Morning everyone, and welcome to Hyprop's interim results for 31 December 2024. I want to use this opportunity to say thank you to the shareholders for their ongoing support. A big thank you to the South African and European teams for the dedication and hard work. If we look at our agenda, I will be handling the progress and the headlines. Wayne Abegglen will be giving us an update on the operational performance of South Africa. Yvette Van der Merwe on the operational performance of Eastern Europe. Brett Till, our financial results, and I will be handling the closing. We started as a management team more than five years ago. Hyprop is a specialist retail fund with one of the best portfolios in South Africa.
Our why is creating spaces and connecting people, and how we do it is owning and managing and redeveloping dominant retail centers in mixed-use precincts and key economic nodes in South Africa and Eastern Europe. We set ourselves the following key strategic priorities. It's repositioning our South African and Eastern Europe portfolios to ensure it's dominant and maintain our relevance, strengthening the balance sheet and simplify the capital structure, protecting the value of the African investment whilst taking the exit, annual portfolios reviews to evaluate the case for recycling assets and finding new growth opportunities. During this period, we had several challenges, and the teams have done excellent work achieving our priorities. We implemented the high-stake liquidity event by Hyprop acquiring the four core Eastern Europe centers. The centers we've identified as non-core were sold at market value or even above.
These sales included Atterbury Value Mart, the two Delta City centers in Podgorica and Belgrade. We are actively marketing other assets we have identified as non-core. In terms of strengthening our balance sheet, we reduced the consolidated loan-to-value from a peak of 52% in June 2020 to 36.3%, increased our unencumbered assets from ZAR 2 billion- ZAR 5.6 billion, and settled all the dollar equity debt. We reduced our EUR LTV from 86.2% to 47.2%, and with that, we also reduced the euro equity debt from EUR 403 million- EUR 87 million. We implemented the sale of the remaining assets in Africa to Lango and with this transaction, we canceled all guarantees and commitments relating to the in-country debt in Africa. In terms of our capital allocation framework, we acquired Table Bay Mall in the Western Cape, plus we started the phase two extension of Somerset Mall.
Various repositioning initiatives were completed with our South African and Eastern Europe portfolios. On the South African portfolio, we improved the tenant mix by securing Checkers FreshX as a new anchor tenant. We opened the first Zara within the Hyprop South African portfolio at Canal Walk. To increase the dwell time for the shoppers, we upgraded our restrooms. We reduced the energy cost with the installation of solar plants at all our Gauteng centres, as well as Table Bay Mall. We're busy with the installation of a battery solution as well as a gas generator at Rosebank Mall, which will be completed at the end of March. We have full backup power at all our centers in South Africa.
And what is a big advantage with all the work we have done, the effort ratio in the South Africa portfolio reduced from 11.3%- 7.9%, and that gives us scope for positive rent reversions going forward. On the Eastern Europe portfolio, as part of a two-year project, we improved the dominance of Skopje City Center in North Macedonia. At The Mall in Sofia, we completed the hyper conversion. This mall was increased to 61,000 sq m, and we upgraded the food court as well as the restroom. We recently completed the increase and a refurb of the food court at City Center One West. The focus in Eastern Europe is securing new opportunities. In Africa, Wilhelm concluded the sale of the remaining four centers with Lango, and this was implemented in September 2024.
The historic Africa structure was also sold as part of the transaction, and this will give us some corporate savings in the future. The last step is selling the Lango shares. It is great that we have dealt with the sins of the past and can now focus on our core portfolio in South Africa as well as Europe. Looking at our headlines, we had an excellent operational performance. Sorry, I am going back. Sorry about that. We had an excellent operational performance for the last six months and on track to meet the upper end of our guidance. The group distributable income increased by 14.5% to ZAR 765 million. Our distributable income per share increased by 14.4% to ZAR 2.01 . We have successfully strengthened the balance sheet, caught up with CapEx, and implemented the sale of Africa.
Therefore, we have decided to increase the payout ratio for this financial year to 80% of our distributable income of South Africa and Eastern Europe from the current 75%. The board declared an interim dividend of ZAR 1.13 per share, which is 95% of our distributable income from South Africa, compared to the 90% before. After the sale of Africa, the LTV reduced to 36.3%. Our ICR improved to 2.6 x compared to 2.5 x, and we are at a healthy liquidity position with ZAR 807 million of cash and ZAR 1.1 billion available bank facilities. On our South African portfolio, all the operational performance looks positive. Our tenant turnover increased by 4.9% and trading density by 4.4%. We are busy right-sizing some tenants, for example, Edgars, and therefore, our vacancy increased slightly to 2.4%. The benefit of this right-sizing we can see very clear at Canal Walk.
The reduced Edgars store had the same turnover on half the space. Our vacancy, I believe, is still well below the market norm and creates the flexibility to improve and optimize our tenant mix. We had positive rent reversions of 4.4%, and Wayne will unpack that in more detail later. We made good progress at Hyde Park Corner with the completion of the first phase of Workshop17 and securing Checkers FreshX for the old Pick n Pay store. We opened the first JD Sports at Canal Walk, and it traded exceptionally well. At Somerset Mall, we started the phase II extension. Now looking at Europe. Our tenant turnover increased by 8.8%, trading density increased by 7.1%, vacancy remains low at 0.2%, and we had positive rent reversions of 7.5%. The independent property values increased to EUR 620 million on the back of good income growth.
Now, I am going to hand over to Wayne to give us an update on the South African portfolio.
Thank you, Morné, and good morning to everybody. Our South African portfolio constitutes the bulk of our business operations. The portfolio, which predominantly consists of regional and super-regional assets, constitutes 68% of our investment property and also 59% of our distributable income, and equates to 78% of our total GLA. The SA portfolio consists of seven large regional malls, one small regional center, and one super-regional mall, which is located in key economic nodes in Gauteng and in the Western Cape. The size of the assets range from about 38,000 sq m- 154,000 sq m , which is our flagship super-regional in Canal Walk in Cape Town. Over the past six months, we have welcomed more than 45 million visitors to our shopping centers.
