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Edited Transcript of RDF.J earnings conference call or presentation 4-May-20 11:00am GMT

Half Year 2020 Redefine Properties Ltd Earnings Presentation - JSE

Johannesburg May 22, 2020 (Thomson StreetEvents) -- Edited Transcript of Redefine Properties Ltd earnings conference call or presentation Monday, May 4, 2020 at 11:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew Joseph König

Redefine Properties Limited - CEO & Executive Director

* David Huw Rice

Redefine Properties Limited - COO

* Leon C. Kok

Redefine Properties Limited - Financial Director & Executive Director

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Presentation

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [1]

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Good afternoon, everybody. Welcome to Redefine's Group Interim Results for the Half Year Ended 29 February 2020. I think, it goes without saying that 2020 will be a memorable year, and it's not only COVID-19 that we will be remembering for many years to come, but it's also Redefine's 21st year of existence. And also, sadly, Marc Wainer also passed away in the year 2020.

Redefine has a lot to be grateful for. He was our founder. He had the foresight to create Redefine, in a time similar to this, where retail property was trading -- not retail property, but property in general, was trading at yields far lower than listed property yields were trading, and that gave birth to Redefine. So Marc will be remembered for many, many reasons. But the one that really stands out today is that he was the mastermind behind the play on words -- I'm sorry, I'm very emotional here today, but its financial-derived financial instrument called Redefine.

So with that, can we please just have a moment of silence in memory of Marc, please?

Okay. So moving on to our results presentation. The conversation this afternoon will follow the flow of our strategic matters, which is to grow reputation, invest strategically, optimize capital, operate efficiently and engage talent.

So looking at growing reputation. Our purpose is what drives us to add values -- value to all our stakeholders. And just looking quickly at the key outcomes for the first half of 2020. Under the environment, you'll see that solar PV capacity has been increased to 25.1 megawatt peaks. Our Green Star certifications by the end of this financial year will total 100. And we have developed green tenant guidelines in the supplier code of conduct to enforce environmental best practice.

On the social side, we are very happy to report that we've received a global CDP supplier engagement A rating. Our total mentees matched to mentors has increased to 1,514 on the mentorship challenge platform, and we've maintained a Level 3 BBBEE contributor status.

In terms of governance. Filling the financial director role provides us with an opportunity to address diversity at the senior echelons of Redefine. We've been awarded a AAA ethics rating from Ethics Monitor. We are 1 of 3 companies in South Africa to achieve this. And then, very importantly, all our Board committees comprise independent nonexecutive directors.

Moving on to our response to COVID. Collaboration has taken on new meaningful Redefine at all levels within our stakeholder groupings, and I think this time in our lives has proven to us that necessity is the mother of invention, and that we actually can stand together and work together to ensure that we, as an industry, as well as a company, can sustain ourselves through what is quite a challenging patch and has some challenge to come.

Looking at the second half focus. We've had to tweak this given what's happened in terms of COVID-19. And you'll see that from a growing reputation point of view, deepening, communication and collaboration will be an ongoing challenge for us. Remaining relevant to stakeholders, I'll touch on some more, but I think is absolutely important in that human behavior will be reshaped as a consequence of COVID-19. And heightening our focus on ESG, well, that's an ongoing priority for us. And there will be lots more to come in the second half of 2020.

In terms of investing strategically. Our core portfolio has been positioned to remain relevant to users' needs, and we will continue tweaking that as we go along, as users' space requirements will change as a consequence of a changed behavior. In terms of outcomes for the first half of 2020. You'll see that our property assets under management are now ZAR 89.2 billion. We deployed ZAR 1.9 billion into property assets, it's mostly development; ZAR 1 billion thereof was offshore, of which ZAR 600 million was invested into our Polish logistics platform; and about ZAR 400 million was invested into student accommodation development in Australia. 80% of our property asset base is local so we remain a South African-focused business.

I think in terms of our portfolio profile from a local perspective, it's interesting to note that nothing really has changed since the last reporting date. You'll see that we are still 73% located in Gauteng, with a slight retail bias.

In terms of headlines for the first half of 2020 from a local portfolio perspective. We are very happy to report solid outcomes despite very difficult economic and competitive conditions. You'll see that there has been some negative revaluation of the active portfolio, and that's mostly as a consequence of pressure on revenue lines. Development activity continued in this period. We had about ZAR 95 million worth of developments that were completed. And disposals, despite challenging conditions, totaled ZAR 707 million for this period. This is money that has been banked.

Letting activity, as you can see, has been brisk, and I'm very happy that we were able to let 455,500 square meters of space during this period, which speaks to the quality of our tenants' offering that we have as well as our leasing capacity. In terms of the local retail portfolio. You'll note here that despite once again challenging conditions, we believe a pretty pleasing outcome for the first half of 2020. You'll note that our tenant retention GLA, our GLA is 95,8%. Our vacancy has moved up slightly from 4.6% to 5.6%. We have had trading density growth, which is pleasing as well as sales growth.

In terms of offices, very happy to report in a challenging as well as very competitive climate. We had tenant retention of 93.3%, that is a top priority for us, in a market where there are no new users coming to market. Rosebank Link achieved 2 Green Star Ratings, a 4 Green Star design rating as well as a 5 as built-rating. We've had a number of refurbishments complete, the biggest of which was at 155 West Street, which is where WeWork is housed. And very, very importantly is our good exposure to the premium node called Rosebank, where we have our offices.

In terms of industrial. This is one of our more defensive sectors. And as you can see here, once again, a solid performance here. Tenant retention by GLA, 97%, a 2.1% vacancy. Rental renewal growth of 9.4%, that is positive in this market, a fantastic outcome.

Looking at alternative investments. We did report at the half year preclose stage that we were at advanced discussions, selling our local student accommodation. I'm afraid to report back that, that transaction has been put on hold as a consequence of COVID-19. In terms of loans, et cetera, we still continue to provide line funding to secure strategic partners. And then just in terms of our high-yielding assets. Our solar PV plants, we continue rolling out. Non-GLA income remains at constant focus for us. And I think it's important for you to note that our Oando Wings transaction has finally progressed to regulatory clearance stage, and that is from the Nigerian authorities.

Looking at our international portfolio now. Once again, not much has changed in terms of the split between listed and direct properties. But I do think I need to highlight the see-through LTV ratio there of 52.4%, and the pressure there is coming from a number of things. But I think that the 2 standout ones would be rand weakness as well as some impairments that I'll talk about in due course.

