Good morning everyone, and welcome to Derwent London's 2025 full-year results presentation. Before moving on to results, you will have seen another release this morning, and a strong sale of a building in Whitfield Street, more to follow.

Now, the order of today's presentation is slightly different. As well as me, you will be hearing from Emily and Damian, while Nigel is not on the stage, he is, of course, here for some Q&A.

Now, turning to slide two. The group's business model and portfolio provide strong foundations on which to build on an exciting and successful future.

Our portfolio is strategically positioned with 75% in the West End, and 81% within a 10-minute walk of an Elizabeth line station. These are London's best-performing areas.

It is high quality, with significant embedded reversionary potential, a diverse tenant base, and robust WAULT. Flexibility has always been fundamental to our approach.

We look to continually adapt our portfolio to evolving market conditions, to ensure that we are well positioned for future market evolution. We have an exciting West End focused development pipeline in some of the strongest submarkets, presenting a real opportunity to drive rents, and therefore returns.

Our schemes are designed to meet the full spectrum of occupier demand, from headquarter space, which serves our core customer base, as well as furnished and flex product, all delivered to our exacting standards, and complemented with high-quality amenity. We also have good visibility on income growth.

Our reversionary potential of £70.9 million will come through into earnings as we continue to lease up, and deliver the next phase of schemes. We're not standing still.

There is a substantial opportunity ahead to create further value. Now turning over.

2025 was a solid year of execution. We completed asset management transactions with rental income of nearly £60 million, a record year.

In the context of a low vacancy rate, we agreed over £11 million of new lettings at rents 10% above ERV. In terms of disposals, we sold £216 million in 2025, and 2026 was off to a good start.

Since the start of the year, we have exchanged contracts for £140 million, including Whitfield Street, announced today, with a further £140 million under offer, broadly in line with December book values. Proceeds will be redeployed into higher-return opportunities, including selective developments, acquisitions, and other accretive alternatives.

Emily will provide more detail in this shortly. 2026 has started with strong momentum, with £1.5 million of new leases completed, and we're under offer with a further £14.4 million, including all of the offices at Network.

In addition, there is £4.4 million in negotiations. Slide four.

This momentum provides a springboard for growth. Our market outlook informs our immediate action plan, which is focused on accelerating returns through active portfolio management and disciplined capital allocation.

We are now past the inflection point, with the outlook characterized by three powerful drivers. Firstly, London, which is our market, we have an unrivaled expertise in demonstrating its enduring dominance on the European and global stage.

Once again, it is proving its resilience and agility in adapting to change, reinforcing its position as Europe's undisputed business capital. Secondly, the ongoing strength of the occupational market supported by high demand and very limited supply.

You will hear more on this from Emily in due course, who will provide further context on this. Finally, improved liquidity in the investment market driven by a return of capital flows, both into London and into offices.

Turnover is up, with larger lot sizes now transacting. The combination of our proactive execution and positive market dynamic gives us the confidence to increase our 2026 ERV guidance for our portfolio to +4% to +7%.

I will now hand over to Emily and Damian, who will take you through our immediate strategy and provide more detail on the financial outlook. Thank you.

Thank you, Paul. Looking now at our immediate priorities.

Our near-term strategy is clear: firmly focused on returns, position the portfolio to capture the strongest rental growth and capital appreciation opportunities through active portfolio management and disciplined capital allocation, with a clear focus on execution and total return on capital. Recycling will accelerate.

We plan to dispose of up to £1 billion over the next three years, and at a faster pace than our historic run rate of £200 million per annum. These disposals will be focused primarily on mature assets, where business plans have been delivered, or where prospective returns are lower than alternative opportunities available to us.

Capital redeployment will be disciplined and returns driven. We will systematically assess the relative merits of all options open to us at any one point in time.

The foundations of our capital allocation framework will be built on maintaining a strong balance sheet and a net debt to EBITDA below 9.5 times. Within that framework, we will consider share buybacks alongside selective development, where we have confidence in strong returns, and strategic acquisitions that support a pipeline for the next decade and contribute to long-term value creation.

Overall, our focus is to proactively manage the portfolio to ensure an appropriate risk-return profile that delivers both earnings growth and attractive total accounting returns. Damian will cover this in more detail shortly.

What does this look like in practice? HQ offices will remain our core business, where we continue to have strong conviction.

We will also continue to deliver flex, and do so at proportionate levels aligned to market demand, and in a way that ensures sensible cost ratios and a simplified operational model that is portfolio rather than asset-by-asset led. As such, our overall flex offering will likely grow to circa 10% to 15% of the portfolio from the current circa 8%.

Both our HQ and flex workspace are supported and enhanced by our DL/ Member platform. Whether we're buying, selling, or investing, we will do so within a disciplined risk-return framework that balances income resilience and earnings growth with value creation.

This may well involve the acquisition of core-plus assets in the future, as well as the development projects we are well known for. We will selectively develop those office schemes where we have confidence in the medium- to long-term returns.

These include Holden House and Middlesex, where we are already on site, as well as Greencoat & Gordon and 50 Baker Street, both due to start later this year. In addition, we will seek to drive value via strategic unlocking and alternative uses on certain sites, working alongside relevant partners to maximize returns.

These include Blue Star House, Old Street Quarter, and 230 Blackfriars Road, and we'll touch more on these later. Finally, we have an established brand and platform, and we believe there's opportunities to leverage this more effectively.