If we start looking at our SA operations from a rolling 12-month basis, key trading metrics for half year 2025 were positive, barring a slight increase in vacancies to 2.4% if we exclude the Pick n Pay vacancy at Hyde Park Corner, where we have secured Checkers FreshX as a replacement. Despite the marginal increase in the vacancy rate, this remains well below market norms and allows us the opportunity to enhance our offering and also to develop better experiences. Key trading metrics for the half year 2025 are as follows: tenant turnover increased by 4.9%, the effort ratio improved by 0.3% down to 7.9%, and trading densities grew by 4.4%. The average monthly foot count showed stable growth of 0.4%, resulting in an increased spend per head of ZAR 4.5% to ZAR 328.
Very strong trading growth was recorded in August, October, and November of 2024, mainly due to improved consumer confidence, two-pot retirement fund withdrawals, new store openings, and also Black Friday sales. If we consider our operations in terms of five-year trends, the following graphs show the trends in key metrics, and this excludes Table Bay Mall. Positive turnover growth from tenants remains, and considering performance on a year-to-date basis, we anticipate that this trend will continue. The upward trend in rental income growth continues at 4.4%, and this coupled with good growth in turnover rental at 10.5%. The weighted average lease escalation shows a positive trend, slightly up at 6.5%. Focusing now on our leasing activity on a year-on-year basis. Overall reversion rates are positive at 4.4%.
The total renewal reversion rate shows growth of 1.5%, strongly supported by new deal reversion rates of 8.6% for retail space and 56% for office space, resulting in a total new deal reversion rate of 18.3%. Retail vacancies, which now include Table Bay Mall, equates to 3.1%. If we exclude the Pick n Pay vacancy at Hyde Park, now let to Checkers, this reduces the number to 2.4%. Office vacancies are 22.1% as of December 2024. However, it must be noted that 17 Baker Street was a strategic acquisition for us and subsequently mothballed. If excluded from the vacancy factor, office vacancies are reduced to 17.7%, and total vacancy reduces to 4% from 4.3%. The lease expiry profile for 2025 is 11.1% of GLA. This could potentially support our repositioning strategies and opportunities for growth should current demand and trends continue.
Looking at our SA leasing workload for the financial year 2024, is about 285,000 sq m. The workload balance as of the 31st of December is 210,000 sq m. Deals under negotiation currently equates to 102,000 sq m and expiries 79,000 sq m. Total expiries for our full year 2024, apologies, is 183,000 sq m and very good progress has been made in this regard. Having a look at some of our new tenancies in our South African portfolio, there were quite a few new tenants who partnered with us during the past six months, of which some of the highlights are depicted on the current slide. I would like to make specific mention of the following tenants in terms of our repositioning and asset management strategy.
At Canal Walk, we were very proud to have the first JD Sports open in South Africa. Silki, an online brand with its first standalone store in South Africa, focusing on body care products, opened. Baseus, a leading international electronics brand, opened a store, and we also welcomed Shift Espresso Bar with a flagship offering. Château Gâteaux, Refinery Junior, Seaweeds, a very fashionable swimwear brand, Whitehouse also opened new stores at Canal Walk, and The iStore Pre-owned opened to complement the iconic iStore flagship offering in the shopping center. At Somerset Mall, we welcome Faithful to Nature, Hi-Tec, Steve Madden and Château Gâteaux. In Cape Gate, we welcome Bootleggers, enhancing our food journey, Pet Sense, Yokico, and there was also a substantial expansion to the PNA store, which is now a flagship offering, and Computer Mania relocated and also expanded.
At Clearwater Mall, Continental Linen opened, Château Gâteaux opened a Crocs store, and McDonald's conducted a full revamp. Anchor tenants such as Pick n Pay and Woolworths have started to perform really better due to collaboration and asset management initiatives with them. At The Glen, new motor dealerships opened in Omoda and Jaecoo. Häagen-Dazs opened a new kiosk and we welcome Porter & Craft into the mix. At Woodlands, Wellness Warehouse opened their doors, Curve Gear and Cellini. At Hyde Park Corner, Kitchen Samurai opened, specializing in knives, whetstones and accessories. A very unique offering. Avenue is an international fashion brand store. Brand Contemporary, Cube Gallery and Society 1840, a luxury salon and day spa, was also opened. Workshop17, which offers dynamic workspaces, commenced trading in October last year.
We are also very excited about concluding a deal with Checkers FreshX, which is scheduled to open in July of 2025. Moving on to Table Bay Mall, we welcome Skechers, which is trading extremely well, and Contempo, Teawesome and Hungry Lion was brought in to enhance our QSR offering. At Rosebank Mall, Cable & Co. is the first store in Gauteng for the brand, a premium fashion offering. Ajmaan, the only modesty fashion store in the center, and we also welcome Steve Madden, One Stop Travel, Ribs & Wings and we are very happy to, excuse me, to announce that the SOKO District is now fully let since inception. It is trading extremely well and is a strong differentiator for the mall.
If we move on to some of our completed projects in the portfolio and those that are currently in progress, I would like to give you a brief update on them. At Hyde Park Corner, Workshop17 commenced trading in October in 2024. Phase I GLA is approximately 3,000 sq m, with total GLA at completion of about 5,000 sq m. We secured a 10-year lease with the tenant. We also opened The Forum in October 2024. This is an exclusive events venue. The size of the premises is about 600 sq m, and they also have about 400 sq m of external area. We also secured a 10-year lease with this tenant. They host exclusive events like the Discovery Foundation Awards, the Johnnie Walker launch, and the Living Planet Award, just to mention a few.