In terms of headlines for the international portfolio. As you can see, we've been very busy in Poland, in terms of disposing an asset-strict offer at EUR 49.2 million at a yield of 6,1%. We've introduced an equity partner into our logistics platform in Europe, and I think the last 2 points I just want to highlight is that the carrying values of EPP and RDI were impaired by ZAR 442 million and ZAR 122 million, respectively, during this period.

In terms of our logistics platform in Poland. You'll note here that there is a number of developments in progress totaling EUR 62.3 million. Our income-producing GLA sits just under EUR 400,000 at this point in time. Yes, it has gone down on last reporting periods, EUR 444,000, but that was because we disposed of Strykow. We continue to develop, as you can see, in this market, and we'll continue to do so using the capital that we received from the Madison transaction.

Also happy to note that active vacancy has reduced from 16-odd percent to 9.9%, and that is expected to reduce further in the second half of this year. And I think the last point I want to make is that COVID-19 has not impacted significantly on the logistics platform, and it is the only offshore asset which is still generating dividend income for Russia and South Africa.

In terms of protecting our net asset value. The RDI REIT remains a work in progress. We are receiving opportunistic approaches, and I would just want to stress that the pricing that is being offered is referenced off current market prices, which, in our view, does not represent value, and consequently, we have been declining such offers. In terms of Delta, we are putting our work on hold until COVID-19 comes down. And then, in terms of Oando Wings, I've already mentioned to you that this transaction is currently being considered by the Nigerian authorities.

Okay. Just in terms of capital allocation priorities. As you can see, the top right-hand block in terms of expanding, ZAR 1 billion is being invested here. It's ZAR 1.4 billion in total, is our commitment for the second half of 2020. But as you can see, the bulk of it sits in the area where you want to be investing your money, which is to receive a high income potential for growth as well as long-term value creation.

In terms of our response to COVID-19 from an investing strategically point of view. You'll note that our shift is now focused on after the crisis. And what does that mean for our tenants? We want to offer a better and more distinctive customer experience. And also, we need to ensure that our space offering keeps up with the evolving dynamics of our users' requirements, which we believe will change as a consequence of systemic changes in behavior.

Looking ahead, you'll note that for the second half of 2020, we will be focusing on how our space is presented. We'll also be expanding offshore through development activity. One would be to complete our Swanston Street student accommodation facility in Australia, as well as to continue expanding in the logistics area within Poland. And then lastly, protecting the value of our existing property assets is an ongoing focus from management to eliminate any downside risks from a NTAV point of view.

In terms of optimizing capital. It goes without saying that one needs to charter a new course because you cannot rely on playbooks from earlier crisis in this environment. So just in terms of key outcomes for 2020 half year. You'll note that our cost of debt has crept up by 30-odd basis points to a group rate of 6.1%. Our interest cover ratio remains at a healthy 3.7x. Moody's, unfortunately, did downgrade us in line with the sovereign credit rating downgrade. 88.7% of our interest rate exposure is hedged. Our LTV has increased to 44.2% and lastly, very importantly, is that we have very healthy liquidity levels, and all our near-term debt maturities have been already substantially refinanced.

Just moving on to the analysis of secured and unsecured debt to property assets. I just want to draw your attention to the fact that we've got ZAR 31.1 billion of our ZAR 89.2 billion property asset platform unsecured, and that supports unsecured debt of about ZAR 11.3 billion. So there's a very healthy headroom here for the unsecured lender, and the residual clearly can go towards some comfort for the secured lenders in the mix.

In terms of an update on lowering our LTV, which, as you know, is a strategic priority for us. COVID has disrupted our momentum. It goes without saying, but we remain confident that disposals in progress of ZAR 2.9 billion won't happen as quickly as originally envisaged, but still will happen. Our Australian assets will be sold, we are confident on that. And the exchange rate has been very kind to us, in that there's been about a 20% devaluation of the rand since we last reported. And that will give us a kick of about ZAR 300 million on what we originally indicated to you.

There's an earn-out fee that's due from our deal with Madison of about ZAR 600 million, which we'll earn in the months to come. And then, all the other areas of focus are already actioned in terms of limiting speculative capital expenditure, moratorium on acquisitions, the implementation of a dividend payout, and then very importantly, we had deferred our decision on the 2020 dividend to November. I think it goes without saying, in operating in an environment where there are too many unknowns. It is, for us, a prudent measure at this point in time to take.

In terms of our response to COVID-19 from an optimizing capital point of view. We want to note that although 73% of April billings were collected, May will probably be far more impacted by the lockdown as well as the credits that will be granted in terms of rental relief packages that are being negotiated as we speak.

Our liquidity headroom, on a stress basis, has indicated to us that we can absorb about 50% of our rental decline as well as no dividend income from offshore sources for the year to August 2020. We are very grateful to all the banks who have been very supportive, encouraging and pragmatic with regards to access to liquidity and covenant compliance for which we are truly grateful.

And then, we just want to note that, in terms of our debt capital markets, we've got ZAR 7.7 billion issued, of which only ZAR 834 million matures in the next 12 months, which from a liquidity point of view, in our view, is a very big green tick. Also to note that all our listed offshore counters are sufficiently capitalized to meet liquidity needs, and we are engaging with regulatory bodies on REIT listing requirements and tax implications going forward.

Looking just at our focus for the second half of 2020 from an optimizing capital point of view. Right-sizing our asset footprint will continue, yes, at a slower pace, but nonetheless, very, very top of mind as a focus area for us. We will bolster our liquidity, and we will also apply our dividend payout policy, when we make our decision around dividends come November 2020.

In terms of operating efficiently. We are focused on managing the variables under our control. Looking at the first half outcomes from an operating efficiently point of view, very, very happy to share with you that our active portfolio margin has been maintained at 83-odd percent. Our new lets have averaged an increase of 2.2%, once again, a very good outcome. Our active portfolio occupancy for the first half at 94%. Tenant retention overall at 95.7%. And then, lastly that I want to stress, nonrecurring income, almost fully phased out. And that is our desire going forward.

In terms of headlines. From a financial point of view for the first half, I think we do need to stress that financial year 2024, Redefine will be a tale of 2 halves. COVID will only really begin to impact on the second half from a domestic point of view. And then from an offshore point of view, we've already experienced the impact, in that you'll note that our headline -- or sorry, our half year distributable income per share is down about 32% to ZAR 0.3346. Almost all of it is, as a consequence of no international contribution through dividend income. As you can see that we've only recognized dividend income that has been physically received.

