Great. Good morning, everybody. Hope you are well. Apologies for the delay. Having a few technical challenges this morning. I think the overcast weather is having an impact on signal. [Mareike], are we ready? Do we have everybody dialed in? [Mareike], can we begin? You are on mute.
Laurence, yeah, we are ready. You can get us started.
Excellent. Good. So good morning, everybody. Welcome. Thank you for taking the time to dial in for our pre-close for the first half of our 2027 financial year. Very pleased to say that we have had a very strong start to the financial year. The numbers we are going to go through represent the first five months trading. If we can just go to the next slide, please. I would say that we have had really a strong start to the year, next slide, please, underpinned by three issues.
Number one is ongoing strong operational delivery. Number two is the successful integration of the newly acquired assets. Number three is a very disciplined evaluation of the future pipeline. If I go through those in a bit more detail, the continued strong operational metrics across all the markets, and really I am going to leave the detail to Itu, Alfonso, and Roberto to talk you through. But just to say, we are seeing continued robust performance in South Africa and Iberia, and a very encouraging early trading in the Esperia portfolio, very much in line with our original underwriting forecast. So Roberto will take you through that in a bit more detail. In terms of integration, I think as you all know, we had a very, very active beginning of the financial year-end. In fact, the end of 2026, beginning of 2027, where we closed a number of deals.
In Spain, we closed Berceo in March 2026. We then did Islazul and Splau in April. Very pleased to say that those assets have bedded down very well. In June, we made the acquisition of our portfolio of three assets in Italy under the Esperia banner. Again, those have been bedded down very well. The reporting is flowing very well. So I think the team has done tremendously well in integrating a very busy acquisition period into the operating platform, and that is now well set and providing a great platform for us to move forward. In addition to that, we have obviously had a very disciplined period in terms of evaluating acquisitions. I think at full year results, we alluded to the fact that there were two further acquisitions we were looking at in Italy.
I am very pleased to say that we secured those assets under exclusivity. They are currently under due diligence and would expect those to close either at the very end of 2026 or beginning of 2027. Important to say that funding is already in place for those two assets that we have acquired. We are excited in terms of what they will add to the portfolio going forward. So that is currently in exclusivity and in due diligence. In addition to that, we have been able to secure exclusivity over a further asset in Italy. That is an asset that will be between EUR 50 million and EUR 60 million. We are acquiring that at a yield of around 9%. Roberto, is that correct, 9%? So that should be a very nice accretive opportunity. That will probably close towards the back end of Q1 2027.
So we really are making very good progress in building up the size of the Italian portfolio, trading very well. I think as I referred to saying, we feel we can get around EUR 500 million of GAV. I think once these deals are closed, together with the existing assets, we are probably going to be at around EUR 350 million in the portfolio. So very, very good progress on that front. South Africa, for the first time in a while, we are seeing some good opportunities. There are a number of potential acquisition opportunities that are currently under evaluation. Then in Spain, after some very significant activity, we continued seeing very good deal flow. I think it is fair to say Castellana is still the first port of call for anybody looking to sell assets.
That being said, we evaluated and declined a number of transactions due to pricing considerations or lack of strategic fit. I think it is something we have spoken about very often. We are very disciplined. It is not about doing the deal, it is about doing the right deal. The right deal at the right price and for the right reasons. I think everybody knows about the very large LSGI deal. That portfolio of around EUR 1.5 billion, EUR 1.6 billion. That traded, from what we can estimate, we think it traded at around a yield of 6.13%- 6.25%. That is broadly the range that people are speaking about on that portfolio. We evaluated it. We, in fact, did not like the whole portfolio. We only bid on a couple of assets. But I think it is a very positive read-through for valuations on our portfolio.
I would argue that the Castellana portfolio is probably stronger than the LSGI portfolio and trades at a higher yield. So we are looking forward with interest to see what the valuers do based on that evidence of that transaction. Also important to know there are 14 bidders on that particular portfolio. That is all in the public domain. I think that is a very strong read-through into the strength of the Spanish retail market. There was a deal on Xanadu, a very large super-regional where 50% of the asset was up for sale that was brought to us initially. We decided against bidding on that one because it was going to be quite complicated with the 50% co-owner who would also be wanting to manage. So strategically, it did not make sense. Then finally, the Megapark deal, which NEPI bought. We had a look at that deal.
