Good afternoon, everybody. Welcome to Redefine Properties' group interim results for the half year ended 28 February 2025. This afternoon, we'll follow the usual format, i.e., running through our strategic priorities and Leon Kok and Ntobeko Nyawo will, as usual, be dealing where necessary with the respective sections. If we just look at who we are, I'm sure all of you by now know who we are. Just to remind you that Redefine Properties has a directly managed, focused and diversified real asset base that is principally in South Africa, as you can see from a percentage split point of view, just under 66% here in South Africa, 34% in Poland. Very importantly for us is our purpose, our mission, our vision and our primary goal. We are, at all times, fixated on delivery of these strategic endeavors.
In terms of key financial outcomes for the half year, we are happy to report that despite the disruptions that we've had during April and so forth, that even prior to that, the upward trajectory of property is definitely underway, although it's a bit slow, and we do know that interest rates are probably gonna pause and not decrease as we were expecting them to be at the last time we spoke, which was last year, November. Just to report, our total asset base at ZAR 102.4 billion is up on last year's ZAR 101.9 billion. Very pleasing to report, our SA REIT LTV at 41.22%. It is now within the target range of 39%-41%. Our distributable income has grown. Ntobeko will talk a lot about that just now at ZAR 0.255 per share.
Some dilution from extra shares in issue as a result of the DRIP and so on. Our dividend per share is at ZAR 0.204 for this period, which is 0.7% up on the same period last year. In terms of SA REIT NAV, we are slightly down on last year, ZAR 7.883 per share at ZAR 7.815. That's mainly due to an increase in the number of shares in issue, as I've said earlier. But also, the rand has been stronger against the euro as at 28 February. Subsequently, it has weakened. That situation should reverse itself in the second half of the 2025 financial year. Our interest cover ratio at 2.2x , very comfortable. It is up slightly on the 2.1 x reported last year.
What is especially encouraging for us, hence my statement about the property cycle being on the up, is if you look at occupancies, both in South Africa and in Poland, you'll see that we've improved on our occupancy levels, and we'll talk much more about that. Both Leon and I will talk about that in due course. In terms of strategic outcomes, I'll just touch on a few highlights. First, strategic priority. If you look at investing strategically, you'll see that we, during this period, raised our stake in Pan Africa Mall by 17%. Very importantly, we completed an expansion at that mall to take it to 25,000 sq m at an income yield of 9.3%. The division of ELI, I'll talk about in due course. That's well underway. Our loans evaluation, I've spoken about.
Very importantly, we've successfully refinanced ZAR 3 billion of our ZAR 3.5 billion debt facilities maturing in FY 2025. From a liquidity point of view, very, very important, especially with these uncertain times as the trade tariff situation plays out. We have a very healthy liquidity profile of ZAR 6 billion, where we have access to undrawn facilities and cash. In terms of operating efficiently, you'll see our distributable income growth at 3.6% to ZAR 1.8 billion. Growth is back on the horizon for us. Very pleasing to report that our group net operating profit margin improved by 0.4% to 76.9% in this period. In terms of our human talent, we were once again awarded Top Employer status for the 10th consecutive year.
EPP, for the second consecutive year, was awarded the Friendly Workplace Award. Our employee retention rates, you'll see in South Africa, is very stable at 97.9%. In Poland, not quite as good at 82.5%, but that's mainly due to the restructure of the property management functions in that region, giving rise to that percentage. So it was a deliberate outcome. In terms of growing reputation, we are very proud of being ranked 35th as a global ESG top-rated company by Sustainalytics. Then you'll see, and Leon will talk about it too, our solar PV is being expanded on an ongoing basis in South Africa, and we're also doing some work now in Poland on that front. Okay. From investing strategically point of view, I'm gonna hand over to Leon now.
He's gonna take you through a group slide and then the South African portfolio. I'll then follow up with the Polish one. Thank you.
Good afternoon, everyone. Trust everybody is well. Just in terms of our group of property as a platform, Andrew touched on this. The total assets under management is at ZAR 99.4 billion, which is marginally lower than what we reported in August. Primarily on the back of that rand strength coming through at February relative to August. Locally, we've increased the portfolio just shy of ZAR 1 billion, which is on the back of development activities. The bulk of, as you can see from a capital allocation point of view, the bulk of the development in CapEx being spent locally, spent more or less in proportion to the portfolio mix, 65% South Africa and the balance within Poland.
Obviously the acquisition of PAD coming through the Pan Africa Mall in Alex coming through during the period, both Phase One and Phase Two, the expansion thereof, and then also that increase of an additional ZAR 30 million in the ownership of Phase One. If we can look at the South African portfolio, our carrying value of our properties at ZAR 64.1 billion, roughly at 3.7 million sq m under management. As you can see, more or less the same as at end of August. Primarily, the movement was the disposal of Bryanston, and we effectively swapped out of a sort of, in our view, a mature asset into a asset with growth potential within Pan Africa Development, and which makes that GLA more or less comparable period on period.
Average value per property, and we'll touch on the valuations outcome, which is more or less flat for the six months. Our average value per property sits at ZAR 271 million. As you can see from the lease expiry profile, that continues to be fairly manageable, and we'll show and we'll touch particularly on the risk within our office portfolio sitting in that lease expiry. From a sectoral split point of view, we continue to be retail biased, with 45% of our assets invested in retail. From a tenant diversification point of view, the bulk of our tenants is what we classify as A-grade. The outcomes from a total portfolio point of view, we're very happy with that, active occupancy improvements to 94.7%.
You'll note on the right-hand side where we do the analysis, where we express the vacancy as we do traditionally for GLA. We also give you an indication of what that vacancy is worth if we express it as a function of what we advertise those vacant space for. As you can see, the bulk of the vacancy sits in the lower quality space, where particularly in our retail side, which is geared or skewed more towards the sort of office related within retail. Similarly with the office, the vacancy sits in the lower end of A- grade as well as the secondary grade. In our industrial portfolio, we're really pleased about that occupancy sitting on close on fully let. In terms of our tenant retention and renewal success rates, very healthy still.