This could take the form of development management fees, promotes, partnership structures, or other arrangements that are returns accretive. I'll now hand over to Damian, who will provide more detail on the balance sheet, as well as the outlook for earnings and total accounting return.

Thank you, Em, and good morning, everyone. Taking a look at our returns outlook and earnings first.

The two large recent projects at Network and 25 Baker Street are now essentially complete. Baker Street provides annualized rent on a net effective basis of about £18 million a year, or £22 million headline.

Based off ERV at the year-end, Network's annualized rent will be about £11 million, or £13.7 million headline. We expect rental income here to commence around the middle of the year.

Our debt refinancing is complete for now. Our average interest rate increased in June '25, but is now expected to be largely stable through to 2031.

Admin expenses were reduced in 2025, and we're targeting further cost savings to come. With rental values growing and cost inflation easing, we now expect to see another period of earnings growth over the medium term.

This feeds into our total accounting return outlook, too, also expected to benefit from improving development surpluses on our carefully chosen schemes and accelerated capital recycling. We will not lose our well-established financial discipline.

That is based on low leverage, a focus on balancing value creation against interest cover and earnings, and our 18th consecutive year of increased ordinary dividends. Now looking at the earnings outlook in more detail.

We currently expect 2026 rental income from 25 Baker Street and Network to be about £18 million higher than it was in '25. This will be supported by rent reviews and other new lettings across the portfolio.

We've allowed for disposals of about £400 million this year, but the earnings impact is small, as the average IFRS rental yield is close to our marginal interest rate. West End projects including Holden House and the refurbishment of Middlesex House will, however, reduce earnings in the short term.

There are also additional voids at Page Street, which is being marketed for sale, and 50 Baker Street. We're targeting further cuts in admin costs this year.

After disposals and capex, we forecast our average debt to fall. However, the refinancing of the convertible bonds in June last year increased our weighted average interest rate by about 50 basis points.

We're also expecting about £6 million less interest to be capitalized in 2026 than in 2025. Putting this all together, we therefore expect 2026 earnings to be about 42p to 44p a share in the first half, followed by 52p in the second half.

That is 10% ahead of H2 2025. Overall, about 3% to 5% lower than in '25, but rising significantly in H2.

2027 should then see EPRA earnings step up. We estimate that about 5% to 10% growth from the 2025 level, or about 15% above '26 levels.

This is as growing rents are captured, and we capitalize more interest. Then by 2030, we see earnings rising very substantially.

Our models indicate at least 25% to 30% of uplift as rental reversion is captured, and income flows from completed projects at Holden House, 50 Baker Street, and elsewhere. Now considering the total accounting return.

The three main building blocks are shown on this chart: earnings, capital growth, and development returns. These are now supplemented by a fourth, a renewed focus on accelerated disposals to provide further options to boost our returns.

Earnings first, and assuming investment yields in our sector remain stable, 3% or a little more based on NTA is a realistic level. As the NTA grows, will earnings.

Next, capital growth, where we believe 3% to 5% of NAV is a reasonable outlook, allowing for the rental growth we're now seeing, backed by stable investment yields, and allowing for a typical 1% or so adjustment for capex and voids. The third aspect is increasingly attractive development returns, now growing again after being squeezed over recent years.

IRRs up to expected letting are now regularly hitting 10% or more for our current and future projects, but rental growth could push these further. Our analysis shows a positive development contribution every year since our first major scheme in 2010.

The final element is to free up capital from the higher disposals mentioned earlier into an improving investment market. This could be for future value creation schemes, as well as potential share buybacks, should that be more attractive at the time.

We've set a £1 billion sales target over the next three years, which could provide up to about £250 million of excess capital. That's after allowing for planned schemes and the acquisition of Old Street Quarter in late 2027.

Now moving back to our 2025 results and the financial highlights. These show a solid performance for 2025, the net tangible assets up to 3,225p per share, and a 5% total accounting return.

Gross and net rental income was slightly higher than 2024, but EPRA earnings were affected by lower surrender premiums and higher finance costs after the mid-year refinancing. Note also that our trading profits are excluded from the definition of EPRA earnings.

Our debt metrics were all very sound, helped by the disposals totaling £216 million and a busy year of refinancing. Finally, the dividend, which has been increased again by 1.2% and remains well covered by EPRA earnings.

Next, the 2.4% uplift in EPRA NTA over the year. After dividends, the group retained 25p per share from earnings, including 8p from disposal profits and other items.

The trading profits all came from our 25 Baker Street scheme, the majority from the sale of 24 out of the 41 residential units at George Street. The revaluation surplus in 2025 was equivalent to 51p per share.

Of this, 20p, or about 40%, came from development surpluses. These figures are after slightly higher than normal deductions for additional capex and voids in 2025, together about 40p per share.

Now the next slide, some additional valuation data. As in 2024, our ERVs grew at about 4%, with the West End outperforming.

Valuation yields remained stable, helped by the rental growth outlook and moderating central bank rates and inflation. Our topped-up initial yield on an EPRA basis at the year-end was 5.1%, and the true equivalent yield was 5.71%.

The portfolio remains good value, with average topped-up rents around £65 per square foot. Now EPRA earnings, these are set out here with the three main categories: property, admin, and finance.

Gross rents were up by £3.5 million, and after property costs and impairment, net rental income was slightly higher than 2024, too. However, surrender premiums were £2.5 million lower this year, overall, net property and other income was £1.7 million down on 2024.

