Good morning, everybody. Welcome to Redefine's pre-close investor update for the year ending 31 August 2025. As per usual, I'll start off with a strategic overview. I'll then hand over to Leon Kok, our Chief Operating Officer, to talk about the South Africa property asset platform. I'll then touch on our Polish asset platform, and then we will end with Ntobeko Nyawo, our Chief Financial Officer, who will take you through some financial insights this morning. Just in terms of the strategic overview, in terms of the operating context, every time we believe that the skies are finally clearing, a dark cloud or two loom. The good news is that these clouds of uncertainty dissipate.
As you know, we had rising geopolitics at the beginning of this year, escalating geoeconomics and GNU fragility here in South Africa, which was all absorbed with little sustained disruption to the markets. Energy and logistics reforms continue, and load shedding is largely behind us. Yes, we've got infrastructural or network challenges that are disruptive, but not to the extent that the load shedding was. Our commercial real estate transaction activity has picked up, especially here domestically. To date, we've sold about ZAR 1.1 billion of assets compared to last year's ZAR 386 million. So definitely going the right way from that point of view. Our president launched the second phase of Operation Vulindlela in May, and long may that continue in terms of its progress.
I think what we are really looking forward to is South Africa's removal from the Financial Action Task Force graylist in October, which we're anticipating. The prospects of South Africa Inc. credit rating upgrade from Standard & Poor's going positive in 2026 is good, and we are very happy that interest rates have finally settled back at their long-term averages. We also hope that South Africa's move to a 3% inflation target will boost the prospects for a lower repo rate. If you look at the latest SARB MPC, they're suggesting about 100 basis points reduction in the short to medium term. If we just look at our strategic focus in the second half of financial year 2025, you'll see that we've been very focused in terms of setting our strategic priorities to adapt to the ever-evolving landscape.
In terms of investing strategically, we are focused on creating value through organic growth and asset optimization. This will be coming through in the operating metrics that will be presented by both Leon as well as Ntobeko. We continue to allocate capital strategically into growth sectors, and remaining relevant to ensure that we meet stakeholder needs is an ongoing process. In terms of optimizing capital, here, Ntobeko and his team have done a lot of work in terms of renewing maturing debt facilities proactively to extend the debt maturity profile as well as to continue diversifying funding sources. Interest rate management has to be vigilantly managed. As you know, as the interest rates come down, we don't want to extend ourselves beyond a reasonable period so that we don't benefit from that lower interest rate trajectory.
Sourcing new capital and recycling non-core assets is an ongoing process. In terms of operating efficiently, we are constantly looking at improving our rental reversions. We're looking at cost controls as well as recoveries that will be coming through in the operating profit margins. Attracting new tenants by offering compelling value-add services, that's an ongoing process. Improving our digital ratio to use data analytics to identify trends and inefficiencies is part of our daily routine. In terms of engaging talent, we are focused on building future-ready skills, cultivate an inclusive and diverse, high-performing team, and once again, we are reviewing our people structures to ensure that they are fit for purpose.
In terms of growing reputation, collaboration with key stakeholders is essential if we are going to embed sustainability into everything that we do, and that extends to socioeconomic impacts as well as reducing reliance on municipally supplied utilities, and Leon will touch on that in his presentation specifically. In terms of key outcomes from our strategy in action, as I said earlier, asset values are increasing as a consequence of underlying transactional activity, but very importantly, it is not from yield compression. It is from improved rental prospects, and this is certainly playing out in our numbers. I just want to emphasize that there has been, and there will continue to be, a significant focus on simplifying our Polish joint ventures. We've got an update in due course thereon as well.
In terms of optimizing capital, we are very happy to report that our loan-to-value ratio is finally back to within our target range of 38%-41%. We do know that our see-through LTV similarly has to reduce over time to be at that same level, and debt margins have been lowered on the renewal of debt facilities. We have made great progress in terms of eliminating European debt amortization, and that process will continue into 2026. In terms of operating efficiently, we are on track to deliver earnings growth. I think it is a very welcome discussion to have, because for a very long time, we've been stuck in a low growth environment. Finally, our conversations are turning towards growth once again, and it's refreshing, I must just tell you. Improved group net operating margins, you'll see through Ntobeko Nyawo's presentation.
EPP is a standout contributor to that. Just in terms of local renewable energy capacity, we've increased it over the year by 9.3 MW peaks. In terms of engaging talent, I'm not gonna go through this in detail, but all you can see is that we've got a very experienced team, both here in South Africa and Poland. Our retention rates are stable, both in South Africa and Poland. Our learnership program is now in its 12th year. In terms of growing reputation, over the past couple of weeks, we were very excited to announce that we've now got an additional three more net zero carbon level two certifications for buildings. We've got nine buildings in total that are now net zero.