Then the one number which we're certainly not very happy with is that renewal reversion at -9%, and we'll touch on this in the detail. That's simply driven by a single lease renewal within our office portfolio, 115 West. If we were to exclude that renewal, it would have caused our total negative reversion to drop down to -5%. Unfortunately, it's definitely a bit of a black mark in terms of the last six months' performance. Apart from that, we're quite pleased with the outcome. In terms of our solar PV capacity, we've increased it from last year at 43 MW to 51.7 MW. That's a 20% increase in capacity. We've got a further 13.3 MW in the pipeline.
That will increase that installed capacity by additional 25%, which will bring our total capacity to just shy of or just over 64 MWp. In terms of our retail portfolio, as we said, the biggest change that has taken place is the disposal of Bryanston's shopping center and the acquisition of Pan Africa. In terms of our valuations outcome, as you can see across the board, positive outcomes. Again, our valuation metrics being driven by income delivery as opposed to change in valuation metrics. You'll note that our valuation metrics in terms of discount rates and cap rates have stayed largely the same since August. Those changes there are on the back of positive leasing activity. In terms of our outcomes in the retail portfolio, our occupancy at 94.6%, very happy with that outcome.
On our renewal reversions at a positive 0.4%. This for us is quite a key development, in that from an income growth point of view, that's where our focus area lies within retail. Simply because there's not a lot of value within our vacancy given where it's located. For us, the real lever, in order to grow income within our retail portfolio, is to get those renewal reversions to turn positive. Now, what in our view is supportive of a positive renewal reversion is our annual trading density growth, which was at 3% for the six months. Our rented turnover ratio, we stood at a very healthy 7.4%. We're quite bullish about our prospects going forward, and we're looking forward to that. Leasing activity in 2026, where we've got 19% by GMR that is expiring.
We will certainly target those to ensure that our renewal reversion is trending more positive. As you can also see on the renewal reversion analysis there, the bulk, 80% of our renewals is at flat or positive. We certainly are quite bullish about our prospects in terms of renewal activity within our retail sector. On the office front, as you can see, even on the fair value or valuation outcomes, across the board, a bit of a mixed bag and overall results kind of flat. Again, the point to make here, this is not on the back of changes in the underlying valuation metrics. Our exit cap rates as well as our discount rates largely stay the same. This is on the back of actual income outcomes during the last six months.
Particularly in our premium grade property, the biggest contributor to that negative performance is our Rosebank Link, where we had a renewal or renegotiation of the WeWork lease. In terms of outcomes, occupancy at 88.6%, reasonably stable, the very ugly -20% renewal reversion for the first six months. We anticipate that number to improve or to be diluted as the year progress towards year-end, but it's still gonna be in the double digits. It certainly will be a key focus area for us. The one positive on that, if you can look at our renewal reversion activity, is that roughly half of our renewals is done at flat or positive. That certainly does suggest that there are nodes that are performing better than others.
Similarly, on the letting activity, I wanna touch on that, where there is potentially a perception that the office market is this country. I mean, if you can look at, we've done leases amounting to 146,000 sq m, of which 44% was new deals. So that's a real chunk of activity. The big challenge in the office sector, of course, is that you've got this mismatch between supply and demand, which puts pressure on market rentals, which causes some of those long leases that's been escalating for 7% or 8% over a period of 10 years to revert deeply negative when there are renewals. But still, for us, tenant retention within this sector is a key focus areas.
From a cash flow point of view, it's far better to retain a tenant than to go vacant and try and find alternative tenants. That's why we're quite pleased with 94% tenant retention ratio, and it's supported by a very healthy lease escalation of 6.9%. For 2026, we've got 23% of our leases coming up for maturity, the biggest of that being 90 Rivonia. We have concluded an early renewal. Well, not early renewal. We've concluded on a renewal that will take place in January of next year for a further three years. We're quite happy that 90 Rivonia has been derisked. Within that, there's still a fair amount of work to be done. In the industrial portfolio, another very consistent performance from a very dependable portfolio.
Over the last number of years, our industrial portfolio has performed exceptionally well. As you can see, it's very well diversified across the various subs, and from a valuation outcome, similarly, a positive outcome. Our occupancy at 98.9%, 1.1% vacancy, which is very healthy. The biggest let during the period was obviously at Cato Ridge, which we managed to secure initial 12-month deal. We are looking to extend that to a further three years. Our renewal reversions to 4.6% positive is indicative of very strong demand and obviously a scarcity of supply. We would look forward to continue having those renewal reversions in the positive territory. Again, a very strong performance by our industrial portfolio, supported by a very undemanding lease expiry profile.
In some respects, I suppose one could have hoped that it was slightly higher next year so we can benefit off the supply and demand dynamic. But it is a very defensive portfolio and a very strong performance from our industrial portfolio. Then lastly, just to touch on our alternative income, a sector that over the last 10 years have shown double-digit growth every year. Now, this year, we're looking to post just short of ZAR 100 million within this category, and it is definitely a focus area for us, where we look to unlock new and exciting prospects. As you can see in some of those new projects, individually, not any specific item of significance, but it does add a new dimension and a different appeal to some of our properties. The biggest contributor of this is obviously our LED network expansion.
With that, I'll hand over to Andrew to take us through Poland.
