Good morning, everybody. Welcome to Redefine's pre-close investor update for the half- year ending 29 February 2024. This morning, you'll see that our conversation will be centered around a strategic overview that I will go through. Leon Kok, our Chief Operating Officer, will talk about our local property asset platform. I will follow with the Polish property asset platform, and then we will close with our CFO, Ntobeko Nyawo, who will take us through some financial insights as well as end with what is probably most important to all of you, being our trading outlook for FY 24. Just looking at the strategy and our operating context, we are very, very positive that the macro challenges that we've been facing for quite a while now will start easing during 2024. We all know that interest rates are now at the peak.
We see it from those JIBAR and EURIBOR rates below there, where you can see that the banks are actually pricing in, particularly in Europe, you'll see some easing during this coming period. What is very positive is that the elections that were held in Poland last year are going to be very positive for the Polish economy, but more particularly for the commercial real estate sector, where there are a number of interventions and initiatives will start playing out very positively in that market in the form of relaxations, potentially of Sunday trading bans, as well as increased social grants. In terms of the energy supply crisis in South Africa and the energy cost crisis in Poland, we are seeing a softening in both of those areas, which is positive going forward.
Yes, here in South Africa, we have a long way to go, we know, and it will be bumpy, but it does seem like things are getting better. Then just lastly, despite the challenging economic environment that we are still seeing here in South Africa, across the board, and I'm talking about South Africa as well as in Poland, you will see from this presentation that our operating metrics are showing ongoing improvement, and this is giving us a huge amount of hope for FY 24 into financial year 2025. In terms of our ever-changing landscape, there are some clouds on the horizon that are beyond our control that could disrupt inflation expectations, and I think we just need to be wary of these.
It's not to say we're gonna be caught up in the headlights of these matters that are way beyond us, but just to note that we are going into an election period here in South Africa as well as globally. This could lead to social instability and some policy inertia. Inflation, we know, has a glide path that is downwards, but it won't necessarily be in a straight line, and this could mean that our anticipated rate softening could be delayed or perhaps stalled a bit. But be that as it may, I think we also just need to be aware that the intensified global geopolitical tensions in both the Eastern European as well as Middle East regions are also potentially inflationary as well as disruptive to supply chains.
I might add, in opting for the upside, that could well be very beneficial to our logistics business in Poland. From a climate change point of view, we all know that it's real. We feel it daily. Here in Johannesburg, I can tell you it has been very hot. Be that as it may, there are other impacts that one doesn't always think of that happen. For example, erratic water levels in key sea routes, which similarly could lead to delays in the routing of goods, but also the cost could be inducing further inflation into the system. Moving on to our response to our market shifting dynamics. As you know, we focus on the variables under our control. We do not allow factors beyond our control to distract us from what matters most.
Here is a very detailed list of focus areas for 2024 with anticipated outcomes, and you'll see that we have broken it up into our five strategic priorities. The first one being investing strategically, and this is an ongoing process of looking at how we are strategically allocating capital. Capital is scarce, so there's selective deployment of capital from recycled non-core assets into growth sectors. Similarly, we are looking at preservation of value as well as protection of value through a number of interventions, and Leon will talk a lot about that as well as in the Polish sections as well. In terms of optimizing capital, it goes without saying that we need to be proactive in maintaining a very disciplined approach to how we manage the balance sheet, and it's all about maintaining sound credit metrics. We need to optimize our offshore gearing levels.
We know that the LTV on a group as well as a see-through basis is high, and we will, when opportunities arise, look at how we can reduce sustainably those key metrics. I think more importantly, in this environment, we need to keep a watchful eye over interest cover ratios. That will be going through this time that we get into the easing of interest rates, something that we have to look out at very carefully. In terms of operating efficiently, it goes without saying that organic growth is not gonna come from the top line in a constrained environment. We have to look at efficiencies, and this is happening across the board. Our digital transformation journey is critical to that.
Similarly, we do need to intensify efforts in terms of retaining and attracting tenants by offering compelling value, and you'll see that in the statistics that will be presented to you in due course in terms of outcomes. In terms of engaging talent, absolutely important that we need to promote our employees' well-being during this testing time by encouraging a work-life balance. I think it's very important that we invest in our people so that we can foster an inclusive environment to not only attract diverse talent, but also create that environment to stimulate creativity as well as innovative thinking. From a growing reputation point of view, here we have lots of work to do in terms of understanding the deliverables that are demanded of us by our stakeholders, and similarly, what we in return want to ensure that there are effective relationships.
For us, it's very important that we focus on a multipronged, sustainable energy, water, and waste solution approach to reduce reliance on the grid, and this can only come through collaboration with all our stakeholders. Building sustainable partnerships with our tenants, suppliers, and community-based organizations, absolutely important if we are going to ensure that our ESG endeavors are deepened throughout our ecosystems. Just looking ahead, in summary, we opt for the upside by identifying the opportunities within our sphere of control. As I said, our focus on conservative balance sheet management, absolutely important. Building that quality, diversified portfolio that you will see is starting to bear the fruit that we expect it to deliver sustainable risk-adjusted returns. Investing and transforming our human capital to enable creativity and foster innovation. Understanding our stakeholder needs, I've already spoken about.
Accelerating new data and digital platforms to create smart and sustainable spaces. Then lastly, but very importantly, embedding ESG into everything we do by embracing and fostering stakeholder collaboration to extend the reach of our green initiatives. With that, I'm gonna now hand over to Leon Kok, who's gonna talk to you about the South African property asset platform. Yeah.
