Land Securities Group plc

Well, good morning, everyone. And welcome to the presentation of Landsec's 2025 Full Year Results.

And I've been saying for some time that owning the right real estate has never been more important. And the performance of our portfolio and business over the past 12 months illustrates this point really clearly.

Irrespective of sector, there is a clear focus from customers on the best space and as this remains in short supply, rents are growing. As such, we are confident in how we have repositioned our portfolio over the past four years.

The success of this strategy is reflected in our strong operational performance, with high like-for-like income growth across both London and retail, which combined make up 83% of our business. We expect this customer focus on quality to persist.

So as the reversionary potential in our portfolio is growing, we expect to continue -- deliver continued strong like-for-like income growth. Over the medium term, this growth will be enhanced by the substantial opportunity that we have created in residential, which benefits from structural demand growth and offers attractive real income returns with rents highly correlated to inflation over time.

And it's the attractive mix of these uses, which create successful urban places that can continue to adapt and grow over time, and Landsec's ability to shape these places that gives us our competitive edge. Now given our actions over the past few years, our outlook for EPS growth in the near term is positive; executing our strategy, we'll build further on this and deliver material shareholder value by moving to high income growth and lower cyclicality over time.

In the long run, it is income growth that is the main driver of value growth in both equity markets and in real estate. And our primary focus is on delivering sustainable income and EPS growth.

For an GBP11 billion REIT like us, materially shifting our portfolio mix takes time, which means we need to think differently about what drives EPS growth near term and what we believe will drive it longer term, as these are not necessarily the same. In the near term, most of our EPS growth will be driven by the assets we own today, not the assets we decide to buy or develop from here.

And our portfolio positioning in recent years are focused on places with real quality and scarcity value, together with our ongoing efficiency savings, mean that the near term EPS growth outlook is firmly positive. The strategic decisions on development and capital recycling that we make from here are about making sure that in three to five years' time, our portfolio mix is such that we are still as confident about its income growth prospects at that point as we are about our current portfolio today.

Alongside our assessment of risk, it is these two factors driving sustainable income and EPS growth in the near term and impact on desired portfolio mix in the longer term that are the primary guide for our capital allocation decisions. And each of the strategic implications that we set out at our strategy update in February, shown on the left of this slide, is directly linked to these two objectives.

These targets remain underpinned by our aim to retain a strong capital base with net debt to EBITDA of less than 8 times and a loan to value of around the mid-30s. And as we deliver on this strategy, we see the potential to drive around 20% growth in EPS over the next five years, which is after absorbing a roughly 10% EPS headwind from rising interest costs and a finance lease expiry at QAM.

As the impact of these headwinds is spread over several years, we expect EPS growth to be relatively linear and for this compounding in EPS to drive further growth in dividends. This positive outlook is underpinned by the continued strength in our operational performance.

Our overall like-for-like income growth over the year was up 5% with uplifts on relettings and renewals in retail and London rising to 8%. And we delivered a 100 basis point increase in occupancy to 97.2%.

In line with the capital allocation priorities that I set out earlier, we invested over GBP600 million into two of the very best retail destinations in the UK, Liverpool ONE and Bluewater at highly accretive yields whilst we sold around GBP655 million of assets, mostly in subscale sectors where growth is more subdued. In line with the view that we set out a year ago that values for the best assets would return to growth, our portfolio value was up 1.1% as our successful leasing activity drove 4.2% ERV growth and yields stabilized.

And this means that our capital base remains strong and our positive operational momentum has continued into the new year. All this translated into solid financial results.

Our EPS was up 0.4% and that was ahead of our initial guidance as the impact of our significant disposals early in the year was more than offset by stronger like-for-like growth and cost savings. Our dividend is up 2%, in line with our guidance and NTA per share is up 1.7%, meaning that our overall return on equity was positive at 6.4%.

Whilst net debt increased as a result of acquisitions towards the end of the year, post our disposal since the year end, our LTV is now just over 38%, net debt to EBITDA 7.7 times. We expect continued like-for-like income growth and cost savings to more than offset higher finance costs in the year ahead, meaning we expect EPS to grow by 2% to 4% this year, which is well on track against our financial year 2030 potential.

