Good morning, everybody. Welcome to Equites' financial year to February 2027 interim results presentation. Great to have you all with us, and look forward to delivering some insightful information apart from the results. I feel that we're going to be sharing some very good information with all of you today, which hopefully will give you some comfort as to the prospects of not only the sector but also the Equites business going forward. I suppose we always start with the highlights, and the most important highlight, I suppose, for the South African shareholder does remain the interim distribution per share and within target of the 5%-7% as indicated at year-end in May. DPS up 5.11% to ZAR 0.7257. As I said, we maintain the guidance. Loan-to-value, obviously, at 28.1% following the exit of the U.K. portfolio.
Whilst it is 28.1% in official terms, it is technically slightly lower than that because there is a whole load of capital that has been invested in U.K. listeds, which technically doesn't alleviate the LTV number, but obviously highly liquid and can be redeployed as and when needed. Again, Aviva portfolio sold, netted out GBP 95 million. Really pleasing in S.A., like-for-like valuation growth. I think we're starting to finally see the merits to the improvements across the board, not just for Equites, but I think across the board with the valuers now starting to recognize that the difference between what an A -grade warehouse is and maybe what a lesser warehouse is, and the level of rental that it's been able to achieve and the consequential valuation that gets attached to that. Translating from that, obviously that like-for-like S.A. valuation growth, and Laila will go into more detail.
Obviously, as the NAV per share growth, 4.5%, obviously very pleasing. A substantial NAV growth for the period. Cash and undrawn facilities, obviously there to fuel our pipeline. As I said earlier, the loan-to-value obviously is somewhat distorted by the fact that we do have some highly liquid assets also on balance sheet, which technically could be turned into that cash and undrawn facility to bolster that as and when required. During the period, we've deployed about ZAR 600 million through seven projects, and the completion of all these projects, which we'll go through to the back end of next year, calendar year, is about ZAR 2.4 billion of value being added to the portfolio. Then, as ever, our regular DCM auctions twice a year, and we seem to be going from strength to strength. The market continues to like our paper.
Whilst, yes, there is a very positive momentum in the marketplace, which may not be there forever, but notwithstanding that, the Equites offering is still achieving best-in-class results in that, and obviously compliments to the treasury team for the success in that. Maybe we can go on to strategy. Very amusing. The team, instead of putting a beautiful warehouse, they've decided to put a picture of me there. Obviously, the sale of the Aviva portfolio and the redeploying of that capital in South African logistics, and effectively at the moment, we are developing between 8% and 9% across all the developments that we are currently undertaking. Capital deployment. In terms of where we're at, we have exited predominantly most of the U.K. We still are effectively in three vehicles there, which we'll go into a bit more detail just now.
The immediate is really to deploy that capital into South Africa. The structural undersupply is definitely there. When I say the undersupply, I really refer to the A -grade product, which we will have a case study which we will share with you during the course of this presentation. Really to try and highlight what we mean by an A grade facility and what it actually does to an operational business. Whilst South Africa's macroeconomic position may be not the most alluring in the world, notwithstanding that what we are seeing is more and more organizations looking to optimize their supply chain to try and gain market share through that. Supply chain, in our opinion, remains a key metric in ensuring that organizations retain their market positions and also look to grow them.
What we are seeing more and more is organizations that are not investing in that supply chain are starting to lose market share as a consequence. Most of our development is pre-let and demand driven. However, as a consequence of low vacancies on our balance sheets from time to time, we do like to put in place some speculative build. Historically, the speculative build has performed relatively well for us. At the moment, we do have three speculative units, one that is just PC'd, two that will PC at the end of the month, which as things stand at the moment remain vacant, but with lots of interest, and we hope to be able to present some successes on those developments as and when they happen. Ultimately, everything we do is really driven to deliver a sustainable distribution growth.
The other important metric is that there is no hiding from the fact that replacement cost for these kinds of assets is only going one way, and that is up. The availability of land is becoming more and more of an issue. Well, should I say, serviced land is becoming more and more of an issue, which is driving pricing on land, but then also construction costs. Whilst surprisingly, construction costs have been somewhat muted during the course of this year, they have not been as large as we potentially anticipated following the events of February. There is no question that at some stage they will start coming through. Let us go into a bit of detail now. The U.K. exit, obviously, and where we are at the moment, as we said, the Aviva portfolio did go.
I think quite interesting on the graph on the right-hand side, which shows where the 10-year gilt was on the day that we actually transacted in May, and where it was a couple of days ago. I am not sure what has happened in the last couple of days, but that number is obviously jumping all over the place as we speak. Ultimately, what we can say is that the U.K. property sector, in general, relies very heavily on this 10-year. The consequence of which, when you look at that graph, you would say that probably we erred on the right side of the decision when we have made the decision to sell. Where the market has gone subsequent to that potentially would have put us in a worse position today.
Positives, DHL Leeds was finally settled with DHL in terms of the rent review, and that came off a base of GBP 6, increased to GBP 9.17. As you can see, a more than 50% uplift in rent, which obviously is extremely pleasing. Whilst this asset is completely unencumbered in the U.K., and whilst we are obviously extremely cash-flush, as we'd say at the moment, no rush to sell it. We are marketing it, but basically behind closed doors, if you like. We hope to be able to achieve our price in due course, and as and when we do achieve that price, then we will repatriate the funds to South Africa. Thrapston and Basingstoke remain the two final items that remain on balance sheet.
Thrapston to be drawn down by our ex joint venture partners at Newlands, and we await some successful conclusion of that in hopefully not the too distant future. Basingstoke, we are making really good progress in terms of a submission for a pre-let on there. We are in the process of submitting the revised plans for the already approved site, but with a different planning requirement for the buildings that we want to put on there, and consequently, we'll be going through that process over the next three to four months. We hope to be successful in that process, and the consequence of which, it will give us, I suppose, the catapult to be able to then unlock the rest of the site as well, which obviously is where we'd like to go.
The final part of the jigsaw in the U.K. obviously remains Coton Park. That has been concluded and handed over to JD.com, who were the buyers of that asset. We are in the process of finalizing the accounts with our joint venture partners there of Newlands, and the funds from that, both working capital and profit, will be distributed by the end of this month. The use of the funds. As everybody's aware, the consequence of GBP 95 million of cash basically coming back to South Africa would have potentially put us in a consequential risk of breaching the 75% of the income coming from property counters.