At the mall offices in Rosebank, we conducted an entrance upgrade, a foyer upgrade, and we also invested capital in upgrading our HVAC plant and equipment. At Hyde Park, Clearwater and Woodlands, we initiated a water backup project. This allows a three-day potable water backup supply for continuous trade. The first phase of this project for the portfolio was completed on December 4, 2024. The Glen and Rosebank installations have also commenced and will be completed by June 2025. The total investment in this equates to just over ZAR 15 million. Moving on to Somerset Mall. This is a substantial mall expansion for the center, and it also consists of retiling of the existing mall and also a bathroom upgrade. The project consists of an expansion of the mall from 70,000 sq m- 75,500 sq m.
We are also introducing approximately 50 new tenants, with a focus on athleisure and mono brands. Leasing is progressing well, with offers under negotiation on all the major spaces. The project includes the downsizing of Game from 6,000 sq m- 4,000 sq m, and the relocation and downsizing of Edgars from 4,000 sq m to approximately 2,900 sq m. We will also be establishing a new food experience in the existing, or at least the ex-Edgars space, with a family entertainment venue. Section one will be completed in November 2025. The athleisure and fashion component with section two, the food and family entertainment experience, will be completed by July 2026. The retiling of the existing mall and columns is earmarked for completion by July 2025, and the bathroom upgrade and refurbishment has commenced and will be completed by November 2025.
In terms of projects that are in progress at Cape Gate, we have looked at the land parcels around the center and have started with satellite office developments. The north side has been sold to Mediclinic, where they will be developing GLA of approximately 4,800 sq m. We have also included minimum restrictions by when this development needs to commence. We have concluded an office development agreement on a leasehold basis with SOM and Giflo on the southern side parcels of the asset. There are three development opportunities as depicted in the rendering on the bottom right of the slide. The anticipated GLA to be developed will be as follows. Site one will be just under 5,000 sq m, site two just under 3,500 sq m, and the third site just under 5,700 sq m of office space.
Mediclinic has not indicated when it will proceed with its development, but will consist of medical consulting rooms. The launch of the SOM and Giflo sites has been very well received in the market. Several international and national blue chip office tenants have expressed interest, and timing is subject to securing tenants. Having a look at Hyde Park Corner, I have already touched on the Checkers FreshX project, which is currently in progress. The project will be completed by July 2025. The GLA equates to about 4,000 sq m and includes a mezzanine level. The development will also include a Checkers liquor store, and we have secured a 10-year lease with this tenant. At Cape Gate, we are currently in progress with the refurbishment of the roof and the installation of solar panels.
The maintenance of the roof is now complete to receive the solar panels, and the size of the plant will be approximately 5.3 MW. Approval of the application to proceed with solar is imminent, and commencement of installation is targeted to be in June 2025. Lastly, at Rosebank Mall, we have commenced with a gas generator and battery storage installation. This is comprised of energy storage, or at least battery energy storage for the mall. Practical completion is earmarked for the 30th of April 2024. Capacity will be about 6,000 kW, and the benefits here include uninterrupted power supply and electricity that can be sold to tenants at lower rates during load shedding and straight diesel generated tariffs.
If we move on to the impact that we are making, our investment in sustainability and the environmental impact on the various projects undertaken over the past few years has resulted in the following. Our reduced electricity consumption now equates to 29.6%. Increased solar capacity is 396%, and our reduced water consumption equates to 10.2%. In closing, the South African portfolio has delivered a good set of interim results. As can be seen, we are continuously investing in our assets and looking at repositioning the portfolio for growth and for defensive purposes. We will remain focused on driving our operating income and asset value and staying true to our purpose of creating spaces, connecting people, and making sure that every experience is memorable. We have amazing teams and people in our business, and through collaboration and being innovative, together, we will make it happen.
I would now like to hand over to Yvette Van der Merwe, who will take us through the Eastern European portfolio.
Thank you, Wayne, and good morning to everyone. Despite elevated levels of global uncertainty, investor sentiment towards our region remained positive. The region is well positioned to evolve due to its cost competitiveness, improving economic conditions, and strong investment appeal, which is primarily driven by strong consumer demand and consumption. Generally speaking, the economy is performing well. Wages have continued to grow, inflation is calming down, unemployment has decreased, and the forecast is for further growth ahead. The regional average GDP growth for the CEE countries was 0.6% in 2023. It accelerated to 1.8% in 2024, and is expected to reach 2.8% in 2025. This good economic growth benefited from the declining inflation, which allowed central banks to cut interest rates.
It must be noted that while the inflation seemed to be under control, the potential for further significant decrease is limited due to raising prices of services and food products. The same goes for the interest rate forecast. Further reduction, if any, is expected to be more modest than the previous reductions. In 2024, retail showed a recovery pattern across the region, not only on the performance side, but also on the investment market appetite and new development schemes. The retail sales rebounded strongly in 2024. Investment activity seems to be more on the optimistic side, considering the low interest rates and more pipeline project development, which is currently dominated by return park projects, partly reflecting the consumer's preference for convenience and proximity, while also allowing developers to have smaller financial exposure. The normalization of the construction cost is also contributing to unlocking more of these retail park opportunities.
ESG remains a focus for developers, tenants, and lending institutions. E-commerce is still on the increase, but brick-and-mortar physical shops are expected to remain the main sales channel. While some retailers will optimize their physical store presence, by example, closing down certain locations to improve sales in the remaining ones. Technology integration and data-driven approaches are expected to play a key role in guiding international retailers to make more informed decisions on expansion strategies. We move on to the slides. We look at the macroeconomic and retail environment. The real GDP growth in Bulgaria is 2.3% in 2024 compared to the previous year. Expectations are for steady economic growth revolving around 2.7% from 2025 onwards.
