Morning, everybody. Morning, everyone. There's a soundcheck. Here we go. Can everybody settle down? Please take your seats. We do have, I guess, a number of people online as well. People are time-bound, very much time-bound nowadays, so we'll... We're never very good at keeping to that, but, we're gonna try our best today. So welcome to everybody. Special welcome to the teachers and pupils from the Riversdale, what is it? Riversdale High School.
Langenhoven High School from Riversdale, guests of one of our non-executive directors, Melt Hamman. So thank you very-- Yeah, welcome, and hopefully you enjoy the experience. For the rest, just yeah, this is obviously the results for the 12-month period, financial year ended 30 June 2024. If I look at the agenda very briefly, we're gonna touch on a little slide which tries to simplify Growthpoint and give you just a little, on one slide, a picture of what we're all about. We have received a number of comments over the years that the Growthpoint equity story is a bit complicated, so we certainly trying to depict it here in simplified form. Then, you know, strategically, we are also trying to simplify the business.
We will touch on the salient features for the period under review, and the strategies that we're busy implementing. We'll review the financial results. I'll be talking about our international investments, give you a bit of an update on what's happening at Growthpoint Properties Australia, Capital & Regional, and Globalworth. And then Estienne's gonna come and present to you on the South African portfolio and our interest in the V&A Waterfront, as well as our Growthpoint Investment Partners business, which is our third-party fund management business. And then I'll come back to just update you on the capital markets, the debt capital side, capital management, and try and draw some conclusion. We're gonna try and keep it to an hour and a bit. We'll see what the bit we have, how we go.
Right. So in simplified form, I mean, Growthpoint today, you know, we sort of break it down into these three sort of main boxes: the South African portfolio, the South African asset base across retail, office, and logistics, and trading and development business, about ZAR 66.3 billion worth of assets. It's about 47.9% of the total book value of our assets and about 47.8% contribution to our DIPS, which stands for Distributable Income Per Share. The waterfront, we own 50% of that. It's valued at ZAR 11.5 billion, and it contributes 8.3% of our total book value of assets and 16% of our DIPS. On the international front, we have three investments. Growthpoint Australia, the biggest one by value.
We own 63.7% of Growthpoint Australia, separately listed on the Australian Stock Exchange. It represents 25.2% of our assets and contributes 22% of our DIPS. Capital & Regional, we own 68.9% of that, separately listed on the London Stock Exchange, and it represents 4.6% of our assets and 3.6% of our DIPS. Globalworth, which also listed in London, we own 29.5% of that. It makes up 10.9% of the book value of our assets, contributes 6.3% to our distributable income. Lastly is our fund management business, third-party fund management business, which we brand as Growthpoint Investment Partners.
We have three funds essentially in that, which with about ZAR 18 billion worth of assets under management. The healthcare business, Growthpoint Healthcare, owns a number of hospitals, got about ZAR 4 billion of assets. Student accommodation, 3.6 billion rand worth of assets, mainly hospital properties. And then Lango, which invests outside of South Africa, in Africa, it's got about ZAR 10 billion worth of assets, and that makes up 3%. Combined, our equity investments into those funds, 'cause we co-invest with the investors, represents 3.1% of the book value of our assets, and it contributes 4.2% to our DIPS. So salient features for the period under review. We started the year guiding for, unfortunately, in negative territory.
It was minus 10 to minus 15% on our distributable income per share. At the half year mark, we updated that to a range of minus 10%- 12%. We were fortunate enough to finish at the better end of all of that range. We were 10% down for the year. We did at the time guide that, you know, the biggest impact by far, 80% plus of the impact is interest and interest rates, given what's happened to interest rates and obviously our gearing. And that has played out exactly as we had predicted, so the story of this set of results, in a sense, is pretty strong operational performance across the business units, so all the properties in all the regions are actually performing quite well.
I mean, SA has obviously been very, very tough, but it's definitely getting better, and all the key metrics in South Africa, you know, have improved. Some of them are still negative, but they are a lot less negative than what they were. So but, across the board, let's call it a pretty healthy operational performance. But unfortunately, the financial performance, you know, is overshadowed by what's happened on the interest rate, on the interest line. And, we'll delve into that a bit more as we go through. So, as I said, not only in South Africa, but even in the three, offshore entities, you know, strong operational performance. The waterfront, again, stands out, and, everybody loves talking about the waterfront. We do, in particular, ourselves, love talking about it.
It's such a unique asset, but it continues to perform well for us. You know, the point I made about interest. Now, you know, albeit that interest rates are, let's say, the trajectory of interest rates now is probably down. I think we're thinking about the first interest rate cuts of 25 basis points, perhaps as early as this month, still in September, with more cuts coming through in November and possibly sort of January. Or, you know, that's all good, and that should start reducing the interest burden, but it's gonna be impacting predominantly the second half of our financial year. And obviously, the rate of decline is quite slow relative to the rate of increase that we saw with interest rates.
And the fact that we sit with a hedge book on our interest rates, not only the South African interest rates, but also offshore investments, which we funded with cross-currency interest rate swaps. We've got some legacy hedges in place, which are at very low rates, and unfortunately, as those roll off and we have to re-hedge, we're having to re-hedge them significantly higher. Because whilst rates are coming down, they're not gonna come down to below where some of those historic hedges are on. So the trajectory there is still up, and that's unfortunately, you know, led us to guide for lower earnings again next year. But we do feel a bit more confident about the prospects then to return to profitability - well, not profitability, we're very profitable, but to growth in distributions in FY 2026.
Just some of these salient financial features here. Our distributable income per share and our dividend per share down 10%. The two are the same because we've kept our dividend payout ratio at the same level of 82.5%. Group property assets at 174. This was consolidated, 174.7 billion, which is a 2.8% decrease. Our interest cover is reduced from 2.9x- 2.4x . Again, you'll talk through the income statement just now, and you'll see just how dramatically the interest bill has risen, so that's reflected there.
The group loan-to-value ratio, again, at the end of the last financial period, you know, we highlighted the fact that we saw the loan-to-value trajectory still being upwards, and it's come through at up from 40%- 42%. And then, with the driver of that is predominantly asset value still being written down, predominantly in Australia, and that has resulted in our net asset value per share also decreasing to ZAR 20.20. That's a decrease of 6.1%. Just touching on some of the strategic initiatives that, you know, we, we're busy with. Firstly, I think that the two key ones are improving the quality of the South African portfolio, and secondly, is to try and optimize our international investments.
But at the same time, we're very focused and remain very focused still on balance sheet and balance sheet management and ensuring that we've got sufficient liquidity and, you know, across the board. So in that regard, LTVs, as pointed out, have, has risen. The biggest contributor has actually been the Australian business, where LTVs went from 36% to 39.8%, call it just 40%. And that is directly linked to the asset value write-downs in Australia. Our South African balance sheet remains pretty conservatively geared, with a 34.6% LTV, and that's up from 32.9%. Liquidity is still, you know, very healthy. We sit with ZAR 6.2 billion or ZAR 6.3 billion rands worth of access to liquidity.
These are loan facilities from banks, either revolving credit facilities or predominantly revolving credit facilities, we can at short notice draw down on them. And philosophically, we've always held this liquidity to deal with. It's part of our rating agency process to ensure that we've got enough liquidity to cover for at least the next 12 months worth of debt and loans that are rolling off and need to be refinanced. We had some internal discussions, our treasury, Head of Treasury here, Yusha in the room. We think perhaps, that's a little bit excessive. We had these high levels when we had our Eurobond that we have to refinance. That's come and gone. It's not possible that we could live with sligthly lower levels, and it's something that we certainly will be working on in the next 12 months.
We had ZAR 465 million worth of cash on balance sheet at December, and through our dividend payout ratio of 82.5%, we will retain about ZAR 842 million worth of cash by paying out 82.5% dividend and not 100%. That's a pre-tax number. On the South African portfolio, we sold 17 properties in the year for just over ZAR 900 million, and we also sold two trading and development properties for ZAR 294 million. We spent about ZAR 2.1 billion on CapEx and development CapEx. And then a very innovative deal, which one of our team members that's also in the audience here today, Werner van Antwerpen, was leading, is the.
We signed a purchase, a power purchase agreement, to acquire a hundred and ninety-five gigawatt of green energy, renewable energy, from a broker called Etana, and that'll come online towards the middle of next year. That represents about a third of our total consumption, FY 2023, if we use FY 2023 consumption as a baseline, it's about a third of the consumption. So, you know, from a ESG perspective, we're able to go to our customers now in our office buildings and procure to or offer them 100% green energy. Many of them need those credits, want those credits.