The result of which we were also linked into certain funding agreements with banks, and our debt capital market position also didn't allow us to sort of foreclose on any of those positions, meant that we needed to get a little bit creative with where we deployed that capital to ensure that we got the necessary returns from the capital, and at the same time, we didn't put our position, our REIT status position, in jeopardy. Those funds currently, or 75% of those funds have been invested in U.K.-listed logistics REITs, which are obviously highly liquid and which continue to give us dividend income through the period. Obviously, in the event that we were to secure a disproportionately even more significant pipeline than we currently have, our ability to be able to liquidate those positions and repatriate the capital is fairly simple.
Hence we remain confident that the income profile that we will continue to get from those investments will benefit effectively our distribution. Obviously, on a side note, one of the U.K.-listed REITs that we were invested in was SEGRO, and I'm sure most people listening today would be aware of the fact that SEGRO are going through the process of being taken over by Prologis. The consequence of which is that there was a mark-to-market gain for us, which we have crystallized already and repatriated the proceeds to South Africa. So that is the position at the moment of where the funds are being deployed. We continue, obviously, to look for acquisitions also within the South African market.
What we are seeing within our sector is the assets that are of an acceptable quality to sit within an Equites portfolio are achieving pricing which would be significantly dilutive to Equites' position. Consequently, we remain very circumspect to be deploying capital at those levels. But we continue to trawl the market. We continue to speak to the market, and should the opportune opportunity present itself to us, obviously, we are in a highly liquid position to be able to transact. The other question, obviously, we get asked often is, "Why don't you do some share buybacks?" Obviously, we do have a massive pipeline coming through and working on some pretty significant development deals, which will come through into financial year 2028 and to 2029, where capital will be obviously very, very important to have at hand to be able to deliver on those things.
Plus, on top of that, obviously, the share has been trading particularly well of late, the consequence of which is obviously any share back would be significantly dilutive to our position. Hence, it is something that we are not considering at the moment. However, for whatever reason, should the share start trading where it was maybe 18 months ago, we did take advantage of certain positions, and we did effect some share buybacks. The development update, and I think obviously this is massively interesting. As you can see, capital value of about ZAR 2.4 billion coming through the system. Obviously, not all the assets are 100% owned by Equites, but notwithstanding that, within the joint ventures that they sit, they remain highly accretive to Equites.
The benefit of the joint ventures also bring through asset management fees and in some instances, also some borrowing cost premiums that obviously benefit the underlying for us. We've deployed effectively almost ZAR 600 million in the period to today. We're in the process, obviously, of delivering on almost 200,000 sq m of GLA. The yields across all these projects will vary between 8% and 9%. In some instances, may be slightly better than 9% where we've had the benefit of the expectation of certain, but we've been fortunate enough to basically tender product and get it acquired prior to some of the increases that we were expecting. So there is a little bit of benefit there. The bulk of the portfolio's development, if you like, is prelet, and obviously Tiger Brands stand out there. TFS is starting to come through.
We currently are doing some improvements to the Benoni meat plant on behalf of Shoprite. We have started and commenced the DHL facility in Boksburg as well, adjacent to the Colgate-Palmolive facility. Premier FMCG has, as of today, been PC'd. Actually, it was PC'd, I think, during the course of last week, so very pleased with that. The client obviously really, really happy. There will be some snagging going on between now and Christmas to ensure that everything can be delivered effectively. We do have two speculative developments: at Jet Park, two buildings, one of 10,000 sq m and 7,000 sq m, and at Riverfields, one of approximately 18,500 sq m for a total of 36,000 sq m, which as we speak today have not been let. What we can say is all three of the units are under great interest from multiple different types of clients.
We are expectant to potentially try and close something out, hopefully before Christmas, but certainly before year-end at the end of February next year, which obviously will then deliver more high-quality income-producing assets into the portfolio. At that moment, we will then reassess based on, and Riaan will take us through some of the renewals that are coming through in the new year. On the basis of that, then we can decide whether we go through another round of potentially unleashing a bit more speculative into the system. As I said, DHL Boksburg and Shoprite, both great additions to the portfolio. In terms of occupier demand, I think we often get asked, "Is the market slowing down? Is there interest?" With macro at below 1%, are there demand drivers? The reality is that there are demand drivers.
There's no question. A couple of weeks ago, we had the SAPOA conference up at Sun City, and the various panels that spoke was interesting. Some of the comments that came out of, I can't remember one of the panels in particular, though, in terms of the introduction of more and more Chinese businesses into the marketplace, and there's no question that we've noticed that as well in terms of the demand drivers. We currently have three Chinese tenants within our portfolio and probably another three or four looking at some of our speculative units as we speak. That's an interesting sort of unpacking of what's actually happening in the market at the moment. In terms of RFPs, as we said, there's constant RFPs coming to market.
That being said, there's also a significant amount of engagement with existing tenants as we speak with ideas of improving supply chains in different parts of the country and those ongoing conversations obviously leave us with a great expectation of some of the product that we will be able to deliver in the next few years. The demand drivers are obviously coming from a wide and varied type of industry. Obviously, 3PL, full-on logistics businesses take the lion's share, which is to be expected. Obviously, a lot of that 3PL logistics space is contract-driven and interesting to see how the 3PLs now are looking to go to a more campus-based offering rather than deal-specific offering as more and more money needs to be spent in technology to ensure the ability to deliver within the demands of their clients.
The introduction of Amazon into our market has no doubt made Takealot significantly more efficient. It is making Bash more efficient. It is making Sixty60 more efficient. It is making basically everybody that is offering a delivery service more efficient and the demands of being able to give to a consumer that is becoming ever more fickle and demanding in terms of receiving their good as and when they order it. That obviously bodes well for us. That being said, it bodes well for some of our competitors, too. As I have said, I think in previous presentations, we continue to back ourselves as being one of the leading developers of this product in the country. But the competition is stiff, and there are many other very competent developers out there that compete for offerings as well. The unfortunate reality is we don't win them all.