TNAV, I will have more color to, so I'm not going to dwell on that point too much, other than that there has been a decline of just under ZAR 0.60 per share, and we will cover that shortly. And then, just also important to note that local debts or finance cost has increased due to debt reorganization, as well as a number of developments that came on stream during this period.

In terms of the summary of contributors to growth in distributable income. You will see that the headwinds far outweigh the tailwinds. And if I can just summarize this very busy slide for you, you'll see that about -- of those headwinds of about ZAR 1,069,000,000, ZAR 661 million is in respect of dividends that weren't recognized from offshore sources, we didn't receive them.

You'll also note that there is an increase in funding cost domestically. That's added pressure. Also, lower income from effectively, Delta, through the Cornwall Crescent line that wasn't recognized. And then you'll see that there are a number of other smaller numbers there that make up the balance.

In terms of our net asset value per share. You'll note that our net asset value has decreased from an intangible point of view and a goodwill point of view by just over ZAR 1, that's ZAR 1.04 to be precise. The reason for that write-down is that we don't see any significant catalysts for economic improvement, setting COVID aside for a minute, that warrants the support for that goodwill figure and that intangible figure on our balance sheet. So we took the decision to write that off, as you can see in cents per share, it's ZAR 1.035 per share. The other big pressure points would be impairments that we took on our offshore exposures, which is roughly about ZAR 0.13-odd per share. And then, we also have the revaluation of the South African property portfolio that resulted in a write-down of about ZAR 0.32 per share.

Our response to COVID-19 from an operating efficiently point of view, has had probably seen the bulk of our efforts during the initial phase of the lockdown, in that there has been and there still is a significant amount of work going into green rental relief packages, with a specific emphasis on assisting and supporting our SMMEs. We have structured the rental relief according to categories, and this is handled on a case-by-case basis.

A one-size-fits-all approach simply can't be the case in this regard. Through the property industry group, we are still negotiating with a number of large and medium retailers. As noted before, no dividend income from offshore entities, with the exception of our European logistics platform, is anticipated for the remainder of 2020. Nonessential costs have been frozen, and I think it goes without saying that there are extra costs that we need to absorb from COVID, but we believe that we have sufficient savings that will offset these extra costs.

Okay. Just looking at our focus for the second half. Clearly, tenant support has to continue. Our utilities management and our discretionary expenditure, we will look at every line item to make sure that we are acting as responsibly as possible to mitigate any impact that we can from a COVID point of view. And then, we'll be looking to unlock procurement and operational expenditure efficiencies as well.

So from a staffing point of view, engaging talent. Through this lockdown process, our values are the glue that holds our people together, even though we are apart. And just in terms of outcomes, I'm happy to report that we've once again been certified as a top employer. Our employee engagement score of 87% beats the global as well as local benchmarks. Our rem policy, thank you very much, was approved with overwhelming support. Just over 8,600 hours of training and development in the first half of 2020 occurred, and transformation is in progress across all levels within Redefine.

In terms of our response to COVID-19. We've got a task team that's been working tirelessly and meeting more than once-a-day to ensure that our business continuity remains as seamless as possible. And I'm happy to report that it has done so and will continue to do so. Our business continuity plans have enabled us to minimize any disruptive activities as a consequence of COVID.

And our staff communication plan was launched using our values as the driver and emphasizing our purpose. I just want to illustrate the emphasis on values by a video clip, which I'm going to now share with you. But before I do so, I just want to mention to you that our focus now has shifted to planning for the eventual return of normalcy. We're not too sure when that will be, but we are readying ourselves for that day. So with that, I'm going to now play you a video clip.

(presentation)

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [2]

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Okay. So just looking at the second half 2020 focus from an engaging talent point of view. Our focus will be on instilling a culture of innovation and learning. There are many, many practices that we're going to have to unlearn in a post-COVID environment. Accelerating transformation is very high in our agenda. And our organizational structure will similarly be refreshed to meet the challenges that await us in the new normal.

Just in terms of our outlook. We believe that one needs to have a fluid game plan to make decisions and to adapt to new rules that will emerge. So we've just taken the word COVID, and we've just created an opportunity as opposed to a crisis. I just want to remind everybody that COVID is a humanitarian crisis, not a financial one. So for us: C stands for Connect; O stands for others; V for values, and thank you for watching the video; R for innovation; and D for disruption.

We believe that by connecting, having a focus on others, living our values no matter the situation, leveraging our purpose as a tool to simulate innovation, and to focus on what matters most, to deliver on our strategic objectives, will not only get us through the COVID situation, but will position us for growth going forward. Unfortunately, operating in an environment where the evolving unknowns outweigh the knowns, we are not in a position to provide you with any market guidance as regards to distributable income per share.

With that, thank you very much for indulging me this afternoon. We are now open to questions. I'm happy to tell you that I'm not alone. I do have my colleagues here, Leon Kok, as well as David Rice. And if you don't mind, if the questions are a little bit too intense or difficult for me, I am going to hand over to one of my colleagues. You might not see them, but I can assure you they are sitting right here next to me. So I'll read out the questions, and then I'll decide who is going to be the one to answer.

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Questions and Answers

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [1]

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So the first question comes from [Sebastian Gano]. And his question is, "What will Redefine be doing to retain tenants in the office and retail sectors? Will there still be value in future for investors looking for strong dividend yield?" I'm going to ask David to answer that question for us today.

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David Huw Rice, Redefine Properties Limited - COO [2]

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Good afternoon. So we will be doing pretty much what we have done with regards to the business. Obviously, tenant retention is the primary focus from an operational perspective. Yes, there will be difficult negotiations going forward. But -- and we're going through discussions with all tenants, industrial tenants as well at this point in time. But we expect lower tenant retention may drop off a bit. We don't expect for that to be a large drop off. Will there still be value in the future for investors? Yes, certainly.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [3]

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Okay. Thank you, David. I'll move on to the next question from Francois Du Toit from Renaissance Capital. His question is, "What strategy" -- sorry, the question has jumped. Sorry. "The renewal success rate deteriorated significantly in retail from 72% at FY '19 to 52% at H1 '20. How is this measure calculated?" And then second part to the question, "What happened to the 48% of unsuccessful renewals?" I'm going to ask Leon to answer that, please.

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Leon C. Kok, Redefine Properties Limited - Financial Director & Executive Director [4]

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So firstly, the way this measure is calculated, it takes all those leases that come up for renewal during the 6 months, and is measured on the success pertaining to those leases itself. Now possibly, and I think David always makes the point, if one look at our stats measured on a 6-month period, it could be skewed either way by a renewal or unsuccessful renewal. So the fact that during the first 6 months, there may have been a smaller percentage that came up for renewal, and therefore, a potential nonrenewal would have skewed that percentage.