So we think it's quite an innovative, you know, initiative on our part, and hopefully, you know, it can be a distinguishing factor between us and some of the competition, trying to attract more tenants here in Sandton, et cetera, to some of our buildings. Since 2016, we've sold about ZAR 12.4 billion worth of assets, and this is all in an ongoing effort to improve the quality of the portfolio. We are focusing on the core portfolio. We're reinvesting and redeveloping some of those, and on the other hand, we're adding new product as well through our development arm, especially focused on the industrial in the industrial space. So that's the South African portfolio.
On the international front, 42% in total of our book value of our assets are located offshore, and in total, 32.4% of our DIPS is earned from offshore. The rand equivalent of foreign currency income, either in the form of scrip dividends or cash that we received from our offshore investments, is about ZAR 1.6 billion, and that was pretty flat compared to last year. If I look at the three entities, GOZ. GOZ remains certainly a very key and core asset, and market for us. Australia, we do still rate the Australian economy and Australia highly when it comes to investment as an investment destination.
Capital & Regional, many of you would be following that, and Capital & Regional as a company have received a number of approaches recently from interested parties to acquire that business, and there are various parties in various stages of due diligence, having a look at that company. Then Globalworth, we continue to support the Globalworth management from a shareholder level with value unlock initiatives for that company. So in total, for Capital & Regional, we received ZAR 141 million worth of dividends, which we reinvested in the period. We also underwrote that equity raise that they had to buy that asset in Edinburgh, the Gyle Centre.
We invested another ZAR 527 million into that entity, and then there's another dividend coming now in the next couple of weeks. It's about ZAR 85 million, which we will receive in cash. Globalworth, on the other hand, we received ZAR 360 million rands worth of dividends, which we reinvested, and then there's another dividend of ZAR 157 million coming in the next couple of weeks, and that will again be reinvested into the company. I'm gonna skip through this. Okay, so this one, I might spend a little bit of time and skip through the next ones.
But if you consider the 10% negative move in our DIPS, represents about ZAR 550 million worth of downward, you know, negative move on earnings. And this slide tries to just give a sense of what the major contributing parts to that were. So in the first instance, South Africa, we're showing -ZAR 165 million there. That is predominantly... Actually, again, if you look at the top line, net property income was actually positive for the year, and that's notwithstanding the asset sales that we undertook during the year. So again, SA performing reasonably well. But what drove what made that negative was significantly less interest earned, interest income earned, and then an increase in other operating expenses.
There were also two one-off numbers for sales of portions of the management companies and one of our stake in the healthcare fund that we sold. These are sort of one-off items that were in the prior year's number, which were not repeated this year. The big factor, as I explained earlier, is that RSA finance cost line. You can see ZAR 381 million worth of additional interest, and that's attributable to the interest rate increases as well as slightly higher levels of debt. A total closing balance of debt was about ZAR 560 million higher than at the end of the prior period. The V&A standard, 87 plus.
Growthpoint Australia shows flattish there at about AUD 4 million, but if you read through the detail, the actual underlying dividend per share was down by just under 10%, and their FFO per share was also just down just over 10%. And but through, I guess, better currency hedging on the one hand, but also, lower withholding tax rate that applied to these dividends and a reversal of an accrual on withholding tax that we had in the prior year, that negated the negative movement and ended up showing a flat result here. Capital & Regional was up GBP 70 million. There's a combination there of a dividend up by about 5.5%, as well as the dividend on the additional investment that we made.
Globalworth was negative ZAR 91 million, and that's almost entirely due to interest cost increases in that market, and their dividend decreasing by 27 odd% in EUR terms. Very significant refinance of their debt in the debt capital markets resulted in their interest margins more than doubling from 3 odd%- 6.25 odd%. Growthpoint Investment Partners, ZAR 16 million down, a bit of a mix there, slightly better management fees that we earned, but slightly lower dividends, resulting in ZAR 16 million negative. Then Trading and Development down ZAR 58 million, predominantly due to lower capital profits made on disposals of some of the assets in our trading and development business. In the prior year, we made pretty significant profits on the sale of two buildings.
This year, we also sold two buildings, but the profits made on them were a bit less. So these are the slides I want to skip through a little bit more quickly. Time check, because Ashton always complains that I never leave him time. Gross property income for the group as a whole is up 5.4%. Property expenses consolidated, up 16.5%. Now, in those boxes, you see Capital & Regional stands out a little bit there. Its revenues were up 38%, and the costs were up 48%. So there was a change in the way we accounted for the recoveries of expenses. So in the prior year, recoveries were netted off the expense, so you didn't have the recovery in the income.
But this year, the recovery is in the income, and the expense is gross. So it's having quite a big impact on those numbers. But the bottom line, I think, for net property income across the group is that we ended up with just under ZAR 10 billion worth of net property income, 9,957. That's 1% up on the prior year. Other operating expenses grew by 21.1% to ZAR 1.127 billion, and that leaves us with net property income after operating expenses down by just 1.1%. So ZAR 8.8 billion of net property income after operating expenses. If you then take finance costs into account, and this is, again, sound like a broken record on this, but it is a big, big feature of the result.
You know, 16% increase in finance costs, that delta, the difference between 4.394 billion and 3.782 billion, ZAR 612 million worth of extra interest across the group. That includes South Africa, Australia, Globalworth, and Capital & Regional, but also the underlying investments in Growthpoint Investment Partners. The finance and other income was 4% down, and that, you then make all these adjustments for non-controlling interest, et cetera, leaving us with distributable income at 4.8 billion, 10.3% down on the prior year. This slide reconciles our distributable income number to the SA REIT FFO, funds from operations. I'm not gonna go into the individual entries that are in there. There are people in the room.
Our Finance Director, Gerald, here, he can, he's much more equipped to explain these accounting entries than I am. But that leaves us with a FFO of ZAR 4.454 billion, and that is 11.4% down. On a per share basis, FFO down 11.5%, distributable income down 10%, and the dividend per share applying a consistent payout ratio of 82.5%, ZAR 1.17, also down 10%. On the balance sheet, just picking out a few highlights off the balance sheet, total property portfolio ZAR 137 billion compared to ZAR 140 billion. You see the big move there, I guess, is the Australian entity.
Australian property assets were revalued quite sharply downwards and having a big impact on the number. Our equity investments stayed pretty flat, ZAR 16.4 billion worth of equity investments. And then, we have a whole range of other smaller investments and loans, and our total borrowings increased by just 0.9% to ZAR 69.9 billion. Again, probably, not much movement actually across all the entities there. As I said, the South African one, just 500-odd billion up. And, Growthpoint Investment Partners are probably the one that's showing the biggest increase in debt, and that's due to acquisitions funded by debt in those funds, but predominantly the student accommodation fund. Right. The three international investments I'm gonna touch on very briefly.
I've commented on some of the key features in what I've said already, so I am gonna, you know, go through this pretty briefly. But Australia, you know, if you look at the numbers, 10.8% down on FFO, 9.8% down on DIPS, pretty stable, flat payout ratio, roughly 80% payout ratio, not much change there. I think key features in that result: interest. Interest, interest, interest again. And yes, there was about a 5.5% lower net property income in the Australian entity, predominantly driven by two some disposals. There was one asset disposed in the year and another asset disposed in the prior year, which has affected that number.
And also in the prior year, there was quite a big chunky number for lease cancellations, where tenants had terminated their leases earlier, paid the outstanding under the lease, and we had to recognize that as income on cancellation. That wasn't repeated in this period. Balance sheet remains, you know, pretty healthy, 40% loan-to-value, very good liquidity. Net asset value per share down quite markedly, 13.8%, again, driven by these asset value write-downs, which is on the next slide. We apply similar policies in Growthpoint Australia when it comes to interest rate hedging. 74% hedged, and the weighted average hedge maturity, three years, and the cost of debt clearly, you know, rising. On the portfolio valuations, the office portfolio was written down by about 11.2%.
Quite dramatic, and, but the industrial portfolio is down by only 1.8%. So principally, what's driving these asset value write-downs again, is the interest rate increase of the cycle that we're in. Discount rates are increased, cap rates have increased, but in the industrial sector, there's still pretty good growth coming through in the rentals. And that growth, which is somewhere between 5% and 15%, has offset largely the negative impact on valuation from the movements in cap rates and discount rates. The portfolio is very, very healthy. 80% of the income is from government and listed companies. It's 97% let by GLA, Gross Lettable Area.