It is a good center. We did not bid on it. We declined it. The reason is we just felt it would be fully priced and the asset is probably fully let as well. So I think it is a stable, strong asset, but in our view, it would not have added much. It was a EUR 240 million, EUR 250 million purchase. It was large, it was fully priced, and we did not see the growth coming in, so we decided against that one. I think the point is, we continue to be active in the Spanish market, but we will only do deals that we see as adding value both financially and strategically, and therefore, we decline those as well. So that is the word of the overview. A very strong start to the year. I am going to turn over to Itu to start talking through the South African portfolio in a bit more detail.
Itu, over to you, please.
Thanks, Laurence. Good morning, everyone. Chad, can you go to the next slide, please? It gives me a great pleasure to present the H1 financial 2027 trading update. At this point, we are very pleased with the current portfolio performance. The overall operating metrics are tracking in line with the budget that we have set forth for the year. Our annual like-for-like net operating income is projected to grow at 8.5%, and this is due to both strong top-line performance. You will see as I go through the presentation, our reversions have improved, our new deals relative to budgets have improved, so the top line is strong. Also continued tight operation expense management. Our cost-to-income ratio has continued to decrease. We have also had significant additions to our solar initiatives. We have added 3 MW peak over the past five months. We are currently busy with another 3 MW.
On the BESS side, we have increased our megawatt hours from 6 to 16. So we have added 10 MWh on our BESS solutions. We continue to execute on our water strategy. Last year, we had drilled six boreholes within the portfolio. We have added another two. Looking to potentially double the savings that we now accrue from borehole water. So overall, really seeing very strong performance on the top line and continued tight cost management. Our growth, including the acquisitions of Chatsworth. You would recall that last year it was in for three months, and this year it will be in for 12. Also including Botshabelo Mall, which the transfer is imminent. That will then take the portfolio from that 8.5% to a 10% growth for the year. With regards to trade, trade has held up admirably throughout the year. We have seen a 5% growth in like-for-like trading density growth.
We measure 14 key categories within our portfolio. All of those 14 categories are trending up. All of the segments that we have within our portfolio have also shown growth in the past five months. So really, seeing sustained growth within the portfolio. The month of June was potentially one of the slowest months that we have seen in the past 24 months. We are a bit concerned about that, but we have seen a very strong turnaround in July and August trade. Menswear and sportswear continue to outperform, and perhaps on the slower side, footwear and womenswear has been slightly slow over the first five months of the year. We have also noted the lower and the softer comparable sales that retailers have printed in recent prints and trading updates. But I think our portfolio continues to buck the trend, growing at levels in line or higher than inflation.
When you overlay that with our lower effort rates, it really speaks to the sustainability of growth in our top line, in our reversions, and also in our NOI. On the vacancy front, we continue to see well-contained vacancies, 1.3% excluding office vacancies. This is notwithstanding a significant amount of deals that we've done in the first five months. We've done close to 50,000 deals. So a representative sample, and we're still seeing strong demand, high retentions, and low vacancies. The reversion cycle continues to improve. Our reversions have improved from 3.7% to 4%. Our new deals are up by 7% relative to our budget, and our escalations are still holding steady at 6.2%. Really pointing to a growing portfolio. The cost-to-income ratio, we had delivered 12.4% in March. That's up slightly to 12.2%.
That's because of the PV, BESS, and water strategy that deployed in the first five months. So overall, I think when one looks at the key operating metrics that we've seen over the first five months of the year, we're quite bullish that we'll be able to deliver on our budget and also the business plans for the remaining part of the year. Thanks, Chad. Over to the next slide. With regards to our footfall and sales, we've seen an overall growth in sales of 5.1%. Again, growth across all segments. Our town sub-portfolio has grown by 4.7%, and this is in addition to the 4.5% that we saw at year-end. Rural portfolio has grown at 5.3% in addition to the 5.9% that we saw year-end. So that segment of our portfolio continues to do very well.
