Welcome to Redefine's pre-close investor update for the half year ending 28 February 2025. Before I begin, I just wanna say a very, very big thank you to all of you for your participation at our recent AGM. We had a participation rate of over 80% and we had an approval average of just over 98%. This confidence, I can assure you, we do not take lightly and I thank you for your support. Just moving on to today's conversation, we're following the usual. I'll talk a bit about a strategic overview. Leon Kok, our Chief Operating Officer, will talk through the South African asset platform. I will then touch on some highlights from the Polish side. Ntobeko Nyawo, our Chief Financial Officer, will close with some financial insights and, very importantly, the outlook.
As you will see, our upside momentum is gathering pace and in 2025, we are now living the upside. What you'll be seeing throughout this presentation is us looking for the opportunity in every challenge. Believe you me, there will be and there are already, a number of challenges that are on the horizon that we see as opportunities. For example, commercial real estate transaction activity, it's picking up both in South Africa and Poland and this is very, very encouraging for us as we look at further selling non-core assets as well as cleaning up our joint venture portfolio in Poland. The escalating geo-economic confrontation will stoke up geopolitical tensions. That's outside of our control.
However, we are hopeful that as a consequence of all of this, there will be some peace that will come from the Ukraine situation, which in turn will be very positive for Poland. We know that the stage has been set for a shallow interest rate easing cycle and with that, we have altered our focus to income growth and there'll be a lot of talking about that this morning. Lastly but very importantly, a possible investment-grade credit rating for SA Inc. of international credit grade is absolutely important and I know that a lot of work is going in that, so we're looking keenly to see that happen this year. Equally, removal from the gray list will be hugely beneficial and we expect that by October, we will have addressed the last two issues that remain outstanding.
In terms of our ever-evolving landscape, nothing has changed. However, we are focused, I can assure you, on ensuring that we remain relevant to our tenants. Absolutely critical in an ever-evolving landscape. Lastly but very importantly, sustainability here at Redefine is evolving from an ESG tick box to a core operational imperative and you'll see that being demonstrated throughout the course of this morning. In terms of responding to market-shifting dynamics, as I said, our primary focus is to grow income to drive value creation. If you look at our five strategic pillars, we are very focused on each of these. Yeah, I'll just give you some examples. Investing strategically, we will continue to create value through a focus on organic growth and asset optimization.
Allocating capital strategically into growth sectors will continue, albeit on a diminished scale, given our LTV constraints. Keeping spaces relevant, I've already spoken about, to ensure that we improve that quality of cash flow through meeting our stakeholder needs. In terms of optimizing capital, ongoing work renewing maturing debt facilities proactively. You'll see a lot of progress in that regard this morning. Managing the interest rate risk volatility vigilantly, very importantly in this cycle. Sourcing new capital and recycling non-core assets will continue, as I said. Operating efficiently, we need to focus on ensuring that our operating margin gets to our target of at least 80%.
That is gonna require us to look very carefully at renewal reversions, strict cost control, efficient cost recoveries, attracting new tenants but very importantly, also harnessing technology to use data analytics to identify trends and inefficiencies. Engaging talent, this is where we're focusing on our human capital to ensure that we have a future fit cohort here at Redefine that is able to adapt to the ever-evolving technology needs that are critical for running a property company and also cultivating an inclusive and diverse high-performing team. In terms of growing reputation, collaboration with all our stakeholders, especially you guys, is absolutely important so that we are able to not only understand your needs but certainly get a beneficial benefit from that relationship. I'm talking here about our share price.
We will show you why we believe our share price can go upwards and we'll tell you how we're going to do so in due course. Then very importantly, creating sustainable socioeconomic impact through acceleration of our ESG strategy and reducing reliance on municipal supplied utilities. Leon will talk a lot about that in terms of what we are doing in that regard. Just looking ahead, there's a lot of noise out there and we will focus on the variables under our control through disciplined capital allocation to secure sustainable growth, actively recycling non-core assets, not only to reduce the see-through LTV but also to improve the quality of our portfolio as that flight to quality continues . Delivering our earnings guidance to drive value creation, absolutely critical, as we cannot rely on interest rate compression.
Lastly but very importantly and we'll talk a bit about it just now, simplifying our joint ventures to enable visibility of our income streams, as well as to meaningfully reduce that see-through LTV. With that, I'm gonna now hand over to Leon.
Good morning, everybody. On the South African front, certainly we've had a very busy last five months and we're quite pleased with the outcomes of our results for this period. Just to note, all the operating metrics that we show you is up to, for the five months, up to end of January 2025. In terms of our occupancy, very pleased with that increase. We increased our occupancy by 100 basis points. We've given you analysis on the right-hand side there on the vacancy, just to demonstrate to you where the vacancy sits. There are far right-hand columns expressed, the traditional way we express it, by GLA. We've given you an indication of what that vacancy is actually worth.
As you can see, our vacancy tends to sit in the lower quality in that by GMR, our vacancy is about a percentage point lower, particularly in our industrial and retail sector. In terms of the renewal reversions, unfortunately, that is still negative and it's impacted largely by a single lease within our office portfolio and we can speak about it now. The positive side, however, as you can see on the right-hand side, where we give you analysis of our reversions, is that roughly 80% by number of deals as well as by GLA has been flat or positive. Certainly, in our view, an indication that we've turned the corner and that growth prospect certainly is in the foreseeable future possible within all three sectors.