Good morning, everybody. As far as the South African performance are concerned, as you can see, the scorecard in general terms, I think we've performed exceptionally well in the last five months. Only marginal blip there is on the occupancy stats, which has increased or decreased slightly to 92.7%. And just to note, that occupancy is expressed as a percentage of GLA. On the right-hand side, where we show you the portfolio vacancy analysis, we give you an indication of what we believe that vacancy is worth. If you can see, the vacancy by GMR is substantially lower, simply because that reflects where the vacancy sits, typically in the lower quality spaces.
For instance, if you look at retail, by GMR, we believe that is only representative of 3.5% of our gross monthly rent, simply because that sits in that lower quality retail space. The same goes for office and industrial. As far as renewal reversions are concerned, the pleasing trend that we've seen last year continues in that number is gradually reducing down, although there is still weakness in the office sector, and we'll touch on that in a minute. On the right-hand side, we give you just an analysis of the activity taking place. Again, the reason why we just give you the breakdown by number of leases in terms of GLA is to indicate that it is a dynamic market. It's not just one-way traffic that all leases are reverting negatively on renewal.
As you can see, there's a number of our leases that in fact are positively reverting. In other words, on renewal that we are managing to renew at higher rates. Similarly, a big chunk of our leases is flat reversion. In other words, reverting at the same level than what they expire. The big element of negative reversion sits in that office sector, and we can touch on that in a minute. In terms of our lease expiry profile, again, a key focus point for us to make sure that we don't have any undue spikes within that. We are reasonably comfortable that our lease expiry profile going forward does not present any undue or areas of concern that produce weakness in the system.
The point in terms of lease escalations and our weighted average unexpired lease term, again, is indicative of healthy leasing activity taking place despite this very challenging economic backdrop that we do find ourselves in. In terms of our sustainability initiatives, a slide that we're extremely proud of, and in particular, our efforts around renewable energy. If you can see on our Solar PV installed projects, these are projects that are commissioned. We've got installed capacity of just over 40 MWp across our three sectors, with the bulk of that obviously sitting in retail. But what for me is extremely exciting about this slide is that the installations in progress, that is just over 17 MW. You can see within our industrial sector, we're certainly starting to capitalize on those opportunities.
The installation in progress 27, and the feasibilities in progress over 17 MWp. If we complete those in progress, and those feasibilities prove to be successful, we can conceivably look to double our installed capacity over the next two to three years, which I think is extremely exciting. We'll have installed a renewable energy fleet of Solar PV projects of just over 80 MW in the next two to three years. Insofar as wheeling is concerned, very good progress being made. Very pleased to say that we've managed to conclude some of the technical assessments for our wheeling pilot project in the Western Cape, and the network upgrades are underway, and also the infrastructure development that will allow us to implement that 5.7 MWp roof-mounted solar installation at our Massmart DC in Brackengate.
That is planning to go live towards the end of this year and being commissioned January or February of next year. The two off-takers will principally be Blue Route Mall and Kenilworth Centre, as well as potentially the towers in the Western Cape. That, again, for us, is an extremely good opportunity and an example of where we believe our renewable energy efforts will move into the future. We similarly made good progress and, albeit somewhat frustrating in terms of negotiating our power purchase agreement in the office sector, which is a wheeling arrangement in the Eskom connected all our Eskom connected buildings and the supplier in there with a generator, which is the third party, is similarly supplying into the Eskom grid. We're hoping for that installation to come online in the back end of 2025 calendar year.
Insofar as the Green Star rating is concerned, I think our Green Star rating efforts insofar as the office sector is well documented. What we are pleased to report on is that we've made some good progress within our retail and industrial sectors, as you can see. Then again, we're extremely proud of our net zero certification within the office sector, where we've got three buildings that are net zero certified. In terms of our efficiency and consumption endeavors, particularly insofar as water and energy is concerned, ultimately for us, that is the key element of our sustainability efforts, is to reduce consumption. We've made good progress, and we continue to install our water-efficient dual-flush toilets within our retail and industrials and office sector. Obviously, the opportunity with industrial is less so.
Similarly, we're exploring opportunities to look at how we can better optimize the utilization of our HVAC systems. As far as energies, energy efficiency is concerned, we've made substantial progress within our retrofitting of our lighting technology within the retail and office sectors. Industrial, it's been a bit of a laggard, but again, the focus will be brought to that sector in due course. In terms of waste management, similarly, I think this is an initiative that does take time to implement simply because you're reliant on having to outsource waste recycling to third parties. So obviously there is a cost involved, but I'm very pleased to report that we've made substantial progress in this regard across the three sectors. Insofar as our South African retail portfolio is concerned, you'll see on the vacancy front a slight uptick.
Again, the point we make here, that is principally sitting not in our traditional retail space. More, that skew towards the office element within some of our malls, as well as the motor-related dealerships where we've seen some increase. If you can look at that bottom bullet point, we note that our core retail vacancy sat at 4% and then office at 1.3% and the motor-related 1.2%. Now certainly that motor-related for us is a non-core, and we would look to potentially dispose a number of those assets. As you can see, we have been successful in selling one of those buildings. The renewal reversions for us is a key focus area within the retail sector. That certainly for us is the revenue opportunity within retail.
Not that we won't attempt to let the vacant space, but the real opportunity is to get that renewal reversions to revert closer to zero and potentially even push into the positive sector. Although not quite this year, we're hoping for that to occur during the course of next year. At 1.4%, albeit still on a relatively small percentage of renewals, only 8.6% after five months, we're very encouraged by that. Obviously that is driven by the actual performance of the malls, as you can see in our footfall increase of 3.5%. Similarly with our rent to sales ratio sitting just at 7.4%, which in our mind indicates that there is opportunity to grow those in force rental levels.
