GBP debt that referenced the South African balance sheet.
There was a facility with Standard Bank and a facility with RMB, which we looked to close down. At period end, we only have one of those facilities left, and it's at a reduced amount. There's a smaller Standard Bank facility to the value of GBP 17.5 million, and that's the only GBP debt which still references the South African balance sheet. Andrea did touch on it, but now our UK LTV sits at 35%-45.8%. We have operational variances. What this refers to is really the short-term vacancies during the period, as well as the associated costs with those vacancies. While a property is vacant, we're not recovering the rates and taxes and other operational costs that may be associated with it.
The first-year dilution impact of Shoprite, we all knew at the time that we concluded these deals at 7.75% or 7.8% that these deals would be dilutive in the first year, and this is that impact coming through. Lastly, just the once-off Forex loss relating to the write-off of FX protection relating to CCIRS. What we did was we knew that these CCIRSs were going to mature. Where we spotted moments of particular strength, we looked to enter into positions which would hedge out or which would provide us with the ability to hedge out or close out those cross-currency swaps at better Forex rates. That detracted a further ZAR 0.0328 from distribution. There were some other items in there, and that takes us to our ZAR 1.3112.
Now, you can do the sums, and you can say, ZAR 131.12, add back the FX relating to the CCIRS and add back the cost of rebalancing the U.K. LTV and add back the CCIRS, and then you can get broadly flat. I think that's sort of the sense check we wanted to do. We made a very strategic decision to eliminate those cross-currency swaps, and that has resulted, or the majority of what's resulted in the decline in the distribution per share. From a balance sheet perspective, the one number that I wanna touch on is that investment property number. Now, when Andrea spoke about the property value, we speak about investment property, properties held for sale, as well as trading property. I wanna focus on that top line a little bit, just that investment property.
It looks as though we've done almost nothing for the period. It looks like it moved from 24.5 to 25.3, but there's actually been a ton of movement for the period. What has happened? We transferred ZAR 4.3 billion from investment property to investment property held for sale. We had fair value uplift of about ZAR 550 million on the portfolio. Furthermore, we had Forex and some other movements which translated into almost ZAR 1 billion movement on that portfolio. Then in addition, we had a disposal which wasn't transferred to held for sale. That was about ZAR 200 million. Those are some of the key movements which actually take us to that movement of 765. Even though it's only 765 that's moved, there's a number of key moving parts within that.
I think another point just to highlight is looking at that properties held for sale, what happened was we started the year with ZAR 2.3 billion. We transferred ZAR 4.3 billion into those assets held for sale. We sold ZAR 4.5 billion, and that's how we arrived at that ZAR 2.1 billion at period end. The trading properties, the balance has remained relatively consistent. We sold one piece of land in South Africa, which was classified as trading property before. That's the Saxdowne piece of land. And then what's sitting in there largely relates to Basingstoke. Cash and cash equivalents at period end, it was ZAR 493 million. We always try to keep this balance as lean as possible.
Sitting on ZAR 493 million was as lean as we were willing to take it, but you have to take that into consideration along with the other undrawn facilities, which takes us to that ZAR 2.3 billion in cash and undrawn facilities. Just if we move over to loans and borrowings, the loans and borrowings increased by ZAR 891 million in line with acquisition and development spend. This was really the debt that we needed to draw down in addition to the disposals or the proceeds from the disposals during the period. Also, there were some timing differences.
Whilst we were waiting for proceeds from a certain disposal, we may have had to enter into short-term loan agreements or draw down on additional debt funding just to tide us over for that period until we received the proceeds from disposals. The share capital this increased. There was a land acquisition in March 2023, where we bought a parcel of land in Riverfields. That increased. That was ZAR 196 million worth of shares, which we issued, but this was offset slightly through our share buyback program, which amounted to ZAR 73.75 million over the period. Okay. The NAV bridge is actually quite simple this time, but what's really nice is that we're starting to see growth in both the SA and the U.K. portfolio. The SA portfolio increased by 4.2% on a like-for-like basis.
The U.K. portfolio increased by 2.1% on a like-for-like basis in GBP terms. As Andrea said, if you were to include the devaluation of the ZAR over the period, that takes it closer to 10%. Something that's quite interesting is on this U.K. portfolio, we've been doing a lot of work just around where rates are in the U.K. and what we expect this portfolio to do going forward. There's around 50% chance of rates being cut in June with another 50%, I think it's 57 and 48% probability of the rates being cut in June and August. If you look at it, there's almost a 100% priced in that it will be at least a 25% drop within the next 2 quarters.
I think the Bank of England said that we can expect the rates. There's no decisiveness on when it will happen, but they do expect that it will have to be more aggressive than what markets are pricing in right now. I think in terms of where U.K. valuations are going, we can expect those to be fairly correlated to where rates or rate cuts or in line with rate cuts over the year. If we just look at FX. Now, this number is a little bit jarring if we look at where the currency actually went. The currency actually depreciated from 22.30 at February 2023 to around 24 rand at February 2024. But what this number includes is also the closing out of those cross-currency interest rate swaps, as well as the translation of the GBP denominated debt.
This actually offset the currency, the positive currency movement on our U.K. portfolio. We've lumped all of the currency or the FX in one line. There were some other items, which added to centre NAV, and this is largely the non-distributable CCIRS income, which is offset by some legal costs and other capital items in the U.K. That's how we arrive at our NAV of 1,714. The LTV bridge, again, fairly simple, not too many movements for the period, but I think if we just look at U.K. disposals, which was a big number, that reduced our LTV by 6.7%. SA disposals reduced our LTV by 3.3%. We spent a fair amount on SA developments, which increased our LTV by 8.8%.