So on now to our operational review. Customers remain focused on the best space in each of our key markets.

So our high quality London and major retail portfolios continue to outperform. For both our relative outperformance widened further during the year as markets continue to polarize, as shown here in the first two charts on this slide.

With our occupancy in London up to 98% and retail up to 97%, the growing competition for space means rental uplifts continue to rise in particular for major retail, which now makes up over a third of our income. Capturing this growing reversionary potential is a key driver for our near term EPS growth.

Turning to London in more detail. The positive outlook for rents in the best assets has started to attract new investor demand, which is reflected in a steady pickup in investment activity, as shown here on the right, albeit from a low base.

Still, the strong growth in occupier demand for the very best space, as shown on the left, continued growth in rents, for example, in Victoria, where half of our London offices sit, and the relatively stable political backdrop mean that London offices look relatively attractive in a global context. And as such, we expect a further steady recovery in activity, which supports our plans to start to release around GBP2 billion of capital from FY27 onwards.

In our own portfolio, we continue to see growth in utilization rates with turnstile tap-ins up 11% over the three months to April compared to the same period last year, and that's even though TFL tube traffic was broadly flat over the same period. Combined with the fact that customers are planning for more space per person to facilitate increased collaboration space, well being or other amenities, this means our operational performance has been strong.

Like-for-like income is up 6.6% with uplifts on relettings and renewals up 10%. And we signed or in solicitor's hands on GBP24 million of lettings on average 7% ahead of ERV.

This drove 5.2% ERV growth and that was at the top end of our guidance and we expect these trends to persist with broadly similar ERV growth, further like-for-like income growth in the year ahead. And this positive demand also bodes well for our two on-site developments in Victoria and the South Bank.

Both are set to complete in the next 12 months, which means that we are delivering into an attractive window, as speculative supply over the next two years is around half of the typical new build take-up. Both schemes are designed to be multi-let, which means that we expect the majority of leasing to happen post completion.

Although, we are seeing encouraging interest emerge and expect to see some progress in terms of pre-letting in the second half of this year. The exact timing of lease-up will have an influence on FY27 earnings.

But overall, these schemes should add around GBP7 million to earnings once fully let based on current interest rates. In retail, brands continue to focus on the best locations as these provide the best access to consumer spend.

As the chart on the left shows, the top 1% of all UK shopping destinations capture 30% of all in-store retail spend. And so it's no surprise that this 1% is where around 90% of all stores of leading brands such as Apple or Inditex are located.

And as the charts in the middle here shows, it is also where around 90% of our own portfolio is focused. The value of these assets is around half of their replacement costs.

So new supply is zero. And as sales continue to grow and, hence, demand for space continues to grow, rents are rising.

And this is very clear in our own portfolio performance. Sales and footfall both continued to outperform the wider market and as a result, rental uplifts continue to trend higher.

This resulted in another year of strong operational performance with like-for-like income up 5.1% and occupancy up 110 basis points, and that means occupancy is now ahead of where it was pre-COVID. We signed GBP26 million of leases on average 8% above ERV.

And our leasing pipeline is up compared to this time last year with another GBP12 million of deals in solicitor's hands, on average 20% ahead of ERV and 10% ahead of previous passing rents. All that drove 4% growth in ERVs across the portfolio, which was comfortably in line with our guidance.

And we expect to see similar growth in ERVs this year with continued growth in like-for-like income as reversion continues to build. So turning now to capital allocation.

Now as I've already said, our primary focus is on delivering sustainable income and EPS growth. And so we base our capital allocation decisions on their impact on income and EPS growth in the near term and on positioning our portfolio mix, such that this EPS growth can be sustained longer term.

Now this slide sets out how, at a high level, the investment opportunities available to us compare on this basis. Major retail is accretive to EPS day one, given its high yield and we believe it can sustain attractive growth over time for the very best destinations, given that this is where demand is concentrated and new supply is nonexistent.