Thanks, Leon. Okay, moving on to Poland. As you can see, it's probably better on this slide to look at the property asset platform in euros, where you'll see a pretty consistent value, both in EPP as well as ELI, and some growth from the self-storage. We'll talk a little bit about that. That's development activity that's underway, that's driving that growth in the self-storage from EUR 25 million to EUR 36 million. Once again, when you convert the euros into ZAR, you'll note the decline as a consequence of the rand strength. Apart from that, a pretty steady platform. At this point, no real changes. If you look year-on-year or period-on-period, pretty much consistent. In terms of salient features for the region, as we said earlier, EPP is benefiting from a cost reduction plan this year.
We'll talk a bit more about those impacts. There has been and there is a significant focus on eliminating unnecessary complexity and high leverage within the Polish joint ventures. I've got a slide on that, so we'll talk a bit about that in due course. I'm happy to report back that institutional investment activity is definitely on the up in Poland. There's a lot more inquiries going on. There's still a number of opportunistic buyers in the market. Nonetheless, a lot of positivity coming through. Should the Ukraine, Russia situation be resolved, I think we will definitely see a tremendous pickup in already a momentum that is building in that regard. We sold Power Park Olsztyn in March at a premium to book value. That's a subsequent event.
There are renewable energy purchase power agreements in place by EPP to initially, this year, 2025, provide 16% of their usage, mainly from wind farms. This will increase to 25% in 2026 and in 2027. I'm happy to report that the Henderson Park debt was refinanced for a further 3.5 years at reasonable terms. The Horse Group JV is continuing its disposal of undeveloped bulk in, principally in its parking areas, in its Metro or M1 properties. Last year, we sold four, and now we are at an advanced stage of selling a fifth plot in Kraków to a developer. It is subject to zonings, so it will take some time before that deal is concluded. Also, another positive from the Polish region is the fact that it seems like REIT legislation is back on the cards.
We're hoping and we believe it could be implemented as soon as the end of this year, and we'll see how that goes. Just in terms of the Polish joint ventures that I spoke to earlier, if you just look at the see-through LTV bridge, you'll note how it progresses to 47.2% from the 41.2%. It also effectively within three components, being the Horse Group or the M1, as I prefer to call it, joint venture, ELI, and then the Community Properties JV. Here we've provided you with a detailed action plan and outcomes that are already in progress. As you can see, the Horse Group, we are pursuing the sale of surplus land to residential developers.
We are also separately looking at disposing of the Power Parks and then the Metro or M1 properties as well. It will take some time, but we will update you as and when we have tangible progress in this regard. In terms of the EPP Community joint venture, here we're looking possibly to the Polish REIT legislation coming to fruition, which could result in us exiting or partially exiting this joint venture. If that does not happen, we will look to market this portfolio in due course. The Henderson Park joint venture, as we know, exposes to the office portfolio. Once that market stabilizes, which there are, I believe, green shoots, especially in the more developed nodes like Warsaw and Szczecin and so forth. But nonetheless, it looks like this market is starting to stabilize, and then we can dispose of this portfolio in due course.
Galeria Młociny, here we're looking at options perhaps to recycle capital from a mature asset to acquire the 30% we do not own, and work is underway in that regard. Power Park Olsztyn, we've sold, as I've already reported. Then just on ELI, I've got a slide on the division of ELI into two portfolios. That's now subject to regulatory approvals and a revised shareholders agreement. We believe this process should be completed by the end of June this year. Just in terms of EPP's core portfolio, you'll note once again, pretty stable. Nothing different from any other period to report on in terms of the slide. Then just looking at outcomes, you'll note the occupancy at 99.2%. It's virtually fully let at this level. The weighted average re-rent indexation rate, 2.1%.
It's in line with the Eurozone inflation rate. Our renewal reversions are positive at 3.4%, growing from last year's 2.7%, which once again tells you that there's market rental growth in that market, which is very, very welcome. Our unexpired lease term is consistent at 3.9 years. Our tenant retention rate by GMR, that's very healthy at 97.6%. Last year, you'll see 97.5%, equally healthy. Our annual footfall has declined from 19-odd million to 18.5 million, and that's principally because there has been a proliferation of retail parks where you'll note in the sales trends by category, the groceries or the supermarket, -5%. A lot of that sales is being lost to that.
Not a concern because overall the tenant health at EPP is very healthy. We'll show you just our collections and so forth. The renewal success rate sitting at 72%, up from last year's 57%. Rent to sale at a very healthy 9.1%, which has improved from last year's 9.4%. Tenants turnover is increasing with the rentals growing as well from the indexation. In terms of the joint ventures, operating metrics by JV here, you'll note that most of them are doing pretty well. Henderson, we know, has an occupancy challenge because it operates offices in which Poznań and Kraków, very competitive smaller cities, and from an office point of view, under some pressure.
If you look at renewal reversions, here we have some pressure given competition from the retail parks. If you just look at rent-to-sales ratios, the M1 or Horse JV is underpinning at just under 8%. EPP Community is very good at 7.5%. Galeria Młociny is trending in the right direction at 9.9%. If I just go up a little bit, I just wanna make one point, and that is on those reversions for Galeria Młociny, it just celebrated its fifth anniversary, so that honeymoon phase that it was in is over. There is a re-tenanting plan that's being progressed there to build a base of tenants that is better suited to that market and are more sustainable.
That's partly talking to that rent sales ratio outcome, but it does play out in the negative rental reversions of 9.6%. In terms of ELI, this is ELI before any demerger. This is ELI as it was constituted as at 28 February. Once again, a pretty stable outcome here. There were some developments in progress, but that was really for Madison and not for Redefine's share of the portfolio. You'll note there that the active GLA is basically the same as last year. In terms of ELI, and this now is the portfolio as it currently is constituted, you'll see the occupancy at 95.8%. Renewal success at 64.6%. I won't go through these too much because I wanna focus on Redefine's share of this portfolio. You'll see all positive.