Similar to the trend in the Eurozone, inflation in Bulgaria has started to decrease, reaching 2.8% in 2024 as opposed to 8.6% in 2023, and is projected to further slow down to reach 2.6% in 2025 and to even reach the ECB target of 2% in 2026. The unemployment rate in Bulgaria remains one of the lowest at 4.3%, which is lower than the European average. The total shopping density in Sofia is 300 sq m for 1,000 inhabitants. Eurozone preparations for Bulgaria are on its way to adopt the euro as official currency after being tied to it in a currency board for about 25 years. The euro currency adoption has been postponed due to the lack of a stable government, but remains a priority for the main political parties.
On the other hand, the preparation for the country's full membership in the Euro Schengen area on land borders reached finality during 2024, and starting 2025, Bulgaria is a fully fledged Schengen member. Croatia exhibits similar trends to Bulgaria, with relatively stable GDP growth of 3.4% in 2024, and it is expected to have a moderate growth of 2.9% from 2025 onwards. The inflation pattern resembles the one observed in Bulgaria, however, with less fluctuation. Unemployment is forecasted to remain healthy at 5.6%, and the shopping density in Zagreb is the highest within the portfolio, with 590 sq m for 1,000 inhabitants. North Macedonia has stable GDP growth in the range of 2.2%-3.8%. Like the other economies, inflation peaked in 2022, reaching 14.2%, and declined to 9.4% in 2023, and further dropped down to 3.3% in 2024, approaching the target rate of 2% from 2026 onwards.
The unemployment rate remains high at 13%, and the shopping density in Skopje is high due to the entry of new shopping centers in the last couple of years at 326 sq m for 1,000 inhabitants. On the next slides, we look at our trading performance. Good performance can be observed when comparing the current period with the previous six months. The turnover increased by 8.8% compared to the previous financial year. The trend continues in January with a 7.2% increase. Due to the improved turnovers, the effort ratio decreased by 0.3% for the six months ending December, and into January, the improvements continues with a 0.2% decline. The trading density increased by 7.1% compared to the previous financial year. In January 2025, the trend is similar, with an improvement of 5.6%. On the next slide, we continue with the trading performance.
The footfall for the first six months remained fairly flat, with a 0.8% increase compared to last year and a slight negative growth of 0.1% in January. Since 1st July 2023, the law in Croatia has changed, and we are only allowed to trade six Sundays per calendar year, and we are further not allowed to trade on public holidays. This puts strain on our footfall growth at our two Zagreb assets. However, the positive news is that despite the low footfall, we have more than 8% turnaround growth, and we expect this trend to continue. The spend per head is 7.9% higher for the six-month period compared to the same period last year. This is due to the good growth in turnover while the footfall growth was low. In January, the spend per head increased by 7.3%.
On the next slide, we look at the five-year trading trends. Our turnover has reached 8.1% growth in 2024 compared to the previous year, and our rental income improved with 7.5%. The indexation movement follows the inflation curve, reaching 6.1% in 2023, while in 2024, it started to decrease to 4%. A major upside is observed in the turnover rental income in the past three years, with a 20.8% increase compared to the previous financial year. On the next slide, we look at our leasing activities. During the financial period, the renewal reversion rate was 6.8%, which relates to 3.7% of the total GLA. Our new deals reversion rate was almost 12%, which relates to 0.6% of the GLA. Combined, the total average reversion rate of new deals and renewals is 7.5%, which relates to 4.3% of the total GLA. During this period, our retention rate of tenants was 85%.
Further breakdown of the reversions for all deals concluded in the past six months includes flat reversions of 27%, followed by positive reversions of 53% and only 20% with negative reversions. The total occupancy rate is 99.8%, with only 0.2% vacancy in The Mall Sofia. The lease expiry workload over the next four year is fairly smooth, with the highest expiry of 34.8% of GLA in 2029 and beyond. We continue with our leasing activity on the next slide. The lease workload at the beginning of the financial year was 17,718 sq m , and by the end of December 2024, the workload reduced to 9,642 sq m, of which 320 sq m were vacant. Tenant movements in Skopje City Mall, M House Roastery Cafe has opened successfully, enhancing our food court offering.
The former ATM area that was relocated is now leased to Intel and Grant, creating additional revenue with a service offering. Our new fashion tenant, Gerry Weber, opened their doors at the end of February, and Swarovski has completed a full upgrade. In Bulgaria, The Mall welcomed several exciting new stores in Sofia. Food lovers can now enjoy the famous Belgian chocolate brand, Jacques, and the local Bulgarian specialty store, Balkan Delikatesi , featuring cheese and meat delicacies. Other new stores that opened are Style Nazina, Sunday Habit, and Intesa. Sports fans are thrilled with the opening of Bulgaria's first Foot Locker store and the enlarged premises of Intersport and the Dunk shop. Several stores undergone refurbishments, including Bakers, First Investment Bank, LC Waikiki, and Spanish fashion brands Springfield and Cortefiel.
The famous German fashion brand, s.Oliver, opened a new store in City Center One East, together with 4F, a Polish sports mono-brand concept offering high-quality sports equipment. In City Center One West, our new stores that opened the last six months were jewelry store, Zaks, and Levi's store. Europa 92 and s.Oliver were relocated so that we could rightsize them, and H&M underwent a complete renovation. The following three slides show some of the projects that were completed recently. At The Mall in Sofia, we built a new staircase connecting the food court to the first floor to improve our vertical food flow and access for the adjacent European Trade Center office workers. The next slide shows the expanded and upgraded food court project at City Center One West that was completed in September last year. We introduced five new food operators, which are trading exceptionally well.