As mentioned earlier, we focused on cost efficiencies again in '25, and admin expenses were down by £2.4 million on an EPRA basis, despite inflationary cost pressures. Net finance costs were up significantly in the second half of the year.

This is mainly due to the £175 million of convertible bonds, which had an IFRS rate of 2.3%, being refinanced in June with new 7-year bonds at 5 1/4%. This took our weighted average interest rate up by about 50 basis points over the year.

Average debt was also £110 million higher than in '24, though this is partly offset by £2.9 million more capitalized interest. The higher finance costs took EPRA profits down to 98.4p per share.

If we add back the trading profits, which are excluded from EPRA EPS, adjusted EPS was 102.1p. The next slide shows movements in gross rents.

After a delayed completion date, 25 Baker Street contributed £5.4 million in 2025, and the retail units at Soho Place another £0.9 million. Other lettings and asset management transactions added 7.6.

£10.2 million of income was lost due to space taken back or becoming vacant. Like-for-like gross rents were up 2.4%, impacted by our EPRA vacancy rate increasing from 3.1% to 4.1% through the year.

We incurred £182 million of capex in 2025, almost half of which was at Network and 25 Baker Street. The ungeared IRR up to PC at Baker Street was 11.3%, with Network expected to deliver between 8% and 9%.

We'll update these figures later in the year. These both represent good returns after significant yield expansion through the life of each project, helped by disciplined cost control and rents almost 20% above original appraisal levels.

Capex in 2026 is expected to be 22% lower at about £142 million. 50 Baker Street is not yet committed, but we do expect it to move ahead in the summer, and particularly optimistic about return prospects here.

Emily will take you through these later. Next, the ERV bridge, which we're now showing on a net effective rent basis to help make earnings forecasting easier.

The previous headline rent basis is also shown at the bottom of the chart. Total rental income reversion is now £70.9 million, after incentives allowed at 20% and with £216 million of future capex.

Note that the pure reversion on the right-hand side from reviews and expiries remains at £15.9 million, but this figure is after reclassifying £3.8 million of reversion into the major projects category. Now refinancing.

As noted earlier, we were busy in June, issuing new unsecured 7-year bonds and redeeming the convertibles. As noted, this caused our weighted average interest rate to rise, giving an average through the year in 2025 of 3.8%, up from 3.3% for the whole of 2024.

We expect our spot rates to fall in March 2026, when we repay the 6 1/2% LMS bonds. This should keep the average for 2026 at around 3.8%, but we believe lower in the second half than in the first.

Redeeming those LMS bonds will also mean that by the end of Q1, all of our debt will be unsecured. At the moment, we're not expecting to issue any more fixed-rate debt in 2026.

Any funding needed most likely to come from bank facilities. However, it's good to know that other debt capital markets remain both liquid and competitive, with margins looking increasingly attractive.

Our debt position is summarized on the last slide, with all debt ratios and covenants comfortable, cash and undrawn facilities rising over the year to £627 million. Fitch retained our A- senior unsecured rating last year, since when our gearing has fallen.

Our borrowings had a weighted average unexpired term of 4.2 years at year-end, and net debt to EBITDA was reduced to 9 times. We anticipate it falling further through 2026.

Thank you, and now back to Emily.

Before moving to our operational activity, let me set the scene with an overview of the London office market, where we have good reason to be optimistic as we look ahead. Firstly, London itself, where we have the highest concentration of top universities worldwide, providing an unmatched talent base.

It is Europe's unicorn capital and number one VC investment, as well as Europe's leading financial center. It also ranks third globally for AI venture capital investment, behind only the Bay Area and New York in the US, and is Europe's biggest hub for generative AI.

We recognize the ongoing debate on this topic, and it will, of course, change how people work. Overall, we do not believe AI will remove the need for high-quality offices, and we believe London is one of the global cities best positioned to benefit, given its depth of talent, innovation, and global connectivity.

As with any fast-moving driver of change, we will stay close to these developments and be ready to adapt as the opportunity evolves. London's strength is also reflected in sector-diverse office demand, underpinned by a broad knowledge-based economy, and finance, technology, and creative industries all in growth.

This global city attracts both blue-chip corporates and high-growth occupiers, and its diversity makes it significantly more resilient through the cycles. London is where global businesses want to be.

The office occupier market fundamentals are strong. 2025 saw robust activity, 11.4 million square feet of take-up, with over 3.5 million square foot under offer.

Importantly, 80% of deals over 20,000 square foot were expansionary, signaling genuine business growth. Vacancy remains low, and prime vacancy sub-2%.

Looking ahead, we expect a significant supply crunch, rental growth, and lease events working in landlords' favor, with occupier renewals extending income and rent reviews now delivering good reversion. The occupational market is inflecting positively, and we're well positioned to benefit.

What are occupiers looking for? Real estate quality matters more than ever: buildings with arrival impact, rich amenity, flexibility, and quality, be that retrofit or new build.

Location and connectivity, very important: proximity to Crossrail, transport more generally, talent, and amenity. Critically, all that London has to offer is what makes it a city which attracts domestic and European businesses and HQs.

The scale and depth of industry and skill is unmatched in Europe. We understand these drivers.

Our portfolio is built around them. Our forward-look strategy is designed to capture the value they create.

Finally, turning to the investment market, liquidity is now improving. Investment volumes in 2025 totaled £7.1 billion, a 40% increase on the year previous.