It's got a long weighted average lease expiry and, about 108,000 sq m of space was let during the period, and I mentioned one small disposal. Growthpoint Australia also has a funds management business. We acquired a business called Fortius about a year and a half ago now, and, the intention was to grow the funds under management. But given the interest rate cycle and the, let's call it lack of liquidity in the market in Australia, as we're seeing pretty much everywhere, it's been a bit of a challenge to grow the funds under management in the period. So it's actually come back from AUD 1.8 billion- AUD 1.6 billion dollars.
Certainly, as the market starts improving, you know, we are expecting, you know, that we will be able to grow the funds under management more aggressively in the next 12-24 months. Capital and Regional, six properties valued at about GBP 9.2 billion. It's 100%. We obviously consolidate this. So these are community-focused shopping centers. They're performing pretty well. We look at some of the statistics on the next page. Dividend was up 5.5%, from 5.5 pence per share to 5.8 pence per share. LTV stable, 43%. No imminent debt maturities. And, on a like-for-like basis, property values have actually remained pretty, pretty stable over the last three odd years.
The NAV and NAV per share did come off from ZAR 1.06 last year to ZAR 0.88. That's the NAV number, and that number is principally not... There's obviously no valuation impact there, but the reason for that was the equity raise, which Capital & Regional did when they raised 30-odd million GBP to acquire the Gyle Shopping Centre. That equity raise was done at a price which was below NAV per share, and that brought the NAV per share down. On a portfolio level, property income was up 17%, principally driven by the acquisition of the Gyle Shopping Centre. 43 million GBP was the acquisition price there.
If you go through the statistics on that slide, it talks to a pretty solid performance. Vacancies, you know, sort of sitting at the 6-7% level. Rental collections are close to 100%, and we spent about GBP 10 million, GBP 10.7 million pounds worth of CapEx on principally two assets there, Ilford and Wood Green. Then the third investment that we have internationally is Globalworth. It's 59 properties. It's over a million sq m of space and valued at ZAR 15 billion. Our stake, that's the 29.5% stake that we've got there. Dividend down 27%, from 29 cents to 21. When I talked to the operational side just now, you'll see operationally, again, doing very well.
This was very, very much this result driven by the refinance of the debt. But also leading up to the debt refinance, the company went and Because all the debt finance that this company had was in the unsecured debt capital markets. So in trying to raise the liquidity to do the refinance, the company went and took on secured debt from the banks, held the cash, drew down on that debt, and held the cash. But obviously, the spread between the rate you're paying at 4%-6% on the interest paid versus maybe 1% on interest earned, you know, gave rise to, you know, negative impact on the income statement and this drop in dividend. Globalworth will continue to offer scrip dividends.
As part of the debt refinance, there were some covenants included, where if the interest cover ratios be below certain levels, the company can pay dividends. But, the three controlling shareholders have given undertakings to take shares as in, instead of cash, until the interest cover ratios have recovered to levels that comply with the covenants in the bond documentation. But a pretty strong balance sheet. Gearing is only at about 39%. The company is sitting on EUR 200 million-EUR 300 million of cash at the moment, liquidity. For the first time in about two years, the company is able to be a little bit more on the front foot. For two years, they were just boxing, trying to sort out this debt refinance. Now, they've got some liquidity.
Those bonds, they were 2025 and 2026 expiries, have now been extended to 2029 and 2030 expiries. So they don't have to worry about that debt too much. They can now focus on the business. Reasonably active in the disposal and development front. There's a 6,000 sq m logistics asset in the process of being developed. Two smaller ones were completed during the period for 13,000 sq m. And then I think of note here is that the entire industrial portfolio that was on balance sheet has actually been sold and in two tranches, there was some assets that were wholly owned and then some that were sort of part owned through joint venture. But then the industrial assets have been sold.
Again, it all leading to the debt refinance and the fact that we need, wanted to bring the, the loan to value ratios down. So, also still seeing asset value write downs. I think asset value is written down by 10.8%, from just over EUR 3 billion- EUR 2.7 billion. There are 36 assets in Poland, 23 in Romania. Vacancies have come down from 14.5%- 13.8%. Portfolio now is exclusively office, save for these smaller industrial assets that are being developed. And, you know, office vacancies, Poland, which is, you know, Warsaw, and then four smaller cities. The smaller cities are struggling a bit with oversupply, with vacancy factors of up to 20% in one, even up to 30%. Warsaw is fine.
Bucharest, which is where all the office assets in Romania are based, is. We were there a couple of weeks ago, and it's actually looking pretty healthy. The letting situation in Bucharest is looking very healthy at the moment. Very low vacancies. I think that 13.8 is across the two regions. Romania standalone is probably as low as 7, 6 or 7% vacancy. So I'll at this point hand over to Estienne to deal with the South African business, and I'll come back to do the capital management and conclude. Thanks.
Perfect. Good morning, everybody. All right. So looking at the South African business, the context is that things have significantly improved, and our teams have been very, very hard at work trying to turn many of these sectors into a growth scenario. We have let over 1.2 million sq m of space in the period. In the process, bringing down our vacancies by 1%- 8.7%, and that excludes the Growthpoint Investment Partners funds. So this is just the three sectors that we're talking about now. The reversions are still negative. That is mainly still drawn down by our office portfolio, where we're still seeing negative reversions. The other two sectors are pretty much very close to breaking even on renewals.
We've improved our ability to keep our tenants in the building by moving our renewal success rate up to 76%. And then our cost to income ratio for the group has ticked up marginally, pretty much driven by the operational expenses in administered costs, etc., that still are increasing significantly above inflation. Our arrears have come down very nicely to what I would deem to be very close to pre-COVID levels. Just to give you an idea, I think in the good old days, say, back in nineteen, our arrears were hovering in and around about, I'd say between ZAR 60 million and ZAR 70-odd million rand, and through COVID, they spiked at ZAR 650 million. And over the past few years, we've slowly but surely making headway.
We now are pretty, pretty close to those normalized levels. And once again, there's always a couple of lumpies in that number. Our provision for bad debt has also been brought down quite nicely. And then we have seen, I think Norbert's obviously touched on this quite significantly, the impact of the additional cost of our debt. So our loans are costing us more, and I think maybe I could point investors to the annexures. In the annexures of our presentation, we give a fountain of information, including our debt profile. And more specifically, I'd like to point them to the sections where we give quite a lot of reflection into the swaps rolling off on our South African portfolio of debt, as well as the Australian dollar swaps, euro swaps, and US dollar swaps.
And that will make modeling for investors, I think, quite a bit easier in analyzing our cost of debt going forward. LTV for the South African business remains very conservative at 35.4%. We are working very hard at maintaining that level. Obviously, if you consolidate the other investments onto the group, and you eliminate the actual investment on balance sheet, it results in the LTV kicking up to the 42.3%. But the South African mothership balance sheet remains very conservatively geared. We have seen an increase in our property values by ZAR 1 billion, and I think that certainly speaks to the portfolio from a valuation perspective now being stabilized, and we expect valuations to start improving from where we are here.
We have continued to develop in our portfolios, and we've spent ZAR 2.1 billion over this period, and we've got further commitments of about ZAR 1.5 billion in development activity for this current FY 2025 year. Our asset sales, we've managed to realize ZAR 1.2 billion through disposals, and just lobbed in that extra little bit. There is a little bit of a benefit of having the lights on a little bit more. My friend Dan at Eskom has promised that hopefully we'll be able to see a bit more of that. That obviously benefits not only Growthpoint, but our tenants, right? They've been carrying the burden of higher operating costs.
I think generally across the economy, it's benefiting us. In the period, we've continued to roll out solar projects. Our total solar peak capacity now is 40-odd meg. You know, in this current year, we'll probably also continue to do so. The target is to get to close to 50 meg of solar power on our roofs, and that's more the larger properties, so industrial and retail properties. It doesn't really make feasible sense to try and do that on our office buildings, and that's where our power purchase wheeling agreement is going to come in and certainly benefit the group significantly there. Running through our logistics business and industrial business. Just as a start to understand that pretty much half the portfolio is logistics.
There were some analysts that had the opportunity to go and look at some of the new developments that we've recently completed, and they were very surprised that Growthpoint owned logistics property. So we thought we'd just put that statistic in there to say that pretty much half the portfolio of 157 properties, just under 2 million sq m worth ZAR 13.5 billion, is in fact logistics. So our vacancies have ticked up just marginally, and the bulk of the reason for that is that we've been building new logistics facilities, some of it on spec. We've been very, very successful in letting many of these, but there are timing differences, and that has resulted in the vacancy ticking up a little bit.