We would love to, but unfortunately, we don't. What we look to do is continue to sort of also gravitate to nodes where we believe the ability to deliver from does have a common sense element to it. Ultimately, it is almost impossible to be in every single node, so you can't always fulfill on behalf of a client that may want to be in a node where we don't actually control any land. That being said, in the previous year, as you can see, we have had repeat business from TFG and Shoprite. As we have said for many years now, some of the cheapest business that one will do is always the repeat business as the need to pay agents and the like obviously gets stripped out of the process. Riverfields, obviously a key node. Everything in yellow on this, obviously owned by Equites.
I think if you add everything that we own, up and built, and what is coming, I think it is almost 600,000 sq m of GLA there with an ability to probably add another 200,000 sq m to the land parcels that we still own and are able to develop out. Obviously, a very key node for Equites. We see this as probably the premier logistics node in the country. We obviously have some stiff competition. A lot of the properties on either side of the R21 owned by the JT Ross Property Group that have developed them over the last 10 - 12 years. Their success has obviously also been our success, and obviously, a massively successful node. I think compliments also to the landowner that had the vision to put infrastructure down in this node, which really does allow for these massive warehouses to operate efficiently.
In terms of the road infrastructure, we have recently done quite a bit of work with the traffic engineers trying to lure a tenant into the location. What we can tell you is that notwithstanding all of this development there, the road infrastructure in and around Riverfields is currently operating at about 40% of its capacity, which means it has lots of headroom for the addition of all the new warehouses that we are bringing to play. More importantly, what we worked out is that a particular client was able to release in excess of 1,000 vehicles within an hour and get them onto the highway within less than three minutes. You can only do that where you have infrastructure that allows you to do that. I think what is critical about this particular node is that infrastructure is in place already.
Over and above that, we continue to improve that infrastructure by introducing, obviously, the solar story, which we will talk to also later in the presentation. But more importantly, in this node, we are starting to introduce, obviously, the recycling of water as well and the ability to offer low water usage to our clients as well. So all these in-house offerings that we put out there obviously benefit the clients, and we continue to grow on those things. As you can see, the Tiger Brands facility, pretty substantial, coming out the ground there, and due to be complete end of first quarter, beginning of second quarter next year. In detail, Takealot, obviously, coming out the ground. It is a 35,000 sq m facility.
There is some land which has basically been set aside and with a requirement for Takealot to execute on the expansion within a certain period of time, failing which, certain penalties start coming through the system. Underpinned by a 10-year lease, and with a very good escalation. Again, this within the Tridevco joint venture, and working fantastic for us. What it does do is it allows us to unlock Extension 116, and as a consequence, already introducing 116 to various RFP solutions through the system at the moment. DHL Boksburg, as I said earlier, adjacent to the Colgate-Palmolive facility, 75% of this facility will be used by Colgate-Palmolive. DHL have got the liberty to then be able to offer the last 25% to third-party clients that they may have in the system.
The benefit to Colgate-Palmolive here is obviously they can give notices to DHL that as their capacity requirements increase, they can demand certain pallet positions back, which obviously is a very close symbiotic relationship. What it does is it brings efficiency to the whole supply chain, thereby reducing those costs for Colgate-Palmolive, allowing DHL to operate more efficiently, and consequently, obviously, being able to offer a better price to their clients. Ultimately, these are the kind of unlocks that we are seeing more and more, and the creative ideas that are being used by the various 3PLs to secure new business, and we very much are trying to work hand-in-hand with all of these organizations to be able to deliver on their requirements. This leads me into the case study I think I mentioned a little bit earlier.
I think it is quite an interesting one, and it is one that we try and use also in some of the presentations that we make to some of our clients. This is working on the basis of a client that potentially may have hypothetically four warehouses occupying about 60,000 sq m of space in the greater Gauteng area. The assumptions we make is those warehouses are probably slightly older, consequence of which is they are probably at about 9 m height. What does that allow? It allows probably five pallet in terms of your stacking. They are probably paying around ZAR 70 a square meter net for that facility. The electrical set up in that facility probably not the most efficient. Obviously, the cost of redoing it, probably not in the landlord's interest at this stage.
What we have assumed, and these are assumptions, and obviously they can be played with, we have assumed that there is 20 inter-site shuttles a day, and we are assuming also that the warehouses are approximately 30 km away from each other. The other thing we have assumed is that your overhead is effectively 12 people per site in terms of staff, which obviously with four warehouses becomes 48. The security position, obviously with four sites for 24/7, is eight people. What we have then done is that we have gone and said, well, if we were to look at this and bring everything under one roof, to an Equites-specified warehouse, what would the results of that be? The first part, obviously, is that you would reduce the amount of GLA that the tenant would need would go from 60,000 sq m basically to 33,400 sq m.
This is on the basis that effectively an Equites spec warehouse is at 15. 5 m clear height, which gives the client obviously nine pallet stacking positions, and thereby obviously greatly reducing the amount of GLA that one needs because obviously it really translates into selling the air again. Our net rental, obviously at ZAR 95 a square meter is substantially more, but the amount of pallet positions that we are able to offer off a lower GLA obviously puts paid to that. Because of the technology and the new efficiencies that come with the electrical installations that we are able to offer today, there is obviously a material saving in the kilowatt hours per meter squared that would use in there.
There would be no inter-site shuttles, and your overhead because of the nature of the height, would probably 18 people, which obviously is a significant reduction in overhead. The other thing is obviously is your security detail would only be at one site, thereby only requiring three people. Ultimately, the productivity gains across the whole operative system are there to be seen. What you can see at the bottom is effectively where the saving comes from. What you will find in every warehouse is that a warehouse will never operate at 100% occupancy. There would always be a bit of a pool area for surges that may come from time to time. That pool gain going into one warehouse would be greatly reduced.
The higher stacking height obviously gives you more, and then effectively by using every single door more efficiently because you do not have four sites, you have only got one. There is also a paired gain in terms of the usage of the doors in one facility, which obviously then gives you the growth headroom too. We take it one step further and effectively we work out what the gains are in terms of the diesel on certain assumptions. Over and above that, what we see is we have allowed for a relocation cost and the cost of racking to go into a brand-new facility. We are of the opinion that the annual savings would be approximately ZAR 54.3 million against a once-off cost of ZAR 28.5 million for the relocation, which basically means in under seven months, you have got a full payoff.