I think what is very important is to look at that relets and renewals at an average rental of EUR 5.34. We are seeing growing market rentals in Poland, which is very good for the logistics sector going forward. Looking specifically at Redefine Properties' share of that ELI portfolio, we entered into an agreement with Madison International Realty during March to separate the portfolio. That's all been agreed. We now are managing our shareholders' respective portfolios independently of each other. The permanent implementation of this division will be implemented by 30th June. However, I must just note that it will be backdated to the 1st September from a distributable income point of view. In terms of Redefine Properties' share of that portfolio, we are gonna have 13 logistics locations, with seven hubs in Poland.
Our asset base will be ZAR 9.5 billion. We'll take on debt of ZAR 3.5 billion. I just wanna add that at the last results presentation, we mentioned that there could be a possibility of Redefine's LTV increasing as a consequence of consolidating, as opposed to equity accounting ELI. I must just caveat what I'm saying, and this is all subject to IFRS, which is very complicated and different auditors have different opinions. Depending on the final revised shareholders' agreement, which is being negotiated, we could well end up equity accounting this once again as a joint venture. Which will mean that 1.6% LTV impact won't come to fruition, which will be fantastic news for our LTV. Our occupancy is at 93.4%.
However, I just wanna mention that during March, 16,000 sq m in Lublin were let, which takes that occupancy up to 96.8%. Our GLA is 516,000 sq m. We've got three land holdings totaling 55,000 sq m. One is a piece of land in Warsaw that we're looking at selling, and the other two land holdings are attached to existing developments as part of phasing. You'll see an unexpired lease term of 5.3 years. In terms of self-storage, as I said earlier, we are still building out this portfolio. If we just look at the net lettable area last year was 26,000 sq m. It's now just under 28,000 sq m.
That is playing out in the occupancy as a consequence of that new stock coming online and also a relatively slow lease up of those properties. You'll see that we have gone backwards on that occupancy, but that is principally as a consequence of the extra NLA that has come onto stream. In terms of development activity, as of February, there were two developments under construction. There is a third one that has started in Kraków, and then there will be a further five that have been approved that should come through, which will expand our total EUR 50 million equity commitment. We are, as we speak, seeking an equity investor to come in, likely it is ELI, and partner us to further develop this platform on an equal footing. All right, just in terms of our focus areas for investing strategically.
As you can see, we are going to be focusing on creating value through organic growth and asset optimization. This is where Leon Kok, [inaudible] will be looking very carefully at how we keep our properties relevant to attract and to retain our tenants. We will be looking at asset optimization, so non-core assets where we can, we will sell. We will allocate capital strategically into growth sectors. Right now, the growth is mostly being allocated into self-storage, as you can see. Maintaining those spaces to ensure they remain relevant. I think that goes across borders. Our stakeholders' needs are evolving and we need to ensure that we are able to read the market before the market makes up their mind and goes elsewhere. With that, I'm gonna go and to now hand over to Ntobeko, who's gonna take you through the balance of the presentation.
Thank you, Andrew. Just on, we really kept our focus on the balance sheet strength so that we can drive growth. If we look at just some of the key outcomes, really all of them are pointing to an improving credit metrics that really supports our value creation, strategy. Now, if we touch on the SA REIT LTV, that's printed at 41.2%, which, a comparable number in August when we spoke to you, was at 42.3%. Another important credit metric is our improvement and the strengthening of the ICR. That is printing at 2.2 x compared to the 2.1. Andrew has touched on our liquidity profile, which we're quite happy that it improved to ZAR 6 billion. The group weighted average cost of debt, that also improved from 7.5% in the prior period, and that came to 7.3%, with the SA average cost of debt staying stable at 9.2%.
The assets average cost of debt also improved with the easing of the Euribor, that moved from 5.1% to 4.7%. We remain hedged very well in line with our policy, where we had our percentage of total debt hedged at 77.6% compared to the 78.9% in the comparable period. A healthy group weighted average term of debt, if you look at it, that's quite healthy, sitting at 3.4 years, and that was at 3.7 at the end of August. We're pleased with the Moody's credit rating that is maintained at Ba2 with a stable outlook. If we move just to look at the LTV in terms of the significant components in the movement. You know, our focus firmly clear on reducing the LTV to our medium target range of 38%-41%, and we are pleased that it's trending closer to that.
You can see that the operational cash flows are covering the dividend, which is healthy because we are in a consistent dividend payout strategy. The DRIP reduced the LTV by 0.7%. That we issued 150 million shares and retained ZAR 668 million. That's really the biggest contributor in terms of that. The rest of the some disposals here in SA, and then also the empowerment trust repaid ZAR 227 million in terms of its loan. We do provide the sensitivities in terms of some of the movements that will impact the LTV. The property values, you will see a 1% movement or ZAR 0.6 billion will have a 0.3% impact. Similarly for EPP, the 1% in EPP will have a 0.1%. We provide for the joint ventures as well as the FX movement that you see at any depreciation or appreciation of 5% will have a 0.2%.
Our focus on see-through LTV, I think when it peaked in 2020, that was at 54%. You know, you've seen a 7% improvement to now at half year at 47.2%. As Andrew alluded, our focus is on resolving and unbundling some of those JVs so that we can get that number further down. Then I'm happy to report that on the covenants, all covenants were maintained during the period. Just touching on the funding profile. I think we're very proactive in terms of managing our maturities. As you can see in the graph that we normally provide, for FY 2025, we're largely done. Out of the ZAR 3.5 billion of maturities, we've dealt with ZAR 3 billion. The ZAR 500 million that is left, we actually, it's a facility with a bank.
We've already got credit approval on that, so we'll also be wrapping up that quite shortly. I just wanna touch on the bond issuances of ZAR 2.1 billion that we issued in the period, with ZAR 1.3 billion, which we placed on a private placement, securing very attractive tenors in terms of the margin in buckets of three-year, five-year and seven-year. As well as a public auction, where we also issued ZAR 0.8 billion of a bond, and that also was split between three- and five-year. At attractive, we see a further margin compression at a three-year to coming down to 1.2%, and then the five-year coming down to 1.4%.