If we strip that out, vacancies would be in and around 3.9%. Our in-force escalations and on renewal escalations are being maintained at about 7.4%, and we have improved the retention of our clients quite significantly in this portfolio. When looking at the leasing today in industrial, you know, more than 60% of the leases are in fact either zero or increasing on renewal. It speaks of a sector where there's a very healthy demand and the supply constraints are leading to improved renewals in the space. Unfortunately, that the 77 odd leases, 71 odd leases that we did renew, pulled back the growth rate just marginally to 3.3%.
But I think if we look forward, we hopefully will start seeing that improve as we go. Once again, bad debts reduced significantly. Like-for-like growth for the portfolio was at 2.6%. This was pulled back marginally by obviously the negative reversions in the prior year and the vacancies. But, you know, looking forward, I'm reasonably confident that the portfolio's annual growth, like for like, will improve in this coming year. Valuations have also improved by 3.5%. Just to quantify that, that's about ZAR 458 million. And effectively, we've pretty much clawed back all the write-downs that we had through the COVID period, and so we're sort of at pre-COVID levels now.
On the capital side, we have disposed and continue to dispose of non-core properties, and we're recycling that capital into newer logistics facilities where we think we'll get better total return over the long term. So we disposed of 11 properties in the period at ZAR 327 million. We've had a further three properties that are currently under contract and held for sale, and then there's another five properties worth over ZAR 600 million that we're busy negotiating at the moment. And then on the development side, what we have done is we've been developing in Cape Town, Durban, and here in Gauteng. As I mentioned, mainly logistics facilities.
And as we stand today, of all the facilities that we've developed mentioned here, you know, there's literally only two units that haven't been let: one in Cape Town at Arterial and one here at Central Park. So demand, really good. Rental levels, really strong. In fact, in Durban, we actually have been obtaining rentals at our trade park, which are actually slightly better than our original feasibility. So those are very encouraging, and I think we'll continue to look for opportunity to do so. On the retail side, so that portfolio consists today of thirty-seven properties. It's just under 1.2 million sq m, with ZAR 25.6 billion.
Vacancies at 5.5% are slightly overstated in a way, in that we are currently dealing with some of the challenges within the shopping center in respect of these certain of these shopping centers with redevelopment and improvements at these shopping centers. And if we strip those all out, I think you'll see that the vacancies will drop quite significantly towards the end of this year. So hopefully by December, Gavin, am I right? We'll start seeing, you know, some of these vacancies come off and there will be an improvement in that number. In-force escalations are hovering around between 6% and 6.5% odd.
And if we look at the renewal growth, the renewal success rate, we've maintained that at above 85%, which is sort of our target level, so maintaining the tenants in occupation. And then if we look at the renewal growth, you know, that's pretty close to flat now at just -2.1%. As you can see there, only 20-odd% of the leases that we are renewing are actually negatively reverting at this point, and arrears are very much intact at ZAR 26-odd million. The like-for-like growth in this portfolio is very much closer to normalized at 4.1-odd%. And if we look at the valuations on the portfolio, we've seen a small tick-up in the valuations.
Since 2016, we have written down this portfolio by ZAR 5 billion odd, which is 16.6% odd. So there's still quite a little road to go to claw back to pre-COVID levels. Our trading density continues to grow, albeit at a slightly slower rate at 4.1%, and that really speaks to higher environment of higher interest rates, where consumers are a little bit tighter than they used to be. Certainly in the last quarter, I think many of the comments coming out of the retailers sort of affirm the fact that things are a little bit tougher in the retail space.
But, you know, we firmly believe as interest rates start coming down, and certainly I think there's a feeling if we listen to National Treasury's comments on withdrawals out of the Two-Pot System. I think that certainly will out of our pension funds certainly we'll see maybe a little bit of benefit popping through there. And then we've been very active in disposing non-core assets here. We've sold three properties for just under ZAR 500 million here, and we've got further property which is in the process of actually being transferred at the moment, which is ZAR 254 odd million. And then there are a few others that we're busy under negotiation, just close to seven hundred, hundred odd million that we're busy with there. We've completed extensions at River Square and Vaal Mall.
We have also redeveloped Bayside and continue to complete that redevelopment in this year. At Longb each, we're busy with an extension for Builders Express for 2,300 squares, which will be completed at the end of next year. In Beacon Bay, we are redeveloping for Edgars and refurbishing that mall, and hopefully, that will also see the mall stabilized in a pretty competitive market. On the office side, we today have 151 offices, just over 1.6 million sq m of space with ZAR 26.5 billion. Here we've seen a significant improvement in the vacancy levels.
I mean, I think vacancy's peaked at over 22% odd, through COVID or just after COVID, and that has been reined into around about 15% now. You know, the counter of that, I think there were certain suggestions by investors where we could maybe mothball or even demolish assets. The reality is that 85% of the property is full generally, right? Statistically. So it's, there's no real one building where you can just sell it off or mothball it. Most of the properties are partially full, and we're working very, very hard. There are strategic initiatives that we are starting to see quite a bit of success with, and we have disposed of circa 16,000 sq m of vacancies in this period.
So the teams are working very, very hard to improve this, and this is a key focus area for us. Maybe the counter opinion would be, you know, there's quite a lot of upside. To the extent that we let the space, that profit will drop straight to the bottom line, and maybe many of our competitors don't have this opportunity as Growthpoint has. It's maybe just a bit of an optimistic way of looking at things. In Sandton, we've also managed to make quite a bit of progress. Sandton's vacancy has peaked over close to 30-odd%. We brought those down to 20-odd% now and continue to see demand in Sandton. There's good work being done in that sector.
It is a difficult market with many of the tenants still right-sizing or, you know, downsizing in the market, which is more really a effect of economic strength in Gauteng than it is of the actual changes in use. So when we look at our ability to retain tenants, you know, that's down at 62%. It is marginally improved, but the reality is to retain these tenants is still coming at a cost of that rental level. So you can see negative reversions just under 15% odd at the moment. In-force escalations still remain at 7%, and arrears are in reasonable condition at ZAR 35 million odd.
Like-for-like growth is just slightly negative at 1%, and certainly we project that in this current year, that'll turn to positive, given some of the progress we've made in letting our properties. And if we look at the valuations, you know, some of the benefits of letting the space has come through into these valuations, where we're starting to see growth in the valuations. But just to contextualize, since 2016, we've written off 6.6 billion rand, which is basically 22% of the value of the portfolio. So there's still a bit of work to be done, and hopefully we'll start seeing the benefits. We have managed to dispose offices.
Obviously, demand for offices from investors at the moment, given the market, is pretty tough, but there are some good discussions underway, and we have made some good progress in selling some of the offices to owner-occupiers, investors, and we continue to and we are basically at various stages to dispose of close to ZAR 500 million worth of non-strategic offices. On the development side, there really is just two real major projects. One is the hotel development we're doing for Hilton Canopy down in Cape Town. It's a 154-bed hotel, which is due to open in the end of the year.
We're also busy with a quite material refurbishment of the old Investec offices, which is now Ninety One's new head office, which it will be a very green building that we will complete for them on the back of a 15-year lease. On the trading and development side, now, this business is obviously, I know it frustrates many investors 'cause it's not as predictable and is quite lumpy. But maybe just to contextualize this business, the development skill is a very, very good skill to have within our business. The team's biggest client is, in fact, Growthpoint, building new buildings, refurbishing our properties, and even helping on the deal-making side.
Then, obviously, we are open for business to the market, where we do trading and development deals and develop specifically for our funds today. When looking at the activity, you know, we've made ZAR 42 million out of trading profits. We've generated ZAR 9.8 million from fees in development. Then there was also net property income from the stock that was on the balance sheet before it was sold, and the cost of the division is about ZAR 55 million. You'll notice in the accounts that it looks like that number has increased quite significantly. The main reason why that is in the accounts is effectively some of the operating costs of the division was accounted for in our operating costs in prior periods.
So this number hasn't actually moved materially in the year. Looking at these third-party developments, some of the things completed was our first sectional title development down at La Lucia Mall, which is called The Kent. Those units were all successfully transferred in one fell swoop, and I think we were very happy to have a successful development there, and I think we've also, you know, learnt quite a bit about producing that kind of product into the market, which will serve us well going forward. We also sold Woodburn Square, which was a little development that we did in Pietermaritzburg, and we made a nice little profit on selling that little shopping center.
River Ridge, which is the old AXA offices, I think some of the investors actually have seen this redevelopment of the office park into residential affordable units, and 80% of those units have been sold. In fact, those units will be transferring within the next two-three months. So in this year, we'll see some of the profit of that coming through. On the student accommodation side, the team has also been very active, where we've completed two developments, Horizon Heights and Fountains. Then we are currently busy with the Crescent Studios and The Podium in here in Gauteng, in a new product that will go ultimately into the funds. Then on the operating expense side, I already covered that for you in our note.