This, therefore, remains our highest conviction call, although, there is a limit to the number of assets that fit the bill. We expect our London offices to see good like-for-like growth in the near term.

But in the longer term, supply and demand will likely remain cyclical and there is a cost of keeping up with evolving customer demands. Residential net yields are broadly similar to the net effective income returns in offices after taking account of lease incentives.

However, income growth in residential closely tracks inflation and is captured annually. So rotating capital out of office into residential should be broadly EPS neutral day one, but offer higher EPS growth and lower risk over time.

In development, the near term benefit to income growth is limited given the time it takes to develop. And hence, we will continue to limit our overall development exposure and focus on those projects that provide an attractive margin and move our portfolio mix towards our medium term goals.

Now each of the capital allocation objectives we outlined as part of our strategy update in February link directly to these priorities. On a one to three year view, we aim to invest a further GBP1 billion into best-in-class retail at yields that are highly accretive with rents that can deliver sustained growth.

As we monetize half our capital employed and predevelopment assets where income returns are minimal and exit our retail and leisure parks where yields are reasonable, but income growth is well below that of major retail. This also underpins our objective to, on a two to five year view, establish a sizable residential platform where income returns are real, given that rents are highly correlated to inflation and to scale back office led development by at least half and release GBP2 billion of capital out of offices to facilitate this.

Our investments over the past year are very much aligned to this. We invested over GBP600 million in two of the top 10 retail destinations in the UK at an average net income return of 7.7% and a low double digit IRR.

Operational momentum in both destinations is strong with, for example, Next tripling their space at Bluewater to over 130,000 square feet and new openings of Sephora, Pull&Bear and Bershka during the year, whilst at Liverpool ONE, UNIQLO enjoyed a record new store opening in April and Sephora are set to follow suit next week. At MediaCity, we have already started to see a turnaround in operational performance now that we have taken full control of the estate with several new F&B lettings and office lettings well ahead of ERVs, whilst we now also have full control over the Phase 2 land, which has an allocation for 2,700 new homes.

This also formed the basis for our disposals in the past year. We sold just under GBP500 million of assets during the year, of which 80% was our hotel portfolio.

And whilst the yield on this was over 7% and the immediate EPS impact therefore was down, around 70% of that portfolio was over 25 years old and required significant CapEx to sustain this income. And since the year end, we have sold a further GBP159 million of assets, including 40% of our residual retail parks where like-for-like income over the past year was flat, well below, therefore, the 5.1% income growth that we saw in major retail.

Looking ahead, we anticipate further disposals in the near term as we exit further noncore assets and start to reduce our capital employed in predevelopment assets. In terms of future developments, our success in planning over the last two years means we now have more projects nearing potential commencement than we have the risk appetite or balance sheet capacity for.

With around GBP730 million of capital employed in predevelopment assets, which produces a current income return of around 1%, the holding cost of this is significant. And so we will look to release around half of this capital employed over the next one to three years by exiting those badged, other opportunities such as strategic land and potentially JV-ing or exiting some of our office-led projects.

We'll be reasonably pragmatic about value but expect this to improve earnings by around GBP15 million per and add around 25 to 50 basis points to our annual return on equity when taking into account the lower capitalized costs. In terms of new development, we will not start any new office led schemes until our current projects are substantially derisked.

And as returns on new office development are similar to residential development, but the risks are different, we plan to scale back office led development by at least half post the completion of our current pipeline, and that's to shift activity towards residential from 2026 onwards. And on that front, we continue to progress the valuable opportunity that we've created across our three key schemes in London and Manchester, each of which benefits from strong transport links and substantial scale in their own right.

During the year, we submitted a revised planning application for the first 600 homes at Finchley Road, which already benefits from an outline and part detailed consent. And we secured vacant possession and completed demolition of the former Homebase unit on this site.

We also submitted a detailed planning application for the first 879 homes at Mayfield after agreeing a renegotiation of the development agreement at that site. And we're considering the potential start of a small GBP150 million office development here, which would unlock the delivery of a further 1,700 homes around the new park that we've already created.