Over and above that, because of the savings per square meter eliminated through all the various elements, as you can see on the right-hand side, not only rent, but overhead, the amount of drivers, the reduced diesel consumption, the labor productivity, the reduced security, and electricity. When you add all the pieces together, for the client to be in the same position, t here will be a saving of ZAR 643 from rent. We will get to what that translates into our rent. If they were to translate their operating cost into the new facility, they could afford to pay ZAR 231 a square meter to be in a breakeven position.
Understand that by paying ZAR 95 a square meter, there is an incredible saving, not only in cash, but I think the most important, which obviously we cannot put into this presentation because we do not have that data, but over and above that, the level of efficiency that goes up, which would probably translate into availability of stock to the consumer, wherever that may be in a business-to-business relationship, in a business-to-consumer relationship, in an online relationship. The improvements that would come from that would also drive revenue growth. Really, this is the story that Equites has been selling now for the last 12.5 , going on 13 years. Ultimately, this is the story that we are seeing from multiple clients that have embraced the thought process and the processes that come through it.
The final element, obviously, and here we have no control of it. Obviously, with the diesel price going where it is going, we have put a table in terms of what those savings could be. But over and above that, obviously in a time of big corporates being put under more and more pressure in terms of their CO2 emissions, the availability of massive reduction in CO2 into the atmosphere is also something that benefits our clients. Obviously, based on the assumptions that we have made, obviously people could increase those assumptions in certain instances, and they could be reduced. But we feel that the assumptions we have made are very much in line with some opportunities that have been effected within our portfolio, and we are going to see those benefits coming through for our clients.
On that note, I am going to hand over to Riaan, who is going to take us through the detail of our portfolio and where it is at the moment.
Thank you very much, Andrea. The first slide illustrates, once again, the impeccable property fundamentals of our portfolio. It is something which we are very proud of and something which we focus on because ultimately, we are a property business and the quality of the portfolio is what enables us to provide to our shareholders the predictable, certain income streams that translate into distributions per share. You will note that at the end of the period, our vacancies sat at 1.5%. Important to note that subsequent to 31 August, we let two of the vacant properties. The WALE continues to be a stellar 13 years, slightly down from 13.7 at Feb 2026. The weighted average escalation profile is sitting at 6.1%, but it is important to note that if you exclude the 20-year leases of Shoprite, the escalation profile goes to 6.9%.
You will note on the left-hand side that 93% of our income is derived from A grade tenants. The combination of the WALE, the escalation profile, and the quality of our tenant provides us with the certainty and provides us with the predictability and sustainability to ensure that performance remains stellar. Our income-producing assets get valued twice a year, and you will note that the valuation increase of 2.4% has been achieved, mainly through healthy rental escalations and market rental growth. This slide deals with our portfolio composition. Due to the disposal of the Aviva portfolio in the U.K., our portfolio value is slightly down from ZAR 28.7 billion to ZAR 25.4 billion. This will rise again as we complete the Tiger Brands development, the DHL development, and the Takealot developments that Andrea referred to. You will note that at the moment, 86% of our portfolio consists of S.A. logistics properties.
There has been a slight change from the previous period in that properties held for sale is now much lower. Also, our exposure to the U.K. has reduced from a top end of 35% a couple of years ago to only 6%. Also, as a result of our successes in the request for proposal market through new developments, our land holdings have decreased to below ZAR 300 million. You will note that Andrea has mentioned that we have acquired further land that will be coming on stream to ensure that we always have available land to participate in the RFPs, as development remains our primary focus in increasing our portfolio value. This is a very interesting illustration of our portfolio.
Vertically, you will see the various nodes where our properties are located, and then the bullets illustrate the gross letting area per node, and the bars illustrates a comparison between the passing rental in that node as compared to the market rental. The reason for this slide is to convey a message regarding potential reversions going forward. We often get the question as to what our passing rentals are as compared to market rentals, because it is important to know whether our financials will be hurt by large reversions. You will note that there are two nodes where the passing rent is below market rent. One is in Meadowview, where we own about 220,000 sq m of GLA. There, the passing rent is just below 7% above market. It is as a result of achieving very good renewals.
In that area, a lot of the businesses there have head office components, and we are very proud of the rentals that we are achieving there. It also illustrates that tenants are very happy with that node, the security it offers, and also the good location. On the right-hand side, there is a couple of properties that are outside of logistics parks. They are lone standing properties. It is about 220,000 sq m of them, and that group of properties have a passing rent of about 6% above market. Importantly, all our other nodes have a passing rate of below the market rental. Our biggest node is Riverfields with 360,000 sq m, and fortunately, all the properties that we own in the Riverfields node have been recently built.
They are built to a very high spec and a very high quality, and we believe that they will continue to do exceptionally well. Jet Park and the Western Cape are significantly below the market rentals. Overall, we can see that we are well-positioned to deal with renewals. We have concluded successfully all the renewals for the financial year 2027, and we have about 67,000 sq m of GLA to renew during the financial year 2028. Again, referring to the tenant engagement activities over the past period, we renewed four leases, two with new clients, expanding our tenant base, and we have renewed two leases with existing clients. As I said, we have already started working on our financial year 2028 renewal pipeline. Importantly, at the bottom right, you can see the tenant concentration.
This will change over the next 18 months when we bring on stream our new developments, and we are also very confident that we will be successful in further RFPs, as well as the expansion of business with existing tenants that should change that composition over time. In essence, 69% of our portfolio are let to our top 10 tenants. Importantly, those top tenants are of impeccable financial credentials, so it adds to the certainty of the rental income. Our joint venture with Tridevco, Andrea alluded to it. We are very privileged to have extended the joint venture to cover further parcels of land. The joint venture is with the Erasmus family through their investment vehicle, Tridevco, and Equites owns 50.1% of the joint venture, whereas Tridevco owns 49.9%. It is a joint venture between two companies with completely different skill sets and attributes.
We, at Equites, are responsible for business development, concluding leases then with prospective tenants. Our development skills create impeccable buildings, and then the property and asset management falls within our responsibility. In turn, Tridevco owns large tracts of land. They are a proven entity with highly specialized skills in obtaining development and zoning rights, and then also works water and other essentials. This allows us to draw down parcels of land when we require them, in that when an RFP necessitates a further piece of land being activated, we will then draw it down. This enables us to limit holding cost and also reduce capitalized interest. So it is a true win-win between the two of us. Firstly, we get the access to the land, and then in turn, once completed, Tridevco gets access to high-quality logistics assets. That is all for me. Laila, over to you.