Yields have stabilized, the market has inflected, and investor confidence is improving, driven by a strong occupier market and supply crunch, as we heard earlier. 2025 also saw the return of the large lot size transactions, with double the number seen the year before.

This is a trend we're expecting to continue in 2026, as debt costs reduce, boosting overall levered returns. £23.5 billion of equity is now targeting London, an 18% increase on 2024, and Knight Frank reported in a recent survey that offices are the most targeted sector by investors in 2026.

Geopolitical events elsewhere are enhancing London's appeal and its position as global safe haven. All this means that we are expecting a further increase in turnover in 2026 to over £10 billion, and this will contribute positively to our plans for disposals.

Now to our own portfolio activity. We completed £216 million of disposals in 2025, and we exchanged contracts for disposals totaling £145 million in 2026 so far.

In addition, we have £135 million under offer, and are in discussions on £100 million. These sales support our target of £1 billion of capital recycling into an improving investment market, where proceeds can be more effectively redeployed elsewhere into higher-return opportunities.

In addition, we will continue to selectively hunt for value-creative opportunities to acquire, be that to support medium-, long-term value through development, or to support income in the near term. Turning to leasing performance.

2025 was a resilient year, with £11.3 million of new leases signed, around 10% ahead of ERV. As the chart shows, leasing activity across the standing portfolio has been broadly consistent with long-term averages for a number of years.

Excluding pre-lets, this highlights the strength of underlying demand for our space. We've started '26 with strong momentum: £14.4 million under offer, including all of the space at Network, as well as the £1.5 million transacted, and a further £4.4 million in negotiations.

These figures support a strong year ahead for leasing activity. Turning to slide 29 and asset management.

'25 was a record year for asset management, with transactions completed across £59 million of income, almost 30% above our previous peak. More importantly, though, was the quality of what we achieved.

Our focus was on capturing reversion, extending income, and aligning lease profiles with our longer-term asset strategies. Through early and proactive engagement with occupiers, we were able to structure transactions that balance flexibility with greater income visibility, while mitigating void risk and future capital expenditure.

Rent reviews of £37.4 million secured at over 17% above previous rents reflected the strong rental growth across submarkets. Renewals and re-gears with longstanding occupiers extended lease lengths and deepened relationships.

Transactions such as Adobe at White Collar Factory and Burberry at Horseferry House demonstrate the strength of our occupier partnerships, and reflect the positives for us of occupiers taking the stay-put option, while major rent reviews at Brunel and 80 Charlotte Street enabled us to capture good reversion. Overall, this was a year where active management translated directly into stronger income security and enhanced reversionary potential.

This will be an important part of business activity as we look ahead in this market. Moving to developments.

At 25 Baker Street, which completed in August 2025, offices were 100% pre-let at 16.5% above appraisal ERV, generating headline rent of £21.7 million, and an ungeared IRR of 11.3%. At Network W1, the offices are now fully under offer.

Practical completion of the building is expected within the next week. Full details of financials on this will be confirmed once transacted in coming weeks.

We've maintained good returns on these schemes in spite of significant outward yield shift. Looking ahead, we have a focused and disciplined development pipeline, which remains a core part of our business model and driver of future returns.

We're making good progress on site at Holden House, and strip-out works have commenced at Greencoat & Gordon. Both of these schemes are in well-connected locations, in submarkets with strong demand and limited supply, with completions targeted in 2027 and 2028, respectively.

We're also on site now with the comprehensive refurbishment of Middlesex House, where we're giving new life to this characterful 1930s Art Deco warehouse building in the heart of Fitzrovia. Together, these schemes, two of which are traditional refurbishments, represent a substantial value opportunity for the group, with double-digit attractive expected returns, and importantly, this growth potential is already within the portfolio, driven by projects under our control, providing clear visibility over future earnings and value creation.

At 50 Baker Street, we're due to commence an exciting new-build development later this year. This is a scheme positioned in a submarket with very limited supply, great connectivity, and strong growth prospects, which deliver all those things on the occupier wish list: amazing arrival and amenity, large floorplates, flexibility, and quality design and architecture, of course.

Our base appraisal shows strong returns, with rental growth expected to enhance them further, given the strength of the Marylebone occupier market, as well as the product to be delivered. Alongside our near-term development pipeline, we also have over 1 million square foot where we are actively exploring alternative, primarily living-led uses and strategic partnerships to maximize long-term value creation.

At Blue Star House, working with an operating partner, planning consent is in place for an apart-hotel development scheme. At Old Street Quarter, we are working with Related Argent in a development management capacity for the time being, to progress a mixed-use, living-led campus.

Importantly, the structure of this allows flexibility over delivery, including joint ventures, forward funding, or indeed plot sales, allowing us to deploy capital selectively and efficiently. At 230 Blackfriars Road, early feasibility work indicates significant residential-led potential, with scope to materially increase floor area.

Together, these assets provide meaningful optionality to partner, develop directly, or realize value through sales. In summary, operationally, 2025 has been a strong year: accelerating capital recycling as liquidity improves, resilient leasing activity, record asset management activity, successful delivery and pre-letting of major developments, and a disciplined pipeline with attractive expected returns.

Now over to Paul, who'll wrap up.

Thank you very much indeed, Emily. Now to outlook on page 35.

As you heard, there is significant activity across the business. We are busy.

£140 million of disposals signed since the start of the year, with a similar amount under offer, and a further £100 million in negotiations. The stage is set for 2026 to be a strong year for leasing.