Now we expect a planning decision on both schemes over the next six months, and that would pave the way for a potential start on site by late 2026. And that would be around a year ahead of Lewisham, where we submitted an application for an outline and part detailed consent for our new 2,800 homes master plan in October with the decision expected in the second half.

With a substantial upside in our existing portfolio and pipeline and a clear strategy in terms of capital allocation, we are well placed to deliver sustainable income and EPS growth over time. So with that, I'll now hand you over to Vanessa.

Thank you, Mark. And good morning.

We have delivered solid financial results for the year. EPRA EPS was ahead of our -- the guidance that we gave this time last year and that was driven by stronger like-for-like income growth and further reduction in overhead costs.

Our dividend is up 2%, in line with our guidance. And at 1.25 times, our dividend cover sits comfortably in the middle of our target range of 1.2 times to 1.3 times.

Our strong leasing activity drove 4.2% growth in ERVs, which supported a 1.1% uplift in the external valuation of our portfolio and a 1.7% increase in NTA per share. So our return on equity increased to 6.4%.

Our strong capital base allowed us to take advantage of the opportunity to invest in rare and highly -- high quality and accretive acquisitions, which will give -- will further enhance our future income growth. Whilst our borrowings increased as a result, pro forma for disposals since year end, our LTV is 38.4% and net debt to EBITDA is 7.7 times.

So combined with our long debt maturity, our balance sheet remains robust. As our operational momentum remains strong and the outlook is positive, we expect to deliver 2% to 4% growth in EPS for the year to March '26.

So turning to EPRA earnings in more detail. Overall, our net rental income was up GBP2 million despite a GBP24 million reduction from the timing difference between our disposals at the start of the year and acquisitions at the end.

This was more than offset by the income from new developments which added GBP12 million and our strong like-for-like income growth which added GBP23 million. We saw a GBP14 million reduction in surrender receipts from the elevated level in the prior year.

So combined with a GBP5 million increase in the recovery of bad debts, as a result of bringing the management to certain assets in-house and collecting the cash that we had previously provided for, this meant net rental income was up slightly to GBP552 million. We also made further progress in reducing our overhead costs, which were down 5% for the year and we're on track to further reduce this by more than 10% over the next two years.

Finance costs increased slightly and that's reflecting a small increase in the weighted average cost of debt and increase in borrowings following the acquisitions in the second half. Together, these factors drove EPRA earnings up GBP3 million.

And this chart shows how this translates into movements in EPRA earnings per share. Our strong operational performance meant the like-for-like net rental income growth of 5% was well ahead of our initial guidance of circa 2.8%.

Central London was up 6.6% and retail up 5.1%, and reflecting -- thus reflecting the strong demand for our high quality assets and our focus on driving operational efficiencies. Mixed use income was up 2.8% whilst our retail and leisure parks were flat.

So in total, like-for-like growth drove over GBP0.301 or 6.2% increase in EPS for the year. Combined with overhead savings, which added GBP0.05, this more than offset the increase in finance costs.

And for financial year '25, this was partly offset by the movement in surrender receipts and bad debt recovery that I mentioned earlier, but neither of these are expected to be material factors in the current year. The net impact from investment activity was down GBP0.101 due to the timing differences between our acquisitions and disposals, but this more than offset -- was more than offset by our strong operational performance.

So EPS for the year was up slightly to GBP0.503. As our leasing pipeline remained strong, we expect like-for-like income to grow a further 3% to 4% this year, which underpins our positive outlook for EPS.

And this is further enhanced by our continued overhead savings. As I mentioned at our Capital Markets event in February, we're seeing the benefits from our focus on improving efficiency on our cost base.

Following a GBP7 million reduction in financial year '24, overhead costs were down a further GBP4 million last year and that's despite continued inflation. So looking ahead, we are on track to deliver a further reduction of at least GBP8 million over the next two years as the benefits from our investments in data and technology come through.

And combined with further savings on resourcing and procurement, this means that we expect overheads to be below GBP65 million by 2027, that's down circa GBP20 million or 23% over four years. So turning to portfolio valuation.