But typically, what would happen with the portion of leases is not renewed, either those tenants would have chosen to vacate or they would have chosen to make use of smaller space. So we do not take into account if a tenant scales down that, that forms part of a successful renewal. So -- or potentially, could have reverted to a monthly lease, because there is still some haggling over certain aspects of the lease. So those leases are similarly not taken to into account.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [5]

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Thank you, Leon. Just moving on. The next question is from E.M. (inaudible). And his question is, "What strategy or method are you using to collect rentals from tenants who are or have been closed during the lockdown? Is the strategy used offshore in Poland, U.K. and Australia?"

So I'll answer the second part of the question, and then I'll ask David to answer the first part. But just to stress, that in South Africa, unfortunately, we don't have any government intervention at this point in time as to guide or even to provide some kind of channel for retailers or -- sorry, tenants as well as landlords to get together in terms of a collaboration around some sort of guide down.

I know, for example, in Poland, that there's been regulated as to how much you can charge tenants and what tenants will do in return. There is a code of conduct that's been drafted and adopted in Australia. And I think, to a limited extent, in the U.K. So we can't, unfortunately, utilize the learnings from offshore yet in South Africa, although we are attempting through negotiation and collaboration with tenants to achieve a similar objective.

David will touch on your first question which is, "What strategy or method are you using to collect rentals from tenants who have been closed during the lockdown?"

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David Huw Rice, Redefine Properties Limited - COO [6]

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So firstly, it's important to note that we collected in excess of 70% for the April billings. What are we doing? We're talking to tenants directly. We have various arrangements that we've made in place with them. We, in general terms, have come to agreement. The areas that we're concerned about, obviously, are the service areas, restaurants, takeaways, gyms, cinemas, et cetera. And those discussions are taking longer than what we had initially hoped.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [7]

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Thank you, David. Moving on, from [Ali Arbie], he's from a company called GGI. His question is, "What is the latest NAV stats as well as what is the plan with regards to the debt burden?" That question, I'm going to hand over to Leon.

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Leon C. Kok, Redefine Properties Limited - Financial Director & Executive Director [8]

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I do think Andrew has dealt with it, so I can refer you to Slide 32 in the presentation. So our total net asset value, which include intangibles, reduced from ZAR 10.47 to ZAR 8.84. On the tangible net asset value, the net asset value reduced from ZAR 9.43 to ZAR 8.84. Now the biggest reason for that decline in the net asset value, as we mentioned during the presentation, was our goodwill and intangible assets, roughly ZAR 5.6 billion, has been fully impaired.

The upshot of that, of course, is that our NAV now fully represents tangible assets. As far as what we will do about the debt burden, I assume the question specifically asked to our loan-to-value ratio, which sits at 44.2% as of end of February. We do acknowledge that, that certainly is not at the level that we want it to be, and the reduction thereof remains our key strategic priority. And we've given a long list of initiatives that will be undertaken.

The most significant of those will be disposal of our student accommodation in Australia, which in our latest estimate, particularly where the rand is currently trading to the Australian dollar, should yield in excess of ZAR 4.3 billion. And then similarly, there's a number of other transactions that have been earmarked. These transactions, clearly, yes, there's an element of de-risk involved with regards to the South African business, but the majority to those transactions, we are confident will be executed, and it will set us on a path to meaningfully reduce our loan-to-value.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [9]

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Thank you, Leon. All right. The next question is from Nesi Chetty from Standard. His question is, "How have the latest property industry group proposals on rentals been going? What is the latest update with regard to clothing retailers, specifically on rental payments for April and May? And will we need government to intervene?"

So Nesi, there was communication in the press as regards to the property industry group position. I just want to stress that the difference in rental discounts that have been offered and what has been demanded is actually very close. There's a difference of 10% between the 2 parties. The bigger issue is on rate and taxes.

The property industry group clearly is a conduit for rates and taxes to local government. We don't make any profit from collecting rates and taxes, and this is the area of contention in -- at the retail clothing group, do not want to pay for rates and taxes. So will there be government intervention? Maybe. We think there could be because there is clearly vested interest from government to assist in this regard.

Another question from Peter Cromberge from Mergermarket. He says, "You mentioned that you have received opportunistic approaches for your shareholding in RDI, which have been declined. At what sort of price point is Redefine likely to consider so?"

Well, I think, Peter, we're not in the business of hanging for sale signs on our assets. What we are saying is if there was an offer that was realistic and capable of conclusion, clearly, in this environment, it would be very responsible of us to consider such a notion. However, I must stress, pricing at the ruling price of RDI is clearly not a price that would be attractive for us.

Okay. Moving on to (inaudible) [Mulwasi] from Ashburton. He says, "Please elaborate on the following: what rental relief programs have you given to tenants so far? In particular, the lives of TFG, Pepco and Woolies, who have publicly refused to pay any rent?" I think just on that point, we've already dealt with it in terms of Nessi's question.

"Provide insight into what level of impact this relief program will have on rental receipts during at '20 March, April and May, but certainly during May. In a time of COVID-19, there will be a likely reduction in more visits and demand for office space as people work from home becomes a new normal, and a possible shift to online sales as people shy away from malls to avoid contracting the disease. How do you see these factors affecting your business?" David, would you attempt to answer that for me, please?

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David Huw Rice, Redefine Properties Limited - COO [10]

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Offices first. I think that it's likely that people will continue to work from home. However, I think that most people will probably want to come back and work from an office. So, I think what you're going to find is, in the short-term, there may be a move away from co-sharing accommodation. As you know, over time, co-sharing has worked out at about 1 person per 5 square meters. We think that, that will move out. However, after that, we think that it's likely that existing tenants will require more space, given the impact of social distancing. So it really is in a sense of wait-and-see situation, but we think that it could go either way, and we think that there will be benefit in one form or another.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [11]

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Thank you, David. Okay. Moving on to Rob Nagel from Ashburton Investments. He asks, "Please give us an update on discussions with National Treasury Strike size with regard to taxation of nondistributed income." I'll let Leon answer that.

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Leon C. Kok, Redefine Properties Limited - Financial Director & Executive Director [12]

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As far as the approach to National Treasury or the size of concerned, this was not a Redefine initiative. It is done under the -- was business of the property industry group, is more specifically the real estate -- or the REIT Association. Thus far, unfortunately, National Treasury has not yet responded to the request and a letter of clarity. And they have acknowledged receipt thereof, but unfortunately, there's no further update on that.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [13]

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Thank you, Leon. Just moving on to Daniel King from [Avior]. His question is, "What proportion of office and industrial tenants have asked for rental relief?" David, will you respond to that, please?