Our value portfolio, as well as our commuter portfolio, showed the greatest growth in the first five months of the year, growing at 6.8% and 5% respectively. We've had eight of our top 10 tenants grow in turnover over the period. So that's a strong print, and all of our major grocery anchors have grown levels in line with the overall portfolio growth. So really strong turnover and sales growth that we've seen in the portfolio. With regards to footfall, our footfall has been relatively flat across the segments, growing at 1.1%. We have significant promotional activity that we plan for the second half of the year, which should see our footfall and people coming to the mall improve to the end of the year. Next slide, Chad.
With regards to our retail category performance, we measure these 14 categories continuously in the portfolio, and all 14 of them have shown growth in trading densities in the first five months of the year. Particularly strong performance coming from the grocery segment. The grocery segment accounts for 32.1% of our GLA, and that's grown by 5.6%. Our food services, and this includes takeaways, has grown by 4.8%. Pharmacies up by 6.2%. Our top 10 tenants within our portfolio have grown in turnover by 5.1%. So really seeing very strong trade across all of the categories. The one category that continues to potentially be soft is the homeware category. That's grown by 0.9%, but this is something that we're seeing across the sector, and it's driven mostly by high competition that's coming through from cheaper imports.
But at a portfolio level, we have really been encouraged and really happy to see the positive trade across all of the sectors that we manage. Next one, Chad. On the leasing activity front, we have seen an improvement in our reversions, up to 4% from the 3.7%. Our new lets have improved by 7% relative to our budgeted rates. Overall, in terms of top-line growth, where we have seen churn and movement, we have seen a 4.4% upswing. Our retention ratio is up at 91% of all of our expiries, which has been good. Our new leases and renewals have been signed for longer tenure. On average, we have seen a 4.2 years in new leases and renewals relative to our WALE of 3.3.
So really happy with the quantum, happy with the value of the leases concluded, and also happy with the discussions that we are having with our retailers to take up space in the broader portfolio. To summarize, really happy with the first five months' trade within the portfolio, in all of the provinces, across all of our categories. We are really encouraged, and also we have been really encouraged by the support that we are getting from our retailers. Where we have had to replace tenants, we have had significant uptake of space that has become available. So looking forward to continuing this momentum into the rest of the year as we look to deliver on our business plans and our guidance. With that, I would like to thank you for your attention and then hand over to Alfonso to give you the update of Castellana.
Thank you, Itu. Yeah, glad to see another period of good performance in the South African side, so well done. [Non-English content] everyone. Will now take you through Castellana Properties' performance across Spain and Portugal. The key message is very straightforward. The portfolio has made a strong start to the financial year. We are seeing sustained growth in both footfall and sales, healthy leasing demand, and consistently high occupancy and rent collection. This results reflect the quality of our assets, the strength of our retail platform, and the continued execution of our active asset management strategy. As Laurence has already highlighted, we have fully integrated the recent acquisitions into our platform, and they are performing smoothly and in line with expectations. In addition, we have identified a number of value enhancing initiatives across the portfolio that will support further growth over the coming years.
So let me start with the customer indicators, footfall and sales. We in that one? Yeah. So footfall and sales continue to grow across both markets. Portfolio footfall increased by 4.8% from April to August, with Spain up 6% and Portugal up 2%. Spain's performance was led by Bonaire, where footfall increased by almost 20%. This is a particularly important result as it demonstrates the center's full recovery and renewed momentum. Although the comparison benefits from the fact that last year was still affected by the flooding recovery process, the most encouraging point is that the recent monthly performance is now also ahead of 2024 levels, which was a record year for the center. We can therefore say with confidence that Bonaire is not only recovering, but once again, performing at record levels. Excuse me. In Portugal, the portfolio welcomed more than 15 million visits over the five-month period.
This was the strongest performance recorded for this period and confirms the continued appeal of our assets. Sales also remained positive. Portfolio sales grew by 3.9% from April to July, with Spain up 4.2% and Portugal up 3.2%. Bonaire delivered again sales growth of 7.5%, while Forum Madeira and Alegro Sintra led the Portuguese portfolio with growth close to 5%. Importantly, growth was broad-based. Leisure and entertainment increased by 9.4%, confirming the continued shift towards experience-led retail. Fashion grew by 4.9%, health and beauty by 4.8%, and food by 4.6%. This balanced category performance provides further evidence of the resilience and quality of the portfolio. This trading momentum is translating into strong leasing outcomes as well. Leasing activity remained strong across the portfolio. We signed 104 leases covering almost 42,000 sq m, representing EUR 10.5 million of refreshed and new annual rent, with an average rental uplift of 6.79%.