An area where increasingly, you know, investors are focusing on, not so much on the cost of it, but more on the benefit of it, is certainly the ESG side. So, just to cover, I've mentioned that we continue to invest in solar on our rooftops, improving the amount of green energy that we use in our properties. We've mentioned the successful conclusion of this PPA agreement, which ultimately will result in 32% of the power that we use, effectively coming from green power. Today, we've got 123 green buildings, which I think is probably the largest green portfolio in the country.
And we've got a very, very innovative new product for our clients, which is linked to the PPA agreement, which is the Eco-2 innovative solution, where tenants can actually acquire green power in their buildings in Sandton. And we hope that those tenants that need green power to their buildings can come and occupy some of our opportunities in Sandton. And then this year, there's gonna be a bit more focus on the water and waste side. We have also maintained our BEE 1 status. We have spent more than ZAR 62 million on CSI.
Through our enterprise development initiative, Property Point, we have been able to create quite a significant amount of jobs, permanent jobs, in terms of this program, which looks at small enterprises, where we help those enterprises effectively provide services to the whole property industry. We also spent money on an educational program, and there have been more than 6,255 direct beneficiaries of our initiatives. Looking at the V&A Waterfront, so there's a couple of slides on the V&A, just giving you a little bit more granular information. It is quite a complex precinct, albeit we count it as one property, with 450,000 sq m. There are quite a few things within the V&A that one can talk about, that's pretty exciting.
Overall, net property income grew at 19 odd %. On a like-for-like basis, that's around about 13.4%. There have been quite a few reasons why we've seen such strong growth at the V&A. The largest of it is obviously the retail, hospitality, and attraction sector, where we've seen a 74% increase in activity and rental there. And then the business on the operational side is also trading very, very well and above expectation. And in the period, we also concluded a transaction on the Portswood Hotel and renegotiated the management agreement with Legacy on both the Commodore and the Portswood, and we opened the Time Out Market, and Investec took occupation in the period. Vacancies are negligible.
Footfall is up by 9%, and certainly the reduction in load shedding, where we do not recover the actual diesel from the tenants, has benefited us significantly, and that cost is down 36%. Just running briefly through each of the sectors. On the retail side, we've seen sales increase by 14-odd%, compared to the prior year, and this is obviously driven by international and domestic tourism, which is up 20% and 15% respectively. So strong market, even though South Africa's tourism is still 20% down on historic levels, and this is per a study completed by one of the audit firms. You know, it proves that the V&A is certainly outperforming in this specific space.
Retail sales for the month of December were a remarkable ZAR 1.2 billion in the month, and that was up 16% to the prior year. We've seen overall rent reversions actually go positive at the V&A, so the 18,000 sq m of renewals were done were at higher levels, and the MSCI index actually reflects that the shopping center trades one and a half times the level of any other super regional in the country. When we look at the demand for prime space, you know, the voids within the V&A are pretty much all full, so it does mean that you into a process of optimizing the shopping center, trying to improve the offering and increase the return within in that shopping center.
We do have a development there called the Union Castle Building, so that was right in the square in the V&A, and that building will be completed ready for the season. And I think there's a very nice new Nike store in there, and there'll be a flagship restaurant on the roof, which everybody will be able to enjoy. Then construction commenced on reconfiguring the very right side of the mall on the top level, where we're going to have a luxury section, where we're right sizing our tenants in the very luxury end, and hopefully that will benefit. And expanding the mall actually by 3,759 sq m at the same time, and that will certainly prove beneficial from a trade perspective.
Office, 15,000 sq m of office was renewed, also at positive reversions. I mean, rental levels now are over ZAR 300,000 in that space. Then, if we look at the year, Investec also took occupation in this period. On the marine side, we did see slightly less vessels in the period, and as a result, the number of passengers getting off at the terminal reduced slightly. Interestingly enough, we saw much more moorings from private vessels in the marina, given what's happening in the Red Sea at the moment. On the hotel side, net property income was up 44%. Here we take significantly more operational exposure, and we also get the benefit of very, very strong trade.
The occupancies and average daily rates for these hotels were up 1.26% and 22%, respectively, compared to prior year. As I mentioned, we acquired the Portswood for ZAR 200 million, and we've renegotiated those operating leases. The Cape Grace has also reopened after its significant refurbishment, and is now under the Accor Fairmont brand. The international tourism is at an all-time high in terms of flights directly to Cape Town. Our vacancies in the residential portfolio is also very low, and we're seeing strong growth in rentals when we renew there at 9.6%. We've also commenced the construction of 5 Dock Road.
So if any of you are keen to have a very nice new apartment in the V&A, just be behind the Ferrari garage, I encourage you to get hold or maybe Google 5 Dock Road and put your name down, 'cause they're flying off the shelf. I think they're coming to the market in September with this new product. And then our helipad that we completed has also seen a 100% increase in turnover. When looking at GIP, so that's our fund management business, this is the objective of this business is to create product for third-party investors that they can invest in. These niche products, and we will manage these investments for a fee, and we also co-invest into this. So we've got three products at the moment.
The Growthpoint Healthcare Property Holdings company is effectively healthcare assets. There's nine properties in there at 125,000 sq m worth ZAR 4 billion. We've got a 39% effective stake in this fund, where we've invested ZAR 765 million odd. And we've seen in this period, we've been able to make a couple of acquisitions. It's a very difficult space to find assets to acquire, but we've bought the Johannesburg Eye Hospital, and we've also bought the other half of the Busamed Hospital called Paardevlei down in Somerset West. Then, GSAH is our student accommodation fund. Now, this whole fund trades under the brand of Thrive Student Living.
All of you, when you go to university, then you can go into one of the Thrive Student Living buildings, and that at the moment consists of just under 8,000 beds, and by the end of this year, we'll increase the capacity to 10,200 beds. That we've got roughly 650 million raised for this fund, of which 250 came from Growthpoint in this year. Then Lango is our African-focused fund. There's also been some progress in the growth of this fund, which today consists of 11 properties worth about ZAR 10.4 billion.
They've successfully concluded a deal with Attacq and Hyprop to acquire another ZAR 200 million worth of assets, and Growthpoint own 18% of the company as it stands at this point, worth our investment's worth ZAR 950 million. They are in the process of re-domiciling from Mauritius to the U.K., which will result in them being able to resume dividend payments. Just high level, we now have ZAR 18 billion under management. We generated ZAR 120 million, ZAR 122 million of dividends, and we've also completed received management fees of ZAR 108 million in the period. Pass back to you, Norbert. Thank you very much.
Thanks. So this time is my chance to complain. You've left me no time, so we'll just cut questions out of the session altogether then. Just on capital management, there are four slides in the pack on capital management. They're pretty busy, and Asha and her team have been extremely busy this year with all the funding initiatives. So we got about ZAR 40 billion worth of debt, and that's mixed between the debt capital markets with institutional investors, and then on the other hand, the banks. In the debt capital market space, we issued ZAR 6.5 billion worth of senior unsecured bonds during the year.
A whole range of ten-year, seven-year, five-year, and three-year bonds, with spreads ranging anywhere between 1.18% above JIBAR at the short end for three years and 1.86% on the high end for ten-year money. Very encouraging that the debt capital markets are open, liquid, fluid, and issuers like ourselves are able to tap that market, you know, on a regular and consistent basis with good demand in that space. We repaid and actually settled during the period about ZAR 3.57 billion worth of bonds, and then we repaid a revolving credit facility of 742. A bit of refinance on some of the debt we've got from the IFC, which was dollar loans that they had given us for the healthcare fund.
And then, moving away from the debt capital markets into the banking market, we actually refinanced and repaid, refinanced mainly ZAR 3.8 billion worth of loans that had matured during the period, and we extended them and renewed them. And then there was a net reduction in total of about ZAR 950 million. We have a EUR 65 million euro debt facility, which we termed out during the period for five years. Moving away from debt and then looking more at the hedges, the interest rate hedges, again, a very busy period. We sit with just under 80% of our total debt hedged for a weighted average term of 1.9 years.
On our foreign synthetic debt, we have about 84.6% hedged, and that's for an average period of 1.6 years. The weighted average interest rate across the South African debt is 9.6%. That's up from 9.1%. And if you include the cross-currency interest rate swaps in our euro debt, it goes down to 7.2%, and that's up from 6.7%. Excuse me. On the South African rand interest rate swaps, ZAR 3 billion worth of swaps matured during the period, a weighted average interest rate of 7.99%. We entered into ZAR 900 million of new interest rate swaps at an average interest rate of 7.8%. And, we-...