Our successful leasing drove 4.2% growth in ERVs, which was towards the high end of our guidance. Yields were up marginally and taking account of CapEx movements and the lease expiry at Queen Anne's Mansions, our portfolio value was up 1.1%, in line with our view a year ago that values for the best assets would return to growth.

As previously highlighted, the existing leases at Queen Anne's Mansions will expire in late 2026 and late 2028. So as these dates are getting nearer, the NPV of the residual finance lease income decreases.

This reduces our -- this reduced our overall valuation growth by around 0.5%. And there's a similar impact for the CapEx that was spent on predevelopment assets, as this has not yet been reflected in valuation uplifts.

But this CapEx will reduce significantly over the next few years as we reduce our capital employed in this part of the portfolio. Our Central London portfolio was up 1% as ERV growth was strong at 5.2% and yields rose slightly.

Developments were up 2.5% and that's due to the growth in ERVs and progress on our two on-site schemes, which complete in about 12 months. The valuation of our major retail assets was up 3.4% with ERV growth rising to 4% and yields compressed 22 basis points, and that's largely due to the value that was created at our asset -- from our asset management activity and that's in White Rose in Leeds and St.

David's in Cardiff. This means retail was again the best performance segment of our portfolio with a 10% total return.

So having already invested nearly GBP1 billion of capital in this segment over the last three years, we aim to invest a further GBP1 billion in retail over the next three years. Our mixed use assets were down 5% in value for the year and this partly reflects a reduction in value at MediaCity in the first half and partly the predevelopment CapEx that's been incurred at our other mixed use schemes, as I mentioned earlier.

And following the sale of our hotel portfolio, our remaining subscale assets were up slightly. We have sold one fifth of this portfolio since the year end, effectively in line with book value and we expect to progress further disposals in the near future.

We continue to see a steady pickup in investment activity in both London and retail, and the outlook for rental growth for the best assets remains positive. So we expect values for such assets to be well underpinned.

The stabilization in the valuation yields and strong operational performance meant that our overall return on equity increased to 6.4% for the year. Our income return was 5.8% whilst valuation growth, excluding the yield movements, contributed 2.1% to our total return on equity.

The positive impact of this was partly offset by the fact that we wrote off GBP22 million of goodwill, which arose on the acquisition of the studio's operating business at MediaCity. This merely represents an accounting policy impact rather than any reduction in value since acquisition.

There were also a number of small one-off adjustments in respect of transaction costs, valuation impairment on trading assets and certain property provisions together totaling GBP24 million. So overall, our net tangible asset value per share was up 1.7%.

Our focus on sustainable income and EPS growth has a number of strategic implications in terms of capital allocation, as Mark set out earlier, which will be attractive to our total return on equity and to reduce the cyclicality of our returns over time, adding further to the positive outlook. This remains underpinned by a strong capital base.

Our average debt maturity is long at 9.6 years with no need to refinance any debt until 2027. During the year, we strengthened our financial position with the issue of GBP350 million 10 year bond at a 4.6% coupon.

And we refinanced GBP2.3 billion of revolving credit facilities, retaining the low margins. At our half year results, we said that we expected LTV to increase in the short term as we'd look to capitalize on the attractive acquisition opportunities, and this happened with the acquisition of Liverpool ONE.

But pro forma for disposals since the year end, our LTV is now 38.4% and we expect this to reduce to the mid-30s over time as we anticipate further disposals in the near future. We continue to target net debt to EBITDA of 8 times or less.

However, we expect to slightly exceed this in the current year as our two on-site developments are nearing full investment but do not produce income until they complete in the next 12 months. This will therefore be temporary and our net debt to EBITDA ratio will reduce again once both schemes are let.

In addition, our aim to reduce our capital employed in low and nonyielding predevelopments will further reduce our net debt to EBITDA by 0.7 times. Taken together, the growing reversion in our existing portfolio, a further reduction in overheads and repositioning of our portfolio should drive circa 30% EPS growth by 2030.

Against this, the lease expiries at Queen Anne's Mansions will likely reduce earnings by circa GBP20 million. And based on the current yield curve, finance costs are expected to increase as we refinance maturing debt.