Valuations, which is quite nice to actually see this coming through, 'cause after a period of where valuations have been relatively stagnant, you can see the power of valuations and how that actually reduces the LTV by 2.3%. The FX loss, that increased our LTV by 1.6%, and then there were some other items, which increased it by 1.7%, and that takes us to an LTV of 39.6. Again, if you look at 39.7 at Feb 2023 and 39.6 at Feb 2024, it seems as though we've done nothing for the year. Obviously, there were a number of movements throughout the period, and I think this shows it quite nicely.
The last thing I just wanna take you through is what we did was a loan to value headroom. Now, we've spoken about, and if you've had a chance to look at our results, we still have a fair amount of assets which are held for sale. We also have additional assets which we've earmarked for disposal in South Africa and the U.K. What we've done is we've said our LTV right now is 39.6. There are some disposals in the first quarter of 2025. One of them have already transferred, and there's two which we expect to transfer imminently. That will reduce the LTV by 0.8%. Then there's SA disposals of about ZAR 1.8 billion, which we've earmarked for the entire period of FY 2025. We expect that to reduce our LTV by 4.1%.
There's some U.K. asset disposals, which are really the assets relating to the HSBC portfolio, which we may look to sell as we require capital. That would further reduce the LTV by 4.4%. The contracted development spend that we have for the period is, would increase our LTV by 2.1%. Importantly, if we were still comfortable at that 40% mark, there's still 7.6% of headroom that would take us to that 40% mark. I think that's just to show how we plan our business going forward. We are very proactive in terms of identifying assets for disposal and in terms of just really making our balance sheet as robust as possible to cater for the developments which we still fully are committed and invested to as a business.
I'm gonna hand over to Warren, our treasurer, because I think these are some highlights which he should really take you through. Thank you.
Thanks, Laila. Good morning, everyone. Yeah, as Laila said, some really good results that we've had this year. I think with the equity markets being effectively closed, especially for REITs, the debt capital markets have been really important. We're not the only beneficiaries of that. There's been a number of counters out there, but really, it really has played into our hands over the past year. You can see that we raised ZAR 1.25 billion in this past year in 3- and 5-year cash. That was through listed debt auctions, where we came to the market twice during the year, and that's something we remain committed to. All the debt investors will be aware of that, and we'll be coming to the market again later this year.
We'll be pushing that out slightly, with the elections on the twenty-ninth of May. We'll probably be looking around sort of early to mid-July. One of the key elements that was really shown for Equites, I think, is the seven-year debt issuance that we did right at the end of the year in February, where we raised ZAR 250 million in seven-year debt through a private placement. For me, that really speaks to the debt investors' confidence in Equites and the confidence they have in the outlook and the strength of the balance sheet. Really something, a key element that we'd really like to shine up there. Further to that, we actually raised an additional ZAR 400 million after year-end. We did that in April.
ZAR 650 million in the seven-year space. We've never gone that far down or along the yield curve, but it speaks to that long WALE that Rian was talking about earlier, and really the longevity of our business. A couple of the other items up there, we've already spoken through, the debt maturity increasing to 3.7 years. Just to point out, that doesn't include the ZAR 400 million of seven-year debt that we raised in April. So really we extending that debt maturity even further. Lastly, on that slide, you'll see the credit rating of AA- from GCR. That was from July last year. We'll be going through our renewal process shortly, and we'll have a rating from GCR in July this year, so in about two months' time. Right.
The next slide is a little bit noisy, so I'm gonna carefully talk you through this. You'll see it's the cost of debt for both South Africa on the left-hand side and for the U.K. on the right-hand side. The dashed red line is Equites' cost of debt in South Africa and in the U.K. The dotted gray line is the reference rate. For South Africa, that's three-month JIBAR on the left-hand side, for SONIA in the U.K. on the right-hand side. The vertical bars are the spread over the reference rate, so again, the spread over three-month JIBAR in South Africa or over SONIA in the U.K. Now, what you'll see is a convergence of our cost of debt and the reference rate, and you'll see that flattening out.
In actual fact, as Laila mentioned earlier, our cost of debt has actually decreased from August, which is something really positive. That's a result of a couple of factors, but one of the key elements is the fact that we had higher costing debt, so that spread above the reference rate that was maturing. That's sort of 3- and 5-year debt that's matured, and we've been able to replace that with much cheaper debt. We're well hedged. 83% of our debt over one year is hedged, and with those spreads coming down, it's enabled us to reduce our cost of debt.
I know some of the analysts out there look at a lot of counters, and there's been talk about refinancing risk, which is when your debt matures and you have new debt coming on that's more costly and it hurts a company. Well, you can see that we're well protected against refinancing risk in this regard. This slide, there's a lot of information on here. It's our treasury dashboard. These are numbers we look at all the time. Most of those items we've already spoken about, so I'm not gonna go through everything in there. Obviously, Laila went into detail on our LTV that's come down from February last year to 39.6%, which is a great result.
One of the key things I do wanna talk about, both Andrea and Laila mentioned our ZAR 2.3 billion of cash and undrawn facilities. What's interesting to note is that our debt maturities over the next 12 months is actually ZAR 2.3 billion as well. What that means is we have sufficient debt facilities on hand and cash on hand to repay all of our debt maturing within the next 12 months. That's a really strong position to be in. That's not to say that we are gonna do that, but we have that capability should we so wish. It really demonstrates a strong balance sheet.