In terms of our priorities, the key focus area, as I said, is to be proactive on renewal negotiations to get those reversions as close as possible to positive and then to try and further reduce our vacancy. For us, store upgrades, particularly insofar as the national grocers are concerned, is critical. We've had good success and a number of examples where that has occurred, where some of the grocers have upgraded their stores and we've seen a commensurate increase in turnover and trading densities for those malls. That for us is the key focus areas. Similarly, to look to unbundle some of our banking courts, which potentially in the past has always presented a bit of a challenge in that it was typically located in sort of deep, difficult to let space.
For us, the real opportunity there is to detangle those banking courts and to integrate into conventional retail. That's also where the opportunity sits and for us to increase our exposure to essential services and value focused brands. We also note, you'll see that in our LTV slides, the Mall of the South was acquired with effective date of 1 December at amount of ZAR 1.8 billion, an initial yield of 8.2%. Insofar as the office sector is concerned, it has been challenging, I'm not gonna lie, although we are encouraged by very decent lease demand, particularly in some of the prime nodes. There I specifically refer to Rosebank, Sandton, as well as the Western Cape and Cape Town in particular, where we've seen renewed demand and very healthy leasing activity.
In fact, in all three of those nodes, we've been able to increase asking rentals over time, particularly in Western Cape, which certainly still has some catch up to do to Sandton and Rosebank, but we are very encouraged by that trend. The increase in vacancy from 11.4%-12.1%, principally the biggest vacancy there that contributed to that was at Centurion Gate, where Kumba vacated during the end of last year towards December. We are encouraged that there is still some decent letting activity that we can try and mitigate that vacancy despite those notable vacancies that we do note that that's coming up, particularly in Black River Park and certain buildings within the Sandton node will kind of cover for those upcoming vacancies. The renewal reversions will continue to persist.
You know, if you have a weighted in-force escalation of close on 7% and very little market rental growth in general, any lease that come up for renewal, there will be negative reversions. That's why for us it's so important to proactively manage that lease expiry profile and potentially entertain early renewals and such like. At 13.4% or -13.4%, we do believe it's manageable, and it's a figure that we certainly do try and mitigate and sort of reduce to at least trend towards -10% or below that. For the foreseeable future, negative reversions within the office sector will persist. We are encouraged, though, by our tenant retention, which is, for us, a key focus area, particularly in environment where there's a lot of competition for tenants.
In the deep 90s, that's certainly where we wanna see that number, and that continues to progress well. Again, just on the vacancy by grade, you can see our Premium grade assets most certainly is mopping up most of the demand, and that is performing well. Now, just a reminder that the bulk of our portfolio, just touching on 90% of our portfolio, sitting at Premium and A grade space. Insofar as the industrial sector is concerned, another dependable performance by a very defensive portfolio. We are extremely encouraged by that positive renewal reversion, albeit on a very small element of the portfolio. Again, it's the first time that I've certainly seen that we've managed to achieve that level of positive reversion within the industrial sector.
It certainly speaks to, in general, market rentals having increased over the last while, which certainly is encouraging for the sector. It speaks to demand, particularly in the warehousing and modern logistics space. The slight uptick in vacancy principally was at Cato Ridge as well at Coega in the Eastern Cape. We're reasonably confident that there is decent demand. We just haven't been successful to concluding leases yet, so we can't report on any of that. In the foreseeable future, we are quite confident that the vacancy figure will again fall back to sub 4%. Again, a key focus here for us is on tenant retention, and then particularly in the industrial sector, operational matters is a challenge, and that certainly also drives some of the demand.
Water efficiency, electricity efficiency, safety and security is a key focus area within our industrial sector. Hence why you can see those various initiatives that we do look out for to implement. We certainly are encouraged by the Solar PV projects that we've recently commissioned within this industrial sector. As we always said, the big opportunity, particularly given that we've got access to large real estate on our roofs, does present a very attractive opportunity within our industrial portfolio. We'll continue to roll out those projects and similarly explore opportunities. We even gone as far as to explore potentially carports within some of our industrial parks to implement solar there. Quite encouraged by that. You should also see some decent development activity that's taken place.
We've completed recently at Brackengate the development for Eddels Group, and we're looking to complete the Illovo Sugar development similarly at Brackengate towards the end of this year. Very encouraged by demand in this sector and a sector that continues to perform well. Again, on the vacancy side, you can see where the vacancy sits. Again, just a point to make that we're reasonably confident that increase in vacancy is certainly not indicative of weakness in the sector. It has just been one or two big vacates that have contributed to that. With that, I'll hand over to Andrew to take us through the Polish sector.
Thanks, Leon. Okay. Just moving on to EPP. We are very happy to report that there is underway a growth in household spend on the back of improved disposable income, and that will play out in the retail statistics in due course. You'll note that from a overall retail point of view, that the sector is in the final stage of recovery from the pandemic, with all sectors now experiencing good growth. Entertainment and restaurants were last to join the party on the way upwards. Development activity remains focused on retail parks with no new large format shopping centers under construction, which is positive for EPP. Retail consumer preferences in Poland continued to be for convenience, value retail, as well as omnichannel.
This is obviously to meet the needs of the consumer to have that flexibility to shop when and where and how they choose to. Footfall across the EPP portfolio grew by around 2% for the period, 1 January to 31 December 2023 compared to the same period. If you look at like-for-like turnover, it has increased by about 5%. The best retail category performance over this period has been entertainment coming off a low base up 31%, services up 19%, restaurants, cafes, food courts catching up now 17%, 16%, and 13% respectively. Health and beauty up 12%. DIY has been a laggard coming off a high base, shrinking by 9% in fashion, which is the largest category.