Thank you. Okay. Thank you, Riaan. I think if we take a step back and just look at what's impacted our performance over the last six months, there are three key changes that I would say have or paint the backdrop as to what's happened in the financial statement. The first, and Andrea has spoken about this, was the disposal of the Aviva portfolio and the settlement of the associated debt, and that changed a number of line items on the balance sheet, particularly reduction in held for sale assets, as well as the settlement in the loans. Secondly, what we did with those proceeds. We invested in listed, highly liquid, U.K. equities, and that was SEGRO, Tritax, and LondonMetric.
The third thing that I think impacted us quite dramatically is just how we refinanced our new debt, and that I'll leave for Warren to talk about. With that as a background, I think we can talk about some of these highlights. A lot of them Andrea has touched on already, but the guidance and where we're tracking with distribution per share, we've grown 5.1% on 1H 2026, which we're very pleased with, and we still see ourselves guiding in line with our previously guided results for the full year. In terms of NAV per share, NAV per share very strong, and we'll talk about that in a little bit more detail. This was bolstered predominantly by valuation increases in the South African portfolio, as well as some fair value uplift, which we realized on our U.K. equities.
Loan to value at 28.1%, which means that we have incredible, or at least significant runway to implement our pipeline. Importantly, and we talk about this metric quite extensively internally, but very promising to see total return on an annualized basis of 18.5%, and that's our total accounting return. The DPS over the starting NAV plus the growth in the NAV, and if we annualize that at 18.5%. Let's go into a little bit more detail and talk about just the balance sheet in some more detail. If we start right on the top line, we see the movement from ZAR 22.6 billion to ZAR 23.7 billion or ZAR 23.8 billion. I think when we look at this, it's important to note that the Aviva portfolio was sitting in that properties held for sale line.
You actually see that reduction in that properties held for sale line, but where you see the increase is as a result of fair value movement, so ZAR 580 million for the period, as well as ZAR 600 million of acquisition and development spend. We'll talk about that in a little bit more detail further on. In terms of the trading properties, Coton Park is complete and there's no longer any balance sitting in that trading properties line relating to Coton Park, so that all relates exclusively to Basingstoke, and Andrea has spoken about the Basingstoke plan and where we see ourselves with Basingstoke at the moment. In terms of cash and cash equivalents, our liquidity is incredibly healthy.
We have a large cash buffer as well as undrawn facilities, and that takes us to ZAR 2.9 billion in cash and undrawn facilities, again, just demonstrating the liquidity that we have to implement a pipeline of developments as well as acquisitions. Included in that other assets is listed equities of ZAR 1.2 billion. We know that it's a big number, so what we have done is we have included disclosure around the balance sheet element as well as the income statement element. Just importantly, what we do is we distribute the dividends received from these shares. We do not distribute any capital gains. Even though we did realize a capital gain on the disposal of the SEGRO shares, that's not included in distributable earnings. Obviously, it does have a positive impact on the NAV.
If we look at loans and other borrowings, as expected, we settled the Aviva loan, but there were some new facilities which we refinanced or drew down on in the period, and Warren will talk through those. If we just take a step back and look at number of shares and issue, there wasn't a significant change. The only shares that were issued in the period related to the share-based payment scheme. Other than that, no movement in number of shares, and that takes us to the growth in the NAV per share. Really predominantly propped up by that ZAR 580 million fair value movement on our investment property balance. If we look at our distribution statement, we split out the revenue from continuing ops and discontinued ops.
Everything that would be included in the discontinued ops has now technically been, or the majority of it has technically been sold, and that was the Aviva portfolio. Importantly, we include the distribution from those listed shares in revenue from continuing operations because in our view, it is deemed to be property related income. It was really just a switch from those Aviva assets into these listed equities, and not the full portion, but 75% of those proceeds. If we then look at the admin expenses, and I think there's a question that always gets asked by analysts, what do we expect our stabilized admin expense to be? If we look at that number, ZAR 46 million in terms of distributable admin costs for the period.
The reconciling items between the income statement and this number is non-cash items, so depreciation, share-based payment expenses, and then once-off legal costs. We have included that recon as an appendix in the shareholder presentation because I think we have become quite used to what analysts need to see. In terms of the net finance costs, we expected to see a decline as a result of the settlement of the Aviva loan, but importantly, and again, another question which we always get asked is, what is included from a borrowing cost perspective? We have shown the split in the commentary alongside. If you just look on the left-hand side of the slide, you can see ZAR 94.5 million of capitalized borrowing costs.
The majority of that relates to S.A. devs and land. The U.K. trading property is the Basingstoke portion, and then U.K. land, which we do not expect to have going forward. It is a very small number, but the current tax expense, you do see that sitting in this recon, and that relates to the U.K., so Hoyland and Thrapston. In terms of South Africa, we do not expect to have any tax leakage. If you look at the segment note, you will see there is a small ZAR 11,000 leakage, and that just relates to some property management services that we do. Besides that, no tax leakage expected in South Africa. That really brings us to the distribution per share of ZAR 0.7257. Our bridge.
As expected, we would expect to see the majority of the distribution growth driven by an increase in rental, and particularly in like-for-like rental. Like-for-like rental growth is 5.3%, and when you look at our average escalation across the portfolio, it is 6.1%. What reduced this from 6.1% in the portfolio to 5.3%? We still are feeling the impact of predominantly the Waterfall reversions, which were concluded in 1H 2026, and those are coming through, and that impact is still being felt. As you recall, there were some significant reversions in that node. What we also have in this period is that we did have periods of vacancy. There was a small asset at Meadowview, as well as one at Lords View, where there was some vacancy during the period, and that impacted our like-for-like rental growth.