We received international recognition for local corporate social responsibility impacts with two Solal Awards that we received in Warsaw. Just in terms of renewable energy there, you'll see we've entered into a power purchase agreement for 37 GWh per annum. Okay, just looking ahead, we're gonna continue to focus on the variables under our control, because that is where you add value. If you look at where a real estate executive can apply their influence, it's quite limited, but we are very focused on building a quality, diversified portfolio that delivers sustainable risk-adjusted returns. Our focus on conservative balance sheet management continues to drive sustainable growth. We are accelerating new data and digital platforms to ensure that we lift our operating profit margin to that target 80%.
We are investing in and transforming our human capital to empower creativity and drive innovation. Last but not least, we are embedding ESG as an operational imperative by fostering stakeholder collaboration. It's no longer a tick box exercise. With that, I'm gonna hand you over to Leon.
Good morning, everybody. I trust everyone is well. It has certainly been a very busy 12 months for us, and we must add, we're very happy with the general improvement of all our operating metrics. As you can see, as at end of July, which is 11 months for the year, our occupancy has improved to 94.1%. The renewal reversions have improved somewhat to -5.2. Yes, it is still negative, and it's principally driven by our office sector. If you can recall, that number was about -10 at end of February. There certainly is an improvement. As you can see on the bottom right-hand, we're giving you a renewal analysis of the leasing activity. Not too far from the -5.2, but simply just to give an indication of where the activity sits.
Yes, that bottom negative reversion of 548 leases are the ones that are causing an overall negative performance. The rest of the analysis just to show there is definitely positive reversion coming through, in particular in our retail sector as well as in the industrial sector, and is not just one-way traffic as we may have experienced just post-COVID. In terms of our tenant retention, also very healthy, 92.9%. The renewal success rate, a key factor for us, particularly in a market that is as competitive as it is currently, is a key focus area for us. We're very happy with that 78% renewal success rate. The weighted average lease escalation, stabilizing there at 6.3%. We're hoping that it will continue to remain at that level, particularly driven by our industrial and office sectors.
Then lastly, our weighted average unexpired lease. A slight reduction, you'll see it comes through in our industrial sector, but we're still very happy. As long as it's above that three years, it is still, in our view, a very undermining profile. Similarly, you can see for next year, the prospect in terms of our lease expiry profile, we only got 16% by GMR of our leases coming up for renewal. There's not any undue spike or anything that leaves us particularly uncomfortable for next year. In terms of the vacancy, as a custom, we're also giving you analysis. This should give you an indication of where the vacancy sits. On the far right is the traditional way of expressing vacancy by GLA, so that's the 5.9%. We give you an indication of the value of what it's worth.
In other words, what we're advertising those vacancies at. As you can see, that is typically your lesser quality space that's causing that vacancy. In particular, as you can see on the retail front, only 2.2%. Similar in office and in industrial, which is virtually flat or virtually zero. In terms of our focus on sustainability, as Andrew mentioned, this for us is a key operational imperative and one of our key levers in order for us to drive improvement in margin. Our solar PV increased by roughly 20% since last year. For us, what is also very encouraging is those installations in progress, albeit a bit slow. I would have liked if it could have happened quicker. Unfortunately, we are bound by regulatory approvals and such like.
We've got a further, about 12 MW coming online, and then there's feasibilities and progress of a further 13 MW. If we're successful in completing all of that should increase our installed capacity by additional 50%. This is on-site renewable energy. A key focus area for us is also to take benefit of solar wheeling. As Andrew mentioned, we've already secured that power purchase agreement, which is essentially gonna supply our Eskom-connected office buildings, those that is located in Sandton, with 14 MW peaks. We're hoping that will come online in beginning 2027. In terms of our own wheeling initiative, we are piloting within the Western Cape.
That project is well underway, and we're hoping to deliver towards the middle of next year, and that will be installation of 5.7 MW peak installation at our Massmart and DCM Brackengate. The two off-takers will be Blue Route and Kenilworth Centre in the Cape. The other opportunity for us in wheeling, which we are very encouraged about, is virtual wheeling. Unfortunately, there is a whole host of regulation that still needs to be passed, and obviously, the other big challenge is around the economic viability of the Eskom model and how virtual wheeling would potentially influence that as well as the municipalities. Potentially for us, there is huge opportunity within that space going forward.
Green Star ratings, we're very encouraged, in particular, in our retail and industrial sector, which is also coming to the party in terms of getting LEED certifications in place. That will continue to be a focus area for us, in particular, to make sure those assets are sought after by our tenants. The net zero certifications at nine, I think that is certainly a proud achievement. As we mentioned, this is not modeled certification. This is as measured certification. In other words, this is real reduction in carbon footprint. Water efficiency and energy efficiency is also a key area for us. Apart from investing in renewable energy, it's also for us to reduce the amount that we are consuming from a water and an energy point of view.