Around 38% of our GLA in the EPP portfolio is fashion related, recorded an increase of 3%. The rent collections for both retail and offices remain very healthy, with a collection rate of almost 100%. From an ESG point of view, EPP is progressing with the obtaining of the necessary permits to start work on the installation of Solar PV on the retail properties roofs. Climate reports for FY 23 were prepared for both EPP as well as the Cromwell joint venture. Happy to share that the reduction in greenhouse gases for the period since 2019 is a 22% reduction. Work has commenced on the implementation of the EU Taxonomy reporting, as well as Corporate Sustainability Reporting Directive. These are on track to be finalized by the end of this financial year.
Just from an EPP core portfolio point of view, you'll note from a trading stats point of view, every stat here is positive or flat. There is stabilization across this portfolio, which is very encouraging. In terms of priorities for EPP, you'll see that the takeover of the M1 Group property management and leasing operations from May 2024 is a task well in hand and will happen, as I said, from the 1st of May. The completion of the zoning process for Towarowa 22, which was sold, is in the process of finalization so that we can receive the remaining purchase price. The timing there is slightly out of our control given that it is with the council for approval. That's the City of Warsaw. We need to complete designs and permitting for EPP Solar PV plants.
The refinancing of Galeria Młociny, as well as the Henderson joint venture debt, which Ntobeko will touch on, are both well progressed. Then once we've got total control over the M1 property portfolio, we'll progress the disposal of surplus land that is within the portfolio. Just in terms of the EPP joint venture portfolio, you'll see here is a very, very busy slide with a lot of statistics, and you'll note that it's generally stable, positive, much like the EPP core portfolio. The Henderson joint venture debt, in which EPP has a 30% interest and is exposed to offices, is a sector facing headwinds. I'll just highlight the vacancy at 25.6% there as a standout. Yes, it will come down slightly by February once we have the National Health Service in Malta in occupation.
Sorry, it's in June 2024. It's not in by February. That will reduce by about 4%, that vacancy level. The principal pressure points is outside of Warsaw. It's in the areas of Kraków, Łódź, as well as in Poznań, where there is challenge around the letting environment. In terms of ELI, the logistics market is recovering. Last year was a very slow year in terms of expansion. The banks are requiring higher levels of pre-letting due to the higher interest rate environment, and this has created a barrier to speculative development activity, which has been very positive in that the gap between effective and headline rental rates has narrowed. What we are also seeing is that, given that there's limited speculative development as well as lower construction activity, it's leading to more keen pricing on developments, resulting in better yields.
It's a matter of interest. As at 31 December, you'll see that the GLA of the ELI portfolio is the same as last year. There were no new developments completed since August last year. Lease renewals of around 54,000 sq m were concluded at an average rate of EUR 4.37, which is a positive reversion growth of 1.6%. New lets of about 20,000 sq m were recorded at an average rate of EUR 4.64 per square, which is a 10.5% increase on the vacating rental. We are seeing market rental growth as well as a consequence of less speculative development, but also as a consequence of indexation that played its role during the course of this period.
First time lettings of 54,000-odd sq m for new developments achieved an average initial rent of just over EUR 5 per sq m, which in itself is record territory. In terms of developments, we have got two developments that are fully let in progress, totaling just under 51,000 sq m at a cost of, and this is for a hundred percent, we own 48.5% of ELI, of EUR 42.2 million. There's a fully let development in Warsaw with a GLA of just over 11,000 sq m under planning, which will cost around EUR 17.8 million that we are considering at the moment. We, as you will see, we've got a lot of land for development. Now this is an area totals 207,000 sq m.
We will be looking here in due course to dispose some of that land if the prospects of development in the near term is not a reasonable prospect. In terms of ESG, 78% of the ELI portfolio has BREEAM certifications for new buildings. 21% of the completed portfolio is undergoing the certification process, and we're expecting either very good or excellent BREEAM-certified levels to come from that process. We've appointed Deloitte to analyze the carbon footprint for the portfolio, which will include decarbonization targets, and that we'll have in place by the end of this financial year. Just from a priorities point of view for ELI, an absolute critical priority for us is to reduce that vacancy of 7.8%.
It's in three nodes, and it's an, It is top of mind in terms of reduction, and we are going to be putting an extra focus on that. As I said, it's in three areas. It's in Lublin, it's in Warsaw Błonie North, as well as in Kraków North. Completing the developments currently under construction is a priority. Securing pre-letting on land holdings for future development at attractive yields is ongoing, but we will look then, as I said, at that surplus land pipeline as well. We can't hold on forever to that land in the hope of a development, given the holding cost and the drag on the overall yield. Recycling older assets to fund new developments at attractive yields will be an ongoing focus, but I must add that the transactional activity in Poland during the course of last year did slow down.
We are starting to see renewed interest coming back into the market on the back of the prospects of interest rate reductions. Refinancing the portfolio is an ongoing process to look at those margins, to reduce them, and also to look at where we can avoid amortization requirements. Just lastly, we will constantly look for opportunities to develop quality, low-risk developments in sizable and key logistics hubs. Just looking at those trading stats, you'll note apart from that vacancy that moved up a bit, the rest of the stats are positive. All right. Just in terms of self-storage, this is a market in its infancy. We see a tremendous growth opportunity here. It will take time, so please be patient with us.
You'll note that the estimated capacity of the Polish self-storage market exceeds 1.1 million sq m, and this is where the growth opportunity is. We believe that we will still see a number of opportunities here in time to come, and this is where we wanna play at this point in time, from developing a new sector with the capacity to generate good rental income, as well as fantastic yields from both an income as well as from a valuation point of view or capital uplift point of view. You'll note in the Polish market, demand is underpinned by robust micro-business needs, representing 48% of overall users. This is well above the EU average of just under 30%.