Still, at 5.3%, we are quite confident, especially bearing in mind that a large proportion of the Shoprite portfolio escalates at 5%. Then, a tightening in the average cost of debt over the period. It is quite interesting. If you look at the commentary, you will see that at period end, our cost of debt only decreased from 8.25% to 8.23%, but that just measures the cost of debt at the end of the period. During the period, we actually had significant periods of tightening, and I think Warren will just talk about how our cost of debt moved over the period 1H 2027 compared to 1H 2026. The lower admin costs, as discussed, especially as a result of closing of the U.K. operations, that contributed to the increase in distribution per share. Solar and other income contributed ZAR 0.0029 to the growth in distribution per share.
Let us talk about some of the detractors. This block has been, I think, a constant in the last few presentations, but just the write-off of costs relating to ENGL. This was predominantly as a result of borrowing costs, which we recognize at Peterborough West, Goldthorpe, and Thrapston, which were capitalized in 1H 2026, and those are no longer being capitalized, and those have now been written off, and that results in some dilution or some detraction from DPS. The Aviva portfolio disposal is an interesting one because we heard from a lot of market participants that the portfolio was yielding 5.5%, you are going to bring it back to South Africa, and all of that will be accretive in year one. What actually transpired was that the Aviva portfolio was yielding around 5.5%. There was also the positive spread on the debt, so between the 5.5% and 3.92%.
Because we didn't bring it all back to South Africa, we actually invested those in the U.K. equities. So 75% invested in U.K. equities, which was yielding around 6%, we would say. There was some dilution, but what we are very mindful of is that as we bring those proceeds back to South Africa, we'll be able to feel that accretion coming through over time. So very comfortable, again, with our decision and how we're managing that accretion over time. The development dilution, we did complete one speculative build during the period. That had a period of vacancy. It's now been let from 1 September, but that did result in some dilution for the period. So overall, quite a clean bridge, and it shows us quite cleanly how the growth was driven from a distribution per share perspective.
If we just look at the NAV per share bridge, again, as expected, the fair value uplift on investment property was the predominant driver for the growth in NAV per share, ZAR 580 million on our portfolio, which we believe is significant. The fair value gain on listed shares, that was on SEGRO. When the Prologis offer was made public, we did make a decision as to how we were going to trade out of those shares, and we did crystallize that gain, which contributed to the growth in NAV per share. But as I said earlier, none of that gain is distributable. You can see quite clearly in note 13, we've split it out and only the distribution received is distributable. Then there was some write-down on the Aviva portfolio, and that detracted from NAV per share.
But at the same time, there was deferred tax liability relating to that Aviva portfolio, and when we disposed of those companies, we realized ZAR 0.18 as a result of the disposal of that portfolio and the derecognition of the deferred tax liability. Then we spoke about the ENGL portfolio and the write-down of some of those land parcels. FX, because we have a much smaller proportion of our business now exposed to FX, that impact is a lot smaller. Then just some positive fair value on derivatives, which ultimately drove our NAV per share to ZAR 17.43. Again, very positive, and that is ultimately contributing to the total return, which we discussed way up front.
My last slide is really just because this was a significant contributor, or there was significant growth in the period, we thought that we'd just pause for a moment on our valuations. What's quite interesting is that you can see where our valuations are tracking, and this talks back to Riaan's slide. In Meadowview, for example, that portfolio is trading at 8.9%. But as Riaan said, we see that we are slightly over-rented in Meadowview as a result of very positive outcomes on our renewal discussions. So it's a bit of a double-edged sword. There you can see that that portfolio, or the net initial yield on Meadowview, is 8.9% as a result of it being slightly over-rented. In the rest of the portfolio, and I think our best indicator of whether our valuations are reflective of fair value is market evidence.
And we know that where assets have been trading in the market have been incredibly tight. Anecdotally, just evidence of transactions, big logistics portfolios trading between 7%-7.5% across the country. If we just look at the average yield across our portfolio, you can see that there's definitely room for compression, and we believe that these valuations are very fair, if not slightly conservative. Particularly in a node like Riverfields, which is brand-new assets. At 8.1%, we believe that there's significant compression which we can still recognize in that node. Really just big picture, we believe that our valuations are incredibly reasonable, if not conservative in a lot of the nodes, and we just wanted to provide some color as to how this is made up. Okay. Sorry. Last slide from me. But in terms of our loan to value, I think we started the period at 35.1%.
Developments and acquisitions for the period amounted to ZAR 600 million, which increased the loan to value slightly. Then the disposal of the Aviva portfolio reduced LTV by 10.8%. We split out, and we kept this intentionally separate because the investment in U.K. equities increased the LTV by 3.5%. But if we were to liquidate all of these, they are highly liquid, and put them in cash just because of how the LTV formula works, our loan to value would be significantly lower, probably around 25%. Then if we look at what assisted the LTV was just 0.8% reduction as a result of the valuation increases, and that takes our LTV at period end to 28.1%. Again, just another factor reaffirming that our balance sheet is in an incredibly healthy position and sufficient runway to execute a pipeline of development and acquisition opportunities should they arise.
Okay, so we've had an incredible period in terms of our cost of debt as well as our financial risk management. I'm going to hand over to Warren to just take us through some highlights.
Thanks, Laila. As Andrea and Laila have highlighted through their presentations, we are well-positioned from an investment deployment perspective going into this forthcoming period if you look at our cash and undrawn facilities of ZAR 2.9 billion, almost ZAR 3 billion, as well as the ZAR 1.5 billion of listed equities. What is key as we go into a capital deployment period is the certainty around pricing our RFPs, our investment decisions. In this regard, over 83% of our debt is hedged. That's both debt and the hedges that are over one year to maturity at reporting period. Further to that, and I'll touch on this a little bit later, only 2% of our book is short-dated, that's less than one year. Then GCR, who provide our credit rating, affirmed our credit rating earlier this year at AA-.
Now, in terms of our asset ratios, Laila has spoken through our loan to value and our interest coverage ratios increased significantly as we bring developments on board, and we've paid down a fair chunk of debt. I want to go into some of those asset ratios just in more detail and in simple terms. On the right-hand side, the bottom four rows, 62%, in fact, over 62% of our assets are unencumbered. 56% of all our secured lenders, their effective loan to value is around 33%. Then very importantly for the likes of our DMTN investors, that unsecured LTV is sitting as low as 25%, which gives us a lot of headroom going into the development period that we're going into. The tagline of this slide, "Headroom to deploy," really speaks to that.