From September to December, the food court turnover increased with EUR 1.4 million compared to the previous year. The last slide shows the renovated Cineplex movies at Skopje City Mall that was completed in October last year. Cineplex has completely renovated their foyer and upgraded all their cinemas with the introduction of reclining chairs in four of the halls. It is worthy to note that Cineplex in Skopje City Mall is the only cinema in North Macedonia. I would like to take this opportunity to thank our European management teams, as well as our Hyprop head office team for all their efforts, commitment and dedication. This concludes the Eastern European part of the presentation, and I will now hand you over to Brett, who will take you through the financial section of our presentation. Thank you.
Okay, I think we good. Thank you, Yvette, and good morning, everyone. Distributable income for the period increased by 14.5% to ZAR 765 million. This equated to an increase of 14.4% in distributable income per share, from ZAR 1.76- ZAR 2.014 in the current period. In terms of performance of the individual portfolios, distributable income from the South Africa portfolio increased by ZAR 6 million from ZAR 448 million in 2023 to ZAR 454 million. Excluding Table Bay Mall, revenue increased by ZAR 49 million, following a 4% increase in rental and other lease revenue.
Total expenses decreased by ZAR 7 million due to a reduction in utility and backup power costs as a result of the lower levels of load shedding compared to 2023, and savings in utility costs from the solar plants installed in prior years. The largest increase in expenses was in the depreciation charge, which increased 18%. The cost to income ratio for the portfolio reduced from 45.5%- 44.3% in 2024. Table Bay Mall performed in line with our expectations and delivered ZAR 60 million of operating income. Interest costs increased by ZAR 110 million.
ZAR 80 million was due to the purchase price for Table Bay Mall being fully debt-funded, and the balance as a result of increases in the average cost of borrowings from 8.9% in 2023 to 9.5%, as well as a general increase in borrowings to fund capital expenditure. The Eastern European portfolio delivered an excellent result. Distributable income increased by 34%, from ZAR 229 million in 2023 to ZAR 308 million. In euros, revenue was up 11%, mainly due to strong growth in turnover rentals and favorable indexation adjustments early in 2024, before inflation in the region started to decline. Operating costs in euros increased by 9%, following increases in minimum wages across the region, which impacted cleaning, security and other property costs, as well as an increase in electricity prices and recoverable electricity expenses, particularly in Bulgaria.
The cost to income ratio for the portfolio was stable at 37%. Net interest costs reduced from ZAR 188 million- ZAR 150 million in 2024, and that is for the European portfolio. This is in line with the reduction in borrowings from EUR 351 million in December 2023 to EUR 319 million in December 2024, and the reduction in the average cost of borrowings from 5%- 4.7% in December 2024. The results of the Sub-Saharan Africa portfolio were included up to 30 September, when the portfolio was sold to Lango Real Estate. A small profit of ZAR 4 million was made. I have spoken before about cash flow and that distributable income must be underpinned by cash generated from operations to support the dividend payment.
At its most basic level, this starts with the cash collections each month from tenants. For the period, we collected 100% of the net billings in cash from tenants in the South Africa and European portfolios. The graphs on the left-hand side of the slide reconcile the cash generated from operations to the distributable income, while the graphs on the right-hand side track the cash flow movements from the cash flow statement. The top two graphs are for the six months ended December 2024, and the bottom two for the year ended June 2024. Looking at the top left-hand graph for the current period, we generated ZAR 1.37 billion of cash from operations. This was used primarily to pay interest for the period of ZAR 555 million and tax of ZAR 48 million, leaving ZAR 771 million of available cash.
This compares to the distributable income for the period of ZAR 765 million and the dividend declared of ZAR 431 million, which obviously excludes the income earned from the European portfolio. If you look at the top right-hand graph, you see a similar story with ZAR 740 million of cash generated from operating activities after paying the opening accrued interest and the current period interest and tax. The negative item in the December 2024 reconciliations is the increase in working capital of ZAR 96 million, mainly due to the increase in accrued rent, sorry, accrued income from turnover rentals, which are calculated at the end of the calendar year in Europe and settled by tenants in the first quarter of the new calendar year. As well as accruals for the recovery of municipal costs in South Africa, which were billed in January.
The working capital position was very similar in December 2023, and is temporary, as evidenced by the favorable working capital change in the June 2024 graph of ZAR 23 million. For the year end of June 2024, cash generated from operating activities was ZAR 1.6 billion, compared to the distributable income of ZAR 1.4 billion, and the dividend of ZAR 1.06 billion, which was only actually paid in the current period. The excess cash represented by the difference between the cash generated from operating activities and the dividend for the period is being retained to fund capital expenditure and manage borrowings. To comment on some of the other items in the results. The increase in fair values of the South African and Eastern European portfolios were ZAR 376 million and ZAR 201 million respectively.
These were mainly due to improved net operating income of the portfolios, as there were no changes to the discount and cap rates applied by the valuers. I will explain the reduction in the carrying value of the Ikeja City Mall in a moment. Capital expenditure for the period was ZAR 253 million, of which ZAR 201 million was incurred in South Africa. A further ZAR 145 million has been committed to approved projects. Major projects during the period include the Workshop17 installation at Hyde Park Corner, the subdivision of Edgars at Canal Walk and Woodlands, the dual fuel generator project at Rosebank Mall, preparations for the solar installation at Cape Gate, and various water sustainability projects in the Gauteng centres, many of which you've seen in the previous slides. The fair value of our derivatives decreased by ZAR 134 million due to the reduction in interest rates.
The tax charge of ZAR 83 million relates mainly to the income tax and deferred tax on revaluation of the investment properties in the European portfolio. Sorry, I jumped ahead of myself there with the slides. Before talking about the accounting aspects of the sale of the Sub-Saharan Africa portfolio to Lango, it's useful to remember some of the reasons why we wanted to exit the portfolio for some time. One of the key reasons was to mitigate our exposure to the debt in the portfolio. The deterioration of trading conditions in Ghana required the group to invest nearly ZAR 400 million in Att Africa over the last three years to reduce the Att Africa group's debt. Over the same period, we received no dividends or cash returns from either the Ghanaian or Nigerian investments.