In terms of tenant retention, still very, very high, given obviously that it's in the first five months and that will obviously trend slightly lower towards the full year. Same with renewal success rates, still very healthy. Lease escalations and unexpired lease terms, similarly quite flat. You can see on the lease expiring profile, only 8% remaining, so that indicates that the lease expiry profile for the year was relatively even and rebalanced between the first and second half. In our first five months, we've roughly done about 8% of our renewals. On a sustainability front, as Andrew said, certainly for us, a key focus and an area that we continuously look to see where we can expand, not just from a ESG point of view but purely, as we say, they're from operational imperative point of view.
To reduce our reliance on municipal supplied electricity and also to mitigate some of the risks we see in the foreseeable future in terms of water availability and water scarcity. On the renewable energy front, we've continued to expand our solar PV fleet and once we have those installations in progress installed, our total install capacity would be at 64 megawatt peaks, which is a 48% increase on what we've printed at August 2024. In the last six months, we've certainly been very active on that front. Just to show that, electricity saving, that is saving of consumption of the municipal supplied grid that was supplied by our solar PV fleet was 57,000 megawatt hours. That was in FY 2024. The feasibility is in progress.
Obviously, the low-hanging fruit is somewhat limited now and as you can see, we are starting to look now at other opportunities where previously the yields could not make sense. Certainly with the increase in Eskom tariff, we are starting to look at some of those previous projects we may have turned down to see if we can potentially expand, particularly in carparks. From a solar wheeling point of view, we're quite excited. We are principally looking at two projects. The first one is the pilot project in the Western Cape. Thankfully, we've managed to achieve all approvals and that project has been kicked off and we are looking to produce electricity from our warehouse at Massmart at Brackengate from the half year in 2026 and the two offtake sites principally will be Blue Route Mall and Kenilworth Centre.
The second one, we've indicated there we were negotiating. Happy to say that, our purchase agreement has now been concluded and we are well on the way to bed that down and the project will commence shortly and we're looking for off-take in our 2027 financial period. That's quite a big power purchase agreement. As you can see, it's a 14 MW peak off-take, which will principally supply our office buildings within the Sandton node. On the water efficiency front, we continue to focus on that. In 2024, we've managed to reduce our water consumption by 7.7%, principally off the back of our low flush toilets but also good work we've done in the HVAC. That will continue to be a key focus area for us.
That reduction is despite us having to increase the occupancy. That therein lies our challenge. We will continue to look at initiatives to further enhance that opportunity. On the energy efficiency front, our LED lights managed to achieve savings of 5,000 MWh during the financial year of 2024 and we'll continue to look at opportunities to expand that. On the retail front, a good outcome in the last five months. We're happy to report that our renewal reversions continue to trend positive and we are very confident that that trend will continue. That slight deterioration in occupancy was in the backdrop of space taken back at Ster-Kinekor and Pick n Pay. As we indicate there, the bulk of that has been kind of relet and we've certainly got plans to mitigate any income risk on that.
As we indicated before, particularly as far as Ster-Kinekor is concerned, the revenue on a base is relatively low, given that it was operating in the last three years off a turnover percentage. From an income point of view, we don't see much risk in that. In terms of our tenant retention, renewal success rate's still very healthy. Our lease escalation dipped slightly lower, given that some of our leases within the retail portfolio is office related and particularly with government and that dragged it down slightly. Our renewals is between currently done on our nationals and core retail leases between 6% and 6.5%, so that escalation would trend more to a 6%.
In terms of our tenant turnover growth at 4.5%, certainly last year and that's just a note, that's for the 12 months to December, so that's December 2024's 12 months compared to the prior year up to December 2023. That 4.5% was skewed last year in that the first half was very slow and we certainly saw a big comeback from a retail performance point of view in the last six months. In terms of our tenant turnover growth, I think that 4.5 is slightly disappointing, particularly given some of the positive prints we've seen in the last quarter. We must acknowledge that first six months was a drag in that performance. We're still very confident that those metrics, in our view, present an opportunity to continue to focus on positive renewal reversions.
You'll see the trading density growth at 2.8%. It is a bit of a misnomer in that, as we indicate there, we've upgraded about 36,000 and expanded 36,000 sq m of essential services retailers. So our reporting turnover has increased by 24,000 sq m period for period. That's why our trading density growth and turnover don't quite correlate but still, we believe is a positive performance. The one point to note, we did not indicate our footfall growth because for the last two years our footfall has been flat. We've certainly seen a change in consumer behavior in that we've got bigger baskets and not an increase in number of visits and footfall.
In terms of our rent to turnover at 7.9%, we still believe that it's at a very healthy level and from an affordability, tenant affordability point of view, set the ground for us for continued positive reversions as we move forward. In terms of our expansion plans, we are very happy to report that Pan Africa, the second phase, was officially launched on 1 November 2024 and we've taken transfer at that point. Then in December we've also increased our percentage holding by additional 17% in the first phase, bringing our total holding in the first phase to 67.9% and phase I or phase II, we obviously own 100%. On the office portfolio, occupancy is still very solid.
Renewal reversion is quite an ugly number at -17% but as we indicate there, that was impacted by a single lease at 115 West. If we were to exclude that, the overall performance would've been a -5%. As we indicate, that relates to 9% of the portfolio. As the year will progress, we forecast that that negative reversion will land up between a -11% to -15% for the full year. That's a consequence of a 10-year lease escalating at 8% for the last 10 years coming up for renewal and with market rental obviously not increasing. As we indicate there, some of our nodes, particularly in the Western Cape, Sandton, Bryanston, is performing quite well and we've managed to increase our asking rentals. It's not just one-way traffic from a tenant point of view.