Now, we do have, within those, ZAR 2.3 billion of maturities, we have ZAR 500 million of listed debt that's coming up for maturity in June, and we'll be looking to come to the market, as I said, in a debt auction off our DMTN program. The last three items on there, those are all internal metrics, and happy to discuss those with you, offline. Right. Now I can get onto the really interesting elements of the business, where we've really invested a lot of passion. It really speaks not only to the strong ESG team that we have in the business, but really the whole of the organization, the passion for ESG. I'm gonna go through a lot of the sustainability elements.
There's a couple of facts up here, and I want to run you through those. Nine point four million megawatts is what was our installed solar capacity at the end of last year. That's increased to 20.2 MW of installed solar capacity over roughly half our properties. You can see that's increased from 19 to 29 properties and the percentage of renewable energy from 11% almost doubling up to 19%. It's really been a focus that we've put into the business. What it's allowed us to do is produce 21.5 million kWh of renewable energy, which is an extraordinary figure, and that's only going to increase.
You can see we're only halfway through the number of properties, so that really is a number that's going to increase, and we can play a major part, not only in South Africa, but specifically for our tenants in allowing them that access to renewable energy. I'm gonna come to the last point in time because I wanna just go into more detail on what Andrea mentioned earlier, which was the first energy wheeling project that we concluded. The City of Cape Town had a pilot project. We stepped forward to that. What made it a little more complex was the way we went about doing that.
As I said, we signed up with the City of Cape Town, and we wheeled energy from one of our new warehouses in Parow in Cape Town to the building in which our head office is located in the Foreshore in Cape Town. Now, we obviously don't own that office building, so it meant going through a tripartite agreement between the City of Cape Town, us as the generator of that renewable energy, and the owners of that building as the off-takers. What that has done is really given us an incredible amount of expertise and experience, and we can now roll that out across the country, obviously through Gauteng, through the municipalities in which our warehouses are located, and again in Cape Town. That was just the first phase. It was a small part.
We actually are already onto the second phase of that, Parow, where we're increasing the energy that's being produced and pushing it through to that foreshore building. A fantastic achievement by the ESG team in that regard. I'm just gonna page through my notes quickly. One of the other elements, our legal team have worked really hard on this, is our green leases. This is aligning us with international standards. There's a couple of other purposes it solves for us or brings to our attention, and that is we're able to bring in that information.
That allows us to better report our Scope 3 emissions. It also, as we collate that data from the tenants, we can go back to them and share that information and evaluate them with their peers and say, this is what you can do to improve your energy consumption. It's not only electrical energy, it's also waste and water usage. It's a really fantastic element that we've brought into our leases when we've done renewals of our leases and new developments. All of that has meant the world has taken notice, right? We have put forward for green building certification 650,000 sq m of GLA for green building certification. As you'll know, our base build incorporates the IFC's EDGE green building certification. IFC awarded us with an EDGE Champions Award, which is a global award in recognition of the amount of EDGE certification that we've done.
Further to that, we've also used Sustainalytics who do our ESG measurements. They do a scorecard for us and evaluate us year on year. We've done so well in that regard that Sustainalytics presented us with awards for top rated company in ESG on both a regional and an industry basis. Again, fantastic achievements in there. We're not resting on our laurels. What are we going to do going forward? Well, that's one of the elements there is the fourth point on that slide, which is speaking to water usage. We suffered it a couple of years ago in Cape Town. I know the people in Johannesburg are struggling with water availability. We have a number of elements that are already constructed into our developments, JoJo tanks and plumbing and so on, that is already future proofing.
What we're doing is going one step further with constructed wetland where we can recycle both gray and black water in our buildings. This is really something that we're excited about. It's going to make a difference. Rian spoke that to the park environments in which we're looking to develop. What we can do is construct these wetlands within those parks and recycle. The figures that we've got at the moment is up to 70% of that water usage can get recycled. There's two other elements that I just want to mention about our progress going forward. That is EDGE also has the way you certify the building is you can do it on a net zero, essentially net zero carbon basis. We've already achieved that with one of our buildings. We're working on two at the moment.
We've not only progressed to the EDGE Advanced, we're now going to EDGE Net Zero, which is a fantastic achievement. Again, highlights our commitment to this sustainability sphere. In addition to that, we're also looking at the SBTI net zero approach. That's the Science Based Targets initiative. We're looking to go net zero by 2040. Wonderful commitment there from the business. This is, you know, it's fantastic achievements that we've accomplished. We have an expert in the business, our ESG officer, Irshaad Wadvalla. I really encourage you to reach out to him, speak to him about this in more detail, especially, you know, if you're looking at warehouses and so on. Then also to look at our sustainability report that'll be coming out shortly, where we go into more detail about the S, the social side and the G, where we've got enterprise and supplier development.
We've got our learnership program. We've got bursaries. There's a lot of detail. I just don't want to go into all of that. It's been a fantastic achievement for the year. Andrea, I'll hand back to you.
Thank you. I think the ENGL platform obviously remains a point in our business which was entered into on the back of yield compression in the U.K. through the late teens and then into 2020 and 2021 and obviously hitting a high in 2022 in terms of valuation and what yields were being achieved in the sector. Equites obviously wanted to be a meaningful player in the U.K. At the time, we had meaningful resource to play there, but ultimately we needed to create value for shareholders. We entered the joint venture with the Newlands team. As you can see, we've between acquiring and taking options on various sites, we ended up basically in a position where we had 10 sites available to us. As you can see, the vast majority of them being in the East Midlands.
Within that context, you can see that we have two sites that have got planning and are currently going through a process of getting them 100% shovel ready. That being Coton Park here in Rugby. We hope within the next sort of probably couple of months to be able to announce a deal on that particular site. Then up at number two, we have Junction 24, which is basically adjacent to the very successful SEGRO East Midlands Gateway project. Some of you may have been on that road show with us a couple of years ago where we actually went into Gateway. Gateway has been massively successful in this location, obviously with East Midlands Airport, which is the only 24-hour airport in the U.K. It's the second biggest cargo airport in the U.K. after Heathrow.