There are numerous single-site operators in the market, offering mostly low-quality facilities, and this is our opportunity to get that market up the institutional grade curve. The largest concentration of self-storage facilities are around major cities like Warsaw, Kraków, Poznań, and Gdańsk, and those are the areas where we wanna focus from an expansion point of view. As you know, we acquired Stokado last year. Subsequently, we acquired, it's called Top Box. It's a single property in Warsaw, which is fully developed and operational. This provides us with a solid operational platform from which to grow the self-storage business. The company through which we'll be transacting is Stokado. Top Box is a bolt-on acquisition. As of 31 December, Stokado is operating 16 facilities, including Top Box. You'll note that the overall occupancy at this point is just under 70%.
There is still a lot of work to do on that letting. In terms of the net lettable area, it's just over 24,000 sq m. 12.4 thousand odd are in containers, and just under 12,000 are in units. Units are where we're gonna focus. That's the institutional grade area in which we want to develop. You'll note there are seven developments of just under 6,000 units underway with a net lettable area of 32,500 sq m. Total cost of EUR 63.8 million. Now, this will be a slow build-out. It's not gonna happen quickly, and the reason here is that it's all dependent on zoning approvals, and these things take time. Over the next three years, we will be building out this development pipeline.
As I said earlier, we will focus on those large urban areas. The two that are really very, very promising would be Warsaw and Kraków. Wrocław, where Stokado has its home base, where it started, we are pretty well established already. Then you'll see that, as I said, all future development activities will take place through Stokado. From an ESG point of view, self-storage has a very low carbon footprint. As you know, it really uses energy only when people arrive at the facility, and generally, your heating requirements or your cooling requirements are limited. Yes, we do install LED lights, and it's practical Solar PV on the rooftops and so forth. As I said, from a BREEAM point of view, we expect to get very good levels of certification for our new developments.
Okay, just in terms of the priorities for self-storage. As I said, we'll continue to expand in major cities, so we're on the lookout for secure, attractive locations. The leasing and operational performance of Stokado and Top Box is top of mind. We have to fill these facilities. 70% is too low. We're aiming to get to between 85% and 90% on every facility. There is some integration work to be done between Stokado and Top Box, where we are selecting the best of whichever system, and we are having operational synergies as a consequence of that integration. Just in terms of bank funding at attractive terms, this is going to be secured once the developments are ready for construction. I'm now gonna hand over to Ntobeko. He's gonna now take you through financial insights, as I said earlier, and also he will close for us. Thank you.
Thank you. Thank you, Andrew. I think on the financial side, for us, it's quite clear that the medium-term outlook will largely just be driven by organic growth. That if you see that, you know, our continued positive operating metrics and our proactive margin management is really driving the quality of our earnings. We're quite pleased to report that our net operating profit margin, which is calculated after admin cost but before funding cost in South Africa portfolio, it's stable at 78%. From a group point of view, if you factor just that EPP printed at 71% year to date, it's coming out at 75%. We're quite clear that in the medium term outlook, that number would like to drive it closer to the 80% level.
If you look at the quality of the earnings, just in the quarter one of 2024, we've almost visually eliminated non-recurring income at 0.1%, and 99.9% of our distributable earnings is actually recurring. We always provide the sensitivities at a distributable income per share level, and you can quite see the first two items that it will be largely changes in the interest rate, both in the euro base as well as in the ZAR debt, and those are the impacts at ZAR 0.007 and ZAR 0.004, respectively.
We do also provide just on the SA occupancy portfolio, which as Leon has touched on, very positive, that if we were to move on, a change by 0.5%, that would be a ZAR 0.004 impact on the earnings. In Poland, we look at rent indexation, a change of 1%, that works out to ZAR 0.004 impact. On the SA reversion rate, it will really have to move by 3% to have an impact of 0.2 on the earnings. Very pleased as well with our balance sheet, quite stable. I think our focus on sustainable organic growth of our simplified asset platform is playing very well.
As you can see that the liquidity that we've maintained of ZAR 6 billion year to date, that compares quite favorable to the comparable period of FY 23 at ZAR 5.5 billion. The group, there's a bit of a 20 basis point uptick on our group weighted average cost of debt. That increased to 7.3%, just largely on the back of the increase that we've seen in the period of the EURIBOR rate. But we've maintained, as an offset, a 2.4% offshore debt amortization, which is really just part of our gradual reduction of our see-through gearing levels. We value our portfolio twice a year. We're currently busy with our interim valuations.
Our expectation is that it will be largely stable, and then we'll share that with you, the outcomes in the interim results. I think in this environment, Andrew touched on this, our healthy cash generation is really a good mitigant to the ICR pressure because of a higher interest rate environment. If we look from a rand-denominated cost of debt, we are quite pleased that is stable at 9.4% compared to the 9.4% in FY 23. Then the 10 basis point movement on our Forex debt, well, that moved to 4.7 from the comparable of 4.6 in the previous period. We'll continue to hedge our interest rates.
I think at year to date, we are sitting at a hedge profile of 73.5% compared to the 77.1% of last year, and taking tenure of one point seven years. There's opportunities that we're seeing in the forward pricing of the interest rate swaps, so we will look at filling that up to the interim period, and maybe get it back to the 75% level by half year. If we move to the debt maturity profile, I think for us it's really pleasing that if you look from FY 24 up to FY 27, we're not really dealing with significant amounts of debt maturities. In FY 24, we have only 14% of our debt maturing.
In FY 25, we're projecting a 12% maturity profile and a 13% in FY 26. At 13% in FY 27. It is a quite low risk debt profile that is bolstered by very healthy liquidity profile of ZAR 6 billion, which is made up of ZAR 3.8 billion of available committed facilities that have been drawn, as well as a ZAR 2 billion of cash in hand. Just on some progress, which is very pleasing that we've made on the refinancing of the debt that is in FY24, that is made up of the ZAR 2.4 billion of bank debt, as well as we've got ZAR 3.1 billion of bonds that are coming up. Out of the bank debt, we've successfully closed ZAR 1 billion of debt.