ZAR 5.3 billion worth of interest rate swaps will mature in the FY 2025 year, and they're at an average interest rate of 7.1%. So you can see the levels that some of these hedges are at are probably still lower than where one would be refixing in the interest rate market today. Having said that, it's been very, very encouraging to see I guess the positivity in the interest rate market and the bond market post the elections and the formation of the Government of National Unity. We've seen foreign investors come in, you know, to invest into the South African bonds and into South African equities. The RSA 10-year has come down nicely.
The three-year swap, the five-year swap have all come down quite nicely, which is very encouraging. On the euro side, the euro interest rate swaps, we didn't have any maturing in this period, and we got EUR 50 million at a rate of 0.6%, which expires in FY 2025. So once again, you can see a 0.6% needs to go to, I don't know, where current market for a three-year euro swap is probably about 3.50, 3.60 there or thereabout. So you're seeing still upward pressure on the interest cost into next year, I guess, is the underlying message. On the cross-currency interest rate swaps, similarly, we have just ZAR 3 billion worth of CCIRS has matured at a weighted average interest rate of 2%.
Those were re-hedged at 4.2%, and with an additional rand liquidity requirement of ZAR 631 million. There are another $314 million worth of interest rate swaps, which mature in FY 2025. The weighted average interest rate's there 1.2%, so that's also likely to be going up as we re-hedge. And then there are a lot of smaller numbers on that slide that I'm not really going to delve into the detail of.
So for the last one on that slide, which is ZAR 294 million worth of USD ZAR swaps at a weighted average interest rate of 9%, which, you know, relates to the IFC funding for the healthcare fund, and that matured, and we settled those, you know, those swaps and refinanced actually in rand, as opposed to renewing the dollars. Debt metrics. The average term of our debt is four years. We've done a great job. Our treasury team done a great job extending. You can think, extending a ZAR 40 billion book by, it doesn't sound like a lot, three and a half years to four years, but we've actually taken a lot of additional long-term debt, as you saw on the, in the bond market. 10-year, quite a bit of 10-year paper.
So that's been very encouraging. 56% of our total debt today is unsecured debt in the debt capital market, as opposed to 50% last year. And the next 12 months, I don't think Asha is going to be going on holiday. She's only got ZAR 2.8 billion debt to refinance in the next 12 months. So relatively speaking, quite you know period for debt refinancing in the next 12 months. We are still investment grade rating from both Fitch and Moody's, which is encouraging, and we've spoken a bit about the liquidity that we've got, which is very sufficient.
All things considered on the way we fund our offshore investments, you know, we do believe that, you know, there's still an element of conservatism there, where at the end of the day, our total foreign currency debt is less and lower than the net asset value of our underlying investments in the offshore entities. Just finishing in conclusion, again, quite a busy slide. I'm going to pick a couple of points out of this. Estienne mentioned the improved sentiment in South Africa, so no doubt that sentiment drives markets. We're feeling a little bit better about South Africa. The metrics, the key metrics that he showed support that with all the key metrics improving. Some of them are still negative, but they, you know, significantly less negative.
But we're encouraged by, you know, what we sort of seeing and feeling in the South African market. We still got about targeting FY 2025, about ZAR 2.8 billion of sales. And, you know, at risk of belaboring the waterfront story, you know, it continues to do well, but as you know, if you keep growing earnings at 15%-25%, you know, there's a limit as to how, you know, you can keep going at that rate. So it will moderate. We're thinking mid-single digit for the waterfront for next year, impacted by two significant redevelopments. So the one is the redevelopment of the Table Bay Hotel, which will actually close its doors for probably about 18 months in February next year. February or March next year.
It might even be on the slide. And then, February now. And then the other one is what we call the Luxe Mall. So there's a section of one of the malls that is being closed down to cater for the extremely high-end luxury brands, the Louis Vuittons, Guccis, you know, all those sorts of things. They are present in the mall, but they, they've been pushing really hard for more space. So we're redeveloping a section of the mall to give them more space, and in the process, we'll add about some 3,000- odd sq m to, you know, to the mall. Australia, unfortunately, going backwards next year. We said 3%-6% in terms of earnings and about just short of 6% in dividends. Capital & Regional, we think, will be stable.
Globalworth, unfortunately, is gonna be backwards. There's no doubt that the debt refinance that they did was only partially in for this particular financial period for us through to June 2024. It will be in for the full 12 months. The impact of those high interest rates will be in for the full 12 months for the next set of results, and so we still see those dividends, unfortunately, going backwards. I think Growthpoint Investment Partners, we predict a stable and growing, so a marginally growing income stream from the funds management fees and the dividends coming out of GIP. And then, you know, you know, as discussed earlier, while interest rates are coming down, which will be positive, we unfortunately still have these hedges, historic hedges, that need to be refinanced, so still pressure on interest.
So two key points from these, from this slide. One is valuations. We think valuations of... and LTVs have... You know, last year we said the LTV trajectory is still up. We think that the LTV trajectory is stabilizing. Little bit of a hedge there on Australia. Australia seems to be lagging a little bit. The interest rate cycle in Aussie seems to be lagging sort of Europe and South Africa and the US, assuming the first cut comes in the next month by three to six odd months. So, there's still some risk that you can see further negative valuations in Aussie, but for most part, we're quite comfortable to predict that we've bottomed out, and we should start seeing improvements in loan-to-value ratios going forward.
Then lastly, just in terms of the outlook, said it all before. Unfortunately, with the interest rates still playing havoc, we predict that our earnings next year will be down again by between 2% and 5%. Looking further forward, you know, we, we're feeling, you know, starting to feel confident about twenty twenty-six, FY 2026, for us to return to, to growing dividends. We'll conclude. I know that there are a bunch of questions online, and maybe we'll deal with those first, and then we will review that.
Shall we first maybe take questions, yeah?
Let's do these first-
First
and then we can come to the floor, yeah.
There's only six questions, fortunately.
Mm-hmm.
The first one you can't answer, which is:
Okay.
Could you put more light on the potential Capital & Regional disposal, purchaser, timeline, proceeds?
Yeah. Yeah. Yeah.
Okay.
Short answer, no.
Okay. And just to contextualize-
No, just to be more serious, yeah. I mean, it's a regulated-
Yeah
... and highly regulated environment, UK-listed company. You've got the UK panel, UK JS, LSE, London Stock Exchange rules apply. You will have noticed, or some of you who watch it carefully, would have seen that, the put up or shut up announcement, by, NewRiver, one of the entities that shown interest in the business, was extended again for another two weeks this morning. So all I can say is that there are a number of parties that are, you know, doing due diligence and in various stages of due diligence. And, you know, for the rest, we'll have to just, you guys will just have to, I guess, watch the market. Unfortunately, we can't say more. Okay.
Good day. We at Risk Insights rate Growthpoint on ESG and have noticed your strong reporting on environmental metrics over the years. We have noted that there is a net zero target. Will we see reporting on specific emissions reduction, waste reduction, and water reduction targets? So maybe I'll give that a crack.
I'll give it a go.
Yeah. So we obviously pride ourselves, as you can see from the content that you've already received, on giving significant and sufficient reporting. In fact, we've been now recently accused potentially of too much, but I don't think there's anything like that. So we are working on our strategy, as I mentioned earlier, on water and waste, and we intend to improve our reporting in respect of emissions over the next couple of periods to come. How much? Yeah.
Just to add to that.
Yeah
... it has been included in the key performance indicators for management scorecard for next year, FY 2025, is the actual development and reporting of, on some of those metrics.
Yeah. How much capital do you estimate the V&A will need over the next five years? I'm sure you agree that if the V&A were separately listed, it would have a much lower cost of equity. The lower cost of capital will create a lot of value for shareholders from this asset. What are your thoughts on the matter? Surely, Growthpoint needs to spin the V&A to unlock value.
I'm happy to give that a go. Look, I mean, it's not our call only. Clearly, we've got a 50% partner here. We own the waterfront in partnership with the PIC on behalf of the Government Employees Pension Fund. It is a true 50-50 joint venture with unanimous consent provisions, so it would have to be agreed with the PIC. You know, we periodically, and I'd say regularly, you know, evaluate you know all the various options available you know to the waterfront and to Growthpoint you know in funding the waterfront. We have recently introduced third-party debt and we've sort of up to about ZAR 2 billion of debt there now. This is on an asset base of about 23, so still very conservatively geared.