I think during the period, some of the early refinances that we've took, and these refinances that are here, you know, given our restructured common security pool debt, we've managed to further reduce our debt margin by 8 basis points to 1.85. I think just lastly is that early refinance that we've done in for Pivotal of ZAR 4.5 billion. On the hedging side, I think, here we're very clear that our risk management has to be agile given the volatile environment. We've taken out shorter dated tenures, but where we're seeing opportunities, as we've done after this reporting period, we've also went out a bit and taken some three-year swaps that were attractive at about 7.1.
If we deal with the cross currencies that that's matured with a nominal value of EUR 97.8 million and EUR 58 million, those were at a fixed rate of 3.7, and the other one had a floating leg. All of those cross currencies we refinance at a fixed rate of 4% for a period of 0.8 years. On the swap side, in terms of the interest rate swaps, we had a nominal value of ZAR 5.2 billion swaps that were fixed at 6.7% that matured in the period, and then we strike new swaps of ZAR 3 billion in the period at a weighted average of 7.2%. You can see that a difference in terms of the new fixes at 7.2%, the expiring one at 6.7% will have an impact on our funding cost.
I'm also pleased to report that furthermore, after the period, we actually took ZAR 2 billion rand of swaps that were at a fixed rate of 7.2% at 1.5. As you can see, as I mentioned earlier, we went out a bit on tenor there and taking 1.5 years. I think in terms of the maturity profile, you can see that for our work, we just need to top up in FY 2026 and also build for FY 2027. As the FX rates get better, we'll also look at building that up and go back to long tenure. This we always share with you, but it just really gives you a sense in terms of how diversified our funding base is and which continues to be our focus so that we materially continue to lower the concentration risk.
If I just touch on in closing here with some focus areas, I think renewing of debt for us, proactively extending the maturity profile so that we can continue as well to diversify our funding sources. Management of interest rate risk in this environment remains our key focus area for FY 2025. I think sourcing of new capital at the right price and recycling non-core assets is quite important. The anticipated outcomes out of that, lower liquidity and concentration risk, delivery of predictable, quality distributable income through the cycle, and I think dealing with the balance sheet risk firmly bringing our SA loan-to-value ratio firmly within our target range, our medium target range of 38%-41%.
If I move on to cover operating efficiently, which really I think for us, we are pleased with the positive organic growth that is also sustaining our operating margin. To deliver profitable growth in this tough operating context is really something that we are proud of as a team. I think if I just first start, let's start with the first two blocks at the top, which is our Active SA net property income margin improving to 84.3%. In EPP, slight coming down of its net the directly held properties, coming down to 85.8%. That is largely driven by the asset management fees, which are at a lower margin. We are quite happy with the underlying improvement. If you look at EPP core on the graph at the bottom right here, that EPP improved its its net operating profit margin to 72.2 from 71.9.
Similarly then, with SA being very stable at 79.1, and then at a group level, that's playing out to an improvement of 76.9%. We're pleased with our progress that we're making on our digital journey, so that we continue to be efficient and transform the way we do business for our tenants. Focused efficiencies in terms of electricity consumption in EPP, playing out with a decrease in consumption of 1.2%. A stable net areas in SA of ZAR 85.8 million. There's a slight uptick in the EPP net areas to ZAR 81 million. That is really just driven by the service recon that happened in February. Subsequently, those have been recovered and that is also stable. You will see that playing out in our collections. The average collection in SA is at 100.1%, as well as the collection in EPP core at 99.3%.
Just to deal with the distributable income that grew from 1.711 to 1.773, which is the 3.6%, if you round it up, it's 1.7-1.8. You know, we're very pleased that the components that are coming through on the tailwinds is really where the organic growth should come from and where capital allocation is driving growth. If you look at the acquired properties, largely driven by that ZAR 90 million, the acquisition in the Mall of the South, as well as the Pan Africa Mall driving that ZAR 90 million. In EPP, we're pleased with the organic growth, which is the contribution that comes through from EPP. Similarly in SA, we're also pleased with this organic growth at NPI level, delivering a ZAR 41 million growth. Then we issued shares in terms of the DRIP as well as the sale of the empowerment shares in the empowerment trust.
That's why we'll have that headwind of ZAR 27 million. On the headwind, I think the key thing that really continues to impact us is really on the FX as well as in the funding cost. I mean, we've borrowed a little bit more just to make the acquisition from Mall of the South. Hence, you can see the contribution in terms of the NPI of the acquired properties. Those will offset, and we're quite happy then with. Other issue just that when we re-fix swaps, the rate at which we're fixing it at 7.1% is slightly higher than the expiring rate, which was at about 6.5%. Just dealing with the NAV. I think a slight decline, which is primarily of ZAR 0.068, printing at ZAR 7.815. Primarily, that was largely just driven by that ZAR 0.183 impact that you see on the right column, which is the share issue.
That is comprising of the 160 million shares we issued for the trip, as well as the 45.5 million shares that we used as a repayment by the empowerment trust. In terms of the normal step ups, our profits, you'll see that coming in at ZAR 0.209, as well as I think also the important thing then on the legacy side is a stronger rand that appreciated resulting in that effect of an impact at ZAR 0.11.
Just on the dividend for the six months, I think, we are pleased that we've consistently maintaining our payout range of 80%-90%. The normal considerations that go into our dividend have remained in terms of the capital that we need to keep our properties fresh, the liquidity, given the volatility in the market, and also no tax leakage in terms of preserving the shareholder value, and also the trajectory in the loan to value ratio, as well as, very important, our ability to service debt through the ICR component. We're pleased at this for the interim period. The board has declared ZAR 0.204 in the dividend out of the earnings of ZAR 0.255 per share.