As you can understand, over and above that in the East Midlands Gateway precinct, they created a rail side as well. Containers can be effectively brought up from Felixstowe into the rail side. This area on the M1, I think has become a very, very key part of logistics make up for the future. We hope to be in a position to be able to announce that probably only towards the back end of the year. There's certain regulations around environmental issues on that site which have changed in the last 12 months, which has necessitated us to actually go back in to update our EIA. As for the other sites, we have effectively three of them coming up for committee meetings during the course of this year.
The first one, and obviously the one that's probably with all of you had the most press and the most been most spoken about is Basingstoke. Yes, we go again. We're hoping to have a committee meeting towards the back end of the summer. We don't have that date exactly yet. But where things have changed in Basingstoke pretty dramatically is that the spatial plan for the Greater Basingstoke area is now incorporating the recommendation that our piece of land actually be included in the employment land category, which obviously is massively beneficial.
That process obviously will take a bit of time before it gets adopted, but the fact of the matter is it started going through that process, and the fact that the council is actually now identifying that site as employment land obviously is massively positive for the outcome going forward. That being said, the amount of value that still sits in that land is that Equites obviously is committed to that piece of land, and we do believe that at some stage, I can't tell you when, but at some stage we will get a planning consent there.
The other pieces of land that are coming up for committee meetings is Straps, and number 3 over here on the A14, and we're expecting to have a committee meeting towards the back end of June there. The other one is obviously Goldthorpe up there, and also in June going to committee. Once those planning approvals are done, process will follow and land will be available effectively for development going forward.
I think just to make it categorically clear, Equites have no intention of putting up any buildings on those pieces of land, and the way forward on those pieces of land once planning has been achieved, is effectively to find capital that is willing to basically take on the expense and the delivery of top structure. I can assure you there is a meaningful capital out there that is basically very keen to get involved on these sites, which obviously bodes very well for us. But at the same time, our allocation of capital will be limited to getting the planning consents over the line. The process of disposal of the entire platform is an ongoing one.
We have every interest to ensure that the Newlands as a going concern remains a strong player in the U.K. market. We are of the opinion that it is not if, again, it is when that a suitable pool of capital will present itself and obviously relieve us of the process of taking all of these schemes to fruition. The one scheme obviously that maybe stands outside of that would probably be Basingstoke, and that is, as a consequence of the fact that it is the one site where we currently do own a portion of it. It's not under option.
That being said, you know, from a year ago when we sat down and we went through a process of speaking to significant capital with a view to selling the platform to today, I certainly feel significantly more comfortable with where we are in the process. I do believe that the demand drivers for meaningful sites with planning consents in the U.K., where planning is certainly not becoming easier, certainly becoming more difficult, puts the demand for this very much on many people's agenda.
The consequence is that it may not all go as one, it may go piecemeal, it may go one at a time, but invariably, we're of the opinion that over the next 12-18 months, Equites' position on these land holdings will be significantly reduced, if not completely expunged. In so doing, we will create capital, which will be released back to the balance sheet. Obviously, I think a lot of the metrics, I mean, especially with the headroom graph that Laila presented, we've taken into account zero of the monies that potentially could come out of any of the sales that are here. That number and the quantum around that potentially could be very meaningful in terms of creating even more headroom.
That's why we're wanting to keep our options open with the UK and the HSBC portfolio that Laila alluded to. Ultimately, balance sheet health remains absolutely critical to Equites. Having the nimbleness to be able to maintain onto assets to ensure that we extract the maximum value, and I'm talking about the stable assets, will also be a function of us being able to realize meaningful capital from this platform over the period of the year. Highlights and again, this really, I suppose it's us sort of being really proud of what we've created, of the value that we will be bringing through to the organization over the next five to 10 years as a consequence of these developments.
As Rian indicated in his presentation, there's no question that the return metrics over a 5- to 10-year period on real estate that has been internally developed does provide a noticeably better return on capital deployed into those facilities. As you can see, the TFG facility, great facility. I mean, TFG have decided to spend a significant amount of capital in relocating a lot of their warehousing from Cape Town up to Johannesburg. As you can see on the backside of this, there's scope to actually double the size of this facility, which will invariably probably happen as they continue to grow their business and attain market share.
This facility actually allows them to fulfill not only on a store level, but obviously also on an online level, which is extremely critical. If you drive past this, you'll see apart from a big TFG thing, you'll see a big Bash sign on it, which obviously is their online offering. Great facility. I mean, one of the highlights, obviously a 20-meter to eaves in the middle, and this particular facility has got a what we call a FM1 floor, which is a super ultra-flat floor because obviously you're picking pallets at effectively 19, 20 meters up in the sky. If you don't have a seriously flat floor, good luck with the forklift. Yeah. In the background, you'll see the Shoprite DC, which is coming up.
As I said, is currently just PC, but will be going fully live, I think, from 1 July. State-of-the-art facility and obviously an absolute privilege to be involved with two retailers of significance like this within the South African environment, but also two retailers that have realized that the investment in their supply chain is absolutely critical to their position of being best in class in their sphere of excellence. To be part of that and to have the team be educated at this level, where we can then facilitate maybe some lesser organizations that don't necessarily have the budgets that these organizations have, to bring their real estate solution to best in class is absolutely critical.