We are seeing in select nodes and particularly in our premium grade offices, that we are managing to increase asking rentals. The only one single tenant that's a triple net lease we've got still coming up is at 90 Rivonia and as we indicate there, we've had very positive engagements with the tenant and we are very confident that we will procure a three-year extension and that will commence in 26 February . In terms of our lease escalation, unexpired lease terms, we still think that is at a very healthy level and as we indicate there, the vacancies are principally at the lower end of the quality spectrum. On the industrial front, a very solid start and again, a fantastic performance by our industrial portfolio.
That improvement in occupancy was across the board in all our units and in particular, Cato Ridge has been let. We're sitting now with a very small vacancy at 2.4%. Renewal reversions continue to be positive, albeit on a relatively small element of the portfolio but that certainly speaks to the good and solid demand we've got within the sector and we forecast that will continue at that kind of level. Tenant retention renewal success has also continued to be very strong and our escalations maintaining at 6.5% and a very healthy unexpired lease term at 4.8 years. As you can see, we've also been quite active from a development point of view and we're selling off on the parcels of land and also on the smaller properties.
Certainly at S&J, our single biggest land exposure, we've seen renewed demand and we are very confident that as that activity picks up, we will certainly also see that it creates its own momentum and that we should be able to start reducing that meaningfully over the next two-three years. Particularly in our industrial sector, we continue to focus at interventions to make sure our units are secure from an energy point of view as well as from a water point of view. With that, I'll hand over to Andrew to talk through international.
Okay. Thanks, Leon. Okay, just looking at EPP, firstly, you'll note that the market is very busy. There have been a number of new international brands coming into Poland and others that are expanding already in that market. In terms of retail parks, there's a continued proliferation of new retail parks and it's spread across the entire Poland. It is not just in the larger to medium-sized cities but also in the smaller ones. You'll see that expansion playing out in the footfall numbers in particular, as well as in the food, grocery and supermarkets sales for EPP on the right-hand side. The last, if you like, percentages at -5%.
The good news is that there's no new shopping centers under construction and you'll see that similarly play out in the next slide when we look at the EPP Core operating metrics. In terms of our operational updates, as I said, footfall has reduced. You can say it's mainly a shift to convenience or retail parks. That's the main driver of that. Like-for-like turnover for the period to December 2024 on a like-for-like basis is at 3% and we give you a breakdown there of the categories on the right-hand side. As I said, you'll note there that value retail is at -1%. That could be as a consequence of Temu and Shein operating in that market. DIY at -3% is coming off a pretty high base given what happened during the COVID years.
In terms of rent collection, it remains healthy at 98.5%. EPP implemented a very deep operational efficiency program and those benefits will play out in the numbers 2025 into 2026 as well and you'll see that in due course as we print the actual financial statements. In terms of ESG, much, much progress has been made by EPP in this regard with obtaining necessary permits for the installation of a number of solar PV plants. Climate reports were issued. You can find them on EPP's website. Very pleasing to note that there's been a reduction in greenhouse gas emissions of 38% since 2019. We are very proud of the fact that EPP was awarded the Financing Story of the Year at the CEE Property Forum Awards in this past year.
If you have a look at the entrants for this award, we actually faced down a number of formidable names that you will know. Please have a look, see why we are proud of this award. Then just in terms of the BREEAM pre- and in-use ratings, you'll note that all the core properties are rated. Okay. Just in terms of priorities for EPP, I'll touch on that in a short while but I want you to focus on those EPP Core trading statistics. You'll note a very healthy active occupancy at 99.3%. You can say it's virtually 100% let. That 0.7% is really churned. Renewal reversions are moving positively at 1.5%, so we are seeing good progress in that regard. However, I must note that there is always a trade-off between tenant retention and renewal reversions.
You'll see retention is up to 98% but it came at the cost of some reversions. That, you'll see play out in the next slide when we look. The indexation rate is at 2.1%, where most of EPP's leases should be printing closer to the 2.4% print for 2024. The reason mainly for that is that there are principally three tenants: Inditex, LPP and H&M who are turnover-linked leases and that is what drags down that percentage to some extent. As you can see, very healthy rent to sales ratio, maintaining at 8.8%. In terms of priorities, the long-term letting of the M1 portfolio is a focus area. We are in and have disposed of plots of land within the Horse portfolio that is earmarked for residential development. It's subject to rezoning.
Four sites have already been sold and we are at advanced discussions for two additional ones. We are concluding the sale of the Power Park Olsztyn. I'll talk a little bit about it just now. We've completed the extension of the retail park at Kłodzko. That's within the community joint venture. We've advanced the Auchan and MediaMarkt space optimization program. We continue to drive operational efficiencies on the program that we've already launched. As I said earlier, we are simplifying our investment proposition and we're reducing our high levels of gearing through a very strong focus on simplifying the joint ventures and I've got a slide on that very subject.
In terms of the joint venture performance, as you can see here, I've already spoken about the renewal reversions and the tenant retention as a trade-off and you'll see that playing across the portfolio out over here. I just wanna mention that Galeria Młociny is higher than the rest. The reason for that is that Galeria Młociny has just celebrated its fifth anniversary during this past period and that's why you're seeing that -3.4% there. We do, however, believe that we are on a very secure footing going forward as a consequence of this. You'll see that playing out not only in the rent to sales ratio, which is now moving in the right direction at 9.8% from 10.5% but we'll see a lot more stability coming into that center going forward.