That was refinanced in December, and it was also pleasing, the margins that we compressed about 24 basis points in that. The rest of the bank debt is actually progressing very well. We did raise ZAR 1.2 billion. You will see this when we touch on the LTV. That was just to fund the acquisition of Mall of the South at very attractive rates of 144 basis points on a five-year tenure. Then the balance of that was funded with an unsecured five-year bond instrument at 149 basis points. We repaid ZAR 1 billion of bonds, and we will go to the market. We're seeing some very attractive liquidity positions in the debt capital markets.
In March, we'll look at raising ZAR 500 million with an ability to upsize to ZAR 750 million. The refinancing of Galeria Młociny, we expect to complete that in March, but what we have is that it's a five-year facility term at a margin of 240 basis points with the requirement to hedge 75% of that. What is very important with this refinancing of Galeria Młociny is that it's a term facility, and there will be no amortization requirement as that was there previously. On the refinancing of Henderson JV, that is underway, and we expect that facility actually matures in June. We expect that by the time it matures, we'll have agreed terms with the funders.
On the LTV side, I think our focus is really just largely that we will have to bring the LTV back to our medium target range of 38%-41%. When we provide the forecast for LTV, I think it's quite important that it's very conservative, as it assumes flat property values outcome, as well as a stable Forex. You will see that for this year, it has, year to date, our LTV is printing at 42.5%, and we expect that to gradually come down to about 42% at the end of the year. I think the real big movement in our LTV is really that 1.1, which is the acquisition of the Mall of the South that we've always disclosed to you guys.
I think then the normal commitment to the paying of dividend and the cash generation that plays out, and then it comes out at 42% at the end of the year. We do provide some sensitivities, just in terms of the property values, both in SA and in EPP. If you look at in SA, a 1% movement, which is in absolute terms, ZAR 0.6 billion, will have a 0.3% impact on our LTV. In EPP, a 1%, which will be in absolute terms, ZAR 0.2 billion, will have a 0.1 impact on the LTV.
We also provide for the JVs, and then the Forex movement will, if it were to move, if the rand were to depreciate or appreciate by 5%, that will have a 0.2% impact. Our focus, which continues to be mitigated by our gradual debt reduction, is really just on the see-through LTV. Post the payment of the FY23 dividend and the weaker rand, you will see that uptick, our see-through gearing uptick to 48.5% in the first quarter. We're also pleased that our interest cover ratio at year to date is very stable at 2.3x . We maintained a Moody's credit rating of Ba2 with a very stable outlook.
To close, if we look at our trading update for 2024, I think the environment we're in, where you know our continued operational positive operational print offset by the elevated interest rates, we're just quite pleased to report to you that we've maintained guidance range of between ZAR 0.48-ZAR 0.52 distributable income per share. On a proactive basis, I think you can quite clearly see that our proactive margin management is really driving sustainable organic growth. I think our very strong cash generation, both in our South African portfolio as well as our Polish portfolio, supports a healthy ICR in a higher for longer interest rate environment. Some unknowns, some of the risks that we think are lying on the horizon.
I think the low growth prospects of the South African economy may be impacted by the 2024 general election outcome. Our focus is very clear in offshore to develop our long-term strategy. I think in that, as Andrew alluded to, if there are opportunities to recycle capital, we'll look at those and also some disposals so that we can continue just to gradually bring our LTV to the medium-term range. On a macro basis, I think we can all attest it's very unpredictable in terms of the global geopolitical environment, the impact of that on the trade flows, as well as the inflation levels, which will consequentially drive what happens to the reduction of the interest rates that is expected in the second half of 2024, and the pace therefore too.
We're quite pleased that with this, we would like to take a close, and then I'll ask Andrew to come and moderate on the questions.
Great. Thanks, Ntobeko. Okay. All right. We've got a couple of questions. I'll just read them out and then decide as to who's best placed to answer them. The first is from Weshu Nene from SBG Securities. His question is: What proportion of your offices are Premium grade? Weshu, thank you. You were quick off the mark, so we were able to get you that answer. 54% of our office portfolio is Premium grade, but if I combine it with A grade, it takes it up to 95%. In terms of the next question, Mahir Hamdulay from Absa, he's got two questions for us. The first is for Ntobeko: What is the all-in cost of debt on the new Młociny facility, including the hedge?
Secondly: Given the increase in LTV, would it be fair to assume that dividends may be trending closer to the lower end of 80%-90% in terms of the dividend payout ratio? Ntobeko, would you like to answer that question?
Yes. Thanks, Andrew. Mahir, I think, our all-in cost of debt on the refinancing of M1 is actually at about 5%. That is made up of, the margin at 240 basis points. The requirement there for us to hedge is sitting at 75%. I think there's one important thing, if you also link to your second question, is that this refinance of M1 takes away the requirement to amortize debt at circa 2.4%, so it does free up some cash. In terms of our, commitment to paying dividends, it will be within that range, but I think we factor a couple of things. We look at the earnings and the flows that we could pull out of that business.
Secondly, if there are opportunities to dispose, that will also be positive in terms of bringing the LTV down. Yes, you're quite right. On a balancing factor plus CapEx, we will look at retaining some earnings, but very carefully on a tax-efficient basis. We won't leak tax on that.