I mean, I think that takes us on to Jet Park. This particular site here, it's right on the highway, over here. This particular site used to be the Aveng head office, and their yard area, sorry. As you can see, we've already fulfilled four warehouses. We have two sites left. Can build a 10,001 in the corner here and a 7,001 over here. The one on the right here is the Encore facility. One at the back is for Cargo Compass. The one in the middle here is Cargo Compass's hazard store.
What is actually very surprising is the amount of organizations that store hazardous goods in just for normal warehouses, and only when things go horribly wrong, everybody starts pointing fingers. I think what we've noticed and obviously in our engagement with management here is that they made the decision that they're going to operate at that level and offer a service in the hazard space. What's absolutely incredible is the amount of new business they've won as a consequence of making that decision and providing the facility which has taken and allowed their existing clients, but also new clients, to afford themselves to operate in a truly legal manner and storing sometimes very dangerous and toxic materials in that warehouse.
Then we have a Finnish company, Normet, in the corner, which provide industrial solutions for the mining industry. This is a great example of a complete regeneration product. Obviously, it ticks all the boxes in ESG. Every single piece of cementitious product that was on this site basically got crushed on this site. I don't think we brought in any sub-base, which is a cementitious product that you sort of put on top of the soil to compact it and make it super hard before you put concrete on top of it. Obviously, all the ESG practices, you can see the solar panels on all the roofs.
Over and above that, the addition of water management systems that will be coming into the park as well keep us at the cutting edge. Obviously, I briefly spoke about the Riverfields one behind the TFG. This is. You can see the TFG in the back. You can see the Bash sign there, just over there. You can see how much solar panels are going in there. This facility obviously is not just a dry goods facility. It is a Freshmark facility. It's got banana ripening chambers. It's got return centers. It's basically got all the bells and whistles.
What's incredible is that this will alleviate the Centurion facility from its complete overcapacity at the moment and will allow obviously the Shoprite group to be able to service their stores in the precinct obviously or in the catchment area of this facility, which is then relieving a lot of pressure off the Centurion facility and to a certain extent off the Canelands facility in Durban, which is obviously the facility below. Canelands facility, we acquired it into RLF with about 55,000 sq m of GLA, and this facility now is 102,000 sq m. It's been live since, I think, 1 February this year, and it's already trading at capacity. The guys are absolutely motoring.
Obviously fantastic that we have obviously 20-year leases on these products and will be escalating at 5%, which will create a base and a platform to our portfolio for many years to come. Before we go to guidance, I would just like to sort of mention the essence of the organization. You know, we're a small organization. We've got 44 members of staff. The staff are extremely passionate about their sphere of excellence.
In the last year, as part of the process of ensuring that we create future leaders within the organization, we've created what we would define internally as a Manco, which effectively is devolution of certain powers to senior members of the team, giving them more authority, more autonomy in terms of what they do and how they do and their decision-making processes. I think as an organization, the health of the organization has never been stronger. I think this comes with a maturity. As I said, it's our 10-year anniversary coming up. We've unfortunately lost some members of staff which have been massively valuable to us, but we haven't lost them because they've not wanted to be at Equites.
Is that some of them have felt that they've done their six, seven years at Equites, and they needed to go on to the next adventure in their lives. Obviously disappointed to see them go. Notwithstanding that, the caliber of people that we've been able to attract to come in and replace. Mainly through having employed also some young people and then obviously given them the ability to experience things at the highest level. More often than not, every member of staff that's been told, "Okay, do you think you can handle it?" More often than not, they've all grabbed it with both hands and really and taken the business forward.
As the leadership team, I think we're extremely proud of the team and the last year has been difficult. You know, after eight years of being told how wonderful you are to be told how useless you are, it's sometimes. Yeah, some of it we'll take on the chin, but some of it was brutally unfair. That's for another day and maybe a glass of wine rather than this presentation. Notwithstanding that, to keep the team motivated, I mean, I'm obviously extremely proud of my co-execs, and we've kept the team positive and believing in the story, believing in the mission, believing in what we do, believing in the excellence that we purport to sell.
Everything we do also within the communities, we've got our social responsibilities. We're involved with local communities. Every single project, we bring on local communities to do work on every single one of our developments. We have a wonderful one-week program where we bring Wits students and UCT students into the office. We do one in Joburg, one in Cape Town, developed by ex-students effectively that have become members of the team. What we do is we expose these kids in a week to every element of our business, and the team presents them.
I think the enthusiasm of these young, talented individuals that are trying to get ahead in their lives, and when they leave Equites after that week, I think it's wonderful to see the effort that they put in, and I think what they learn and what they gain and they take away. All these elements are elements that are developed by the team. They're fostered by the executive, but they're developed by the team. There is a desire to be really good at what you do, but also to share. In that, I'm obviously extremely proud of the team and as you can hear.
It's been a tough year, but I'm absolutely stoked with what we've achieved. I think what we've achieved is remarkable. There's been obviously the rumor mill has been massive, and we've been focused on what we do. We haven't listened to it, and I think today's results presentation really talks to that massively. On that line, we can go to guidance, and our guidance is 130-135. So it's more or less flat, maybe a little bit up. Obviously, we've given ourselves a tighter range. Things that could move this, let's say, to the north of that would be obviously if the interest rate cycle was significantly more aggressive than maybe the processes that we've done.
We won't feel it all obviously, because as Warren indicated, we are extensively hedged, but we will feel some of it. If that process does become a lot more aggressive than is currently anticipated, it'll obviously spin positively for us. Over and above that, the execution and some planning consents coming through on the U.K. business and the return of some of that capital, if it were to happen a little bit quicker than we're currently anticipating, there could be some positive spinoffs. Rian continues to drive the process with Chris and Wouter on the asset management side.