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David Huw Rice, Redefine Properties Limited - COO [14]

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I can't give you an exact percentage of what it is, but we've had discussions with probably half of the tenants, not necessarily because of relief, but our intention is to work through the entire portfolio and talk to every single tenant, if possible. But an actual percentage, I can't give you.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [15]

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Thank you. Okay. Moving on to Keith McLachlan from AlphaWealth. His question is, "If you refer to Slide 26, down the bottom right-hand side, you list sensitivities to various events and their impact on Redefine's LTV. You also note that a key covenant is an LTV less than 50%. All the events listed appear in varying degrees are probable to highly certain. And thus, if I add up all the sensitivities adjustments to LTV, it adds plus 10.4% to your 44.2% LTV, and that implies that it is likely your breach this covenant. What are your comments here?" And I'll let Leon address this point specifically, please?

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Leon C. Kok, Redefine Properties Limited - Financial Director & Executive Director [16]

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For starts, we've only listed the sensitivity analysis to negative events. What is not taken into account, which I suggest also you do do, is to take into account the impacts of those risk-mitigating LTV actions that we similarly list in the presentation on the page before the slide you specifically referenced to. So we've demonstrated that slide just to indicate, these are all the factors that keeps us awake at night and that we worry about, and that's similarly, why we have embarked on this strategic initiative to reduce LTV.

And if you can recall during our pre-close, we certainly indicated that we, at the time, expected to bring that LTV significantly down with the various disposal transaction that we have earmarked, and that it allowed us some headroom to absorb negative headwinds as we listed in this slide. So if that scenario does happen, that all of those factors happen at the same time, it will be mitigated with the LTV-lowering initiatives that we've embarked on.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [17]

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Thank you, Leon. Okay. So the next question is from Ross Krige from JPMorgan. It's a pleasure, Ross. Thank you for thanking us for the presentation. Your 3 questions. I think some may have been answered already, but we will see if we need to add more color as we go. I'm going to volunteer, so to say, is aware of it, Leon in advance.

The first is, "Would you be able to give a rough estimate of the impact of rental relief on rental income in May? And how much of the loss is deferrals versus cuts?" Cuts, I would imagine, is discounts.

"How will revenue recognition account for deferrals included in revenue? Does support and pragmatism from banks suggest that covenants will not be enforced? And additional credit facilities are likely to be available, if the current stage of the lockdown is extended post-August?" Leon Kok?

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Leon C. Kok, Redefine Properties Limited - Financial Director & Executive Director [18]

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An answer to your first question about the rough estimate of the impacts with regards to May. I certainly wouldn't even want to offer any percentage at this point. Simply because as we state, that even though the collections for April was quite encouraging, we do acknowledge that there will be some retrospective application of credits to that amount. So for me to, at this point, even attempt to do an estimate would be incorrect, and I don't want to do that.

Secondly, the revenue recognition. You raised quite an interesting point here, and I wouldn't suggest that we talk about IFRS accounting for this treatment of a deferred revenue. My personal preference and my personal suggestion would be that we would recognize that revenue on a cash received-basis only. In my view, liquidity and cash at the moment is of paramount importance, and similarly should reflect in your revenue recognition principles, particularly in so far as accounting for

distributable income or calculating distributable income.

As far as the point is made around the support and pragmatism from banks, I'm not suggesting that I'm committing our banks to any leniency. All we're saying is that all the conversations that we've had on a bilateral basis, between redefined and individual banks, as well as a collective from the property industry group has been very supportive, and the banks indicated that they're willing to be pragmatic in their approach to some of these issues that we've listed.

By no means that any banks gone on record to confirm that they will not enforce covenants, or they suggesting, and thus far, the message that we've received back is that they are fully supportive of the government's initiatives around stemming the pandemic. And similarly, they understand the role they play within the broader economy of South Africa.

And they similarly acknowledge that the real estate sector is a large contributor to that aspect, and that we'll continue to be supportive and assist through whatever means they've got possible to be as pragmatic and commercially minded as possible, in so far as those issues are concerned.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [19]

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Thank you, Leon. Moving on to [Nick Kricker] from Signal AM. His question is, "What do you expect borrowing cost to do considering the short-term interest rates are down, while long-term rates have increased? Would Redefine consider using shorter-term funding? Can you split the May and April collection rates between retail, office and industrial? Thirdly, do you expect the large clothing retailers to pay the full rent now that they're allowed to [pay] trade? And how did the clothing stores perform this weekend following the lifting of restriction now?"

Nick, you asked a lot of questions here that cover David, Leon and even I can add a couple of points here as well.

So let me just quickly deal with number three. I'll let David and Leon decide amongst each other there, which ones they would answer. But just in terms of the large clothing retailers. What we did agree in principle with them was that, whatever discounting arrangement was settled on, it would only apply for the period of the lockdown that they were affected. So if they were to resume trade on the 1st of May, the normal lease would then prevail, and they would need to then pay their full rental for the month of May. So that's how it would work in principle.

In terms of your other questions, I'll let Leon and David decide who answers the various parts.

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Leon C. Kok, Redefine Properties Limited - Financial Director & Executive Director [20]

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Okay. In terms of your first question, what do you expect borrowing costs to do considering the short-term interest rates are down, while longer rates have increased? The immediate impacts of the lowering of interest rates certainly wouldn't have a profound impact on our expenses. As you would have noticed in our presentation, 94% of our South African debt book is hedged, which so through conventional interest rate swaps.

So it's only 6%, which is subject to variable interest rates. I suppose that in this climate, we would argue that we've been too conservative. However, that has been our stated mandate to be as conservative as possible. Unfortunately, in the short term, that will come as a cost. So I don't foresee this in the short to medium-term to have a meaningful impact on our cost of borrowings.

The second question, can you split April and May collections between the 3 sectors? The 72% or 73% collections quoted for April, is quite right. It's an average amongst the 3 sectors. It is skewed in favor of office and industrial. Retail was lower than that. Unfortunately, I wouldn't be able to give you an exact split between that. And then, the last point about clothing stores, I'll hand over to David.

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David Huw Rice, Redefine Properties Limited - COO [21]

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So it's a bit early at this stage to give you some idea as to numbers or percentages. The impression I have from photographs that I would constantly send over the weekend, so I was surprised at what appeared to be in the numbers of people going through the shopping center and the queues outside shops. So I anticipate better than perhaps people thought.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [22]

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Thank you, David. Thank you, Leon. Just the last question that I've got is from Trevor Jacobs. He's from Brickfield Group. And his question is, "How much of the May rental roll has been collected?"