The LED lights, in particular, has been for us key focus areas, and also in terms of our low flush toilet systems have been very successful in the areas that we rolled out. Waste management, as you can see, it's skewed more to our retail and office sectors because those are the buildings that we typically have better control over the operation of a building, and it continues to be a key focus area for us, albeit at a cost, because typically those assets, you have to outsource the waste management whilst you're still incurring in those four costs. In terms of the view of our retail portfolio, as I mentioned across the board, an improvement, and we're very encouraged by that. That occupancy at 94.6%.
The slight drop there is on the back of some of the Ster-Kinekor theaters that we got back. Again, the point to make, that doesn't necessarily have an impact on our GMR, given that they've been operating on a rent to turnover for some time. Our ability to let, even if we only let the four courts, will be accretive from an income point of view. The renewal reversions are starting to show very encouraging improvements at 1.6%, and we will definitely look to improve on that number into 2026. Our renewal success rate and tenant retention also on the high end and very encouraged by that. Our weighted average lease escalation, we're looking to improve that to 6% and slightly over 6%.
What we're encouraged by is our tenant turnover growth, which obviously support our rent to turnover number, which in our view, at a 7.4% is still very low and supportive of rental growth going forward. The focus for us from a retail point of view going forward is to focus on those renewal reversions. Yes, the vacancy, it would be nice to fill, but as we mentioned before, that's not where the real value lie. The real value lies in operating efficiencies in terms of our cost structure in our retail portfolio, and in getting those renewal reversions to trend more positive. On the office front, similarly, very encouraged by the performance. Our active occupancy at 87.3%. Yes, a slight dip, but it's also again indicative of a very competitive market.
As we're successful with a let, we may lose a tenant to a competitor. As we can show at the bottom there, where our vacancy sits, certainly the demand lies in that, in the upper end, and particularly our premium grade assets is performing exceptionally well. That renewal reversion at -12.3%, if you can recall, the number at end of February was -20%. Again, it's indicative that the smaller pocket renewals that are taking place, and we're giving you a renewal analysis there, is mitigating that heavy negative that we've taken at 115 West. Certainly for next year, we're hoping that that number will be substantially better, albeit still negative.
I'm not suggesting it's gonna be positive next year, but hopefully, it will be better than that, given that we don't have any large single tenant boxes coming up for renewal. In terms of our renewal success rate and tenant retention, as you can see, also very healthy and on a very high level. Our weighted average lease escalation stabilizing at that 6.9%-7%. We're very encouraged by that average unexpired lease term. As we mentioned here, we've conducted a number of renewals and pre-let renewals in order to secure that pipeline of GMR going forward. 3.5 years, I think, is a very healthy WALT for our office sector. On the industrial front, one of our star performers from a growth and income perspective, and it continues to outperform.
As you can see, this year in particular, it's been driven by very active lettings, so our occupancy at 98.2%. It's on a very healthy front, only 1.8% vacant. Our renewal reversions, that -0.2%, was a bit of a surprise, to be honest. It was caused by a single lease at 12% . If it wasn't for that renewal reversion would have been +3%. Again, this sector is supported by strong demand, particularly for our modern logistics and warehouses, warehousing assets. As you can see from our tenant retention and renewal success rate, also very healthy and strong and supportive of income growth for 2026. Weighted average lease escalation at 6.5%.
In terms of our prospects from a leasing point of view, we similarly expect that number to remain at that level. The weighted average unexpired lease term at 4.6 years, in our view, is still very defensive and very healthy. The focus for us on the industrial front, in particular, is to unlock that developable land in S&J through either disposals or develop to lets, and then just to focus on our existing assets to make sure that they are able to mop up this demand we are seeing in the market. With that, I will hand over to Andrew to talk us through the international portfolio.
Thanks, Leon.
Okay, starting off with EPP. As you can see, the retail environment in Poland is really healthy and it's continuing to build on its momentum. In terms of the market, you'll see that retail sales for the period April to June 2025 has grown by 8%, 4%, and 2% respectively. The share of e-commerce has been quite static, oscillating between 8.7%-9.1% during 2025, which is essentially a very narrow band. A number of new brands have come into the market, such as MR D.I.Y., HalfPrice, Worldbox, Centrum, Reserved, Sports Direct, Rituals, and then DM. They are expanding within EPP as well as the greater Polish retail market. In terms of retail parks, they continue to expand rapidly.
Although it looks like there is now signs of saturation into the Polish market in some catchment areas. The good news is that there are no new shopping centers under construction as we speak. Lifting the Sunday retail trading ban and the introduction of REITs has taken a bit of a back step, given that there's been a change in the presidency and the current president is not totally aligned with the ruling coalition party. In terms of the operational update from an EPP perspective, although footfall across the portfolio, you'll see, is down about 2% for the period to 31 July this year. Like-for-like turnover has increased by about 2%. Less visits, but more spend per visit is clearly the outcome. In terms of rent collection for both the retail and the office portfolios, very healthy at 99% odd.