If he manages to achieve an extra ZAR 5 a sq m on his lease negotiations than he's currently sort of telling us that he can achieve, then I'm sure all those things will add to it. I mean, we feel very comfortable at the ZAR 130-ZAR 135 level. I think, as I said at the beginning, the story around us wanting to sell the ENGL platform is around the fact that we believe allocating capital to a development platform in the U.K. doesn't make sense for the cost of capital and the capital that we currently and the resource that we have. However, we are not leaving the U.K. We are wanting to retain our stabilized assets in the U.K. We think they're fantastic assets.
We've got incredible gearing against them, and if anything, we would like to rebuild onto that portfolio going forward as and when necessary capital and appropriately priced capital becomes available to us, on which the management team is working extensively to try and achieve. The size and the quality of the portfolio obviously continues to just go from strength to strength. The recycling of some of the older assets and de-redeploying that capital into some of the newer assets you've seen, and that is an ongoing process, and that will continue over the next 2, 3, 4, 5 years. You know, my hope and ambition is that I will stand here one day, and every single one of our buildings will be a sustainably ticked off building.
Every single one of our buildings will be generating solar for the benefit of our tenants, but also for the benefit of the environment as best we can contribute to it. Hopefully, you know, the water recycling plants and whatever within the realms of our parks are becoming probably a necessity. I think, you know, we look forward to the unpack of those, and it's really for me also extremely exciting to be doing something that no one else is doing. Being on that cutting edge is exactly the ethos of Equites and obviously always wanting to improve and be better.
In conclusion, the assets that we're recycling out, they still retain value, so the people that are buying them are certainly not buying assets that need to be thrown to the wolves. They are quality assets that within the realms of a private portfolio, which most of the acquirers have been, remain extremely relevant. They're still tenanted with very high-quality tenants. And they remain sort of zero vacancy. We as Equites obviously would love to grow the portfolio more. The growth that's coming through and seen in the portfolio as Leila highlighted affords us that little bit of extra loan-to-value and the generation of that capital, which then can be redeployed into the base.
Notwithstanding that, we're constantly looking at ways of creating fresh equity, and that is some of the stuff that we've done in the past. We've done a great joint venture deal with the Imbali Group, who have taken a 35% stake in three buildings. We've done transactions with Eskom Pension Fund, and obviously with Shoprite. There's no reason why we can't do more of that, where we retain significant ownership, we retain management, we potentially can start generating a few fees out of that. In so doing, what we can do is we can release some equity capital, which then we can redeploy into new state-of-the-art facilities going forward.
I think on that note, I think that brings the presentation to an end. Thank you so much for listening. I hope we haven't bored you to tears. We do have quite a few questions, I think, coming through. Maybe we start with the present before we go to the online. Naz, will you? Who's got? I think Mush over there has got his hand up. Okay. Sorry. Thank you, Lydia. Sorry.
Hey, guys.
Hello, Mush.
Just a few questions. Sorry. To start with your support, right, for the ENGL sort of planning process, can you give us a random amount for how much you've actually spent this year on that?
Laila, you wanna take it?
Yeah. I mean, this is the beginning. We generally have funding requests on a monthly basis. If we spend a couple of hundred thousand pounds on a monthly basis, that's plenty. In some months, it'll be as low as GBP 50,000. Other months, if there is a specific utility connection or something else that we have to do, it can go up to GBP 150,000 or GBP 200,000, but it's really been negligible.
Okay. Thank you.
Okay.
Obviously you've spoken about a LTV headroom. I'm wondering if there is no possibility of changes in your payout ratio for FY 2025. I know that wasn't communicated yet, but what are your thoughts?
Changing of what, sorry?
Payout ratio.
Payout ratio.
Okay. Well, I mean, this is obviously a very contentious issue. Everybody's got an opinion on it. Ultimately, you know, as I've said, I think at pre-close, I think I mentioned it as well. I mean, since COVID, when we get to the board meetings pre-interim and pre-year-end, the concept of payout ratio and the concept of a DRIP program is always debated. Up until today, the board has felt absolutely 100% comfortable with a 100% payout ratio. My personal opinion is, at the moment, there is nothing that screams out at me that says that should change.
I think the board has the maturity, has the understanding of our business, and should that thinking change, it will be spelled out, it will be explained as to why, but as things stand today, there is no reason for us to change that situation.
If I may, I mean.
Absolutely.
We are offering a dividend reinvestment option at this point, which is a way of potentially retaining some capital. We thought that this is a nice way of treating all shareholders equally, and we saw it with some other counters who have done it quite successfully. Secondly, if we were to do it, we would want to make sure that we have a sufficient tax shield. We are currently looking at what that capacity is, and it's something which we just keep debating. At every reporting cycle, we keep debating it, and those are some of the considerations which we take into account.
Yeah.
Okay, there's no sort of LTV level?
At the moment, there is nothing on the table that says that we should be changing that. Does the management and does the board have the right to change their minds? Absolutely, they do. Should circumstance necessitate it will be spelled out in very big letters. Because it will be a big decision. It is something that we've stood behind for 10 years. The way we see it and part of the reason we showed you that particular graph is to show you that there are ways for us to create the headroom for us to continue to deliver excellence.
Mm-hmm.
that really is where it's at the moment. Could that change? Absolutely. Anything can change.
Okay, thanks. Just lastly, with regards to your U.K. assets exposure, just for valuation purposes, is there a target range that you'd like to keep with your sort of standing U.K. portfolio as a percentage of total?