Well, Trevor, we only really start seeing collections start rolling in from about the 7th, and then it hits a peak towards the end of the month. So unfortunately, your question is a week or 2 premature. So we can't answer that.

Moving on, we have a lot of questions here today. The next one is from Gershwin Long from Vunani Fund Managers. His focus is on arrears. He says, "Arrears have increased circa 50% since FY '19, and now represents 15% of gross monthly rentals." His question is, "What initiatives are in place to reduce this? Can you provide a sense of sectorial contribution to arrears? Mr. Leon Kok, will you answer please?

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Leon C. Kok, Redefine Properties Limited - Financial Director & Executive Director [23]

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As far as the -- what we can do to collect it, clearly, it will just be an ongoing effort through our credit collections team to make sure that we do everything in our power, be it billing queries and such like is resolved as quickly as possible.

We typically experienced the February levels of arrears to be higher than what we report typically in August, simply given the time of the year. Clearly, the Christmas and holiday break in South Africa typically does push out that level. It is not concentrated to a specific sector. It's across the board. Yes, government, for instance, is also in there, and typically, we experienced their level of outstandings, particularly in February as higher than what we normally experienced at August, for instance, given the kind of cycle where they're at towards their own financial period.

And it will just be through ongoing effort and initiative through our collections team to collect the money. We don't see that necessarily as a -- it also comes off a low base. The difference we're talking about roughly about ZAR 40 million increase in the net arrears figure. So we don't see that as a [3 C3] implication that this is a figure that we will continue to grow and increase. It just happens to be at a point in time.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [24]

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Okay. Just moving on, Trevor Jacobs, again. I think I'm not going to read out your question again in part because the question has really been asked. But your second question is a new one. And that is, "What is the financial impact of your cross currency swaps?" Leon, can you answer that, please?

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Leon C. Kok, Redefine Properties Limited - Financial Director & Executive Director [25]

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I suppose it probably be better to answer that question in the visual engagement. Our cross-currency swaps is fully disclosed in our full year financial statements, which is available on our website. Similarly, we've attempted to be far more granular, in terms of how we calculate our loan-to-value. So the way we typically look at cross-currency swaps is that we account for when we look at it on a practical basis, that we treat it similar to what we would have done on our currency loan. So the impact of the cross-currency swaps will have been increased since the prior period, simply because we have also expanded elements within our logistics platform, and our equity contribution there would have been funded. And typically, we prefer making use of cross-currency swaps.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [26]

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Thank you. Thank you, Leon. Okay. Just moving on to an old name. We haven't seen this name for a long, long time. So it's good to hear from you, Vincent. Vincent Anthonyrajah from Differential Capital asks, "I hope you guys are well. Could you please comment on collection rates in April by sector?"

I think, Vincent, we've already answered that in parts. "What is your sense of the ability to access DCM in the current environment? And will banks step up to assist, if there are liquidity challenges here?" I'll let Leon deal with that second question of yours, Vincent, which is appropriate around the DCM markets and the like.

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Leon C. Kok, Redefine Properties Limited - Financial Director & Executive Director [27]

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Look, I suppose, as everybody would have noticed, there has been limited to no activity within the auction space in debt capital markets. So I think it's fair to suggest that liquidity has somewhat dried up in the debt capital market space. However, we do believe that private placements would still potentially be an avenue to source debt from.

In terms of our own liquidity analysis, and that's why we specifically made that point about our maturities in the next 12 months, we believe there's limited exposure to Redefine specifically. Clearly, as far, I'm not yet to speak on behalf of the banks. But clearly, it depends again on the individual relationships and on bilateral basis, what you can negotiate in terms of variability or appetite to refinance maturing DCM debt.

But as I said before, thus far, the communication and the discussions has been pragmatic. And so far, Redefine is in good standing with all its funders.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [28]

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Thank you. Thank you, Leon. Okay. The next question is from Mike

[Miyel]. His question is, "Do you see a continuing correlation between property yields and asset bond yields?"

I think, Mike, it's really a question for people sitting on the other side of the table from us, such as yourselves, that can perhaps answer this question. The way we see it is that yields are representative of risk. Now clearly, where property as an asset class sits from a risk perspective, would be in a very different class to perhaps South African government bonds on a risk-adjusted basis.

So I think the answer lies therein, what the perception of risk is, and that will clearly dominate, how the 2 yields will correlate going forward.

Okay. Just moving on, Trevor Jacobs from Brickfield Group again. "How much reduction in rental are you having to offer tenants to renew leases across each segment?" I'll let David speak about this for you, Trevor.

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David Huw Rice, Redefine Properties Limited - COO [29]

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(inaudible) bear with me, because I think these questions are asked, and we haven't done as much renewal work, if you like -- as one would like to give you a proper overview. But if you look at the report, it shows you what our rent reduction rate has been per sector over the 6 months. That will indicate to you where -- what those percentages are. But in general terms, they are a lot less than what I think most of the market would have anticipated.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [30]

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Great. Thanks, thanks, David. Okay. Here's another question from Trevor. Clearly, Trevor, you're having a kind of a lonely afternoon there. Your question is, "When do you expect EPP to release its declared dividend?"

Trevor, as you know, EPP is a listed security. Its Board did release, on a SENS announcement, that they would consider the dividend and the payment thereof in June. Now clearly, we would need to wait for that Board to deliberate and then to inform the market as to its decision. So I'm, unfortunately, unable to answer your question.

Another question from Vincent Anthonyrajah. "Could you comment on the prospects for municipal rates given the weakness in valuations in the SA portfolio?"

Now Vincent, before COVID even was a twinkle in anyone's eye, the rates valuations bore no resemblance to what was happening in the marketplace for some time already. And my summation is that nothing here really is going to change at this point in time. Because if the values do fall, I would imagine that the rate in the rand would compensate by way of adjustment. So the number or the amount that you pay, I think, is going to remain constant.

Michelle G. asks, "What in your view is the probability that the 2-year dispensation will be granted, given the 75% payout level to REIT status?" So Leon, do you want to answer that?

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Leon C. Kok, Redefine Properties Limited - Financial Director & Executive Director [31]

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Look, I think in the first instance, we need to distinguish between REIT listing requirements; and secondly, the tax legislation. I'm not even going to try and offer a view on what the probability is, particularly as far as Treasury is concerned, in terms of granting the relief sought for the 2-year period. As far as the 75% payout level is concerned, again, I think it's a very technical question, and one needs to very closely look at what the JSE requirements is -- listing requirements are in that space.