A lot of the information on this graph we have touched on already. Laila did mention the slight uptick in our cost of debt, so 8.25% at the same time last year, August 25. 8.13% in February. Ticked up slightly, 8.23% at August 26. That's a twofold reason. One is we had a higher amount of short-dated debt in the preceding period. We had ZAR 1.2 billion of one-year notes, which, given the liquidity we had, we were able to repay those notes. So that's a reduction in cheaper short-dated debt. Had a slight impact on the increase in the cost of debt. Then obviously with the Reserve Bank increasing rates, that has an impact, too. Our sensitivity in that regard is 20%. What that really means is that for a 1% increase in rates, it's a 20 basis point increase in our cost of debt.
Or put simply, if the Reserve Bank decides to increase rates by roughly two increases of 25 basis points, so a 50 basis point increase in rates would increase our cost of debt by 0.1%. Again, it's that level of certainty that then feeds into our investment decisions that we can make. What this slide illustrates is our debt expiry, and it shows you how not only from a total debt, if you look on the right-hand side, the top graph, what our debt maturity looks like all the way through to 2032, but also our DMTN note issuance profile. That's of more interest because of the heightened rollover risk that sits in DMTN notes. In the bottom graph, you'll see that there's two bank private placement notes that are maturing in November and December. Those we'll be repaying.
Then really the next auction is November 2027 maturity. What I do want to point out here is two important things, is we've spoken about our almost ZAR 3 billion of cash and undrawn facilities. That's sufficient cash to pay down all maturities up until the first quarter of 2029. That's an important thing to note for the liquidity and that certainty that we have as a business. The second element is, debt investors would've received a term sheet earlier this week. That's for an upcoming auction that we're going to be doing at the end of this month. That's a new seven-year note that we'll be issuing. That'll give a maturity of November 2033, which is further to the right than any of those graphs show. That speaks to the maturity of the business that we're now looking to extend that debt tenor.
Weighted average maturity is 2.9 years. We're slowly moving that out, and a later graph will illustrate that in more detail. We have a great relationship with the real estate finance teams at all the banks, and they hate me showing this graph because it shows our DMTN spread compression all the way back from 2020 through to the current period. These have been readjusted to show the spread over ZARONIA. Obviously, all the earlier ones were priced over three-month JIBAR, so these have been adjusted. The banks do have to follow where we're issuing in the DMTN market. Importantly to note, as a business, what we do do is we balance our DMTN issuance with our bilateral bank term loans and facilities. It's important for us to work together closely with the banks.
As I mentioned earlier, there is a slightly higher rollover risk sitting in DMTN issuance, and so only 42% of our facilities, of our debt facilities, are DMTN notes. The rest sits with the banks. Then we've shown this slide before. It is quite busy. One probably to take home and read as you're going to bed tonight. What I want to show, though, is two elements here, is that we've had both tenor extension, so tenor getting longer, and spread compression in the last six reporting periods. I'm going to use the latest one, which is on the far right-hand side, the first half of 2027. What that illustrates is that the debt that matured in the past six months had a weighted average maturity of 2.4 years. But the new debt that we put onto the book had a weighted average maturity of 4.8 years.
We extended the duration, the tenor of the debt that we put on. Not only were we able to extend that, we also reduced the cost of debt with the spread over ZARONIA coming down from 138 basis points, and that includes the ZAR 1.2 billion short-dated note that we had in issuance. We reduced it from 138 basis points down to 125 basis points. We've achieved that every six-month period for the last six reporting periods. Andrea, back to you.
Awesome. Thank you, Warren. Just a quick slide now on sustainability, obviously a key metric within the Equites portfolio. We obviously continue to grow the solar capacity as we unlock all these developments. Every single one of them is accompanied by a solar provision. We are basically expecting a further 5.1 MW to be added to our system over the next 24 months with all the various developments coming through with a CapEx of approximately ZAR 62 million. We continue, all of our developments basically are EDGE certified. We're looking for advanced EDGE certified, consequence of which is as more and more new buildings come into the portfolio and being developed to ensure that they meet these metrics.
We currently have 60% of the portfolio EDGE certified, and of the 60% of the portfolio, I think it's a hell of a compliment to the kind of product that we own in the portfolio and the long-term quality that will sustain, in our opinion, rental growth for a significant period of time. We've obviously made huge strides in the recycling of water, with basically a very strong water stewardship program. It hasn't been the easiest path to tread. A lot of the governmental agencies were not totally comfortable with what we were trying to do, but patience and constant communication resulted in us finally managing to get the permitting required. We are basically in the process now of finalizing our first water treatment plant, which will be fully operational before the end of this financial year.
The consequence of which is that 100% of the non-potable water requirement in the facilities where the plant is being put will basically be achieved through the plant. That is obviously the first step, and there's obviously massive learnings in these processes, as there were with solar when we started five to seven years ago. No doubt, we will improve our offerings to our clients. I think what's important to note, at the moment, this is being done predominantly as a service, as unlike the solar, which potentially will add to the distributable earning potential of the business. For now, at current water prices, this is a break-even investment, if you like. However, we feel it's absolutely critical for the long-term sustainability of our product and the learnings that will come from it.
We also do believe that the consequence of the level of investment that needs to go into our water infrastructure across the nation, water prices will need to move at some stage. So we are trying to be ahead of that curve. Final element, obviously important, we've managed to get a Level 2 B-BBEE rating and 80% verified Black ownership. Over and above that, we have six Statement 102 transactions completed within our business journey to date, which obviously all talk to the social responsibility that, as an organization, we take and obviously try and adhere to the best metrics possible without the risk of destroying value in the organization. We get to a final slide, which is prospects.
Again, gives me great joy to reaffirm our 5%-7% distribution growth for the financial year, notwithstanding all the challenges that we've discussed during the presentation, notwithstanding all the challenges that the globe keeps throwing at us. We are comfortable in our shoes with where we're at. The development pipeline obviously is delivering spectacularly well for us. The reversions and the small amount of vacancy that we have experienced through the speculative process, and we will experience in the second half. However, taking into consideration all of these factors, we're still very comfortable with what we are guiding the market.