With the disposal, all of the borrowings were transferred, and the group was released from all guarantees and commitments to the lenders to the Sub-Saharan Africa portfolio. In addition, executive management time has been freed up to focus on the core South African and European portfolios. 80% of the Lango shares that we received to settle this sale price were received on implementation in September, with the balance anticipated to be received by the end of March 2025. The Lango shares and sale proceeds receivable are accounted for at fair value. The fair value for accounting purposes has been calculated based on Lango's IFRS net asset value, with their investment properties carried at fair, at independent valuations, and we've deducted a 30% discount from the net asset value as a result of the minority interest we hold in Lango and the reduced marketability of the Lango shares.
This principle was applied in September 2024 on implementation of the disposal and December for reporting. We have grouped all of the items relating to the assets held for sale and the Lango shares and sale proceeds receivable together on the right-hand side of the slide. The carrying value of the assets held for sale were adjusted to the fair value for accounting purposes of the Lango shares received and receivable in September. The reduction in value is reflected as a change in the fair value of the Ikeja City Mall of ZAR 169 million, and an impairment of the shares in Att Africa of ZAR 85 million. On derecognition of the assets sold, the foreign currency translation gain of ZAR 193 million was transferred to the statement of comprehensive income.
The fair value of the Lango shares for accounting purposes was negatively impacted in December, primarily due to the termination of the Lango asset management contract, which resulted in a reduction in the Lango net asset value per share at 31 December, and an impairment of the carrying value of the Lango shares and sale proceeds receivable by ZAR 105 million. The Lango shares and proceeds receivable are carried at the fair value of ZAR 441 million in December 2024. Turning to the group's treasury and borrowings. Total borrowings reduced from ZAR 15.8 billion in June 2024 to ZAR 14.9 billion in December, mainly as a result of the disposal of the Sub-Saharan Africa portfolio. ZAR 750 million of rand facilities were refinanced early at lower margins, with a further ZAR 250 million refinanced post the period end, also at lower margins.
The euro debt reduced from EUR 327 million in June to EUR 319 million in December due to the amortization of the in-country borrowings by EUR 5 million. We continue to work with a variety of lenders in South Africa and Europe, as well as debt capital market investors. The 19% of total borrowings reflected as DCM in the pie charts relates to bonds issued under the DCM program, which are held by investors as opposed to bonds which are held by banks in terms of bilateral funding arrangements. The group's LTV reduced marginally from 36.4% in June to 36.3% in December, and remains below our target of 40%. Positive factors that affected the LTV are the disposal of the Sub-Sahara Africa portfolio, the increase in the fair values of the South African and European property portfolios, and the profit for the period.
Payment of the 2024 dividend had the largest negative effect on the LTV. The LTV of the European portfolio reduced by 1.5%- 47.2%. We will continue reducing this LTV by amortizing in-country borrowings and retaining distributable income in Europe, subject to the increase in the dividend payout ratio. The group's liquidity remains strong with ZAR 807 million of cash and ZAR 1.1 billion of undrawn facilities on 31 December. We intend refinancing the bonds which mature in the next 12 months via the DCM and are planning an auction for early April. Details of the auction will be announced shortly. The unencumbered assets are ZAR 5.6 billion, which is nearly double the value of the bonds issued under the DCM program, other than those held by banks. Sorry, that's the unencumbered property assets are the ZAR 5.6 billion.
We are evaluating various proposals to refinance the EUR 20 million term loan due in July 2025, and will conclude the refinancing of this facility before the financial year end. The interest cover ratio for the period was 2.6 x, compared to 2.5 x for the year end of June 2024. The cost of funding for rand borrowings increased from 9.4% in June to 9.5% in December, despite the reduction in the average margin from 1.6%- 1.5%. The reason for the increase was the expiry of historic cheap hedges and their replacement at current rates. The average cost of borrowings in euros was 4.7%, which is 0.2% below June 2024. The average margin on borrowings increased to 2.2% due to the higher margins on the revolving credit facilities. The benefit of utilizing excess cash to pay down the RCF outweighs the additional margin on these facilities.
85% of the group's interest rate exposure on term facilities was hedged at 31 December. 62% of the ZAR hedges are cap and collars, providing protection against an increase in rates while allowing the group to participate in any reduction in interest rates. The guidance for the FY 2025 of a 4%-7% increase in distributable income per share remains, and the group expects to meet the upper end of this range. The board has also resolved to increase the dividend payout ratio for the FY 2025 from 75% of distributable income from the South Africa and European portfolios to 80%. In line with this, the interim dividend has been increased to 95% of distributable income from the South Africa portfolio. An interim dividend of ZAR 113.43 was declared.
Before handing you back to Morné, I would like to thank our funders for partnering with us, all finance team members for their hard work in preparing the results, and all operations and support staff for their ongoing efforts to ensure our centers remain the leaders in their markets. Thank you, everyone.
Thank you very much, Brett. Now in the closing, looking forward. We are all set for good growth going forward. As mentioned before, and Brett also mentioned it, we are on track to meet the upper end of our guidance. We have increased the payout ratio to 80%, and we will be reviewing the payout ratio again at the end of this financial year with the intention to increase it further. We would like to sell the Lango shares and recycle at least one of our South African centers. We are in discussions with some of our Gauteng centres, but the deals have not been finalized. We are actively looking for new opportunities in Eastern Europe. On the South African portfolio, we want to pursue some further organic growth opportunities, specifically at Somerset Mall and Cape Gate.