Occupancy across the retail portfolio, and this is across the entire spectrum, has been maintained slightly up at 97.9%. The office portfolio we know has been battling and is now sitting at 84%. It's down about 3% on its prior year comparative. Operational efficiencies are being realized from a number of interventions at EPP, but most notably would be the property administration that was rationalized, recoveries in respect of asset management activities on the JVs, and then we've internalized the accounting as well. In terms of sustainability and action, EPP is well on track on its journey in terms of sustainability. As you'll see there, the energy consumption continues. PV installations are underway for about 7 MW peaks. EPP achieved a CDP B rating score during the period.
In terms of waste tracking, this is a new tool that's been implemented at King Cross Marcelin, and it has prospects for us here in South Africa as well to adopt, to enable our tenants to better manage their waste with the electronic management tool. In terms of priorities for EPP, we will continue looking at asset management from a tenanting perspective, especially for the M1 shopping centers. You'll see a number of new stores have been opened. We've opened, as well, at Kłodzko, a big extension which resulted in significant footfall increases. As you can see in the deep teens, up into almost 30% in May was the increase in footfall over there.
A number of new lease contracts have been signed specifically at Galeria Młociny, and we've done a lot of work there in terms of retenanting and rebalancing the tenant mix there to sustain revenue growth to the longer term. If you have a look at operational efficiencies, I've spoken about that, and then Ntobeko will talk on profit margins. You can take careful note of that coming through in the numbers. Simplifying our investment proposition, especially around the JVs, is receiving attention. Very importantly, tending to that high level of see-through LTV through disposal activity is definitely on the cards. In terms of EPP's core portfolio, I just wanna touch on its active occupancy there. As you can see, 99.3%. It's virtually fully let.
Then all the other metrics, as you can see, trending positively, except for the like-for-like footfall, as I touched on earlier. Rent to sales ratio, I just want to point out, is still at a healthy sub-10% level, which by the way excludes grocers who don't report their turnover. Had they reported their turnover, that percentage would be a lot lower. In terms of the EPP joint venture portfolio, we have given you a snapshot of the outcomes there. As you can see, solid retail operating metrics are across the board. Galeria Młociny, as I said earlier, there are rental reversions as you can see. You'll note that the indexation rate is lower across the board. That is as a consequence of inflation, but everything going according to plan.
Madison does still have a bit of settling in to do, given that it's just celebrated its fifth anniversary from a renewal perspective. Moving on to ELI. You'll note from a market position point of view that tariff uncertainty has kind of played out in this sector. However, if you look at the overall stock position, still showing growth of about 8%. Leasing activity is up 16% year-on-year in the first quarter of 2025. This was mainly as a consequence of re-lease renewals and a decline of new developments coming to market. There's a stable tenant demand, and I think this will drive leasing volumes beyond the 5 million sq m mark for 2025.
It's, you know, but one cannot say that you know the overhang of trade tariffs is actually affecting the overall market, although it has been a bit disruptive. Headline rents remain in the range of about EUR 360-EUR 675, dependent on the size of the space as well as the location. From an ELI operational point of view, and bear in mind this is reporting on the split portfolio. This is now Redefine's share of the portfolio, the ELI portfolio. You'll note that the GLA is unchanged year-over-year. If you look at the leasing activity, a very, very busy and productive period in that we've managed to decrease the vacancy rate from 10.1% last year to 3.2% as we speak.
This is now gonna start playing out in ELI's contribution from a dividend perspective into 2026. As you can see, lease renewals signing just under 15,000 sq m were recorded at an average rent of EUR 4.74, and very importantly, achieving rental growth of 6.3%. New lettings of just under 9,700 sq m were recorded at average rent of EUR 4.86, reflecting an 8.3% increase over the expiring rental rates. First-time lettings of just under 30,000 sq m were recorded in developments at an average initial rent of EUR 4.43.
Looking just at sustainability in action, ELI now has got its global emissions under control from a measurement perspective, and we have energy performance certificates for all our buildings, all ranging in the A to C class, which means that we are compliant when the EPBD ordinance comes into play, which is expected in 2026. From a priority point of view, enhancing dividend yields is top of mind. Securing pre-lease agreements for undeveloped land, we are seeking. If we don't find them, we will sell those land holdings. We don't have a lot of land, as you could see from the top there, 55,000-odd sq m of land.
The last point to make here is that we are still finalizing our shareholder arrangements with Madison regarding the portfolio, and I have got an update thereon in shortly. In terms of the portfolio separation with Madison. As you know, we did enter into a side agreement where we have divided the assets into two portfolios, and this has been in place retrospectively from the first of September. This arrangement will become permanent once we have a revised shareholders agreement incorporating the terms of the side agreement and other corporate requirements. We are well advanced in this regard. Until these conditions are met, the parties have agreed to an interim arrangement under which cash distributions, such as revenue, proceeds from disposals, refinancing gains, et cetera, from each shareholder's portfolios will be distributed to that respective shareholder.