That's very good. Occupancy has been generally stable across the portfolio with the exception of the offices in Henderson. You'll note that the indexation rates in the Horse Group is lower. This is not because of rental caps or you know, strange arrangements. It's more about OBI, who is a DIY retail chain that will have its indexation applied in May per their lease arrangement. They're a little bit out of kilter with the rest of the portfolio, who are effectively running from 1 January onwards. That will play out and will normalize during the course of the year. Then just like-for-like footfall, you will note there that it is looking for the Horse Group down at minus 3.4%.
There is some development activity happening at the M1 centers where we are transforming them, which is partly playing out there along with the retail parks doing their bit. Then you'll also see that in the EPP community portfolio, there's one property, Galeria Olimpia, Bełchatów that's similarly under the scrutiny, which is dragging down that footfall there. Okay. Just in terms of rent to sales, you'll see everybody trending in the right direction and that bodes very well for the stability of the joint venture portfolio. Just in terms of ELI, you'll see that the logistics market last year has grown 9% but new supply has fallen 33%. There has been a slowdown in development activity and this is very good from a market rental perspective and you'll see it playing out in the numbers.
In terms of the rentals themselves, as it says there, prime warehouse rentals have remained stable. Effective rates are down due to incentives for longer periods being reduced by 20% and this is a consequence of that slowdown in development activity. You'll see that there's still some growth in terms of investment going forward from the logistics sector in Poland. What we are seeing, which is very pleasing, is that portfolio deals are starting to happen again. Last year, there were none. We're starting to see green shoots here and that is very, very important for us as we look to how we can optimize our joint venture portfolio going forward. In terms of ELI's operational update, you'll see there that there's been good letting activity.
We'll talk a little bit about occupancy on the next slide but very pleasing to see the initial rental over EUR 5 per sq m. When we initially started with this portfolio in 2018, the rentals were under EUR 4 per sq m. To give you a sense where we were, they were about EUR 3.75 or thereabout per sq m. We've seen good growth in the last year in rentals and this is very, very positive for us. Our GLA as a complete portfolio is just over 1 million sq m. You do know that we are in the process of demerging ELI, where we will end up with roughly 0.5 million sq m of GLA going forward as a consequence of the split.
Our lease renewal totals, you'll see 10,000-odd sq m were concluded at an average rent of EUR 5.25 per sq m. That reversion rate is 14%. Fantastic achievement. New lets of 10,000-odd sq m were recorded at an average rent also similarly of just over EUR 5 per sq m, which is similarly 14%. It's not by coincidence but it's just over 14% ex increase on the expiring rental. In terms of ESG, the BREEAM certifications continue and you'll see that 94.8% of the portfolio has been certified and you'll see that 85.3% of the certified portfolio have achieved either a very good or excellent level of certification. The portfolio's operational greenhouse gas intensity, w e don't use to have FY 2024 but it was in 2023, 50% below the Polish average, which is very good.
Then the verification of the portfolio's carbon footprint is underway for FY 2024 and we'll report on that in due course. In terms of developments and disposals, we completed a development for 11,500 sq m during the period. We are still busy with one development in Warsaw at the moment, just over 16,000 sq m. Eight plots of land with a total GLA of 177,000-odd sq m is available for development and we're critically looking at these plots to see which ones we can sell if we cannot secure a tenant for these plots. We don't wanna be stuck with unproductive land. Then just in terms of a sale that was happened, it was a property in Gdańsk that we've just completed the contracts on and it will close during March.
I must just add that this property will form part of the Madison split, so it won't come to Redefine from a proceeds perspective. In terms of priorities for ELI, as I did for EPP, I'll talk about that last. Just focusing on the trading statistics, you'll see a very pleasing increase in active occupancy. That is as a consequence of good letting activity during the period. Rental reversions overall, very positive at 13%. Tenant retention could be better at 51%. Indexation rate is basically in line with what was printed by the Eurozone in terms of inflation and the weighted average unexpired lease term is reasonably kind of consistent at 5.9 years. From a priority point of view, we will continue to reduce the current vacancies in the portfolio.
We'll continue to secure pre-letting on land holdings for further development at attractive yields or else we will dispose of those land parcels. We will be pursuing quality low-risk developments only in sizable key logistics hubs. The demerger process, I'll talk about on the next slide but I just wanna mention that we are progressing that as we speak. In terms of the joint ventures, restructuring these joint ventures holds the key to reducing the group see-through LTV and also improving the visibility of our income streams going forward. We want to simplify this entire bundle of assets. In terms of the Horse Group or the M1 portfolio, as I prefer to call them, we are progressing the plan to buy out our partner.
It involves introducing new third-party equity, the sale of the residential properties that I spoke about, as well as three properties that we're looking at to sell during 2025 to assist us with that endeavor. The EPP community joint venture, we flagged it as a medium-term exit, given the proliferation of retail parks, as I spoke about earlier. Here, we were thinking initially about establishing a Polish REIT. Unfortunately, REITs seem to be a bit on the back burner from a legislative perspective. We are rather looking, going forward, to market this portfolio once institutional activity normalizes. Now, that may happen well into 2025, 2026 and not in this financial period. The Henderson joint venture, similarly, we'll market that once the market in offices stabilizes.
That's once again a medium-term situation to play out. Galeria Mokotów, we'll look at options to resell other non-core assets within EPP to buy out the 30% not owned by EPP. This asset, as I said, is stabilizing and we believe could become the crown jewel in time in the EPP Core portfolio. Power Park Olsztyn has been sold. We expect the disposal proceeds to flow during March 2025. Just in terms of ELI, the separation of the portfolio, as I said, is in the process of implementation. However, we need to pay very careful consideration to any adverse tax implications. Hence, it's taking a little bit longer than we would like. In terms of self-storage, here the story continues in terms of growth and development of a very infant or immature market.