Both these centers are located in very strong development corridors, and there is a big tenant demand at these two centers. We are busy with a few projects on the South African portfolio. We want to implement the two PPAs at The Glen and Cape Gate, secure solar solutions for Canal Walk as well as Somerset Mall. The solar solutions will be a combination of on-site solar as well as a wheeling solution. We have rightsized all the Edgars stores in the portfolio and made good progress agreeing terms with Pick n Pay to rightsize and upgrade some of their stores. At Hyde Park Corner, we want to complete phase two of the Workshop17 and complete the new Checkers FreshX at Hyde Park. The focus will now be on Game and Woolworths to see how we can improve their operational performance in our portfolios.
On the Eastern Europe portfolio, we want to finalize the solar installation at Croatia and re-tile City Center One West, also in Croatia. Looking at the next slide, specifically at The Glen. At The Glen, we agreed with Pick n Pay to reduce their store, and this creates an ideal opportunity to improve the flow within the center and secure some further line stores and improve the tenant mix. This is in line with our master plan. As part of the project, we want to increase the size of the back stores and activate the ends of the center, which was not trading well, by improving the flows as well as improving the view lines. You can see that it is indicated with the green arrows on the plan.
We also want to improve the flow from the parking deck to the escalators in the back, and this you can see with the red arrow on the plan. Phase II will focus on improving the vertical flow from this level of the center to the ground floor, which is anchored by Woolworths and Checkers FreshX. Looking at Somerset Mall. We have got three phases happening at Somerset Mall. Phase I, we opened a new Checkers FreshX and improved the food court supporting the cinemas. Phase II, an additional 5,500 sq m, as mentioned by Wayne, will be added. It is to improve the flow, rightsize Game as well as Edgars, as well as replace the food court, which was used to develop the Checkers store.
Phase III will add a further extension of about 15,700 sq m and will link the current Woolworths entrance and the Pick n Pay entrance. All of this is done on the back of additional tenant demand. The tenant mix will focus on new fashion tenants, home and furniture tenants, as well as casual and formal dining. The extensions will further enhance the flow within the center. After the completion of phase II and III, the center will have a total size of 91,000 sq m. At Cape Gate, we finalized the master plan of the Cape Gate precinct. The priorities at Cape Gate is firstly, to improve the look and feel of the center, improve the sense of arrival, and to improve the offering of two of our anchor stores.
As mentioned by Wayne, we secured a deal with SOM and Giflo to develop three office blocks on the satellite sites on a leasehold basis. We sold a site on the northern side to Mediclinic for new doctors' rooms and potentially a day clinic. Parallel with that, we are planning an extension of about 9,700 sq m on the southern side, which will complement the office development. The focus and tenant mix will be casual and formal dining, new national fashion tenants, as well as mono brands and further showrooms. The final design and layout of all these developments must be in line with our master plan and approved by Hyprop. Thank you very much. We will open the floor now. On this slide, we actually just show some artist impressions of what the offices would look, plus the extension.
But with that, we at the end of the presentation, so we will open the floor now for some Q&A. Thank you very much.
We have a question from Pranita at Truffle. Hi, guys. Thank you for the presentation. On the payout ratio, you mentioned that you would be looking to increase it further over time. What is your target sustainable payout ratio, and over what timeline would you expect this to materialize?
Pranita, we haven't put that out in the market. As I said, what we will do is we will actually look in the end of the financial year, whether we want to increase it further. The one thing which we want to get right is actually reducing our debt in Eastern Europe portfolio lower. It's currently 47%. We potentially want to bring that down. So every time we're going to review the payout ratio, we will take those calculations into account and what is happening forward in the market, and then we will make a decision, what is the increase in the payout ratio.
We have a question from Anka. Property operating expenses reduced sharply relative to rent the last 2.5 years. Does this reflect lower levels of load shedding? What would the impact of load shedding over the weekends at recent levels be in the second half of 2025?
I think, it's a combination of factors. Firstly, we have been trying to manage the costs as best we can, given some of the inflationary increases which get passed through. Secondly, we're seeing the benefits of the solar installations that we've done over several years and are harvesting that solar power, where the cost of that is effectively in the funding cost of the depreciation without being in the utility costs. Thirdly, you do have the benefit of no load shedding over the last six months. Remember, when there's load shedding, we under-recover the diesel and generator costs that we operate. Whereas when there is no load shedding, we over-recover the cost of electricity that we pay to council and obviously the cost of the electricity we generate through the solar ourselves.
I think the current load shedding levels over the weekends are probably too small to actually quantify a difference, and try and extrapolate that for the rest of the financial year.
Just maybe our budget has been done on a stage two load shedding.
We have a question from Nazeem at Investec. What are the key issues regarding monthly leases not yet signed? Is there material divergence between the tenants and the landlord?
Not necessarily. I think each one will have its own unique opportunity. I think there's some that are still under negotiations. Others, potentially you want to move the tenant, and it's getting to a point where you can agree terms for the movement, or you sometimes want them to upgrade their store and you need to talk to each other how you're going to do that store upgrade. I think there's a number of reasons why those leases haven't been extended. Obviously, we also measure it and look at it at our ExCo meetings, and we're driving the teams to actually make it fulfilled. But there's not one specific reason why they're on month to month.
Can you please elaborate on the financial impact of the office development agreement at Cape Gate?
How that deal is effectively structured, we've signed an option agreement with SOM. They will find some tenants. Part of the deal is there's an upfront payment, and then there's a continuous ongoing payment from them on a leasehold basis. So we generate upfront payments plus a leasehold annuity income on the transaction we structured with them.
Question from Anka. There's a big increase in CapEx plans. Can you give some color on these? Will GLA change as a consequence?