Then just looking at the trading statistics for ELI. You'll note there the active occupancy at 96.8%. Our renewal reversions very positive at seven-odd percent . This is a time when you do not want your weighted average unexpired lease term to be at the five-year level. You'd love it to be shorter, given that market rentals are growing very, very robustly, given the drop-off in new stock coming to the market. In terms of self-storage, this is still a sector that is in its early stages, and it remains on a very promising growth trajectory going forward. As you can see, Poland has nearly 200 self-storage facilities in the market, and it is growing steadily, most notably in urban areas where space scarcity and high cost drive individuals and businesses to seek alternative storage solutions.
Expansion of the self-storage segment is driven primarily by rising demand from individuals needing additional space and small businesses seeking flexible storage options. Just as a matter of interest, our latest acquisition at Modlińska in Warsaw, we have almost a 50/50 split between small businesses and individuals taking up occupancy in that facility. From an operational perspective, the integration and standardization of our operations, as well as implementation of technology across all locations, is largely done. As of July, our total net lettable area was just under 28,000 sq m spread across 20 locations. Average occupancy is at 72%, and our internal units are a bit higher at 81%. Containers, which I'm by the way, not a fan of, just under 65%. Our first development that we undertook with Stokado, located in Kraków, will start trading now in August.
It's looking great. In fact, there's a good LinkedIn post if you wanna see it opening, and you can get a good sense of what it looks like on there if you want. That facility added 5,000 sq m of net lettable area, providing a further 940 units. Bank finance we now have in place to assist us with further expansion activity. As you can see, we've got a number of developments currently under construction, two that we are well underway with. We've got a further two that we are going to begin, and that will take us to a significant increase when we complete these developments, to basically double the current net lettable area in the space of about three and a half to four years.
In terms of priorities for self-storage, clearly the focus is on expansion through development activity. Efficiency is very important for us, and divesting from these underperforming container sites. As I said, I'm not really a fan of them, and I believe we can rather redirect our resources to better performing investment-grade standalone self-storage facilities. In terms of sales and marketing, we are proactively building the brand to boost occupancy and rental income. Most of it is all digital, and we've got a very strong platform to assist us in that regard. Just the development of a strategic pipeline in Polish cities will continue while we are looking to secure a strategic investor. First, we wanna get these developments, as you can see here, complete before we will actively start looking for such an investor. That will happen probably during the course of 2026.
In terms of looking at our joint ventures, as I said earlier, this is a very big focus for us, and it continues to be. Restructuring the Polish joint ventures holds the key to reducing our high LTV from a see-through perspective, but also importantly, focusing on quality assets going forward. In terms of the Horse Group or the M1 portfolio, here we're pursuing the sale of surplus land to residential developments. It's well progressed. We will look to sell the M1 properties. It's a process that's underway. Then we are looking at selling two of the retail parks separately to an independent investor. In terms of Henderson, this is a medium-term exit, although Malta Office Park is being marketed to establish whether there is any investor appetite out there.
We are starting to see this office market stabilizing, but we need further stabilization before the portfolio becomes saleable at a reasonable price. In terms of ELI, the division of ELI into two portfolios provides us now with optionality, given, one, the very attractive asset profile, but also importantly, a WALT of 5.1 years. For now, we will focus on improving ELI's equity yield while we wait for the investment market from a logistics perspective to pick up. It's not because there isn't an underlying activity in this market. The issue is about 10% of the market is up for sale at the moment, and we'd like that to be worked off first before we come to market with this portfolio, potentially. Okay, with that, I'm now gonna hand over to Ntobeko.
Thank you, Andrew. Good morning, everybody. It's really on the financial insights, it's very exciting for us to see the improving margins supporting our profitable organic growth. If we look at that from the earnings outlook point of view, really the healthy operating margins are driving the high quality of earnings in FY 2025. If you look in the top left, we give you our net operating profit margin broken down between our South African portfolio, our directly held EPP portfolio, as well as the group. You will see the gradual improvement in South Africa, which is getting very close to our medium-term target of 80%.
Last year, we had 78.5% in South Africa, and we expect that to gradually get closer at 79.2%. Big contribution is really coming in terms of the EPP, the directly held portfolio, which last year was at 66.4%, and then this year we're expecting that to be at 72.6%. If you put those together in terms of the group impact, we're expecting about a 2% uplift in our group net operating profit margin from 75.1% to 77.1%. Corresponding with that is really the high quality in terms of recurring earnings in FY 2025 that we expect to be at 99.8%, which is a significant improvement and gives a lot of visibility and clarity in terms of our future earnings outlook.