Thanks, Ntobeko. Okay. The next question is from Nazeem Samsodien from Investec, and his question is: What is the rationale for selling ELI land? Is it due to lack of access to capital or lack of demand to build our product? I think, Nazeem, the short answer here is we need to look at the optimal yield out of ELI. If the development prospects are low for that land in the medium term, the holding cost is going to price us out of contention in terms of getting a decent yield on developments. It's not a lack of access to capital that's driving this decision. It's more a strategic decision around allocation of capital in a constrained environment that's driving this thinking.
Yes, it's not an easy process just to sell land, as we know, because the purchaser, somebody's gonna have the same questions that we have in terms of development prospects. I must say that this land was acquired at a reasonable price, so that does enable us to dispose of these properties at an undemanding pricing level too. Yesh Pillay asks, and he's from Anchor Stockbrokers: Have you dealt with any inquiries from business process outsourcing firms, i.e., call centers for your office space, especially in Sandton? Secondly, you mentioned store upgrades for national grocers in your retail portfolio. Can you share which national grocers these are and what it entails? His third question: How has Pick n Pay corporate and franchise stores performed in your portfolio?
What is the scope for Pick n Pay to rightsize their store space given their current operational challenges? Leon, I think those questions are all yours.
Sure, Andrew. Yesh Pillay, just firstly on your question around call centers, yes, we've seen exceptional demand for call centers, in particular in the Western Cape, so we've placed and signed a number of leases with call centers within our Cape Town portfolio, and in particular at the Towers. We haven't necessarily seen the same level of demand within Gauteng, especially not Sandton. We have had a couple of inquiries on the West Rand and some of our more outlying areas. Obviously, rental levels dictate that. We are encouraged by that growth of the BPO market, particularly within Cape Town, and there are some opportunity potentially within Gauteng to expand that. In terms of your question around store upgrades, yes, unfortunately, it has not been Pick n Pay.
It was driven largely by Checkers Shoprite, their closest competitor, and some of the other grocers. Your question around Pick n Pay and how they've performed, I think at a franchise store level, we've certainly seen continued good performance. It's at a corporate level where they are certainly lagging, in particular, Shoprite Checkers' performance. You ask around the scope for Pick n Pay to rightsize their store space. We're not necessarily of the view that the size of the space is the challenge. The real challenge is that I think they've been stingy in terms of their capital spend, in terms of upgrading stores. Our biggest ask at this point, and biggest bone of contention in discussion with Pick n Pay is store upgrades, not reduction of space.
We are quite comfortable with the store space we do have, and I think they are in prime locations and well located. What is needed is capital to refresh those stores, and there's ongoing engagement with Pick n Pay on that.
Thanks, Leon. Okay, moving on then to a question from Weshu again, and his question is: Are current lenders happy to extend further credit for both the EPP and ELI businesses, or is liquidity still tight? Weshu , I'm glad you're asking this question now, and perhaps not nine or so months ago, because things have changed for the positive. The banking sector has certainly had a change of sentiment towards retail, and this is particularly coming from the German banking sector, and we are seeing appetite for lending again. The offices is a more selective story, given the headwinds they face. I think LTVs and so forth, they are sensitive to, but they're not closed for business when it comes to lending to EPP. Particularly happy to lend on the retail side, a little bit circumspect on the office side.
ELI, I can assure you, we are getting very good support from the banking sector for the logistics sector and for the quality of the developments we've undertaken, as well as the quality tenants we have in occupancy at those facilities. Liquidity is not tight like it used to be. It certainly is much better. Nazeem Samsodien has a question for us on amortization requirements on refinancing. He's saying: Will you manage the LTV by maintaining a conservative payout from EPP to RDF? Or will you distribute all of the cash earnings, which should be higher given the less amort? Ntobeko, will you take that question?
Yeah. Thanks, Andrew. Nazeem, I think what is specific to Młociny there, where the actual LTV in Młociny is quite attractive and allowed us. I think it's circa 44%. It allowed us to restructure the debt in Młociny and take out the amort. You will recall that in terms of then that improved cash earnings that we could pull out, it fits within our targeted payout ratio from EPP of between 60% and 74%. You're quite right. I think it will be on, it does improve our ability to do that, but we will consider the gearing on as well as part of looking at how we pay that cash out.
Thank you, Ntobeko. Okay. The next question is from Mahir Hamdulay, and he's asking: Can you confirm the value of the remaining proceeds from T-22 disposal? Mahir, the short answer is: I don't know, and I'll tell you why. It's because the zoning that is approved by the council will then be audited by an architect, which will then, according to a calculation, give us that final amount. I'm not too sure what the council will finally approve as the final GLA for T-22. However, there is a range. On the lower end of the range, it's EUR 38 million, and on the upper end of the range, it could be as much as EUR 44 million.
I know you guys like to divide it in the middle somewhere and say, "That's the answer," but the truth of it is, I'm not sure of the exact number at this point. It is that range that I'm talking about. Yes, hopefully it will be the higher, but I can't tell you that as we stand here, given that the council has to have the final say on the GLA. Weshu 's got another question for us: What is your target for self-storage exposure as a percentage of Polish investments? Weshu , the answer is that if we just look at last reported numbers, about 37% of our exposure from an asset platform is to Poland.
If we build out our self-storage platform to where we want it to be, which is a gross asset value of EUR 100 million, that's roughly ZAR 2 billion. It'll take us up from a Polish exposure point of view by about 2%. The 37% will grow to about 39%. That's basically where it will be in the next five or so years' time. At that point, we will introduce an equity investor. That's why we want the EUR 100 million gross asset value to attract that institutional investor then to further expand, like we did with the ELI platform. In terms of Weshu , he's having a very busy morning. He's saying: What is the current structure of the balance sheet? Does ZAR weakness increase or decrease the NAV on a cents per share basis, Mr. Nyawo?
Short answer, Weshu , is that yes, the weaker rand, when you translate, then your Forex asset, it has an impact on the NAV and the inverse will also be consequentially true.