If you have a look at the capacity for self-storage, we are told that there's growth potential of just over 880,000 sq m, which is more than sufficient for our growth kind of aspirations. There are numerous single site operators which operate mostly low-quality facilities and it's a hybrid between traditional self-storage units as well as containers. This is where we believe the opportunity lies, where you can build institutional grade units, which over time will dominate the self-storage sector in Poland. From an operational point of view, good progress is being made. We've launched a new website. That was in December. There are further software enhancements planned, mostly around revenue generation and also optimizing rental on an hourly basis.
Mobile access control is a given for all sites, as well as obviously linking it to market pricing tools as well. A very dynamic model on the rental side is a necessity in this market, as well as obviously ease of access and doing business. In terms of operational facilities, Stokado has 20 of them. The occupancy rate is at 67.7%. Generally speaking, in the winter months, it's a bit slower than in the summer, so we should see a bit of a uplift come spring in Europe. Then just in terms of the net lettable area, you'll see that roughly 14,000 sq m is containers and roughly 13,000 are units in the existing portfolio. Over time, those containers are non-core.
We will dispose of them but for now, they are generating cash flow and we will continue to hold on to them while they do so. But it's not a long-term hold as we build that institutional grade facility that I spoke of earlier. New developments are being focused largely on the urban areas of Warsaw, Kraków, Wrocław and Gdańsk and we've got a map to show you where we believe the key markets in this sector lie. In terms of ESG, BREEAM certification is very, very important to attract funding and it does support valuations. This goes without saying that all of our new developments will be certified as a consequence. We have two developments that are currently under construction. A third is starting in March.
You'll see there that we're gonna be adding a further 13,000 sq m of net lettable area to this portfolio. We are looking at 5 other developments comprising just under 25,000 sq m. The total cost of these developments will basically use up our entire EUR 50 million. That's EUR 50 million of equity that we earmarked for this investment. We are actively now looking to attract an equity partner, like we did with ELI, to continue with expansion going forward. Just from a priority point of view for self-storage, you'll see there that we are continuing to look at prime locations in major cities, very importantly, with an institutional investor backing, 'cause we don't want to over-commit beyond the EUR 50 million. Leasing and operational performance can be improved and is being improved.
We are looking at completing the integration and standardization of operations across all locations through the implementation of technology. Mostly the Top Box is the big part of bringing that into the Stokado portfolio and then just looking at favorable banking financing for new developments but very importantly, attracting an institutional investor for expansion. With that, I'm gonna now hand you over to Ntobeko .
Thanks. Thank you, Andrew. Good morning, everybody. I think on the financial insights, it's very clear for us that we're focusing on delivering growth in an uncertain operating context. Now, just to touch on our focus in terms of stabilizing earnings outlook, I think just upfront, on the financial numbers that we're quoting here, they are for the first three months of our financial year 2025, so they're up to 30 November 2024. If we look at the net operating profit margin, let's start with the group, that improved by 80 basis points from 75.1% that we printed last year to, in the first quarter, 75.9%. That is supported by the improving net operating profit margin out of our directly held portfolio in EPP Core. That improved very nicely, strongly as well, from 66.4%-71.7% in the first quarter.
Also pleasing from a South African portfolio point of view, a very stable net operating profit margin at 77.8%. That, with a very clear focus, I think in terms of the quality of the earnings, as of the first quarter, 99.9% of our earnings are all recurring. I think just to move on to touch on some sensitivities in terms of distributable income per share, I think it's really just around the interest rates, that if we are to look at the change of 50 basis points in the Euro interest rate, there would be a ZAR 0.006 impact on the earnings. Also we share with you the impact in terms of a 1% movement in the indexation in Poland, that will result in a ZAR 0.004 impact on the DIPS.
The ZAR interest rate by 50 basis points, which is after or net of hedging, that's why you see that number coming out with an impact of ZAR 0.002. Also in this period where there's been a lot of volatility, especially around the ZAR, in terms of depreciation, if it moves by 1 rand, that will have a ZAR 0.002 impact on the DIPS. If we move along to our balance sheet, I think we continued with our prudent risk management, which we believe supports our long-term value creation. Our focus, as we said, is we want to build a balance sheet that can support sustainable medium-term growth from our well-diversified asset platform.
If I touch on liquidity, we can see that as of the 30th of November, we had excess in terms of undrawn committed facilities and cash on hand that amounted to ZAR 6.4 billion and that compares very favorable as we improved our liquidity, especially in these uncertain events. It adds a lot of flexibility in terms of balance sheet and I'll touch on that. You'll see also when you look at our low risk debt maturity profile just in a second. Pleasing that our group weighted average cost of debt decreased by 30 basis points to 7.2%. I think that was largely just on the back of the interest rate cuts that we continued to see out of ECB in Europe.
I think our commitment in terms of our offshore is that with gradual reduction of see-through LTV will be maintained with an average of 2.4% offshore debt amortization in EPP. I think just to touch on what we're expecting, we are currently busy with our final evaluations. We expect that they will remain largely stable in terms of the outcome. I think to touch on the, you know, where we are in terms of since we last spoke, probably one big factor is that the interest rate expectation in terms of the cut is much shallower than what we had expected but that, plus if you combine that with our very strong cash generation, we'll continue to expect an improvement in our ICR headroom in the medium term.