In Spain, 69 leases have been signed so far. Of these, 43 were renewals, delivering a positive escalation of 6.72%, while new contracts achieved an uplift of 10.7%, mainly through relocations and tenant replacements. Overall, the average rental uplift in the Spanish portfolio was almost 7.5% for the period. In Portugal, we completed 35 leasing transactions covering above 13,000 sq m. Of these, 16 were renewals with positive reversions above 3%, while new agreements, largely driven by tenant replacements, generated an uplift close to 9%. Taken together, leasing activity in the Portuguese portfolio delivered an average rental increase of 5.15% over the period. Across both countries, the balance between renewals and new contracts demonstrate both strong tenant retention and continued demand for space in our centers. Renewals delivered an average uplift of 5.83%, and that is excluding CPI indexation, which will be applied in due course.
New contracts achieved an average rental uplift of almost 10%, reflecting the strength of the Castellana team's execution and the portfolio's continued capacity to capture rental growth. Overall, these figures confirm that our assets remain attractive to retailers and that we continue to capture rental growth while maintaining strong leasing momentum. This demand is also reflected in the portfolio's occupancy and collection metrics. Finally, the portfolio continues to operate at very high occupancy levels. Vacancy stood at just 1.1% across the Castellana Properties portfolio, with Spain at 1% and Portugal at 1.7%. Rent collection remained equally strong at 98.7% for the portfolio, comprising 98.8% in Spain and 98.2% in Portugal. These metrics underline the defensive quality of the portfolio and the effectiveness of our asset management approach, don't they? They also provide a strong foundation for our continued income growth.
To conclude, Spain and Portugal have delivered a strong start of the year. Customer activity is growing, retailer demand remains healthy, rental growth is positive, and occupancy and collections remain at excellent levels. This combination gives us confidence in the portfolio's ability to continue delivering sustainable performance, supported by high quality assets, disciplined execution, and an active asset management approach. With that, I will hand back to Laurence for the next section. Thank you.
Alfonso, thank you.
[inaudible]
Roberto, I am going to pass that ball down the line to you for the Esperia update.
Yes.
Thank you.
Hello. Hello. Good morning and [Non-English content]. We are the newcomers, so very happy to be part of the Vukile family, and we are really trying to do the best we can to match the outstanding performances of Itu's and Alfonso's team. As you might recall, the first acquisition of Esperia was closed on the 15th of June of this year. We have also been able to complete the structuring of the Luxembourg and the Italian platform, so Esperia itself, and we are now focusing on the management of this portfolio. As just said, we have been managing this portfolio on behalf of Vukile only for a couple of months. The data that you see here is on a rolling 12-month history, so the last 12 months, the footfall of the portfolio has shown growth.
Overall, this portfolio attracts almost 10 million visitors per annum, of which almost half are focused on Quarto Nuovo. So we have 4.6 million visitors per annum on Quarto. That has shown also the best growth within the portfolio. Le Due Valli, that is the Turin scheme, has shown healthy growth with an increase of 2.2%, and Le Centurie, that is Padova, has been basically stable. As far as the sales performance is concerned, as you can see, they are all healthily growing. We have had an over-performance on Le Centurie, but let's say on average, the three assets are still showing some growth.
The vast majority of this growth has been led by new leases, because the like-for-like trend is 1% growth versus the 3.2% total, meaning that there is still some room for active asset management, new leases, and also demonstrates that when we are able to attract new tenants, the footfall immediately increases and so does the turnover. Just to give an overview of the sales density, the Italian average is EUR 3,500 on a square meter basis. Our portfolio is around EUR 3,750, with a peak of EUR 4,000 in Quarto Nuovo. So again, these three assets are over-performing the Italian average, and Quarto in Naples definitely is and remains the best performer. If we can go to the next slide. During the last 12 months, there has been some good activity. We have renewed or signed 18 new leases.