At the moment, we'd like to keep it all. If we can unlock the necessary capital to be able to feed our development ambitions from other things, then we will keep it all. The one nice thing about the U.K. is, unlike South Africa, where any property over ZAR 96 million, in which we tend to operate quite extensively, needs to go to Competition Commission, and the processes that follow. The reality is that from getting an offer subject to due diligence in South Africa to actually closing out the deal, you'd be lucky to do it in 6 months. The reality is that the same deal you can probably do in 6 weeks in the U.K. That is fundamental to the way forward.
Now, ultimately, we're not beholden to a number at a particular moment in time. If we feel that there's sufficient capital coming back from the ENGL potential sale or a transaction that we've managed to secure on a parcel of land where we will be receiving significant money back, then it takes the pressure off the need to actually sell some of the real estate. Some of the real estate that we're looking to sell in SA, I mean, as an example, I mean, I saw on Rian's thing, there was something in Airport Industrial at ZAR 160 sq m. Obviously, you didn't talk to it, but I mean, that's the hangar, to be specific, at the airport in Cape Town.
Now, the hangar is not core to Equites, but we've just renewed the lease. The tenant is gonna be there for a very long time. We're getting a very good rental. We've got a good escalation on it. From a REIT perspective, it's a great giver of capital or of distribution over time, especially as we've just renewed the lease. Is it core to what Equites is wanting to do going forward? The answer to that is no. We're in no rush to sell it, but it is an asset that with a brand-new lease on it, there are many people that would wanna buy it, especially in Cape Town for some reason. You know, the Cape Town buzzword is massive at the moment in South Africa.
There will be no shortage of buyers for that asset. I think that's what's fantastic about us as an organization, is that we have that agility to be able to think on our feet and make decisions that are appropriate in that moment in time. The fact that we are showing you that we may sell GBP 2.4 billion of U.K. assets, we're not saying that we're definitely gonna do that. What we're saying is that we have the ability to do so and do so comfortably. We will do so only on a piecemeal basis as and when it is deemed necessary to ensure that we retain the health of the balance sheet.
I think that's what's critical to Equites, is having that continuous growth of quality in the portfolio, that continuous evolution of sustainability-linked product, but at the same time is ensuring that we provide our shareholders with a meaningful dividend. I think we've come a long way in terms of making the decision that we wanted to give you a purer dividend linked to income. We've made that decision, and that's what we stick to for the time being, and we move forward. We're very excited. I mean, I'll be honest with you. I mean, I'm extremely excited with where the business is sitting today. I mean, I think the quality of the actual underlying business has never been stronger.
It's the strongest business that I've led in 10 years, without question.
Okay. Thanks, guys.
I think Kundai had a question here in the front. Naz, here in the front. Kundai? Okay. Are you only doing that side? Okay, sorry. Lydia in the front here, Kundai. Thanks.
Thank you. Just one question on the disposals. I think I saw about ZAR 1.8 billion planned for this year. Do you have any yield expectation, just a range for those? Thank you.
Obviously, we target in line with book values, and I think the ranges would be probably between 8 and 8.75.
Okay.
There's a particular parcel where we expect to get around 8.25%, but certainly in line with book values.
Great. Okay.
Any other questions, guys? Okay, Andrew.
I mean, well done on good results. As always, the presentation, I think, is impeccable. Some of the audience has raised questions about levers being payout ratio. For me, you-
The lever that deserves thinking about more closely is your gearing, your LTV, the extent to which credit markets are receptive when equity markets are closed.
Mm-hmm.
Obviously, there's a point at which gearing becomes credit negative. With the kind of WALE that you've got, and with the visibility and cash flows into a very long distance in the future, why can't you gear more in order to lower your overall cost of funding?
Yeah.
I raise that as an observation as much for the audience.
Yeah
As for your response.
I think it's a very valid observation. I mean, we are very different to probably any of the other REITs in South Africa with a WALE of 12.4. I think Rian indicated earlier, the minute Riverfields Shoprite and the minute Gqeberha Wells Estate Shoprite are finished with 20-year leases, the consequence of those coming onto balance sheet as finished and income producing assets will mean that WALE will jump to north of 15 years again. We have sold down some of the older assets in the portfolio, and we are going through quite a big renewal process at the moment. Rian indicated earlier, we had the Intaprop transaction that happened in 2015, and then we had the Attacq transaction that happened in 2016.
Over the next 18 months, a lot of those leases will be coming up on those original 10-year leases, and we are more than halfway through having renewed most of those leases, either with the incumbent tenant or with new tenants because of the caliber of the real estate. The consequence is that the quantum of leases that we have in that 1-2-year range over the next 1-2 years will actually diminish pretty dramatically. It is a valid thought. I mean, it's a thought that obviously we debate with Warren at treasury on an ongoing basis. You know, ultimately, it's been a process. As Warren indicated earlier, when we first came into the DMTN market, we didn't really know it.
We didn't understand it. Maybe we didn't sell it well enough. The consequence of the debt that we put in place at the time, which, to be totally frank, we were very satisfied with at the time. Where the market's gone and the levels at which we are achieving at the moment probably talks to the fact that people are looking at that WALE. In that conversation and in those roadshows that we do have going forward, you know, there may be merit in actually looking to greatly extend. Well, not greatly, but extend that ability to potentially have the loan-to-value at north of 40%, especially if we can deploy it in the quality and the caliber of real estate that we currently are bringing online.
Especially in a cycle that hopefully will see meaningful re-reduction in interest rates over the next 18 months, which obviously also then bodes well for valuations and everything else that comes on the back of that over the next, let's say, 3-5 years. Everything we've always done has never been for the year one, and you can see that by the quantum of money we've put into the Shoprite deal and the fact that we are quite happy to stand here and say, "It has been diluted." Yes, it has been diluted, but we still believe it is a deal that is in the best interest of the Equites shareholder over the next 10 years. Thank you for raising that, Andrew. I think it's actually a very valid point.