The focus areas here, I think for us, is really Leon touched on this, is focus on the reversions, cost control, and also be very efficient. The reason for that is that we really look, we have to find other ways to attract new tenants, offer compelling value services, and also improve our digital ratio to use our data analytics to identify trends and inefficiencies. That on the outcome that we anticipate is really to lift our net operating profit margin to a medium term of 80% for all of our key operating segments. Also, to improve occupancy levels, limit the increase in the admin cost so that we maintain our margins. In doing this, I think we'll really have invested heavily. We'll look at leveraging AI to scale our digital opportunity to drive efficiency right across our group.
If I move on, and I'll cover engaging talent. I think for us here it's really just around, in our key outcomes, from a talent engagement point of view, we are pleased with the retention that is very healthy in South Africa at 97.9%. EPP came out at 82.5%, and that was impacted by some of the restructuring that we've done in that business. Also, just I think, the highlights from a South African point of view, to be certified as a Top Employer for consecutive 10th year is really a pleasing outcome that continues to speak volumes of our talent management profile across the group. Just some focus areas here. I think for us it's looking to build future fit skills, cultivate an inclusive and diverse, high-performing team, and continuously, I think across the group, we do review people structure to ensure they are fit for purpose.
The outcomes that we anticipate out of that, it is to develop an internal pipeline of our own talent, and also that can enable creativity and foster innovation. Lastly, which is another outcome here, is that we really wanna develop a diverse future-ready workforce that efficiently delivers on the strategic priorities of our group. If we move to growing reputation, I think collaboration is at the core here of our sustainable journey, of our sustainability journey. Here we've just provided you with some of the highlights in terms of the accolades that in our journey have picked, as well as just to color some of their impact. For us, the focus is really on managing the environmental and social impacts across all the key activities that we undertake across the group. I'll just skip here.
These are just further accolades in terms of we've spoken about the Top Employer and all the good things that we've done even on the debt side. You can see that ZAR 15.6 billion of our debt now is in green funding. If I just close here with some focus areas in terms of this aspect, is that we really wanna collaborate with our stakeholders, create sustainable socio-economic impact, reduce reliance on municipal supply utilities with the outcome that we anticipate of expanding the reach of our sustainability initiatives, accelerate our ESG strategy, and innovate resource efficient solutions like we've doing with solar and also improving our alternative energy mix. With that, I'll hand back to Andrew for a recap. Thank you.
Thanks, Ntobeko. Okay, just to wrap up. Over the past five years, it certainly felt like a game of snakes and ladders for us, where every year there has been a reset event. From the pandemic back in 2020 to, as you know, we had an energy crisis, we've had a war erupt, we've had elevated inflation leading to high interest rates last year, and this year we had trade wars. Unfortunately, trade wars are very much market drivers that are negative. They lead to uncertainty, which as you know, from a commercial real estate perspective, not great for confidence as well as interest rates. Although they, these are the headlines, we are firmly fixated on the variables under our control.
We remind ourselves by looking at the real drivers of the big cycle changes that create these circumstances that have led to these events. Technology, demographics, geopolitics, and climate change, as you know, are the mega trends at play and are actually forcing and shaping our commercial real estate going forward. What we've provided you with is an impact analysis from a Redefine perspective of this deterioration of trade relations with the U.S. You'll note that from a liquidity perspective, Redefine's in very good shape, given that we've got sufficient liquidity to meet not only the current debt maturing, but certainly the 26 as well, assuming we can't mature. That's a worst case environment. Also, very importantly, there is no, and Ntobeko mentioned this point earlier, there are no bond maturities for the rest of 2025.
We only have ZAR 500 million of the ZAR 3.5 billion debt that would mature in 2025 that needs to be refinanced in the second half. From a local retail perspective, it would seem that currency fluctuations are probably the biggest issue, because this can lead to, as you know, retailers' margins being impacted and certainly impacts on disposable income. However, there may be a silver lining to this in that we could benefit from Asian and European markets looking to supply more into this market, which could potentially not only lead to new brands, but potentially better pricing as well. From an office and industrial point of view, we've looked carefully at our tenant base. We did lose an office tenant due to U.S. grant funding being pulled back.
We've got about 25 office tenants that are involved in mining or related sectors, which could be influenced by tariffs, but there's no red flags in that regard. I think from an industrial perspective, it would seem that it's quite limited in that most of our automotive related tenants supply Africa and South Africa domestically, and not really directly affected by the automotive tariffs, et cetera, that Trump seems to be fixated on. In terms of Polish retail, it would seem that it's largely unaffected by what's going on. There could be inflationary impacts, which we would keep an eye out for. From a logistics point of view, it's very interesting to note that Poland's biggest trading partner, around about 30% of their exports, is to Germany, and a big chunk of that is automotive related.
That could be a pressure point for Poland. It's estimated that their GDP could potentially be affected by 0.4%. Not a big number, but nonetheless a negative impact. We need to note that around 23% of ELI, and this is now our share of ELI's GLA, is exposed to tenants who supply automotive products to Europe, which could be affected. On the other hand, logistics could benefit from production reshoring. On the one hand, an issue, but on another hand, an opportunity. We are very much on the lookout for any opportunity arising from this situation. For our game plan for the rest of 2025, you'll see that we've identified four focus areas, and I'll just start on the bottom there. The delivery of the earnings guidance to drive value creation is a non-negotiable.
In fact, we would like to better that, and that's our challenge to our teams here in South Africa as well as in Poland. Disciplined capital allocation in an environment where capital is scarce will continue to secure sustainable growth. Simplification of joint ventures, I wanna stress, is definitely a focus point for all of us to reduce the see-through LTV. By the way, if you reduce your see-through LTV, naturally your LTV will similarly reduce as well. By solving for the one, you actually improve the other as a byproduct, too. If you just rule of thumb use those percentages that are indicated that are the pressure points from LTV to see-through LTV, you can more or less work out that that is the impact on LTV too, when you remove these situations.