As always, the new leases have brought more increase in rent compared to the renewals. Please take in mind that on the renewals, CPI is not considered because it triggers the year after you renew, whilst on the new contracts, CPI kicks in immediately. The fact that we have been able to attract almost 1,200 sq m of new tenants with an increased rent level shows once again the attractiveness of these assets and our capacity also to bring in new tenants that help for sure also, the attractiveness of the assets and the merchandising mix and the commercial powerful of our three shopping centers. As far as vacancy is concerned, this is a portfolio that is almost fully let. If we can go to the next slide. We are 97.9% occupied. The vast majority of the vacancy is on the upper floor of Le Due Valli in Turin.
We are at the moment considering a project of merging three vacant units. If we were able to complete this project, the vacancy here would drop to less than 3%, and this would mean basically that the entire portfolio would be above 98% of occupancy. Our rent collection rates are higher than what is shown on this graph. The reason being that after the acquisition, we of course had to change all the bank accounts, and some tenants have still paid on the old bank account, so we are recovering the money from the former owner. Our target is to be around 97% by the end of the year, if not 98%. That has been traditionally the average of our collection rate on this portfolio in the last 10 years.
All in all, we believe that this is a strong, resilient portfolio that has some future angles of asset management. In full honesty, having been managed in the last five years with no investments whatsoever, we also believe that now Vukile will be able to extract more value through a very focused and detailed CapEx strategy that we have started to implement. The most interesting part of this slide is based on the fact that this portfolio has outperformed the Italian average, especially on electronics. In Italy, electronics have been witnessing a negative trend, and our portfolio has, on the contrary, seen an increase of over 2.5% of the overall turnover as far as electronics is concerned. That is quite surprising.
As far as the other categories, we are absolutely in line with the Italian market, so a good increase of food and beverage, and some kind of stability on fashion and footwear and personal goods. Household goods also are in line with the national trend. Once again, it is interesting to see that we've been able to increase almost by 1% the sales density, once again, going way beyond the Italian average. I think that this is all for our newly Italian portfolio.
Thanks. If we can go to the next slide, please. Just to sort of perhaps round up before we take questions and go through the prospects. Firstly, I think what Itu, Alfonso, and Roberto have just shown is a very, very strong operational performance for the first five months of the year. Great metrics all around, and I think a huge thank you and shout-out to all three of you and your teams for the great work that you're doing. I think where we are sitting is that we would expect that continued performance into the remainder of the financial year. I think you're hearing a very positive, very upbeat message across all of our markets in terms of operational performance. The integration, we've spoken about that.
I think where it is important, and maybe just to highlight the point, is we are constantly looking to buy assets that have got growth opportunities through value-added projects. As Roberto just explained, the Italian portfolio that we bought was historically starved of cash. We are certainly taking a very different approach to how we would manage those assets. Roberto and his team are starting to identify some value-add opportunities there, and we look forward to discussing those with you in due course. Castellana, I think, has really made its reputation on not only buying exceptionally well but adding value to the assets. Alfonso has got a great pipeline of future value-add projects that we think will bring well above inflation growth for the next number of years as those projects come through. On the SA side, again, we continue to look for projects.
The most recent being Nonesi, which was completed very successfully. Itu is always looking for opportunities to expand the portfolio in terms of those value-added projects. So we have a very stable portfolio as we sit today, and I think that stability really provides two things. One is the foundation for the value-add projects, as I have just mentioned, and two, the platform for further acquisitive growth and having a look at the markets. I think what we are known for and what we will continue to do is be very disciplined in our capital allocation. We are always looking for deals that are accretive financially, that is relative to the weighted average cost of capital at the time. Obviously, one is being very mindful of borrowing costs at the moment. Interest rates do seem to be rising, although that is generally factored into the pricing at this stage.