This -- the combined impact of this is around GBP0.05 per share spread over the next five years. Overall, this means that we see the potential to deliver around 20% EPS growth by 2030, which adds further to our attractive 5.8% income return on NTA.

For financial year '26, we expect good progress on this trajectory as we expect like-for-like rental income growth to support around 2% to 4% growth in EPS. And with that, continued growth in dividends.

With a strong capital base and a clear strategic focus on driving sustainable income and EPS growth, this means we are well placed to drive substantial shareholder value over time. And with that, I'll hand back to Mark.

Thanks, Vanessa. So I'll now wrap up with our view on the current environment, what you can expect from us in the year ahead and then we'll open for Q&A.

So notwithstanding the recent increase in wider economic risk as a result of shifting US trade policy, we are yet to see any impact from this on our business. So our outlook remains positive.

Our focus on driving sustainable income and EPS growth over time to drive long term shareholder value means that our strategic priorities for the next few years are clear. And our decisions over the last few years mean that we're well placed to continue to capture the growing reversion in our existing portfolio and to drive continued like-for-like income growth over the next three years, whilst we further reduce our cost base.

We will also grow our retail platform by a further GBP1 billion following our GBP600 million acquisition of Liverpool ONE and Bluewater over the last 12 months. As we exit our remaining noncore assets and release significant capital from low or nonyielding predevelopment assets, all of which positively impacts earnings and our overall return on equity.

Over the next two to five years, we will then start our first residential development projects and begin to reallocate capital from offices to build a GBP2 billion plus residential platform from 2026 onwards. And this will ensure we build on our positive EPS growth in the near term by shifting our portfolio mix, such that this growth can be sustained in the medium to longer term.

So to summarize, Landsec today is well placed as a result of the successful execution of our 2020 strategy. At a time where quality has never been more important for customers, we have established a best-in-class office and retail portfolio, both of which are focused on areas of strong customer demand.

And we have created a GBP3 billion residential pipeline, providing a valuable opportunity to grow in this attractive structural growth market, all of which is and will continue to be underpinned by a strong balance sheet. As we move to the next phase of our strategy, the opportunity to build on the success provides clear upside.

Our portfolio is 97% full and so ERVs are growing meaningfully. Office rents are already 12% reversionary and ERV growth adds further upside to this.

Whilst in Retail, uplifts on relettings and renewals are now up to 10% on recent deals. In addition, our focus cost efficiencies will see overhead reduced by a further 10% from here, building on the 13% reduction over the last two years.

And our capital recycling will drive further upside in income. All this means we see the potential to drive around 20% growth in EPS by financial year '30, which will drive continued growth in dividends.

With an existing income return at NTA of 5.8%, this compound growth in EPS will drive an attractive return on equity. So as we move to high income -- higher income growth and lower cyclicality, delivering our strategy will see us drive significant shareholder value.

And with that, we will now open the floor for Q&A.

As usual, in our Q&A, I'm going to start here in the room, we will have roving handheld moment so please wait for mic before asking your question. Once we're through questions in the room, I'll move to the conference call and finally pick up any remaining unanswered questions via the webcast.

So please any questions from in the room.

It's Sam Knott from Kolytics. First of all, on your 2030 sort of target, I appreciate that it's a long way out and this is potential rather than strict guidance.

What do you need to sort of hit that GBP0.60 target and what do you currently see as the major risks to not get into that point?

So I think the key thing is the vast majority of that growth between now and 2030 is based on the portfolio we own today. So that is capturing the reversion in the office portfolio.

So 12% reversionary as things stand and likely to grow and capturing rental growth within the retail portfolio, whereas we've mentioned we're now seeing leases ahead of previous passing in double digit and that's a growth rate that's accelerating. We've then got the cost efficiencies.

We've got very good visibility to the cost efficiencies. A lot of that is technology enabled from the systems that we successfully implemented at the end of last year.