Recycling of non-core assets to improve the quality of the asset platform. That is an ongoing process of proactive property and asset management, which as you know, Redefine has done well on over the years. Although it has slowed up in recent times as a consequence of the funding not being as available as it has been when interest rates were much lower. Just from an outlook perspective, our guidance remains intact. We are going to deliver between ZAR 0.50 and ZAR 0.53 per share of distributable income. Our dividend payout policy, and Ntobeko's already spoken about, as you know. We paid a dividend at the interim, at the lower end of our policy.
We'll probably, if everything works according to plan, we'll probably be paying out the final, like last year, at the higher end of the payout policy to average 85% over the period, where effectively we would like to maintain our payout policy. With that, I want to thank all of you for your attention. I wanna thank you for your support. I also wanna thank you for your questions. I was getting quite excited when I started reading the questions coming up on the screen, and I thought my job is done and Leon's going to have to come to the podium here, because most of them were for Leon. I see Mr. Nazeem Samsodien wanted everyone to have an opportunity to speak. Let us go through the questions.
The first one is from Nazeem from Investec Securities, and his question is: Are there any other major over rents in the office portfolio? Focus on the larger long-term leases. He asked a question, impact from 90 Rivonia for FY 2026 estimate. Mr. Kok.
I'll at the same time answer Chris Reddy's question. He also asked about the lease extension in 90 Rivonia. Maybe I'll tackle both those questions.
Sure.
With the same answer. Just in terms of 90 Rivonia, the lease is coming up for renewal 1 January, or it has been concluded for 1 January 2026. The impact for 2026 will be eight months, roughly ZAR 16 million, and it was concluded at a negative reversion of 25%. The escalation for that lease is being agreed at 7%. Sorry, my mistake, it was not for three years. We actually extended it for four years. In terms of any other major leases coming up within Alice Lane, we've got a 15,000 sq m tenant which is coming up in November 2025, expiring at about ZAR 300, and we've concluded at ZAR 260. Roughly a 10% negative reversion on that. Still, I think at a very healthy rate, demonstrating the demand within the Sandton node. There's only those two big ones for 26 that at this stage is with me.
Thanks, Leon. Okay. The next question is also for Leon. It's from Mweisho Nene from Standard Bank, and his question is: Can Leon please go into more detail about the three different alternative income streams? What are the yields on these items?
Mweisho, maybe just to clarify, it's not that there's only three streams. It's just, you know, the kind of way we've indicated it with the three blocks, but there's actually a myriad of different revenue streams. The single biggest contributor to our non-GLA income is our billboards or LED screens, which typically is placed within malls or on well-located properties facing oncoming traffic and such like. There, the yields can average anything from 20%, where some of our well-performing billboards located in Sandton on very prominent intersections can go as high as 95%. But again, remember, you can't just focus on yields because these assets have a shorter lifespan, typically five to six years. You need to build in a depreciation factor too. That yield I'm talking about is clearly a cash yield.
Again, also depends on the format within which we enter into. Some of these initiatives, there's no CapEx outlay because we will simply enter into a revenue share arrangement rather than you know, to test the concept and such like. For instance, in electric charging stations and so on. It simply is just an initiative to try and maximize income on property. We explore all avenues on how to achieve that growth with non-traditional income streams.
Thanks, Leon. Okay. Just, there are two questions on LTV, so we'll try and do both answers with the questions. The first question is from Nazeem Samsodien, from Investec, and he says, "LTV target of 38%-41%, what are the drivers to get to the bottom end of the range, i.e., 38%?" And he asks, "Is it sales or all organic from valuation uplift, amort and retained earnings?" Then Jaco Scholtz from Rainer Investments asked, "It was said that if the C3 LTV declines, then the LTV will also decline. Is that necessarily true? If the Polish JVs are fully consolidated, surely then the LTV will go up." Okay. So, Nazeem Samsodien, firstly, if you have a look, there is a sensitivity table on the LTV slide.
If you actually apply reasonable expectations of capital appreciation prospects and such like, you'll see that it doesn't move the needle significantly. What will be impactful is the sale or disposal of one or two of the Polish joint ventures. Obviously, two will be great, one will be good, but nonetheless, not only does the LTV decline, and this is going to the second question, not only does the see-through LTV decline on a C3 basis when you dispose, but similarly, you will be selling the equity that you're currently holding on balance sheet and translating that into disposable proceeds which you'll use to apply to your debt as a repayment, and that will improve your loan-to-value ratio. As I said, one, holding thumbs.
Two, joint ventures that we're targeting to try and dispose of, and this we will report on as we have tangible progress in this regard. Right. If we move on then, Nazeem, as we know, has become quite a prolific questioner. His next question, and it looks like, Mr. Nyawo, it's for you. He says, "Positive outcomes on margins." I assume that's a statement. "How much do you think the average margin could decline by and how far? I.e., is a 1.6% margin achievable versus 1.85% currently?" Mr. Nyawo.
Thanks, Andrew. Nazeem, look, I think you know, if I look at where the margins were before we restructured the SA secured debt, they were not at 2%. I think they were sitting at 2.15%. So we've really already taken about 30%-40% reduction in the margin. The opportunities to continue to improve that, I think lie on our maturities. I think our sense at this point you know, there's a lot of factors, liquidity is driving the pricing in the market. We think we can get to in the next 18-24 months, we can get the margin to about 1.7%.
Cool. Thanks. Thanks, Mr. Nyawo. Okay, the next question I would suggest is also for Mr. Nyawo, and that is from Mweisho Nene, and he asks: Why does RDF opt to fix the euro cross-currency swaps for only 0.8 years? It seems short, perhaps unnecessary.