On the right side, we do share with you some sensitivities in terms of the interest rates on the ZAR funding, if that were to change on 50 basis points. All of these changes are at distributable income per share on an annualized basis. You will see that the ZAR 50 basis point change on interest rates will have a ZAR 0.005. The indexation in Poland, a change of 1%, will have a ZAR 0.005 on the DIPS. On our euro interest rate of 50 basis points, we'll have a ZAR 0.004 impact on the DIPS. On the SA admin costs, a 5% change will have a ZAR 0.003 impact.
On the office reversion, which Leon touched on earlier, a change on 3% on that reversion rate will have a 0.2 cents impact on the DIPS. If we move to the balance sheet management, I think for us, our consistent risk management is really lowering the risk through the market cycles. Our focus on the first point has been delivering just around sustainable medium-term growth from our well-diversified property asset platform. The stable liquidity profile that we've got access to. As at the end of May, which is the 31st of May, we had ZAR 7.6 billion of liquidity.
On the group weighted average cost of debt, we are pleased that it decreased by 90 basis points to 6.6% if you compare to what we printed in FY 2024, which is 7.5%. Largely, these are driven by the reducing base rates, especially in the Euro bond, as well as the margin compression that we've been able to achieve on the refinances that we've gone through. Very committed, very clear in terms of our gradual reduction of the see-through LTV as Andrew also has touched on that. If we look at the property valuations, I think also Andrew touched on this. We expect a gradual improvement in SA and a stable outcome for Poland.
In terms of the easing of the interest rate, as well as really for us, the strong cash generation to gradually improve, which we've seen also now with our in the improvement in our ICR headroom in the medium term. On the ZAR debt, we've seen also a corresponding reduction in the cost of debt to 9% if you compare to what we printed in FY 2024 at 9.2%. On the FX, on a weighted basis cost of debt, also we saw a decrease of 60 basis points to 4.5% from, if you compare to, the 5.1 that we printed in FY 2024.
On the interest rate hedges, I think we've increased our hedging to 90.4% if you compare the way we were hedged at FY 2024 at 78.9%. Also on that, the tenor that we've had there, we've still kept it a bit short at 0.8 years if you compare to the 1.3 that we had in the previous period. Just to touch on the debt maturities, and some facility and the available facilities, I think we continue with our proactive management of liquidity so that we negate and manage any volatility that could come out.
If you look on the top left, we give you our debt maturity profile, largely done with FY 2025, with only 1% left, which our plan is to prepay. I've touched on it just now when I touched on the progress. This gives us the basis then to really deal with only about 5% of debt that is coming up in FY 2027. Really, we've kept a very low risk profile in terms of debt maturities. No significant maturities up until FY 2027. I've touched on the cash on hand that makes up our total liquidity of ZAR 7.5.
The 2.4 that you see is at the end of May. In June, you remember, when we restructured our SA secured debt, we aligned our interest payments to quarterlies. We made an interest payment in June, and also we made a distribution in June. That cash has been utilized towards those two purposes. We've kept our facilities then at ZAR 5.1 billion. Just to touch on some debt refinancing, I think, that has gone on in the period. In FY 2025, we've done about ZAR 6.5 billion of debt facilities.
Their margin was at 2%, and some of them we early refinanced, and we're able to achieve a 1.6% margin, which is a nice improvement in terms of the margin that Andrew touched on. That also gave us the tenor for 4.8 years. In the debt market, in the debt capital markets, we've continued our presence in terms of we've issued ZAR 1.9 billion in our DCM with the private placement on a three-year basis. Also that's achieved about 1.3% in terms of the spread on top of JIBAR. Then on the five-year, we also correspondingly saw very interesting spread at 1.5%. We saw the liquidity, and we went out with tenor there.
On a seven-year basis, we also achieved a spread of 1.6%. In terms of the public auction that we conducted in the period, which was 2.3 times oversubscribed, which speaks to the healthy appetite that sits for Redefine debt. That we split into three-year tenor that achieved 1.2%, which is a further margin spread compressed to 1.4%. If you put it all together, we did about ZAR 2.6 billion of capital that we raised in our DCM and at a weighted average margin of 1.4% and at a very healthy tenor of five years.
The use of that, we've taken about ZAR 1.5 billion, and those proceeds we paid the high debt margin that had a margin of 2.1%. The residual of the proceeds, which is about ZAR 1.1 billion, we've earmarked. If you see in 2025, we've got about 1% left. We earmarked a repayment of that and then also start to look at some opportunities in terms of the 5% that is coming up in the first half of 2026. Just to touch on the refinancing of cross currency swaps as well as our interest rate swaps.