We think that in the short term, yeah, additional debt funding is probably the optimal way to fund the growth. You know-
That is bringing down its cost of capital.
That, yeah, absolutely, is ultimately bringing down its cost of capital. In terms of the quantum of funding, you know, there's probably in the order of about ZAR 4.5 billion worth of approved projects that is sort of in the pipeline already. There was an article a while back of which suggested a further twenty-odd billion ZAR worth of capital requirements, which is very much linked to the new application by the waterfront to the City of Cape Town for additional rights. The waterfront's 660,000 sq m of bulk rights through the original package.
We've applied for another 440, and if those rights were to be granted, there's 10- 15 years worth of development there at probably at least ZAR 20-25 billion in today's money, so not in future value. It is something that is on our agenda, is to continue to look at optimal ways of funding that growth. And right now, an IPO or a separate listing of the waterfront isn't on the cards, but it is always in the mix when we consider, you know, these, longer term, strategies in relation to the waterfront's development.
Do you have concerns that the euro earnings will continue to slide in absolute terms due to weak operational performance and rising debt costs? How long will it take before GWI finds an earnings bottom? Are there any plans to solve for this holding potential split up, of all the parties at NAV?
I'll give it a go. So, as I mentioned earlier, I think the refinance of the Globalworth bonds took place in, I think it was either March or April this year. So for the period to June, it's only in, you know, in our rolling 12 months. So they got a different year in. They got a December year in. But we take, you know, the, the rolling 12 months, and, so the impact has actually been, only for a few months in, in this set of financial results. Next set of financial results, the impact of that debt refinance, where the interest rates went from 3%- 6.25% on something like EUR 700 million, it's still gonna have a negative impact. So I don't-- I'm not too worried about operational performance.
I think operationally, the companies will do fine. It's more. It's, again, it's 90% of whatever decline there, there's likely to be, will be from interest rates. And, you know, thinking about the timing, I would then think that our FY 2026, sorry, FY 2025, around about June 2025, will be probably, you know, the bottom of the, let's say, earnings cycle, if you want, principally impacted by the interest rates, would be my guess. On unbundling it, on trying to unscramble the egg, you know, often, you know, thought about. Right now, I guess, you know, there's obviously three or two big shareholders that own, Globalworth. We're a third, and then there's an entity called Zakiono, which has got two large shareholders. They're 50-50, but they collectively own 60%.
You know, they also have got, you know, post, you know, this, or in this cycle, with increased interest rates, have had significant sort of, refinancing and pressures to do on their own debt and balance sheets. And so Globalworth hasn't really been a priority, but as we come out of this cycle, you know, perhaps, you know, we can, you know, spend a bit more time on it, but it's, there's nothing imminent there.
Right. This one's probably more for Gavin. So, if my information is correct, Growthpoint has had a front-row seat with regards to the aggressive restructuring of Pick n Pay stores owned by franchisees. Have you been surprised by how aggressive the restructuring has been? How much more exposure do Growthpoint have to Pick n Pay? How many more stores do you estimate will be closed, and how many stores will be reducing in size? So I don't know if there's a rolling mic maybe for Gavin over there.
Gavin, for everybody's benefit, is head of our retail-
Apologies
...portfolio nationally. Yeah.
Yeah. Thanks very much. Just to give some context to the Growthpoint portfolio with Pick n Pay, we may have had a front-row seat by observation, but not by impact. Pick n Pay, we have 19 Pick n Pay supermarket stores in total, including in that is two hypermarket stores. We don't have any franchise stores throughout our portfolio. They're all corporate stores. They're very strongly located stores. There were two specific stores in the portfolio that were trading poorly from Pick n Pay's side. They have signed band-aids to relet. They still have long leases on them, and they're under offer by Shoprite and Checkers. We don't have any Boxer stores, and there's a lot of interest in a number of our assets from Boxer. Pick n Pay, contextually within their clothing and their liquor trade, at very good levels.
Of the nineteen total stores, it occupies 100,000 sq m of space. It's about 6.3% of gross retail rental. So they are a significant part of our business. We would measure about six of those stores, which would trade slightly below the average trading density of the portfolio, not concerning stores, but will be looked at by Pick n Pay for reductions of 10%-15% of space and may be given to franchisees in that process. And that is the process we go through with Pick n Pay. We've just renewed Festival Mall for five years. We've renewed Constantia Village with Pick n Pay for five years. So we have active engagements with them. So the portfolio is strong.
... and on the back seat of that, the positions are powerful, and they attract a lot of attention from competing supermarket groups for that space.
Thanks, Gavin.
Yeah.
Right, a few questions here. What is the like-for-like NPI expectation for RSA for FY 2025? Should CRP be sold, what would you intend doing with the proceeds? And then will you consider increasing your dividend payout ratio, given the comments around liquidity? So, I mean, the NPI one's a bit of a forecast, right? That's a bit weird, right? Can we do that?
What was it on the slide?
Uh.
What was this year?
Yeah, so look-
It'll be better than this year.
Yeah, I think that was gonna be my answer, was it's gonna be improved, probably closer to normalized levels, is about as much as I would say, in, in terms of-
Yeah, I mean, I would just hedge.
Yeah.
office, you know, office remains a bit,
Yeah
... a bit of a concern.
Mm.
You know, national vacancies are still high.
Mm.
Our own vacancies are something like 15% in office, and it's very difficult to start getting positive reversions when you still have that kind of oversupply.
Mm.
So we do feel pretty confident that industrial and retail would turn positive on the reversions. I mean, we saw like for like in, I think in... Was it retail? Was 4%.
Mm.
Still negative reversions of three.
Mm. Mm.
So we do think those negative reversions turn positive. That'll mean the overall like for like will be better in those two sectors, but office is gonna pull it back. And, I don't have the overall number for the three sectors in my head.
Mm. It's about five.
But there, we definitely would see an improvement.
This year.
Yeah.
Yeah. So it'll be a bit more than-
Yeah
... the current year. CRP-
CRP
... sold, the proceeds? At this stage.
Look, again, I think for now, just-
Mm
... I'm not gonna say anything about Capital & Regional.
Okay.
Sorry, guys.
The payout ratio?
Payout ratio, look, you, the context or the question talks to and links the payout ratio to liquidity. I think liquidity's never really been the key issue. We've always had good liquidity. The real restraint, if you want, or constraint, was more, LTV, you know. And, so whilst even last year we had ZAR 6 billion plus of liquidity on balance sheet at year-end, we've got a rolling ZAR 6 billion of liquidity available. But we were concerned, as we said previously, that LTV trajectory was up, and in order to fund our development activities, you saw the numbers here. This year we spent ZAR 2.1 billion on development activities and CapEx. That needs to be funded. So, you know, we can borrow more.
At the moment, with our share price where it's at, we're not really prepared to issue equity, but we can borrow more, but we're worried about the LTV. Hence, you know, the decision to cut back on the dividend. I would suggest that and I think I've made this comment before, that I don't think Growthpoint ever goes back to 100% dividend payout ratio. The business needs to be self-funding, as best as it can be. You know, if we're spending two odd billion rand, that is made up of about ZAR 1.5 billion of CapEx and seven hundred odd, sixty to seven hundred odd million of what we call maintenance CapEx, and ZAR 1.5 billion of development CapEx.
Certainly, the maintenance CapEx, you cannot just borrow every year to fund your maintenance CapEx. You have to fund that from internally generated cash resources. And that, by definition, means that dividend payout ratio couldn't and should never be 100%. The good old days are long gone. So I don't think we'll be moving off the 82.5% anytime soon. You know, perhaps when LTV start, you know, going back down into the mid-thirties or something like that, we can have another look. But not whilst they're elevated at or above the 40% level.
Okay. Trading and development and GIP forecast for next year. So I think they're asking for growth numbers similar to the retail numbers. I think, once again, on the trading development, very lumpy. If all the deals come off, it'll be definitely more than this year. And, on the trade, on the GIP side, I think it will also be more than this year. Then on the, Lango side, is there recourse to Growthpoint's balance sheet of the Lango debt, and is there a realistic expectation of a dividend from Lango in the next financial year?
So there's no recourse. I mean, important to know that the funds management business is set up and structured in a way that there's no recourse to Growthpoint. While we, in our AFS, in the annual financial statements, consolidate these entities, not Lango, because it's not a REIT, but we consolidate the healthcare fund, we consolidate the student accommodation fund. It's a technicality, which it talks to us imposing REIT status on those entities. But we obviously, in this presentation, we've tried to simplify it because it does muddle the numbers a little bit. We only own 18% of,
Student accommodation
... of the healthcare or student accommodation, but we consolidate it. So it makes the numbers difficult to follow in a way. But there's absolutely no recourse. Obviously, there's brand risk. We put our brand to it. It's our fund. It's Growthpoint Healthcare, Growthpoint Student Accommodation. But there's no legal, financial underwrite by Growthpoint of their debt and their gearing, and definitely not Lango.