Andre, a couple of questions from the floor. Firstly, from Paolo. What are your thoughts on acquisitions locally? Is that something you would consider? I think we've addressed that. Our growth will be through the pre-let developments, for the reasons mentioned earlier. Then one question-
I think if I can, Rian, just interject there. I mean, I think ultimately, we don't wanna say that we won't buy anything. We'll certainly look at everything, and we will do the necessary work. What we've seen is that basically ninety-nine times out of a hundred, it actually makes more sense for us to just build our own stuff. There may be that one occasion where something comes to us, and we'll certainly consider it if it's appropriate.
Thanks, Andre. Then a question for Laila from Nazim. Thanks for the earnings bridge, but could we have a look at going forward? What are the drivers for flat growth given major hurdles out of the way in FY 2024? NPI should be positive from long WALE. What's the drag? Funding cost, recycled assets, increase in capitalized cost, or feeding into earnings?
Yeah.
Leila.
I think it's a very good question, and we haven't done a forward-looking bridge, but I can detail some of the key drivers. I mean, the first one is the Shoprite dilutions. Even though we had a small amount in this year, we're actually having the majority of those completing in FY 2025. We're doing a massive extension at Wells Estate. Canelands is PC'd. Riverfields will come online. A lot of those, the Centurion extension. All of those that are coming in, we know that those yields are below our cost of capital right now. We have that dilution, which is coming through. We also have, reversions in FY 2025. We have a couple of reversions which we've penciled in. We've got disposals. We've said that we've earmarked ZAR 1.8 billion of disposals in South Africa.
As we know, a lot of those properties are higher yielding properties, so that causes some of the drag. Then, we have made provision for certain disposals, for example, of the ENGL platform and where that also may be dilutive. We really have been quite conservative. Where I think, you know, there may be certain upside if interest rates starts coming off or if we achieve better values on our disposals, those may be some, or may present some upside, but definitely there's still a lot of, I would say, dragging or factors that would still cause a drag on our distribution. There was another question which was linked to that which I just want to answer. Someone asked the question as to why is there such a big finance income.
If you look at it really is just the interest income leg on our interest rate swaps. Unfortunately, the way we account for it isn't netting off the finance costs. You show the full finance costs, and then you show the finance income as a result of those interest rate swaps. That's what it is. That was just another comment sort of relating to this.
Andre, another interesting question. Cost of capital is much higher in SA than the U.K., and rental growth has been less attractive in the U.K. year after year. Why do you see SA as attractive for new logistics developments and not the U.K.?
Well, like all things, I think, the purported return on capital deployed in the U.K. is in rand terms, unless the rand consistently behaves in terms of its depreciation on a straight line, which we all know it doesn't, the purported returns that you're gonna get in the U.K. in any given moment in time are gonna be lower. The rental growth that we've experienced in the U.K. in the last sort of five years will need to plateau out at some stage. The perception that, you know, there's some asset managers out there that are underwriting deal flow that that's gonna see, you know, 7%-8% rental growth in the U.K. for the next five years, I'm not a believer of that.
I do believe that rental growth will plateau in the U.K. It can't carry on growing at those levels. I think the level of growth that we've seen has been substantial. I mean, if I can give an example, I mean, in 2016 when we first went into the U.K., everybody was chasing leases that had RPI or CPI-linked reversions with a cap and collar, and ideally with 2%-4%. The consequence of which is that every five years you were more or less guaranteed a reversion of between 13%-18%, plus minus if you're looking at that. All of a sudden, nobody wants those assets anymore because they feel that they're being suppressed in terms of value by their leases, and everybody's chasing the OMV.
As you can see, we're sort of experiencing between 40% and 60% over our portfolio. That won't be forever. Likewise, in South Africa, we've seen, over the last three years, 30% uplift in our rental growth. I think it's wrong to assume a moment in time and say, "Well, this is what's happening at the moment," or, "This is what's happened for the previous three years," and think it's gonna happen for the next three years. We have an opinion in terms of where the market is going.
We have an opinion because we are negotiating in that market on a daily basis, and our opinion is that the development front in SA at the moment, in terms of the return metrics that we need to achieve for our business, are still definitely in vogue for us and are definitely gonna give positive results for the Equites portfolio going forward.
In the UK at the moment, the reality is you could probably do better by acquiring assets, stabilized assets, that will give you income from day one than doing developments, because the developments at the moment, because of where they sit, the quantum of debt that you will be able to get against the asset, and coupled with that, the spread being negative in the short term, basically for a REIT like Equites makes it very difficult for us to operate in that space. So, you know, nothing's a given, and nothing and everything's evolving. I think, you know, us as a management team, we keep ourself relevant in both markets, and we believe we can still do many meaningful transactions in both markets.
It must be the right transactions that can benefit the business medium to long term, not just to go and buy, I don't know. I mean, we can go and buy a 10% yielding asset in the U.K., but, you know, it's not gonna be the kinda asset that we want in the portfolio. Okay. Anyway, on that note, thank you, Rian. Thank you, Leila. Thank you, everybody. I just wanna thank the Equites team that obviously were involved with organizing today. Fiona, thank you for, I think she's outside, but anyway, thank her for her hard work and, you know, Justin, Naz, Thabo, who else is here? Chris is here.
Zee.
Zee is here. Tristan's here. Jean's here. Sorry. Please engage with the team. I think it's as important for them as it is for you to get a feel for what we are as an organization and the caliber of human capital that we've got in the team that are here to obviously serve the shareholders effectively. On that note, thank you. Cheers