We had maturities of EUR 299 million, and that was split into EUR 191 million at a fixed rate of 4.1%, and EUR 108 million that was at an average margin of 1.5. We're pleased that we refinanced all of those at a fixed rate of 4%, and we took a tenor of as a replacement tenor of one year on the maturing of those cross currency swaps. Similarly, we've been quite busy in the period in terms of the interest rate swaps. If you look at the ZAR 9 billion that matured at 7.1%. We replaced that with ZAR 9.5 billion.
That's why you saw the high up hedging that you saw of 90 in this period. That we also fixed at 7.1%. We took, because to Andrew's point, we're now seeing interest rate levels in where they are sitting is where their long-term average is sitting. We took out a bit of tenor and went out for two-year period on those renewal of those swaps. Just to touch on the loan-to-value ratio. I think our focus here very clear is to really firmly bring our LTV in line with our 38%-41% medium-term target range. As at the end of May in Q3 2025, you will see that the LTV actually is printed at 40.8%.
I think there's a typo there in that 4.1. I don't know if it came out right on the slides. At the end of the year, we expect it. If you take into account that we had it in the interim dividend payment, the cash that is for the next three months will bring down the operational cash flow, will bring down the LTV, and then there will be a corresponding second half dividend payment. There we expect that our LTV will be very close to the upper end of our target range. In terms of the covenants, I think we're quite pleased that the ICR, which was relaxed to 1.75 times up to 31 August 2026, is actually sitting at. It has improved to 2.2 times.
The SA LTV with a covenant of 50% at 31 May sitting at 40.8%. Also pleased if we look at the credit rating that Moody's had reaffirmed at Baa2 as at 14 February 2025, with a very stable outlook. If you look in terms of the sensitivities that we always provide in terms of the LTV, it's very important that the LTV number that we show here on the forecast to end of the year assumes very flat property values and a stable FX. That is a conservative basis that we've done that. If you look at the property values impact, a 1% change in SA property values, you will have a 0.3% movement on the LTV.
Also on the EPP property values, a 1% change will have a 0.1% impact on the LTV. We also give you with the sensitivity for the joint ventures values, which a 1% change to that will have a corresponding 0.1% on the LTV. FX is a big issue given the rand, and as we've seen in this period where the rand depreciated and had an impact on the LTV. If the rand depreciates or appreciates by 5%, that has a 0.4% impact on the LTV. On the see-through LTV that we share with you, that gradual improvement is really we continue that because that's on the commitment of our debt amortization and also the activities on the simplification of the joint ventures. That's the focus, as Andrew has touched on earlier.
In terms of the trading update for FY 2025, I think really for us the solid operational metrics that is driving the profitable organic growth. We are pleased to upgrade our distributable income per share guidance to ZAR 0.515-ZAR 0.525. In terms of the focus, in terms of improving operating margins to continue to support profitable organic growth, that is firmly on our radar. Also similarly to maintain our strong cash generation so that the high quality earnings profile of our business remains intact. That is also firmly in our focus. In terms of Andrew touched on the unpredictable global macroeconomic environment. I think it's largely driven out of the U.S. policy uncertainty. The playing out of that, we will watch that quite carefully and closely.
If you, if you take what is the variables then in that scenario of things that are within our control, it's really to maintain our disciplined capital allocation with a strong focus on reducing the see-through LTV. Then also, Andrew touched on the revision of the SA inflation target. Both looking, we're very clear on the long-term benefits of that, but also watch closely what could be the short-term impacts that we may need to contend with. With that, we'd really like to thank you and then I'll hand over to Andrew, and then we can deal with the questions.
Thanks, Ntobeko. Okay. Thanks, everybody, for your time this morning. I just want to apologize. On slide 28, when Ntobeko was talking about LTVs, the screen was a very different portrayal of LTVs compared to what is on the website. The website's correct, by the way. It's slide 28. Have a look. If you look at a 4% LTV, I think you'd agree with me, it would be a lazy balance sheet. Okay. Just looking at some of the questions from you guys, Maher from Absa has had a very busy morning. So he's asked three questions. I'm gonna try to incorporate all three into one, and we'll go from there.
The first question from Maher from Absa is, what is the annualized amortization of debt and CapEx for the EPP core and JV portfolios respectively? The next question is, what is your view on the risk of further tax leakage from the Polish portfolio given changes in government? The last question is, what impact do you expect a lower inflation target to have on renewal escalations in RSA? All right. I think I'll give the first question to Ntobeko. I'll take the second one, and the last one I'll let Leon talk to.
Maher, the amortization of debts historically used to be at between 2% and 2.5% in EPP, and now we've improved that between 1% and 1.5%. As to Andrew's point, that is still the opportunity we see playing into FY 2026. In terms of the CapEx, which is really both in EPP core and the JVs, is driven by the leasing activity, as we've seen now in the M1 portfolio. Also you have to factor your defensive CapEx to keep those properties relevant. We expect that to be 1% of gross asset value.