From a weighted cost of debt in the ZAR debt is that we are pleased that we maintained that at 9.2%, which is actually printed the same in FY 2024. On the back of a declining EURIBOR, we also saw the FX debt average coming down by 20 basis points to 4.9% compared to the 5.1% in the prior period. Prudently, we continue to hedge and we increased our interest hedge to 81.8% of our debt. That compares favorably to where we were at 78.9% last year and we still keeping short-dated tenors with an average tenor of 1.1 years.
Just to touch on debt maturity, I think for us, what we always maintain is that we want in terms of per each single year, not to have more than 20% of our group debt coming up but we're fairly comfortable with the progress that we're making in FY 2025. I'll touch on it just now. In 2028, there is five-year deals that we did in EPP Core for Pestka and Wileńska . That's why you see that coming up at 31% but we're comfortable. We're not losing sleep in terms of our ability to file. Those are very good assets and there's sufficient bank appetite in terms of refinancing those. If we break down the ZAR 6.4 billion, I've already mentioned ZAR 1.3 billion, it's our cash on hand and then 5.1 is the excess in terms of the facilities.
Let's just touch on the progress that we've made in terms of FY 2025 debt refinancing. I think we refinanced a revolving credit of ZAR 2 billion, that facility which we managed. We're pleased to achieve a 37 basis point margin compression. And it's a 4.5-year tenure. As a part of our important strategic presence in the debt capital markets, we did two bonds. One, we raised ZAR 1.3 billion unsecured in November, which across three, five and seven-year tenors and we achieved a margin of 125, 145 and 163 basis points respectively over those periods. Then the proceeds there we used just to refinance some of our legacy margin debt that was at 223 basis points and that led us to achieve a saving of about 82 basis points.
Recently now in February, we also went to the market with a bond auction where we raised ZAR 800 million across three and five years and I think it was pleasing that this was 2.5 times almost oversubscribed, showing the liquidity points that we're taking advantage of in the markets. Also similarly with that was supported. The margin compression that we saw, I think on three-year money, is we achieved 119 basis point margin and then on five-year money, we achieved 140 basis point margin. We will use this as well, just as part of managing our cost of debt, refinancing some of our legacy margins in terms of improving and managing the cost of debt in this through the cycle.
The refinancing of 560 term debt facilities that are remaining now as part of FY 2025 is progressing very well and we will conclude that in due course. Lastly, I think in terms of the refinancing activities, I think it's also we were pleased that we're able to refinance the debt in Henderson. That was concluded in December and that facility was at a margin of 2.5%, with the entire facility being hedged at 2.4% and maintaining, as I've alluded to earlier, an amortization of 2.2% per year. Just to touch on the refinancing of cross-currency swaps and our interest rate swaps, that during the year, we had some maturities that we had spoken about that had a fixed rate of 1.4% and a floating one that was at 1.6% over the six-month Euribor.
Those matured and then the combined maturing cross currencies of EUR 90.8 million were refinanced at a weighted average fixed rate of 4.4% for 0.7 years. There we went for shorter tenure. I think we're just waiting for some uncertainty that was clouding that was just around the U.S. election. Pause that and we've got another EUR 75 million cross currency that is coming up and we're seeing attractive pricing points. In terms of the interest rate swaps, I think there was a notional of ZAR 2.4 billion that had a weighted average of 6.3% that expired in the period. We refinanced those. We entered into ZAR 3 billion of new interest rate swaps at a fixed rate of 7.2%.
That impact that you see between the refinancing of these, interest rate swaps at 7.2 compared to the expiry profile of 6.3 is one of the elements that is continuously impact in terms of our, cost of debt in the balance sheet. Just to touch on our loan-to-value ratio. I think, the focus here is very clear for us that in the medium term, we have to trend towards our medium target range of 38%-41%. We are quite pleased that in Q1, we have a print of, forty-one-point-five percent. I think, in terms of that, we very clear that, in the assumption, the big assumption there is a FX outcome in terms of this is exclude. The 41.5% excludes, property valuations as well as the FX impact.
If I touch on just the covenants, our interest cover ratio, that was relaxed. This covenant was relaxed to 1.75 times for all periods up to 31 August 2026. That printed at 2 times at the end of November. The SA LTV printed at 41.5 and with a covenant of 50%. We're also very pleased in terms of the Moody's credit rating that was reaffirmed at Baa2 on the 14th of February with a stable outlook. We provided with the sensitivities in terms of what will happen in terms of the property valuations outcome, both in SA and EPP. You'll see that in SA, a 1% movement, which is, will result in a 0.3 impact on the LTV. Similarly, in EPP Core, that in EPP it will be a 1% movement that will result in a 0.1%.
Also the movement in terms of our investment in joint ventures, if we were to move that by 1%, it will have a 0.1% LTV impact. The rent, which is the depreciation of the rent by 5% will have a 0.3%. I think Andrew touched on the ELI measure. Post that, you know, the impact of consolidating, 'cause at the moment we treat ELI as a joint venture. If it becomes a subsidiary that gets consolidated into the group numbers, it will have an LTV impact of 1.7%. I think just to touch on the trading update, I think, we're quite pleased to share with you that, in terms of our guidance that we had shared with you, at ZAR 0.50-ZAR 0.53 distributed income per share, we're maintaining that.
I think the key aspects probably that have changed since we last spoke is the upside in terms of that, in terms of the interest rate path that has panned out to be lower. That actually trends that to probably encourage more towards the middle but towards the middle and towards the lower end of that range. If we look at some of the variables that are within our controls, I think our focus on driving sustainable organic growth and improving margins, as you have seen what we started to achieve in EPP portfolio. That is our focus. We'll continue to do that to support organic growth. Strong cash generation from the quality of our asset platform and that continues, I think, even in this shallow interest rate cycle, to actually mitigate the impacts of that.