In the first instance, one must understand that in order to declare dividends, the company, Redefine or REITS, as do all other companies operating under the South African Companies Act, need to, in the first instance fulfull (sic) [fullfill], and comply with the requirements of the South African Companies Act. And that Act is quite clear in that, when a Board decides on declaring a dividend, it similarly need to prepare or be satisfied that the company will continue to be solvent and liquid for a period of 12 months after payment dates.

Now if you are unable to give a view or a certain view on that, then I think the company is clear in terms of what you need to do and not need to do. Secondary to that would then be your listing requirements obligations, and ultimately, one needs to understand the tax consequences of any decision to retain any distributable income that happens to be taxable.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [32]

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Okay. Thanks for that, Leon. Just moving on. From Trevor Jacobs once again, "How much of the monthly rental is due from leisure, entertainment and restaurants?"

Trevor, I'm going to save everyone a lot of time and refer you to Slide 33. At the bottom of that slide, we give you a gross monthly rental breakdown by category of retail, office and industrial tenant-buyer type. I hope that answers your question.

Okay. Then moving on. [Catherine Robinson]. "Could you please elaborate on your collections? Is there substantial difference in behavior between larger corporates as opposed to the smaller tenants? Could you comment in general on the health of the smaller tenants?"

I just want to make a general observation, Catherine, and that is that, in all our negotiations and discussions, the most productive that we've had has actually been with the smaller tenants, for those who are really feeling the pinch and are happy to collaborate and work on packages that make sense for everybody.

So we've really had a very, very strong alignment of Ubuntu with the smaller guys. In terms of their health, it's very difficult for us to comment on how they are doing at this point in time, because it's still early days.

In terms of the liquidity pressures, I would suggest that May, June, July are going to be the difficult months ahead. And this question, unfortunately, is a little bit too early for us to really comment with any degree of intelligence on it at this point in time.

Moving on to Ridwaan Loonat from Nedbank. "What was your rental collection in March?"

March? Should have been April, Ridwaan, but anyway. "And what update can you provide with dealing with large retailers?" I think we've answered this, Ridwaan. If you still need some further clarity, we can do it in our one-on-ones.

[Michael Flex] from Apollo Fund Management. His question is, "How confident are you of the deal success for the sale of the OZ student portfolio?"

Mike, the answer is we are very confident. Yes, it's taking longer than we would like. We are targeting to have a signed agreement mid- to late-June this year. And this transaction, we believe, will go ahead. We are dealing with credible buyers in that market.

Another question from Trevor Jacobs. "What is the update with relaxation of REIT, REIT withholdings, et cetera?" I think this has already been answered, Trevor.

Rob (inaudible). "Do you foresee any negative changes to valuation assumptions going forward? And if so, what do you think will be the most material one?"

Now this is a question that I'm going to leave for Leon. Clearly, it's something that exercises our mind on an ongoing basis, Rob.

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Leon C. Kok, Redefine Properties Limited - Financial Director & Executive Director [33]

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The fact that property valuations is typically derived at doing a discounted cash flow on future expected cash generation from a building, and the most significant element thereof, is derived from the exit capitalization rates that you value your terminal years cash flow on. In my view, your exit cap rates will have a major bearing on this.

Obviously, you need to have a different view potentially in the current limit on at what rates you're going to discount these assumed cash flows, clearly, in a more volatile environment. It would suggest that, that could also potentially move out. And I think your revenue assumptions needs to be far more prudent potentially.

The view that one would have typically taken on how long it will take to full vacant space. Second, the view one must take in terms of rental reversions could potentially also be influenced. So I think there's a myriad of factors that plays into this. But again, one must understand that a property value is not necessarily reflective of the current environment. The property's value is reflective of its permanent value.

So one also needs to -- we'll see the sort of short-term impact of what the COVID pandemic, in particular, the lockdown would have on property cash flow. But more importantly, one needs to start forming a view on what will be the more enduring and lasting and sustainable cash flow generation, which hopefully, we, through the initial undertaken by the government to contain the virus; and secondly, hopefully, at some of the economic stimulus that will be introduced will have a meaningful impact. And that property values over the medium-term should recover to more what we were accustomed to before the pandemic.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [34]

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Great. Okay. Just moving on, once again, from Trevor Jacobs. "Is WeWork paying your rental?" I'll let David answer that question further.

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David Huw Rice, Redefine Properties Limited - COO [35]

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(inaudible) today, but we're also receiving profit share in terms of our arrangements.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [36]

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Thank you very much. Okay, from [Sabila Adele] from [Alwani]. "Please give us a sense of collections by sector." I think Sabila, we've answered that.

"How likely is the risk of spill over to other sectors from the retail negotiations?" I think it goes without saying, Sabila, that one has to be consistent. And if you are being overly generous to one, it would go without saying that you need to apply that consistently. So clearly, whatever negotiations are settled with certain retailers will have a bearing on other negotiations as well.

Charles Boles from Titanium Capital asks, "With service operators in the retail space, there seems to be a demand to pay a percentage of revenue as rent, especially as turnover is likely to recover slowly. How would Redefine consider this?"

I think, Charles, for us, there's a number of issues with moving to a percentage of turnover for rental. One is the reliability of measuring the turnover. The other is online sales could potentially affect turnover within the store. We also know that cash sales aren't always reported through the tools as we would like them to be. And for that reason -- or reasons, we don't believe that moving to a turnover model would serve us in the longer term.

Moving on to [Bandi Zander] from Standard Bank. I've already answered your first question, Bandi. [Mike Flex] asked the same question, which is the likely disposal of OZ student accommodation. Oando Wings is done. In terms of LTV impact, our Oando Wings is not LTV impact. But certainly, the student accommodation in Australia would have at least a 2% to 2.5% increase, if you include the sale of Cromwell in that mix. In terms of any comments on Macsteel, if they're paying rent, the answer is they are. They have paid up-to-date, and that is okay.

In terms of [Nicholas Lyle's] question, "Have you set yourselves a hard deadline as a Board to reduce debt? If so, can you communicate it? And also, the level at which we believe your debt reduction would be sufficient in terms of a sustainable LTV?"

I think Nicholas, for us, our comfort zone has always been 35% to 40%. Now if you ever look through our results presentation, we did mention 2 points in our update to LTV. The one was the sale of the domestic assets, totaling ZAR 2.3 billion, plus a further ZAR 4.3 billion arising from the sale of assets in Australia.