If they re-domicile, then we will probably receive a dividend.
Yeah, so we optimistic that with Lango's re-domiciliation to the UK, some of the, or the current constraints on paying a dividend will be eased up. And I know that Gerald snuck something in the budget there for Lango this year.
Okay. Then there's another question probably for you, Gav. Shoprite have announced a much larger format, standalone, I think it's called MediRite or something like that. Have you heard of it? Right. Have you seen demand for this new format, and are you able to accommodate these stores without complaints from competitors?
... MediRite pharmacy component has been around with Shoprite for quite a long time. They have talked about penetrating the market with individual standalones as opposed to with in-store concepts. They are at the tail end of trying to find space in centers because of the lead by Dis-Chem and Clicks, and there's limitations on pharmacy license and the number of pharmacies per square meter in a center. But those are active discussions, and we have got one or two opportunities we've explored with them, where we don't have the full component of pharmacies in the mix. We do not have currently a single standalone MediRite. They are all inside the stores.
Right, so no more online questions. Anybody in the audience with a question? There's a hand up. There's a roving mic. Maybe just... If you can give us your name, and then the question.
Nusiki Nene from SBG Securities. Just wanted to touch on guidance, right? You have an Aussie dollar cross-currency swap, which is expiring in FY 2025, or that you've mentioned, or at least on average, at a rate of 1.2%. Can you please give us the month in which that swap expires?
Mm-hmm.
Kinda useful.
July.
July.
July. Some in July, some in September, and some in March of next year.
There's more than one-
So it's not just one-
Yeah
... swap.
Okay.
It's a couple of them. Is the biggest one of the lot the July one?
Yes.
The September one. Okay, yeah.
September. Okay, cool. And then, can you give us an actual number for the diesel spent in the V&A for FY 2024?
FY 2020. We disclosed it at the-
No.
Did we disclose the number at the half year?
No. We'll have to come back to you on that number.
Yeah, I'll have to-
Yeah
... we'll have to revert you on that.
Okay.
From memory, it was about $20 million or $30 million.
Modelled materially.
Trying to find every little cent to try and get closer to growth.
But I thought you guys weren't recovering on that, so if there's no load-
We weren't.
Yeah, yeah, yeah.
That's an expense.
Yeah.
That's expense.
It'll be. It's, but it's baked into our guidance that we've given on the waterfront, which says mid-single-digit growth of this year. The saving on diesel, you know, will be baked into that number, into that projection.
Okay.
But I think it's ZAR 20 million-ZAR 30 million, right?
Okay, and then just-
Yeah, it was a deliberate decision taken at the waterfront at the time, not to charge the tenants any cost for diesel for the generators. Because, you know, they're already paying a fulsome rental there, and it was a strategic decision as well to position the waterfront relative to competition, that the waterfront's up and running. It's always on. When there's load shedding, you go to the waterfront anytime, everything should be working.
Okay. And then just lastly, the guidance range. Do you guys include a potential cut in interest rates in that number, and is that why the range is as wide as it is?
Yes.
Okay.
That question, yes, is the answer, yeah.
Okay, cool.
Question over there?
All right. Talya Ginsberg from Umthombo Wealth. I have a question, just to get more color on the C&R's sale. Are you gonna dispose of 100% of your stake or just part of it?
I'm not saying anything about CNR.
You can't disclose.
... I'm sorry.
Okay, and
The UK panel is a very. It's an onerous territory to speak about a listed company, listed on the London Stock Exchange, in public, is just something I'm not prepared to do. Sorry.
Okay, that's fair enough. If I could then proceed with my next question. Given that you would be given proceeds from that sale, would you want to recalibrate your international strategy? By that, I mean, would you just want to stay out of it? Would you want to reinvest in the UK, or would you perhaps want to go to different geographic regions, such as CEE or Southern Europe, Australia, wherever?
Yeah, look, I mean, certainly we continue, you know, strategically to, you know-
Save the dates
... to favor offshore investment. You know, SA's turning, SA's looking better, but, you know, fundamentally and strategically, we continue to look to, you know, expand internationally and improve our offshore exposure. We don't have any geographies identified at the moment that says we wanna go into North America or, you know, south of France. So we're comfortable with the regions that we're in. And certainly, you know, Australia's always been a very much a favored destination at the Growthpoint board level.
And while Eastern Europe and the entity that we're invested in is having challenges now with the, you know, with the debt and the cost of debt, Eastern Europe as a region, Poland and Romania as countries, are still viewed favorably by ourselves in terms of the macro demographics of those countries. So strong GDP growth, low unemployment. Yes, they're emerging markets. Well, Poland's not so much of an emerging market anymore. But the growth rates and the yields and the returns you get out of those markets are commensurate to what you get in South Africa, and probably on a risk-adjusted basis, we believe better. And one of our difficulties has been, I guess, the exposure to office.
You know, right across our business, I guess, if you compare us to many of our competitors, we are heavy in office. We're heavy in office in South Africa, we're heavy in office in Eastern Europe, we're heavy in office in Australia, and that's, you know, some of the challenges we're dealing with, I guess, when you're looking at relative performance at the moment. But I would say that any further offshore allocation of capital would probably be into, you know, existing jurisdictions that we're already in and familiar with.
Okay. All right. Thank you.
All right, anybody else? Coffee's getting cold.
Yeah, maybe more just for my own information here. There was quite a big decrease, right, on the student accommodation, like for like growth from an NPI level. Can you just explain what exactly was taking place there?
Yeah. So look, student accommodation was obviously very heavily impacted by the change to the National Student Financial Aid Scheme, where they reduced the rate that they were paying per room unilaterally from George. Is George in the room?
Yeah.
From where are you, Georgie?
From 60,000 .
Ah, from 60,000 to?
45,000 , only for Pretoria.
Okay. 65,000-45,000 , predominantly in Pretoria. That together with the fact that we had a rental underpin. When we bought the original portfolio from the Feenstra Group, they gave us a two-year rental underpin. And that underpin is obviously now expired, and we were exposed directly now to these lower levels of rentals. That, together with some additional debt funding that was introduced, has resulted in lower distributions, you know, from the student accommodation fund. Yeah.
Who's taking up office space in Sandton?
Where's Paul? Yeah, Paul, you wanna answer that? I think you're best, please, please, please.
Thanks a lot. So actually, a combination of people. We have seen tenants who left, specifically large tenants who left a couple of years ago, come back to Sandton. But a couple of BPOs. So BPOs nationally have been a good source of tenants for us, and a growth market for us, and then a lot of smaller companies. So we're doing a lot of deals in Sandton, but the average size deal in Sandton is around 500 sq m. So it's not that we're reducing space in one fell swoop, but it's really chipping away at those vacancies over time.
Who was the one that left and came back? Was it Engen or-
Engen.
It was Engen.
So Engen came back.
That was about 6000 sq m.
Yeah.
We had one BPO for close to ten.
Yeah.
So-
So at Illovo Office Park, we had FNB move back into. They refurbished their, you know, one of their big buildings here in town. They moved out into, back into the RMB building and left a 10,000 vacancy. We filled that with a BPO. So BPO is this business process outsourcing, call center, coding, whatever you wanna call it. It's sort of a.
Right
... an all-encompassing word for these kinds of companies. Very strong in Cape Town, very strong in Durban. So much so that, in fact, with the Cape Town market now being almost fully let, and Durban on the Ridge, Umhlanga Ridge, which is where the guys typically wanna be, our vacancy there is 1%. These guys don't have actually space to go, and it's a growing market. There's more South Africa as a destination for BPOs actually, increased the appetite and favor of South Africa has increased post-COVID. And, so we're seeing excess demand flowing to Joburg. It's been a bit slow in coming. The guys are hanging around. They don't really wanna come to Joburg, I don't think, but they don't have any options down in Cape Town and Durban anymore.
So, we did another 4,500 sq m, one in Constantia Office Park on the West Rand. It's definitely picking up, you know, momentum. We see that as, you know, one of the opportunities to fill some of the, you know, the 15% vacancy that we still have in office.
Weather's much better here.
All right, everyone, I'm just conscious of time. It's already 12:45 P.M. We will be around for questions if anybody wants to join us for a drink and a snack. I'd like to thank you very much for your time and attendance. Much appreciated, and we hope to see you again in six months' time. Thank you.