In terms of a government of national unity, that stability is very important. I think with an expected economic growth of at least coming to some 2% in South Africa by 2027. I think Andrew has touched on this in terms of just progressing the restructure of our Polish joint ventures and then also actively recycling capital out of our non-core assets. The one aspect which is the very unpredictable is the geopolitical environment, which has an impact on inflation expectations and also subsequently then determines or actually hampers the pace of interest rate cutting cycle which has played out. The extent of that also influences where the swap markets in terms of where we could buy swaps in the market, that will also have an impact.
Overall, I think we're quite pleased that we continue to see solid operational performance that is able out of our portfolio and is a testament to the quality of our diversified asset platform that can weather these uncertainties and then continue to deliver sustainable growth for the business. With that, I'd like to thank you and then I'll hand over to Andrew to deal with questions.
Thanks, Ntobeko. Great. Okay. Thank you very much for listening to our delivery. We have a few questions. Maite from Standard Bank has asked about the EUR 90 million cross-currency swaps. Were they extended for only 0.7 years and not longer? And were you not happy with the pricing, Mr. Nyawo?
Definitely, Maite, the pricing, I think it was at the majority took place. It was clouded by the U.S. election buildup. We felt that the pricing wasn't right. We've got opportunity with the coming ones and we liking the pricing. That could give us the ability to play with 10 a bit more.
Great. Thanks. Okay, Sandile from Umthombo Wealth says, "In a healthy and growing Polish economy, what would be normalized distribution contribution coming out of the Polish operations?" There's a few questions, Ntobeko can answer that one. The next question is, "What level of LTV would you like to maintain for the Polish assets and how are you planning to achieve this? And what is a sustainable payout ratio to ensure healthy gearing levels? Do you wanna answer, Ntobeko?
Yes, Andrew, I can deal with the.
Deal the first one. I'll do the other.
Yes, please, yeah, let's deal with the first one.
Okay.
I think we had clearly communicated that the normalized earnings out of EPP, once we've restructured it, will be closer to EUR 50 million. I think we are pleased that we are very close to that target. I think we'll be very close to achieve it this year or next year in terms of the earnings that are coming out of that portfolio.
Thank you. Okay, just in terms of what is a reasonable LTV, around 50% would be the answer. The reason why 50% and not lower is because that is the percentage where banks no longer require amortization of debt. That's what we're aiming for. How we're going to get there would be through a sale of non-core assets as well as the elimination of those very highly geared joint ventures. That's how we're gonna get there in due course. In terms of a sustainable payout ratio, we would like that to mirror the payout ratio here in South Africa, so that we don't overdistribute here in South Africa to make up for the retention in Europe. We'd like the two to mirror.
If we have a range of, let's say, 85%-90% or 80%-90% as a payout policy, we would like EPP to mirror that in due course. A question from Nazim: "Please provide more color on the exit of EPP community properties. Is the partner in a position to acquire the remainder or are they also looking to exit?" Nazim, the partner is not prepared to pay the price that we would like, which is a fair one, i.e., around book value. They would like to see a discount of around 40% to that book value. That's not a sale price in our view. Are they looking to exit? No, they're not. I can't speak for Castleview. I can only speak for my half of that portfolio and we would obviously need to navigate our way as to how that happens.
Nazim has a busy morning here with us. His next question is, "The Henderson JV refi is complete. Is this an indication that banks have an appetite to fund offices in the region and is a sale likely soon?" Nazim, the banks are prepared to fund offices once again. Clearly, they are very circumspect around LTVs and also, you know, what the prospects of the latter looks like. We would like to exit this joint venture with the partners. That will be a total sale of the portfolio. Right now, it can't happen because there's very opportunistic buyers in the market, mostly for single assets. We do see that turning, however, in due course. There have been some single asset transactions in the market in Ireland and we will assess that on an ongoing basis.
We may need to look at selling, say, Malta, which is one of the better properties within that portfolio but we'll have to assess that on a individual basis. Although our preference would be to exit portfolio-wide. Nick Wilson from Media24 asks us, "How confident are you of Pick n Pay turning around its business?" That's a difficult question for Leon, 'cause I'm sure everybody would like to know that and I'm sure it's easier to ask the CEO of Pick n Pay himself that question. Nick goes on to say, "I see space has been taken back from both Pick n Pay and Ster-Kinekor. How much space in terms of square meters does this amount to?
How big are these two as tenants in your portfolio and how concerned are you about Pick n Pay and Ster-Kinekor's future prospects, Leon?
Nick, firstly, let's deal with Pick n Pay. Look, I don't wanna speak for Pick n Pay but certainly from where we sit and given our relationship with Pick n Pay, we believe that they are focusing on the right things. I think their challenges are well documented. From operational point of view, I think in terms of the new management team, they are focusing on some of the low-hanging fruits and particularly focusing on the customer experience, where they possibly in the past have lost their way a bit. It's clear that there is a big CapEx requirement in terms of them upgrading stores and such like, so there is definitely some time and space that they need in order to effect that.
We are reasonably confident and particularly given our current working relationship with Pick n Pay, that they have the ability to focus on the right things and turn around their business, particularly within our portfolio. In terms of their exposure to Redefine or Redefine exposure to them, in terms of our total monthly rents, they are roughly 5% of our retail portfolio. On a total portfolio they constitute 2.3%. Which again, I think just speaks to the diversification within a portfolio the size of Redefine's. We don't think there's any undue risk in that. In terms of the space they're looking to reduce, it's not just closing stores. It certainly is also, you must understand Pick n Pay, particularly a number of their leases has been signed many years ago.