There are some very interesting opportunities that we are seeing in Italy, in South Africa, and in Iberia as well. We will continue to evaluate them and continue to build on our exposure to dominant shopping centers in our core markets. Just to turn to an important factor being the rand. So when we gave our guidance at year-end results, we gave our rand forecast that was sitting at 19.60. The rand has obviously strengthened since then. We are currently using a forecast for the year of 18.87, so that is a strengthening relative to what we originally planned. Notwithstanding that, we are still reaffirming our guidance for FY 2027 of growth in FFO per share of between 8% and 10% and dividend per share growth of between 10% and 12%. So really, in summary, a very strong start to FY 2027.
Great operational performance that we expect to continue into the remainder of the financial year. The strong acquisition activity that we experienced at the beginning of the financial year has all been bedded down. That is giving rise to further growth opportunities. We are starting to evaluate further opportunities, most notably in Italy, and our overall guidance remains intact, notwithstanding a headwind from the strengthening rand. We are 100% hedged on our dividends for both Castellana and for Esperia for FY 2027. We are 80% hedged for FY 2028. So we have locked those rates in already, and hopefully, that reduces the impact of currency volatility going forward. To end up, and then we will take questions, just to reaffirm guidance, 8%-10% growth in FFO per share and dividend per share growth of 10%-12%. Thank you all for your time. Really appreciate it.
Brian, can I turn it over to you for questions, please, in the chat?
Yeah. Good morning, everybody. Thanks, Laurence. I hope you all can hear me. We don't have any questions in the chat yet, but perhaps we can open up to the floor. Please raise your hand and then we can address the question.
Doing an auction soon, Brian. Going.
Perhaps we can give it 20 odd seconds.
Nice.
Any questions from the floor? There we go. Ridwaan, please go ahead.
Morning, team. Just a quick one on the two acquisitions that you're potentially looking at in Italy. Is that part of your guidance? What yield do you think you can achieve on that? Given that you're looking to target EUR 350 million , it sounds like it's sizable deals that you're looking at. Then the impact on LTV as well.
Sure. Ridwaan, the acquisitions, as we mentioned at our full year results, those two assets combined are just over EUR 200 million. The yield is above 8% on those. I think probably closer to about 8.4% if I'm not mistaken. We will fund it with an LTV of 40%, so won't have an impact on group LTV, and that's LTV based on purchase price, not valuation. Okay? You would expect to see LTV coming down when those assets get revalued. The key part of your question, no, those numbers are not yet part of the forecast that we're putting forward, and that's because we really are not certain on exactly what date they're going to close. The forecast that we've been through does not include either the two assets that are currently under due diligence or the third one that we've secured exclusivity on.
Thanks, Laurence. Alfonso, perhaps I can direct this question at you from Matthew Pouncett from Laurium Capital. Asking really around online penetration in Iberia. Can you perhaps comment on recent trends in terms of online shopping within Spain and Portugal? Has online penetration increased over the last 6- 12 months from the data you've gathered and from what you've seen?
Right. Yeah, thanks, Brian. Online penetration in the southern Europe countries is the lowest. I would say that Italy probably is the lowest within the southern European countries, then Portugal and then Spain. But still Spain is around the 10%, 9%- 10% online penetration. But always we have to think that out of the e-commerce, out of the total sales that are done online, only 35% are products that are part of a shopping center. That's when we talk about fashion or we talk about electronics or things like that. So that 9%- 10% in Spain is practically reduced to the 6%- 7% in terms of those categories that are actually present in a shopping center.
Once again, however, we shouldn't be disconnecting both channels of selling because at the end of the day, what retailers are now is into omnichannel, which means that they have to integrate both ways of selling because they are very much interconnected. While people can buy or look into online and then buy in the shop, and vice versa, look in the shop and then buy online. But for the retailers, it's very much their ecosystem has to be completed and integrated. Sometimes a sales operation is benefiting the physical shop and vice versa. Sometimes it's benefiting the online world. However, I think that the e-commerce is already well consolidated into Spain, Portugal and Italy, and probably Roberto can say more on that. But what we don't see is growth figures going further these days.
The growth ratios are diminishing and now it seems that they are getting to the peak or even they are starting to decrease. Right? I think it is stable and we are not seeing further penetration into the physical shopping.
Thanks, Alfonso. I don't see any. A question just came in from [Jeppo]. Just to clarify, how much will the total GAV be in Italy, Roberto? This can go back to you, perhaps to you, Laurence, after you secure the third Italian asset that you're currently looking at?