Thank you. All right. Just, Maher, in terms of tax leakage, I believe it's not a risk. Firstly, it's not a change of government. It was a change in presidency. The government's been in place now since October 2023, so there's no issue there. Leon, just in terms of the low inflation target.
Yeah. Just in terms of the question around what impact the lower inflation target will have on escalations. In the short term, I don't think much. Secondly, I suppose the point to make is that very few of our escalation rates are actually linked to inflation. Structurally, the three sectors perform somewhat differently. Obviously, in the industrial and office portfolio, we managed historically to achieve substantially higher than inflation, given the various operating costs and stuff involved in that. Then on the retail front, which is a far more active negotiation, given that you're dealing with professional property teams, particularly from the nationals, the escalation rate there is somewhat lower.
I would think in the longer term, it potentially will have a downward pressure on rental escalations, but I certainly do not think that it will be driven down to that lower level target of 3%.
Okay. Thanks, Leon. Nick Wilson's question is, I've been speaking to analysts recently with company results coming out, and they all say they, the effect of lower interest rates still have to come into play. In other words, there is a lag. There seems to be across the board improvements in your property portfolio lately. Does this indicate the economy is turning? Nick, look, first of all, 25 basis points at a time is very difficult to tangibly see. Yes, we all know that it takes time for interest rate reductions to start playing out in terms of consumer spend and other economic drivers.
For us, it's more about a very focused approach in managing the variables under our control that is turning our fortunes, and we are not relying on a turning tide, so to speak, to get our property metrics to improve. Our economy is still in a very low growth, kind of, trajectory. We all know that. We have resigned ourselves to that. As I said, we are focusing on quality tenants, quality properties, and quality people to manage those properties to their fullest potential. Okay, moving on to Mpumelelo Nene from Standard Bank. Regarding the Madison portfolio separation, are you still expecting a EUR 2 million earnings unlock for FY 2025? The short answer is yes. We are, and it is in Ntobeko Nyawo's forecast, Mpumelelo.
In terms of the next question from Mpumelelo, with a few more years into solar PV rollouts, what has the yield on the solar CapEx been? Leon?
Mpumelelo, it's a bit of a difficult question in that not all solar PV rollouts are equal. Depends on various factors, you know, the shape, size of the building, the reticulation involved, and also what connection you have to make to a potential substation and such like. Our year one yield on solar PV rollouts ranges between 15% up to 18%, and in some instances we even achieve up to 20%. It also depends on the output of a particular panel that you use, but roughly between 15%-18%.
Great. Thanks, Leon. Okay. There seems to be no further questions. With that, I wanna once again thank you for your time this morning, and I thank you for your ongoing support. We've just refreshed, by the way, our questions and there's a couple of more here that I can see here from Suren. Suren Naidoo from Moneyweb. His question is: What is the biggest contributor to the increase in guidance? For context, what was the previous guidance? Sorry, Mr. Nyawo, I thought your job was done.
Suren, if you recall, our guidance previously was ZAR 0.50 DIPS to ZAR 0.53. The revised guidance is actually on the upper end at ZAR 0.515-ZAR 0.525. I think some of the two large factors that have really driven that, you saw it, Leon touched on it, the SA operational metrics, quite solid, much more better than when we started at the beginning of the year. Similarly, in our Polish portfolio, Andrew touched on it, you saw that it's also traded far much more better than that. Interest rate cycle muted, and then some of the benefits, like on the split of the Madison portfolio coming through in FY 2025. Those are the driving factors.
Thank you. Ntobeko, unfortunately, your job's not yet done. There's one more question from Gareth Elston from Golden Section Capital. His question is, see-through LTV is reported at 46.9%, and management points to reduced debt margins and hedging improvements. Given refinancing concentration and continued exposure to European interest rate volatility, how confident is management that current credit spreads and hedging strategies will hold if macro shocks hit liquidity again?
Garreth, I think you know, our sense here is that in the medium term there's actually liquidity is very deep in both South Africa as well as the European markets. We're pleased with the liquidity points, and we believe that based on that, the credit spreads are gonna continue to hold. The focus from a balance sheet management point of view is to really diversify our funding sources, and I think we've done a lot of work around that. If you see in terms of our counterparty exposure, both in Europe, in Poland, as well as in South Africa, we don't have a single exposure per counterparty that is more than 15% of our debt.
That gives us a lot of flexibility should there be any unforeseen changes in the market conditions. Similarly, that's why we're conservative on our liquidity approach. We've got quite a serious cash buffer. At the end of May, we had ZAR 7.1 billion of liquidity. If you work that out, we could actually cover up to FY 2027 maturities if there were glitches in the market. We're pretty confident that the balance sheet is well-placed, even if there were to be any unforeseen events in the capital markets.
Great. Thanks, and Ntobeko. Okay, so with that, thank you, everybody. We look forward to seeing you for our year-end results at the end of October, beginning November, and wishing you all the best and hope everyone keeps well in the interim.