It's in terms of them also right-sizing stores, particularly focusing on some of the hyper stores where they have a couple in our portfolio, where there's a 12,000 sq m store, which in the current environment certainly lends itself to being reduced and still fulfilling a very competitive presence and such like. During the period, we've agreed to take back an underperforming store at Centurion Mall and we've managed to relet that, so we're not concerned from a revenue point of view. There's continuous plans with us and the Pick n Pay team in terms of how we can right-size some of the other stores. There are principally three other malls that we're looking to right-size. We're not concerned from that front. On Ster-Kinekor, we have six cinemas, cinema complexes with Ster-Kinekor.
Ster-Kinekor, given that they've been in business rescue and paying relatively low rent, constitute a very tiny percentage within our exposure, so they constitute zero point one percent of our monthly rental bill. It's relatively low. In terms of conversation with Ster-Kinekor, we would, after the restructuring and taking back of the cinemas, we will be left with two cinema complexes and basically those cinemas that have IMAX theaters within them. From a future prospect point of view, Ster-Kinekor is obviously very dependent on content coming out of Hollywood and they believe that there is still future prospect for that. We can certainly see a smaller footprint for cinema experience in the country, not just limited to Ster-Kinekor but also their competitors.
There's gonna be definitely a consolidation but we believe there is still good prospects for select centers, as I said, particularly with a point of difference like a IMAX theater.
Great. Thanks, Leon. Okay, Suren Naidu from Moneyweb has asked a similar question regarding the office portfolio. I've already answered that. Then we're gonna finish up with three more questions from Nazim. The first question from Nazim is, "I anticipate office vacancies to rise post the Wembley Square vacancy. I thought new tenant only in November 2025. Was this mitigated from other letting or being excluded from core?" Leon?
Nazim, you're quite right. We've managed to relet the Wembley space that was vacated by Amazon and the take-up is staggered from November 2025 up to February 2026. That space is currently reported as let, even though the current tenant is not currently in occupation. Yes, some of the vacancy has also been mitigated by other letting.
Okay. All right, another question from Nazim is: "What work is being done at M1 Assets? Could this have an impact on higher CapEx budgets year on year?" Nazim, we spoke about this last year and nothing has changed. We will continue to spend defensively as and when is required. The answer is nothing in addition to what has not already been discussed or earmarked for this portfolio is being spent on it at this point in time. The value and this is the third question from Nazim, "What is the value of the 30% in Młociny?" Nazim, if you just look at the net asset value, 'cause he's gearing against this asset, the net asset value is roughly our share, which is 70%, it's ZAR 2.8 billion.
If you take out your calculator, it's just under ZAR 1.2 billion is what that 30% and that's ZAR, what it's worth. In terms of other questions from Property Flash, Alistair Anderson has two questions. "Did the postponement of the budget have any effect on confidence in listed property in South Africa, given that it moves in line with economic growth?" There is a lot written, Alistair, that we all read about the postponement of the budget. We haven't seen anything negative translate into letting activity or anything fundamentally at this point in time. It's way too early to tell what is going to happen.
I do think we take heart from the fact that there is democracy at work, that we are seeing evidence in the halting or the postponement of the budget, in that there's no longer a single party that is ramrodding policy down all our throats and I think that's very positive. We look forward to the twelfth of March to see how the budget, in its reconstituted format, will work. For now, we're not seeing anything untowardly negative, Alistair. In terms of his second question, "Is Redefine looking to offshore retailers coming to South Africa, maybe premium retailers at Centurion Mall?" Leon, have you got any thoughts?
Alistair, we are continuously remain open to engage with offshore retailers that are looking to explore in South Africa. The one name that does come to mind is JD Sports, which is obviously being rolled out under the TFG or from the TFG group. You know, we've got a number of malls earmarked that they would look particularly in the second phase to roll out. The first one being at East Rand Mall. Centurion Mall potentially is a candidate, too. For us, the focus at Centurion Mall, in particular, is to improve our entertainment offerings. That is also a center where we will take back the Ster-Kinekor. Particularly in terms of kids entertainment and teenager entertainment, we've got very good prospects. In fact, we've opened a very attractive and successful kiddie entertainment center in our basement there at Centurion Mall.
Thank you, Leon. Okay, the last question we got is from Kgapano from Mazi and he asks, "Post the JV exit and disposals, what will your Polish exposure look like? Potential for further transactions beyond storage once the transaction or the structure has been simplified?" So Kgapano, look, capital allocation is dynamic. We need to, on an annual basis, look at the merits of where we are deploying our capital long term. That comes with risk considerations as well as opportunities. Right now, it's an open situation in that we need to see how we settle first the exit of these joint ventures. If you look at the EPP Core assets, they're doing fantastically well.
The fact that there are no new shopping centers on the horizon from a construction point of view, we believe that those core assets will continue to dominate their nodes and will continue to deliver good returns over the medium to longer term. It's open. We don't wanna go into new territories. We wanna stick to Poland because we understand that market and we have got good representation from a human capital in that market. We can build on it if there are opportunities but we would rather stick to what we know and we understand, which is retail, principally, as well as logistics. In self-storage, we'll see how we go.
It's not to say that after building out and stabilizing this portfolio, it's a long-term hold because there is a significant capital uplift that we can bank from this. With that, I thank you for your time this morning. I wish you well for the rest of this month and we look forward to talking to you in May when we release our interim results for this half year. With that, thank you and all the best.