What will the GAV be? Is that the question, Brian?
That's the question for Italy.
About EUR 350 million, EUR 360 million. In that range.
Perfect. I don't see any further questions in the chat. Perhaps we can go back to the floor. Anyone with a question, please welcome to raise your hand.
Okay, good. Brian, thank you. Thank you everybody.
[inaudible]
[inaudible]
Yes. Sorry. It is a question from Francois du Toit from Anchor Capital in South Africa. This is a question for you, Itu. Department store trading density growth was stronger than any other category in South Africa. Does this reflect the ongoing reduction in space occupied by department stores? Referring to the fact that department stores are now just 5% of the GLA, whereas it was around 9% four years ago. Was the 9.2% trading density growth on a like-for-like basis?
Yeah. Thanks, Brian. Francois, it is a combination of decreasing department stores, but also historically, we have always had the Massmart stable in that department store category. Part of the improvement has been in the Game store trading over the past 6- 12 months. The Massmart Games have kind of swayed more towards groceries and there has been significant growth over the past year. I would say that the answer is a combination. We definitely have seen smaller department stores. For instance, Edgars used to on average be at 4,000 sq. That decreased to 2,000. In December, we are opening our first Edgars at 500 sq. That plays part to growing the trade intensities, but it is also overlaid by the Massmart factor. Yeah. But I would be happy, Francois, if you want me to dissect that further for you, to send you some more detail.
I think that concludes the Q&A, unless there are any final questions from the floor. I think there is now from Moisha. I think Moisha joined. Sorry.
Hey, guys. Sorry. I will be brief.
Sorry. Moisha, there's a question in the end, there's a question from Nick. Can I just perhaps go to the chat first? There's a question from Natty. I saw that question come in first. For the two Italian assets under DD, obviously, which we've said to close in Q1 2027, say the funding's in place, what is the mix of euro debt, cash, and equity? Laurence?
Well, as I mentioned, the euro debt on the asset will be 40%, is the LTV that we're going to look at on the assets. And the balance will be cash that we've already raised. You'll recall we did that capital raise in May. Part of that money is earmarked for these transactions. So we have the money available for that when we close.
Thanks, Laurence. Nick, I see your hand is up. Please go ahead.
Oh, thank you very much, Brian. My question's more clarification, Itu, if you wouldn't mind following up on what Francois was saying about the department stores, and you mentioned Game actually performing well. I take it these are the Games, that these are not Games that have been converted to Walmarts. I know that they're also busy with that process as well, some of their Game stores. I just wanted to double-check with you.
Yeah, Nick. Listen, we haven't had any conversions into Walmarts in our portfolio. What we have seen is a category change within the current Games, in terms of what they offer the market. The reference that I was making to specifically to the Game. I think the overarching comment that I was making to Francois is you've seen retailers become a lot more efficient in space usage. They're generating more turnover on smaller space footprints. This is kind of one of the reasons why you would've seen department stores seeing an improvement in their trade intensities.
Thank you.
Thanks, Itu. Moisha, please go ahead.
Cool. I will be very brief. Just wanted to double-check with regards to your guidance, what assumptions have you made for the South African repo rate by the time you guys get to year-end? What assumptions have you made for the European Central Bank policy rates as well? I know it will not have a huge impact, I just need to maybe get a sense of your guys' view on the monetary outlook.
Yeah. I am going to comment. Laurence, go and just jump in if I have got the wrong numbers. We already obviously factored in the hike of the other day. We have factored in one more hike for this year, of 25 basis points, and we have also factored in a further 25 basis points increase in the euro cost of funding.
That is great. Okay, awesome. Thanks.
Apologies, I was on mute. I do not see any further hands. Laurence, either I will leave it to you to close, or you would perhaps like to give it a few seconds.
Great. Thank you. Firstly, again, thank you to everybody for attending. We appreciate that. Very positive with where we are sitting at the moment. We are on track for another good year. That is coming off a very strong base from last year. Please feel free to reach out to us if you have any further questions that have not been raised. And wish you all a great day further. Thank you very much for dialing in.
Thank you. Cheers.
Thank you.
Cheers, guys. Thank you.