I think that is quite covered in the last slide. As I said, it is the future projects. The big GLA change on our portfolio would be the 5,500 that is under construction at Somerset Mall. Obviously, the offices that are being developed is on a leasehold basis. We will get some passive income, but the GLA won't sit with us. That will be sitting with SOM and Giflo effectively. What is the benefit of that is you will create annuity income, which is passive, which you don't have to work for. Another reason why we also structured it on a leasehold basis was to ensure we keep control of what happens on those sites.
It is key for us that we get offices and things that is complementary to the mall, and we didn't want to go and do things that is actually going to deteriorate or compete with us in terms of retail.
We have another question from Nazeem at Investec. What was the average decline in ZAR margins mentioned in the presentation? What is the proportion of the older debt on the balance sheet with upside risk to margins similar to recent refinances?
I think I'm understanding the question. The margin reduction we're referring to is the borrowing margin that the banks or the DCM add to the base rate. When the presentation is available on the website, if you have a look at slide 74, there is a breakdown of what the margin is compared to the base rate that we pay on the various facilities we have. There is also a fairly detailed list of our facilities in the financial statements from last year that show you the margin on the different loans. Why the margin is coming down, we're trying our best to negotiate with the banks where we can. We have had improvements in our credit rating over time, and I think that has been a factor. We're also using alternative products with the banks.
For example, when the banks can fund using a DCM bond, they are able to provide a better funding cost than without the DCM bond because of the way that they have to hold reserves relative to those, or for the bonds rather than the traditional term facilities. Thirdly, I think all issuers have benefited from the oversupply of money in the DCM market, and I think generally people's margins have been coming down over the last 18 months, I would say. Sorry, Boyti, what was the second part of the question?
What is the proportion of the older debts with upside risk to margins similar to recent refinances?
I think you are referring there to the interest rate hedges. I would have to check the percentage, but we have been rolling our interest rate hedges consistently for the last two years. We have managed to flatten that expiry profile quite significantly. I think the historic hedges that were done shortly after COVID, there are probably only two or three of those left in the system, but I will check for you and update you when we speak to you individually.
Then we have a few questions from Moshira at Standard Bank Securities. Hi, team. Great progress on the environmental impacts. How much spend on solar is expected in the second half of the financial year and in FY 2026, respectively?
In terms of PPAs, effectively, we don't incur the cost that's incurred by a third party in we buying the power from that, although they use our roof space to do the solars on. In terms of The Glen and Cape Gate, there won't be any CapEx. At Somerset Mall and Canal Walk, we are considering on-site solar, and if we go PPAs again, it effectively won't be a cost for us. If we do the solar itself on our site, you're looking at a plant in any region from ZAR 70 million- ZAR 80 million. I think something like Canal Walk will be a little bit bigger. I think our intention is to go again with PPAs, given the numbers work.
We're also looking at wheeling, where is also no CapEx expense to us, but actually a contractual obligation with someone buying power from them rather than having the CapEx on our balance sheet. Is there anything you want to add?
No.
Next question. Please explain the tax change related to Eastern Europe portfolio. The results mentioned on page nine. Is this new effective tax rate expected to remain?
The European entities all pay tax as normal companies do. They don't have the benefit of a REIT regime like we do in South Africa. The tax rates there vary between 10% and 18% for the operating companies and up to 25% for the holding companies in the U.K. and the Netherlands. The tax charge has always been there, but we took some steps last year to try and mitigate some of the tax leakage, and you're seeing the benefit of those steps coming through in the reduction in the tax rate for the current financial period. Remember, they also pay tax on not only their income tax, but on capital gains as well. The revaluation of the investment properties gives rise to a deferred tax charge related to that gain.
Then last question from him. Given how the SA operating costs decreased, are you expecting similar decreases in FY 2026 on the SA portfolio?
Look, I mean, a large proportion of the reduction in operating costs is due to the benefits from the utilities. That is dependent on load shedding. But hopefully, I mean, we are already three months through the second half of the financial year, and we have only had limited amounts of load shedding thus far. So if that continues, I think we can expect costs to remain fairly flat six months on six months.
There could be a benefit coming through when some of the solar plants also come into operation going forward.
Then we have a question from Etienne le Roux. How long do you plan to settle all the EUR 87 million equity debt in Eastern Europe? How much is amortization per year? Will any excess cash go into paying down this debt?
I can answer that. ZAR 87 million is what we call Euro equity debt. There is no amortization on that debt. That is interest-only facilities, and those is mainly funded by SA Banks. What we do do is when those It has got a staggered expiry profile. So if we have cash, we do reduce it, and we have done it actually before. I think we communicated when we settled EUR 20 million of debt, and we put a resolving credit facility of EUR 10 million on that. In terms of the in-country debt, there is fixed amortization. The amortization is roughly EUR 10 million per annum in euros. Is there anything?
No. I think the last part of the question is, even though we have decided to increase the payout ratio, we will still pay 100% of the South Africa income out and top that up from Europe, which should leave us with some residual income in Europe that we can use to pay down the equity debt. Obviously, not as fast as we had previously indicated we would like to, but we will keep chipping away at it, and hopefully after another couple of years, that LTV will be down in the low 40%.
We have a question from Ridwaan at Nedbank. There has been an indication of asset recycling, specifically in South Africa. Is that still the case? Also, please talk to liquidity in the South African market for the Hyprop type of assets.
These assets, as I mentioned in the presentation, we are in discussions with potential buyers. I think the negative for our assets, they are quite big. The smallest asset within our portfolio is about ZAR 1.6 billion. So for other than other REITs to buy it is quite a tall order for private sector, for private property owners. So that is why it takes a little bit longer, but we are looking at different ways to sell some assets, potentially selling an undivided share or potentially getting a consortium of private buyers together. So that is why the deals take a little bit longer than smaller ticket numbers.
I think that is it. That is all the questions that we have.
Oh, thank you very much. I want to say a big thank you to everyone for spending some time with us. We are looking forward to our one-on-ones, going forward this week. Thank you very much.