Thank you. Okay. Francois du Toit from Anchor Stockbrokers has asked us: How do you expect the debt amort to impact dividends from EPP and ELI and their JVs? Please confirm that distributable income is not impacted by the amortization rate given RDF distributable income definition. That's a very technical question, Mr. Nyawo.
Francois, it's almost similar to the question that was asked earlier by Nazeem. I think, as we explained, that the amortization, if we stop it in Młociny, it improves the cash earnings, which back our distributable earnings that we can pull out from that business. It is, in our view, within the range that we target to pull as earnings out of EPP, which is between 60%-70% of earnings. I think, it's just the last point to make on that, it's one of the most tax-efficient mechanisms for us in this environment, where we're able to retain earnings in EPP without leaking tax and also address as part of a multi-prong plan to address our see-through gearing.
Thank you. All right, Craig Smith from Anchor is asking us: what is the profile of occupier for space inquiries in Sandton and Rosebank? The BPO operators have been very active in Cape Town or the Western Cape. How active are the BPO operators in Joburg? Leon, I think that's a similar question to earlier, if I'm right.
Sure.
Do you have anything to add to that?
Yeah. Andrew, just in terms of the profile of occupier for space inquiries in Sandton and Rosebank, I couldn't say that it represents a specific sector or industry. It is, however, smaller inquiries, so the large space is in excess of 1,000-2,000 space is very limited. These are smaller occupiers. There is decent activity. In terms of our BPO call center operators, very active, as you say, in Cape Town, less so in Joburg. There has been some one or two inquiries, but at this point, it's still feelers out, and I do think that the state of city of Joburg certainly has something to do with it.
Great. Thanks, Leon. Okay, Zintle Simelane from MSM Property Fund asks us: can you talk us through the planned disposals for the rest of the year and total disposals thus far? Zintle, can I ask you to be patient with us? We will answer this question as part of our results announcement. As you know, this is a trading update. It's not necessarily a disposal as well, or a balance sheet update. Given that there's some work in progress, there's deal risk on a couple of things we're working on. I just want to caution everyone's expectation in that the transactional market, both in Poland as well as in South Africa, is muted. It's quiet given where interest rates sit. Nonetheless, we have got some disposals that we can talk about.
As I said, a lot of them will be committed to writing, and we won't be in a position at this stage to share that with you yet. Pranita Daya from Truffle Asset Management asks: given your previous stance to close out cross-currency swaps and considering the recent renewals, what is the stance on cross-currencies going forward? Mr. Nyawo.
Pranita, our stance hasn't changed. I think, we're quite committed that when the opportunity and the right environment arise, we will gradually take out cross currencies with a consideration given that we don't want it to be too earnings dilutive. In the current environment, like we had said, the ones that are coming up for maturity, like what we did in October 2023, the EUR 45 million, as well as what we just recently did in January, the renewal of the EUR 65 million euros cross currencies, is just part of maintaining until the environment is right. Over the medium term, we would like to eliminate them when the opportunity arises.
Okay. All right. The next question is from Craig Smith. His question is: what is your exposure to Boxer stores, and can you comment on how these stores are performing versus the likes of Shoprite? The second question is: can you comment on activity in the direct property market and how you see liquidity and investment values panning out in 2024? I think, yeah, that second question already, Craig, we've kind of answered already when we spoke to Zintle's earlier question, but I think Leon will answer your Boxer question for you.
Craig, just in terms of your question on exposure to Boxer, I don't have a split in Boxer between Pick n Pay and Boxer. To give you an idea, our total exposure to the Shoprite group, which include all their brands, is roughly about 6% of our gross monthly rents, and Pick n Pay is roughly 5% of our gross monthly rent. That includes all the brands within those two. We've certainly seen in terms of Pick n Pay's performance relative to the Shoprite group, Boxer stores is certainly holding its own and performing well. That is one element within the Pick n Pay stable that certainly has continued to perform well and is not lagging as much as Pick n Pay relative to a Checkers, for instance.
Great. Thanks, Leon. All right. Mahir, there's a question, and this is a, how can I put it? A very pointed one in that he wants us to give an exact answer here. His question is: can you please elaborate on guidance all-in cost of debt of around 5%, three-month EURIBOR is currently 3.9, plus margin 2.4, already greater than 5% guided. Ntobeko, can you answer that?
Yeah. Thanks, Andrew. Mahir, the 3.9 EURIBOR, that's floating, and that will be 25% of what we've guided. Remember, the requirement for EPP is to hedge 75%. The three-month EURIBOR, so the weighted on that, is trading at, on a five-year tenor, is trading much closer to three. I think actually in February it did touch 2.9%. So, if we hedge it out, it actually works out to about the five that we guided.
Thank you, Ntobeko. Okay, Luqman Hamid from Ninety One has a question. He says: Can you comment on the spread between expired cross-currency swaps and the renewal thereof, given EURIBOR has moved more than the South African repo rates? Ntobeko.
Yes. Luqman, we do provide, I think on the two refinancings that we did, the one that we did in October, you could kind of see that the expectations there drove the spread at a fixed rate. We achieved a fixed rate of 5.07% compared to the expiry rate of 1.89%. On the refinancing that we did in January 2024, with a much more better outcome on the fixed leg at 4.82%, compared to the expiry rate of 1.81%. On the floating leg with the JIBAR plus, it has remained consistently at the margin of 1.75%.
Great. Thanks. Good. Well, from what I can see, there's no more questions. With that, I want to thank all of you for your time, your attendance, your patience, and most importantly, your support of Redefine throughout this period. We look forward to seeing you on the 6th of May when we do release our results. I wish you a very pleasant week further. Thank you.