We're on site on three really exciting projects, which we forecast will deliver an average IRR in excess of 10%. We have a clear plan for the accretive redeployment of disposal proceeds, as we seek to balance near-term income with value creation in the medium term.

This includes potential share buybacks. London feels different.

The fundamentals are good. The office cycle has really turned a corner.

Rents are growing strongly. Investment liquidity has improved markedly, with London offices being the most in-demand sector.

There has been a notable pick-up in activity. We're seeing more inquiries from potential occupiers, and an increasingly broad range of investors are knocking on our door.

This is the foundation of our ERV increase for 2026 to +4% to +7%, and our confident financial outlook. Now a personal reflection.

As I've made the decision to retire after 38 years at Derwent. I've been with the business man and boy, and I'm proud of what we have achieved over that time.

I'm excited for 2026 and beyond, knowing that the business is well placed with a great team. Thank you, and we're now going to take questions from the room, and then from those who are joined remotely.

Questions, please. Please, go.

Thanks. Good morning.

It's Thomas Musson at Berenberg. Question first on the perceived AI risk to tenants.

The market is beginning to price some of this in recent share price moves, interestingly, a lot more in the US. Would you expect property valuers to react here, perhaps assuming greater tenant covenant risk or changing assumptions around lease renewal probabilities, just would be interested if any of this have been part of conversations you've had with them?

I think, firstly, one of the benefits we obviously have is how close we are to our occupiers and indeed other occupiers in the market. Any area of change like this, we'll always stay close to.

I think in terms of the property sector more specifically and the valuation point you made, there's two strands to the AI debate at the moment. One is the direct demand versus the indirect impact, if you like.

To date, we're not seeing that reflected negatively by any means in the valuation piece. I think the covenant point is, as with any of the other big tech booms we've seen over the cycles, there will obviously be winners and losers in that.

From our perspective, we always take that covenant risk piece very, very seriously. On a more general piece in terms of the AI story, I think we feel, as I mentioned, that globally, I think London is somewhere that should really position themselves well for that.

It's something we're going to stay very close to as things evolve.

Thanks. Secondly, you mentioned potential share buybacks in the event of being in a surplus capital position.

At what point would you consider yourselves to be in a surplus capital position? Do we wait until you've cleared this year's capex requirement, for example, or some of next year's, too?

Just interested how you think about that.

No, we have a plan to sell something over £1 billion over the next three years. We've started off really well this year.

We have got some investments going into the portfolio for really accretive developments. As we build up those resources, I think we should have a good look and keep open-minded.

Damian, do you want to add a bit to that?

Tom, it's a good question. I think let's get some disposals out of the way.

We've made a good start to the year. Personally, I think we need to get sort of £200 million plus under our belt before we can seriously look at what we do.

We do have Old Street Quarter coming up in probably late 2027, we need to look at that in our forward funding plans, as well. I think the £400 million this year is a good start.

We've mentioned there could be up to £250 million of excess capital over the three years. That doesn't mean to say we have to wait for three years.

I think we will look at this as we go, and we will see how things progress. I don't want to commit to a particular number today, but I hope you can see how we're thinking about this.

Helpful. Thank you.

Maybe if I could ask one last one just on the residential sales at 25 Baker Street. I think at the half-year you'd exchange on 23 of the 41 units.

Today, I think you say you've sold 24, one more. What's the demand like right now for those?

Are you having to meaningfully adjust price there to generate interest at this point? Should we adjust our trading profit expectations for the rest of the units?

I think we started off really well, with prices well above our underwrite, and getting some very strong prices first, particularly for the bigger units, £3,000, £3,700 a square foot. We've got the little ones left.

They will take a little bit longer to time, but they're great flats in great location, but it will take a little bit longer. Damian, do you want to add to that?

Just one other point to make is that the 2025 result included the cost of all the affordable housing. From here on, it's essentially profit.

Now, the market has definitely got slower,

and

I'm pretty sure we'll see pricing coming off a bit. We've got quite good headroom here, confident that at some point we will see a pick-up.

A lot of one-beds for sale, if anyone's interested, please let us know.

Thanks very much.

Thanks, Tom. Please.

Morning. Adam Shapton at Green Street.

Just put my hand down then when Damian talked about the one-beds. I didn't want to look like I was volunteering.

Firstly, congratulations, Paul and Nigel, on retirement, let me say that. Before getting into questions, just a clarification on the £1 billion of disposals number.

Is that in addition to what's already exchanged and under offer, or...

No, the £1 billion includes the figures that we've done this year, £1 billion over three years. We would have done £280 million, I think, as the next deals get done.

That's a good start. Yes,

if

we're hoping that we're going to get something close to £400 million this year,

so

that's the plan.

Just in that context, if I may say, three years sounds quite conservative to do another £750 million. What's the limiting factor there?

You've talked about improving market, you quoted Knight Frank on all the equity chasing offices.

I think don't view the £1 billion as a cap. I think what we're looking to do is proactively dispose here mature assets where the business plans delivered, and where we think we can deploy other more accretive opportunities.

It's not a fixed number per se,

and

depending on the market and where we're at in terms of other opportunities, that may move.

Both the number and the timescale might be conservative, is that fair?

We're seeing liquidity improving. There's some big assets, £100 million today.

Last year, I think they doubled £100 million. The year before was difficult.

I think as we see liquidity go up, and if we can get a strong price for those assets, we're going to be realistic and sensible. I think we want to make sure when we do sell, we sell well, and that we sell at the right price, with the balance sheet in good place.