If one looks at those initiatives, it should reduce your LTV by 4.3-odd percent. So that would mean that we can get ourselves back to around 40%, if not below, percent, in the medium term. We were aiming to have it done by August, but I just need to stress that because of the whole COVID environment, things have slowed up in terms of concluding transactions. It's not to say that they're not going to happen, it just means they're taking a lot longer than initially envisaged.

[Nick Kricker] asks, "Is this (inaudible) to use rental deposits to make up lost revenue? Is this material? And how has this been factored into the reported 70%?" Well, Nick, just to tell you, we're sitting with someone's deposit, it is not income in our hands. It's cash that we've received. We are not appropriating deposits. So you can be rest assured that the 70% collected is actually income that was collected, that was cash-banked, unrelated to any rental deposit. So it's a true number.

And then I've got a question from Lawrence (inaudible) from Momentum. His question is, "Does the increase in the cost of debt mean some cross currencies were reduced? And what caused the increase?" I'll let Leon answer that for you.

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Leon C. Kok, Redefine Properties Limited - Financial Director & Executive Director [37]

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(inaudible) actual cost of debt, the South African debt cost itself has gone down. But the relative contribution of SA debt versus FX debt has increased. And that's principally driven by the unconsolidating, if that's a word, of ELI, the fact that we no longer control that entity. And that we now only proportionately consolidate ELI has caused that disproportional growth in South African debt versus OSHA debt. So it's a larger contribution to the overall cost of debt. But in terms of the actual rand on SENS, yes, there has been a slight reduction in cross-currency swaps.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [38]

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Thank you, Leon. Okay. So moving on to [Mohamad Ali] from Urban Group. His question is, "What is your view on the current share price of Redefine?"

Well [Mohamad], it goes without saying that the share price was determined by market forces. I would suggest that the current share price weakness is not reflective of value in Redefine, and my reference point would be our net asset value, which is a tangible number. Yes, you can take a view as to what impact perhaps COVID has on that. You can take quite a dire view on our NAV, and I'm sure you will still get to a number far in excess of our current share price.

A question from Trevor Jacobs. Let's see, okay, Trevor. That's not a question, but actually a thank you, and I appreciate your remarks. And I'll just read it for everybody's benefit.

It is, "Andrew and team, thanks for the presentation, most appreciated. Not a lonely afternoon." I'm pleased to hear that, Trevor. "Just trying to get some fairly basic info. Best of luck to you guys."

Trevor if I can suggest, reach out to our Investor Relations people, and they will set you up with a one-on-one engagement with us, where we can bottom out all those detailed issues you may have with Redefine, which we'd love to elaborate on with you.

(inaudible) from Anchor Stock Brokers says, "Since the full year results in August, I calculate a circa ZAR 1.7 billion write-down on the SA portfolio, which equates roughly to 2% to 3%. Does this include a provision for the potential impact of COVID? Or was it essentially due to the weakening property fundamentals prior to COVID?"

Now I think, [Vana] , if you work through our results booklet, you'll see that we've devoted a number of pages arguing why the potential impact of COVID is not relevant to the numbers as at the 29th of February 2020. So I think that should answer your question.

From [Rafael Eliasof], "Why was there such a long delay in receiving the Madison proceeds? On the 10th of March, a significant portion of them were -- was received. How much is this and why is the total not being received?"

Now I think, Rafael, everything was as per the agreement. What you need to understand is that there's 2 components to -- or actually, 3 components to this transaction. Madison committed ZAR 150 million of equity to the logistics platform, and roughly ZAR 58 million thereof was in respect of the equity they acquired. And that is the proceeds that flowed on the 10th of March.

There's another amount of approximately EUR 33 million, which will be earned as we develop the projects in progress. There is an earn-out fee. And the balance, which is roughly EUR 66 million, is a commitment to fund further projects in the future. So everything on time, and as we reported previously, Rafael.

[Razin Diner] from Douglas & Collins asks, "Please can you comment on your expectations on the share price "

I'd love to, [Razin], comment on the expectations. Clearly, we feel that it's on the lower end of where we would like it to be. But as I said earlier, the market will decide, and we respect the market's view. All we can do is make sure, we are as transparent as possible, and that we are focused on what matters most to ensure that we achieve our strategic priorities.

I've got a question from (inaudible) [Ahmed] from (inaudible), "How our debt interest rate cover ratio covenants calculated? Is it based on cash flow or earnings? And how were tenants withholding rental feed into this? Also, how often is it tested?" I'm going to ask Leon to answer this one.

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Leon C. Kok, Redefine Properties Limited - Financial Director & Executive Director [39]

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So it is calculated based on earnings, but cash earnings, for instance, it's not -- but it doesn't include equity accounted earnings. Only includes the cash element of the dividends. As far as the local African earnings are concerned, again, I think it touches on a question that was raised earlier on what basis will we account for this. I don't want to necessarily muddy the waters with our risk considerations as such like, but I can assure you, my own view is that, given the volatility and uncertainty in the market, we would prefer to account for that on a cash received-basis only. Now obviously, we will also similarly let it feed into our calculation of the interest cover ratio. And it's calculated every 6 months at our reporting period, February and August.

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Andrew Joseph König, Redefine Properties Limited - CEO & Executive Director [40]

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Great. Okay. I think I'm on my last question now, and this is from [Nick Kricker] from Signal AM, and his question is, "The market hates uncertainty, and this is hurting the share price. Do Redefine intend to provide more frequent operational guidance, especially on collection rates?"

I think, Nick, as we said earlier on, from a grain reputation point of view, the need to communicate and to be as transparent as possible is so important in this environment. And yes, as and when we do have updates that are meaningful outside of the reporting periods, as you know, we generally report to the market quarterly in that we do pre-close engagements as well as the interim and final results engagements.

So if there is meaningful updates, i.e., a large transaction or we are seeing that we are collecting either worse or better than we thought we would, we will most certainly keep you updated.

And with that, I'm going to thank you very much for this afternoon. I thank you for your questions. We thoroughly enjoy the engagement. And we look forward to the investor one-on-ones over the course of the next 4 or 5 days.

If any of you still feel that you need either more time or you've been left off the list, please reach out to us. We are more than happy to spend time with you, because when you understand our business as well as we do, we believe that you will rate us at the level that we believe we should be.

So thank you for that, and have a fantastic afternoon forward. All I can do is wish you strength, wish you safety as well as health as we end our way out of the lockdown process to normalcy, whenever that will be. Let's hope it's soon. Cheers.