Over and above that, we are in the very fortunate position of having an extremely strong balance sheet with the ability to deploy capital to opportunities as and when they arise, and be effectively, and remain one of the leaders in the logistics space within the South African marketplace. On that note, I would like to thank everybody for participating in the presentation. Thank my colleagues for their contribution to it, but not only to the presentation, but obviously thank them and the entire staff at Equites for the incredible work that they do to ensure that as an organization, we continue to deliver as expected by our shareholders. On that note, Laila's got some questions, I'm sure. Let's take some questions. Let's go there.
Yeah. Unfortunately, there are about 50 questions, so we're going to stick to I've aggregated some of them, and if I could just start because—
Absolutely.
—there are quite a few questions around the income received from the listed shares. I think I have said this during the presentation, but just to clarify, please look at note 13. Yes, it shows ZAR 161 million of gains from those U.K. equities, but only ZAR 69 million is actually the dividends received. So it's not ZAR 161 million that's included in distributable income. As with our properties, we don't distribute fair value gain. So it's only the ZAR 69 million. Then if you were to calculate a yield on those, it's the ZAR 69 million over the ZAR 1.5 billion that we would have invested in those equities. But there are more detailed questions. So we do have one-on-ones, and everyone that's asking these questions does have my email address. So please email me or we will get back to you just in terms of unpacking the more detailed questions.
That's really the fundamental of how that investment works. We don't distribute anything that is a fair value gain. It's purely the distributable income from those REITs. Okay. Then Andrea, there's a question. When are you expecting to repatriate the remainder of the Aviva proceeds? What is the latest you believe you'll bring this in?
Oof. Yeah, how long is a piece of string? Ultimately, there is no question that if we could put that money on money market at the moment in South Africa, we would probably make a little bit more. But obviously, it would then start impinging on our ability to retain our REIT status. Ultimately, that is the underlying metric that we need to constantly monitor. The development pipeline keeps on going from strength to strength, and should we be successful in further RFPs between now, let us say, and the end of the financial year, which we obviously are extremely hopeful to be, we would then need to start making decisions around the allocation of capital to those developments. The consequence of that is that we would then need to start planning the repatriation of those funds.
In the interim period, though, we continue to get, I think, meaningful distributions from those shares, from the ones that are invested, which allow us to basically convert that back into distributable income, which obviously is extremely important to us, and consequently so. Again, I have not given you a precise date, and ultimately, I do not think I can. But I would be very surprised if, let us say, within the next 18 to 24 months, we still had funds there. I would be very surprised.
Okay. Thank you. Fayaz is asking a question. He says that: "Our LTV is quite low, and excluding the listed REITs, it is about 25%. Where do we expect our through-the-cycle LTV to be?" I guess this ties into Mursha's question around how quickly will we bring those proceeds back.
Yeah, ultimately it comes down to we bid on a portfolio of approximately. We were unsuccessful in that process. Unfortunately, we were outbid by someone who obviously saw more value in that portfolio than we were prepared to pay. In this instance, we were not the winners. But as I said, I think, earlier in the presentation, we continue to look for opportunities, not just in the development side, but also in the acquisition side. Should we be successful in any of those, I think when we do make acquisitions, I think they tend to be quite meaningful. It is highly unlikely we will be making acquisitions that are sort of in the ZAR 100 million -ZAR 200 million range. I would think more often than not would probably be in the ZAR 500+ million range.
There, obviously, we are subject to deal flow in the marketplace and pricing being commensurate to our ability to pay, effectively. If the market continues to believe that property should be bought at prices significantly more than Equites is prepared to pay, obviously, that bodes well for our valuations going forward, which obviously then will probably reduce our loan to value even further. So all positive things, I think, for our organization, and obviously very pleased to have the strength and balance sheet and the ability to be able to transact in the marketplace, and obviously from a position of strength.
Thank you. There is just a question around trading properties. So how much did trading properties contribute to distributable earnings? We do not distribute any of the capital profits made on trading properties. So on Coton Park, if you look at the segments, you will see that we did make a profit, but that does not get distributed. It is capital in nature. So the only contribution to distributable earnings is the borrowing cost capitalized on Basingstoke, and we have shown that breakdown. The disposals in that trading property note relates to Coton Park. The development is now complete. We have received the proceeds from JD.com, so that is what the disposals relate to. Okay.
Yeah.
Then, I think maybe just two questions remain. Fayaz is asking, we mentioned 18 occupiers seeking around 292,000 sq m a year. How many of these RFPs are still live? Where are we seeing yields for these RFPs?
Again, the live ones, I would say at least half of them are probably still live. Some of them are not all RFPs. Some of them are also just requirement for space, i.e., tenants looking at our speculative developments that are coming to completion. So there we have multiple tenants looking at the three units that are basically coming up. We do have one vacancy where a tenant has vacated at Lords View as well. So we have four buildings within the portfolio that are currently sitting vacant. Or going to be vacant, because two of them are not even finished being built. So those are live. In terms of RFPs, there are probably a handful of RFP, pardon me, that we are still participating in for future developments. Obviously, they are linked to very specific areas where we do have land.
We haven't included in that list any requests that we received where we would never be in a position to be able to execute because we don't control land in those precincts. Riaan, is there anything else you'd like to add to that?
I think just the second half of the question. I think the yields that we're targeting is between 8% and 9%.
Riaan, I think the last question is just for you. We spoke about two vacancies. Where do we expect to sign leases relative to exit rents for Lords View and the small unit at Meadowview?
Look, I think as indicated, at Meadowview, given the length of the previous leases, there may be some small reversions there, whereas at the other, only at Meadowview and at the lone standing facilities in Gauteng do we expect vacancies. We expect positive reversions in all the other nodes as we renew going forward.
Okay.
Awesome.
Okay. I think that's it.
That's it.
Yeah.
Fantastic.
Thank you. Thank you, guys, again. Thank you to the technical team here that have filmed and distributed this to you guys at the other end of the camera. I trust you have a fantastic day, and obviously, some of our more meaningful shareholders will have the benefit of a one-to-one engagement in the next sort of 10 days or so. We look forward to that and look forward to seeing you again in this mode for pre-close, I think, in February next year. Amazing that the year has passed us by so quickly, and we are fast heading into a Christmas period, which I hope will be blessed for all of you. Look forward to seeing everybody soon. Thank you so much. All the best.