I want to make sure that we do it strategically. Clearly, Richard and his team are well set up to do that.

As I say, we will accelerate disposals if we see a strong price for something and we can use the money more accretively, we will certainly do that.

Great. Just two more.

On the flex growth, Emily mentioned going from 8% to 10% to 15%. I think I'm right in saying the 8% is a mixture of F&F and third-party operators?

Yes.

What's the shape of that?

The growth from the 8% to 15% is more around our portfolio and what expires within that timeframe of a size and location where we think will naturally move to flex. It's not proposing that we're going out shopping per se for an extra 7% of that stock.

It's more that we're looking at where the sub-10,000 square foot units coming back in the right submarkets, and they will likely convert.

We should expect to be more your in-house, as it were, rather than leasing to...

Correct.

Exactly.

We've got a number of refurbishments at the moment,

which

I think are ideally placed for that sort of thing.

Maybe somewhat related to that, on admin costs, you made some good progress. How should we think about a floor of where that could get to in today's money, given your strategic ambitions you want to sweat the platform more,

what

could the admin costs...

I think our target for this year is another couple of million. I think though at that stage that feels like it's quite lean.

There would have to be quite structural changes

before

it could go much lower than that. That's a reasonable target for now.

Okay. Thank you.

Thanks, Adam.

Thanks, Adam.

Adam Marley from Analytic.

Hi, Callum. You're right.

Couple of questions.

Outline

the new strategy today with disposals and buybacks, but the stock has obviously been trading at a material discount now for a few years, and you've had a while to act on it. Why are you committing to this now?

I think in terms of the strategy, we're looking at all optionality here. We're disposing, but then obviously focus on the balance sheet.

You've seen track record on development and investment, where we're committed and where we want to commit. Obviously, looking at the dividend, and as Damian touched on, which he can pick up on, the share buybacks come as and when we reach that surplus.

It's looking at the whole picture and that optionality around that, keeping open-minded to that.

I think also that the key really is how the investment market is now opening up. We have had two years where it's been quite challenging to sell large lot sizes, and as a result, leverage has crept up a bit.

The balance sheet's still strong, but maintaining a strong balance sheet has always been one of our foremost requirements. We now have more options open to us, as well.

The other thing, of course, is maintaining earnings. You've got the situation now where the IFRS yield on most of the things we're looking to sell is probably very close to our marginal interest rate, the earnings impact of disposals is much less than it was, say, three or four years ago.

I hope that gives you some idea as to how...

I think that's the point, with the market opening up, more liquidity, gives more opportunity to sell, and consider what we do with that money. I think, as the market liquidity has improved a lot.

Got it. Then the 25% earnings growth target, is that built on sustained rental growth?

If so, what's that number?

The rental growth to 2030, essentially what we're doing is we're building into our models some growing reversion from rental growth of round about 4% per annum. We've also got, I think, expecting increasingly attractive returns from projects like 50 Baker Street and Holden, where the gearing impact as well, it improves those returns still further.

You factor that in, about half of the rental growth comes from those two projects, and about half of it comes from the rest of the portfolio.

So 4% is our...

Roughly 4% per annum is what we're putting in our models going forward, yeah.

If I can just ask on page 22, just looking at the prime office rents, they seem to be flat from 2015 to 2019. What makes you think that 2025 to 2030, that is going to be 4% a year going forward?

Firstly, I think there's a pretty tight supply crunch, and then that demand is pretty good. People are growing.

80% of the deals last year were of 20,000 square foot, people were growing. Rents do need to increase in order to, there are more proportion people's outgoing, I think people want to be in good locations.

They need to pay the right rent for the right location, I think it is time for landlord to earn a bit more money. I think we feel pretty positive about it.

Last few years, despite the difficult macroeconomics, we've been consistently letting at 10% above ERV. We have strong visibility about inspections and viewings and tenant demand.

I think we feel pretty positive about it. London's the place to be, people want to be in town.

Emily, do you want to add to that?

I think the 4%, if you look at the sort of big houses' prospects over the next five years, that's probably pretty conservative. I think the supply crunch is the big driver at the moment.

London's got a supply shortage that we haven't seen before. Part of our repositioning is making sure we're in the right place for that, but I think the 4% we're pretty comfortable with from a market perspective.

This year, we're in a place where every submarket in London is now projecting growth, whereas before, it has been much more spiky following COVID. You're really seeing that evening out now in terms of a more lateral growth across the city.

Rents have fallen behind other costs quite substantially over the last five years. They're now beginning to catch up, and we're seeing our rents growing now at a slightly faster rate than overall costs.

Really, that's been squeezed quite a bit over the last five years. If you go back to the last big rental cycle, which was sort of 2012 onwards to 2015, our earnings pretty much doubled in that period.

I'm not forecasting a doubling of it, that would be nice, we'll come back next year hopefully, but I think our 30% increase feels very realistic, given that we are seeing really quite a shift in the dynamics, and overdue, I think.

Thank you.

Thank you. Please.

Zach?

Morning, it's Zachary Gauge from UBS. A couple of questions from me.

One is on the ERV growth conversion into capital growth during '25. Obviously, 4% ERV growth, I think at the portfolio level, you're only 0.8% on capital growth.

You touched on why the valuers aren't giving you the uplift when yields were effectively stable, and why you're confident that going forward that will convert into the 3% to 5% capital growth that you've guided to. Then the second one, sort of again picking up on the share buybacks point and capital allocation, I noticed that the net debt to EBITDA target seems to have shifted slightly from getting it below 9 at the end of this year to now sort of 9.5 going forward.