Thanks, Andrew. Mweisho, yes, it is short, but I think you know one of the things that we really faced in this period when we had to refinance this cross-currency is the volatility in the rand. You know, our view is that you let the trade war, which is the currency juice to play out, the rand should settle where the long-term average may be in relation to the euro is far more normal than maybe at Between 2018 and 2019, exchange, then you can go out and play on tenure. We did this just as a caution and actually looking at the volatility in the currency. As the currency stabilizes, we will look at extending the tenure.
Thanks, Ntobeko. The next question is from Jonathan du Toit from Oyster Catcher Investments. He asks, "Please can you provide more color on the following. One, in the segmental analysis, it shows that operating costs declined in the industrial division by 2.3%. What is the reason for the decline? Two, in the retail division, costs grew significantly slower than contractual rental income. What was the reason for the slow cost growth, and is this sustainable?" I'm gonna have to flip a coin here between Leon Kok and Ntobeko Nyawo, but Leon Kok seems to be the one who answered question.
Jonathan, firstly, in the industrial sector, it's this year we've got substantially better performance in terms of our credit or ECL provisioning, so lower bad debts in FY 2025 versus FY 2024. In retail, it's simply the benefit of our solar PV coming through nicely. Whether it's sustainable or not, certainly not at that level, because obviously once it's in the base, you can't continue to achieve that. That expansion of solar PV will. It's certainly sustainable. It's just a year-on-year effect. Once it's in the base, wouldn't be as pronounced.
Thanks, Leon. Okay. Louis Kruger from C61 Asset Management asks, "Please comment." It's Leon's turn to speak once again. "Please comment on Ster-Kinekor across your portfolio as well as at Centurion Mall specifically.
Louis, as you might know, we used to have six Ster-Kinekor complexes across our portfolio. Four of those we've closed, and the one at Centurion Mall as well. We will only have two complexes left. That will be at Blue Route Mall and at Killarney Mall, simply because those two have IMAX theaters which still provide a point of difference and attraction, and we believe that that format will continue to be attractive. At Centurion Mall, we've closed it. We're looking to expand Exclusive Books, and we will also put a kids entertainment facility called Total Ninja in there. From an income point of view, you must also remember that the Ster-Kinekor is typically given that they were operating off percentage rental and such like, that low GMIs in the base.
All these changes we're making is actually accretive from an income point of view. From that perspective, we're quite happy to take back those underperforming Ster-Kinekor.
Thank you, Leon. Okay. Dean Gillan from Centaur Asset Management asked, "How do you intend to close the gap between your NAV and the share price? What is your view on share buybacks in the current environment?" Dean, this is a question we continually debate around where's the best allocation of capital. Clearly, if you were to rank cold-bloodedly from a mathematical perspective, what is the best allocation capital? You're 100% correct. Buyback shares makes a lot of sense. However, that's the pro. The con is, it is LTV negative. As you know, our LTV is under pressure. For us right now, that is not an option. Paying down debt is probably the next on the list, but then you need to dispose of something to do so.
Coming back to how do we believe we can close that gap, we believe there are two strategic initiatives that are underway that will do so. The one is the reduction of that C3 LTV to mirror or be as close as possible to the LTV. Secondly, an LTV that is sub 41% for reasons that I've explained a short while ago when Nazeem asked his question. The other is delivering sustainably organic growth. That is firmly on our radar once again. We are looking at efficiencies from a how we do business across points of view. Ntobeko spoke about AI to support us to get efficiencies into the business. It's not to replace people, it's to make people more efficient and to get that productivity up.
Then we need to focus on the top line. Leon's got a big ask in terms of reducing or eliminating those reversions, especially in the office sector. Similarly, growing our rental income through reducing, and we've already done so, as you would have seen on the industrial front, but reducing our levels of vacancy across the portfolio. Obviously, industrial is doing fabulously well. If we get those two right, Dean, I do believe our share price will respond accordingly because our dividend or distributable income will naturally increase and our balance sheet risk will be significantly reduced.
Okay. Paolo from Clarens Capital, he asked us, "Could you talk us through the payment distribution waterfall in Horse Group with other partners?" Paolo, I'm assuming that you're talking about the distributable income. How it works right now is that PIMCO, who's our partner, they have a return of 8% on their equity invested. They get the first amount of the distributable income. EPP then enjoys its 8%. Then if there is a residual after that, the partners share in that equally. If the initial PIMCO 8%, let's say, is short, it will roll forward to the following year. They will not only have their 8% for the following year, but they'll also have a catch-up if that does happen.
If there's an exit event, slightly different waterfall payment structure in that PIMCO there will get a preferred equity return of 14% IRR over the period that they have been invested. That is why we are selling these plots of land that you would have seen, five plots of land to date. That is to provide the ability to settle PIMCO without any impact on Redefine's share of its equity investment. Okay. There's one question that I see might have slipped through the cracks here with Leon's endeavors to answer a multitude of questions earlier, and this is from Rafi Chichon, and she asks, "What is the renewal reversion rate for the office portfolio, excluding the impact of WeWork?" Leon?
If we reported -20. If we exclude WeWork, that negative 20 actually drops to -26. That implies that the WeWork was done at a lower negative reversion. I think the reversion on WeWork is roughly about 12%. It actually worsens the picture if we exclude WeWork simply because WeWork was done at a lower negative.
Thank you. Great. It seems like that's all our questions from you this afternoon. Once again, thank you for your time. Thank you for your support, and we look forward to engaging further with you. If any of you have questions for any one of us, please use our investor relations email address. Very importantly, please follow us on LinkedIn. There's a lot of good things going on there from an event and from an outcome's and an impact point of view that we'd like to share with you. Give us feedback. If you feel we're not doing enough or we're doing too much, let us know, because at the end of the day, we are in this together. Thank you very much, and all the best.