Bearing that in mind and the capacity that gives you, should we sort of see the £250 million of excess capital from the £1 billion of disposals as the high-water mark for buybacks, and would that then be sort of flexible depending on where you sit on the net debt to EBITDA ratio and obviously doing potentially more disposals than £1 billion?

Damian, do you want to start with

the... Let's start with the second question.

Yeah.

The 9.5 isn't a target. We've currently got it down to 9.

I'd prefer it to be lower than that. We're expecting it to be lower by the end of this year.

So 9 1/2 is really where I think we see the upper limit over the next few years. Could there be a bit more available?

Yes, I think we need to see how we go on this. We'll update you as we go.

The 9 1/2 is very much an upper target. On the valuation point, I think I mentioned earlier, we've got about 40p a share of additional capex and discounting for voids and the time effect of rental growth coming through.

That did impact us in 2025. We've looked over the last 10, 15 years, and the average amount by which we see valuations impacted by capex and voids is roughly 1% per annum.

Last year, it was more like 2, 2 1/2. We have been looking at a number of new schemes to try and grow rents, and I think that was one of the reasons you've seen a bit of a step-up in 2025, but we don't think that is a normal level, and we think it will come back down closer to its 1%.

The only other point to make is that our 3% to 5% is on NTA, and obviously the rental growth is on the gross asset value, there's an impact there, as well, which helps. Thank you, Zach.

Sorry, and on the £250 million being the top end of buybacks, independent on additional disposals?

Not a top end at this stage. Let's wait and see.

I think, and don't think it's all going to come in one go, either. I think we need to get the disposals underway, look at the capital allocation at the time, and we'll take it from there.

Three years isn't forever, either, let's see where we go.

I think it's going back to the plan we've talked about, Zach, in terms of looking at all of the options available to us alongside one another.

Paul, I think you had your hand up. Yeah?

Thanks. It's Paul May from Barclays.

About three questions, I think, from me. You regularly provide the ERV target, but I think through the presentation, I've noticed a sort of welcomed increased focus on earnings and cash flow moving forwards.

Do you think you'll consider providing a like-for-like rental growth target per annum moving forwards? I appreciate you've said the 4%, but just sort of gives some color there in terms of converting ERV growth into actual cash flow would be sort of welcome.

Regarding the disposal of Whitfield Street, obviously understand Lone Star's pretty high cost of capital enterprise, do you have any indication as to what they're expecting on that site, and why they can hit their sort of 20% plus IRR targets versus what you would have expected to achieve on that site? Then just on the 2030 target, is it reasonable to assume that that's relatively back-end loaded, there'll be a little bit of bumpiness between '27 and '29, and then as those schemes complete, that should come through into 2030?

Just touching touching on Whitfield Street first, obviously, they they will have a fairly slightly probably a bit more aggressive view on on on on rental growth. We're very happy with the price.

I think a net initial price of 5%, initial yield of 5% is good. There's a bit of vacancy coming up.

It's a 20-year-old building. I I can't really speak for them as to where they think their their returns could be, but they they they're probably reflecting the same thing we are, in as much as the West End's very tight, rents are growing, and Fitzrovia is a very good location.

They're probably targeting pretty aggressive rental rental growth. For us, we think, recycling is important, getting some more money into the portfolio, we can secure a strong price, which we did, then we're we're reinvesting elsewhere.

I think it's all about their view about where where rents might grow. We're we're not renowned for being overly aggressive on where we see rent rent growth.

I I's to say we're delighted with the start of the year, how much sales we've done, how much we've got under under offer. We wish them well with the with the purchase.

I'm sure they'll be delighted with it in some time. We as I say, we've done we've made our money there.

It's a 20-year-old building, and we've got plenty of other opportunities to spend the money. Do you want to talk about Paul's other two?

Yes, first of all, on the like-for-like rent, it's an interesting idea. I think we will certainly consider it.

The point to make here is that the rental growth grows the reversion, and it takes time for that to be captured into earnings. You tend to get this cycle where initially the like-for-like rents lag behind the ERV growth, but at the end of the cycle, they can often outpace it.

We found in that period we mentioned earlier, that five years when rental growth was very low, for the first two or three years of that, our like-for-like rents were still growing nicely because they were based on previous reversion. You get this slightly different timing impact coming on.

We'll think about how we might guide to that going forward. In relation to the earnings, you are right, a lot of the uplift comes from 50 Baker Street and Holden House and others coming through probably in late '29, early '30, it is quite a step-up in '30.

We do think, though, that there'll be some nice solid earnings growth in 2028, 2029, but it's really then a step-up in '30.

Oh, perfect. Sorry, last couple.

One, coming back to the initial question on AI, do you think your portfolio or your tenant base of generally smaller tenants, smaller floorplates, actually offers some protection in that AI world, given it's probably larger entities that are cutting back on some of the graduate recruitment?

Short answer, yes. I think very big, banks, etc., who knows?

I think one of London's great benefits is diverse base. I think average size of our lettings across our portfolio about 15,000 square foot.

I think that gives quite a lot of resilience with such a range of different occupiers. Emily, do you want to add to that?

I think that covers it, most, other than to say obviously the way we look at our portfolio generally and AI falls into this is to make sure we've got everything to meet that matched demand. The higher growth at the lower end, probably in the fitted space, growing up to the 50 Baker Streets.

Like any other, I think we'll make sure it's balanced in that way.

Sorry, just finally one linked to that. The 10% to 15% on flex, given that 15,000 square foot sort of average tenant mix, and that's probably skewed by a few large ones and then quite a few even smaller ones, could flex become a significantly larger part of your portfolio than the 10% to 15%?

At the moment, we think the 15% is probably where it still makes sense from maintaining everything that we have to look at in terms of cost ratios, operational efficiencies, and overall net-net returns in terms of extra capex and everything else that goes into it. At the moment, that's where we think.

We will always continue to kind of mirror the market and make sure we're delivering what we believe the market is. Over the years of flex and all the headlines it's grabbed, it's never really moved much from the sort of 4% to 7% of the total market activity.

It feels we're looking at that on all the financial metrics, but also where we think the market is. Of course it could change in the future and we'll adapt as we need to, but that's where we feel it's right at the moment.

I think that's a good point. As a percentage of the whole of the market, it's relatively small.

It's got a lot of headlines, and it's done well, but we also like our headquarters, nice long leases, helps our valuations. Thank you, Paul.

Any other questions we've got from the room, or do we have anyone online on telephone?

Thank you very much. Good afternoon, everyone.

My first question is around how is the board weighting M&A optionality as a way to boost shareholder return, so that's rising the succession gaps that has been created by the recent senior departures?

Was the line not

very good, sorry.

Was the question, just bear with me, how do we think about M&A

in respect of

addressing succession matters?

Sure. If you wish to...

Obviously, we're very focused on our business at the moment, and obviously, I've made a decision that I'm going to retire, and there is a process going ahead with finding a successor. The focus is on the business.

There's nothing to say about M&A particularly. Unless we've misunderstood your question, Marc, wasn't a great line.

No, it was the question. My second question is around, effectively, given AI-driven de-rating of New York office stocks prices, do you still view share buybacks as the right call in that environment?

The next one related to that is how confident are you in the long-term earnings and total return, specifically target that you've provided through 2030?

I think, firstly, it's always got to be a balance between buybacks and investment and all the rest of it. Obviously, it's got to be seen as an opportunity at the moment.

Damian, do you want to add anything to that?

The principal things we're trying to do here, we're trying to accelerate disposals to give us more options. The first thing we do is maintain a strong balance sheet.

The second thing is we invest in our accretive returns for our schemes. After that, we have options.

AI is one of the many factors we take into account in looking at investment decisions. We're all trying to work out what it means short term, medium term, and long term.

For now, though, I think, hopefully, our capital allocation outlook is clear, and we will keep our eyes and ears open to see how things move forwards. I'm not sure we can say much more at this stage.

I just wanted to have your thoughts. The final question for me is how much disposals are you assuming in your 2030 targets?

Which target?

2030, we're we're assuming about £1 billion in the next three years, and I think a couple of hundred million year per annum after that. Is that right, Jennifer?

Yes.

Yes. Jennifer does all the modeling, she knows.

About

1.2, 1.3?

About £1.3, £1.4 billion, yeah, over the five years.

Thank you very much.

Thank you, Marc.

Thank you.

We've got one more.

Hi, team. Thank you for the presentation.

Two questions also from my side. Thanks for the presentation.

You mentioned £2 million of cost-saving target in 2026. What is a reasonable amount to assume for 2027 on top of that?

Cost savings,

yeah, we talked about £2.4 million came off our EPRA costs in 2025. We're anticipating a similar level in 2026.

I think our models assume inflation after that, but we will be looking to make this business as efficient as we possibly can. Anything we can do after that to reduce costs will be done.

There isn't a specific cost target, I think, in the 2027 model at this stage, but that doesn't mean to say we won't look at further efficiencies. All

right, clear. Then one more on the capitalized interest.

On slide nine, you state that the capitalized interest in 2027 is about £8 million higher than in 2026. Looking at slide 51, where you break down your capex pipeline, the 2026 number is £6 million and 2027 number is £8 million.

Where does the remaining £6 million increase come from?

50 Baker Street, Damian.

These figures in the back here are for essentially the committed schemes. If you look at the top half of the report, there is in the bottom, it says consented 50 Baker Street.

That is not yet in the top half of the project, because it's not been committed. When it does get committed, and we're assuming it will do, then it will go into the top half and we'll show you the capitalized interest.

That figure in the outlook includes capitalized interest for 50 Baker Street. The appendix doesn't.

Okay. Thanks so much.

Thank you very much for the call.

Thank you.

Have we got any of the...

There are two questions on the webcast.

Okay.

The first says, 'While you've mentioned the possibility of share buybacks, are you taking any other active steps to reduce the gap between the current share price and the net asset value?'

We're hoping this presentation will help.

Exactly. We're selling, we're letting.

We think the market's improving. The fundamentals are good, actively we're looking at other options of whether it is buybacks or something similar.

Emily?

No, exactly that. The plan when you've heard today is laser focused on shareholder returns and what we get and where our focus is in that regard.

Thank you. Then

the last question is, 'Within the 2030 guidance, does it take account of a potential share buyback?'

No.

Okay.

Nice easy answer.

That's an easy answer. Thank you everyone for today.

We're all around if anyone wants to have a chat afterwards, pick up the phone, or obviously on tour as well, thank you for attending today. I know it's a busy week for everyone and have a good day.

Thank you very much. Thanks, everyone.