So that's the vast majority. I would say, towards the back end of the period there's some aspect of capital recycling that would deliver an element of that and that capital recycling will -- we do assume within that, that there will be a gradual steady recovery in investor demand for office assets to allow us to facilitate that rotation.

But the vast majority of that is about executing on growth in today's portfolio.

And then just on your residential developments, you quote returns between sort of 12% to 13%. What is the development yield that underlies that and how does that compare to maybe a stabilized yield in the same market?

So the first thing I would say is these are projects that we're looking to start at the earliest sort of late 2026. So we don't have absolutely fixed numbers today as you would expect.

But we will be looking on a net basis, so net of all operating costs, a yield on cost that's going to be somewhere in the low 5s, high 4s to low 5s, depending on London versus Manchester within the pipeline. Stabilized yields, I mean, we're starting to see a bit more transaction activity in the market.

Depending on where those assets are, they tend to be valued at the moment of somewhere in the region of 4.25 to 4.75, depending on exact location. You've got factors such as the quality of the products and clearly what you're delivering in a new development pipeline in the context of a new building safety environment, of dual staircases and all these things.

I mean, I don't think they're necessarily quite apples and apples comparisons. But the most important feature for us is how strong the correlation of rental growth is to inflation and you've got such strong political support to see houses being delivered to be -- see residential units being delivered, particularly in brownfield locations.

So for us that -- we see that political support ultimately easing the path to delivering viable projects in those brownfield locations playing into what is an unquestionably strong demand for residential.

It's Zachary Gauge from UBS. A couple of questions from me.

Firstly, on the under construction developments, unless I misheard you, Vanessa, I think you said they were completing in about 12 months' time. At the half year results, I heard Thirty High completing October '25 and Timber Square completing December '25.

So has there been any shift in the expected completion date on those assets? The second one on the return on equity.

So 6.4% for the year. Obviously, still a little bit below the 8% to 10% sort of guidance that you gave assuming stable yields, which they largely were.

Appreciate there were the caveats, the J-curve on developments, Queen Anne Mansions and the goodwill write down this year. But going forward to sort of next year, assuming we have stable yields again, hypothetically, are there -- is there any other potential headwinds that would mean that we wouldn't be at the 8% to 10% that you've sort of guided to?

So your second question, I'll pass to probably Vanessa in a moment. Then just to talk on the under construction developments, so we're expecting to see those complete around the end of this financial year.

We talked at Timber Square of seeing some slippage and cost overrun at the half year. There's been no further deterioration on the cost side.

Exact completion dates and leasing in this final sort of 12 months of development, there's a little bit of flexibility around that. But there's probably been some slippage from when the projects were initially committed to.

But in terms of completion over the next 12 months, that's something that we're comfortable with. And as I mentioned in my comments, we expect to get into the pre-letting window for those projects really in the second half of this year.

They're multi-let projects. Thirty High, in particular, is effectively 27 office floors of 10,000 square feet each, the highest building in the West End with unrivaled views.

We're going to get the best pricing for that by waiting until the product is more complete, so people can see and imagine themselves in that space. And that type of occupier tends to have shorter lead times.

Timber Square, slightly bigger floor plates. That's probably going to see pre-let demand a little bit sooner.

And that's the one I think we would expect to sort of start to get traction on in the second half of the year. Just on the -- then on the ROE guidance and some of the one-offs that we have identified this year, the likelihood of what we might see in the year ahead…

So I think as we -- as we've -- as I mentioned, I think we're in a position now where we see that the yields are in a stable position from a valuation perspective. So I think we're in a good position now with around 5.8% income return on NTA and also seeing ERV growth coming through and expecting that to be, again, in a similar -- broadly similar to what we've had this year with low to mid single digit growth.

We're in a position to deliver a good return on equity going forward. The adjustments that we referenced in the presentation around one-off costs in terms of development, the write down of QAM and the other write down on the goodwill, et cetera, was really a one-off situation.

So we don't see those reoccurring. So that puts us in a good position that we should be able to be in a good position to deliver our target return of 8% to 10% going forward from here.

Max Nimmo, Deutsche Numis. Just if you could talk a little bit about the retail investment market.

There's obviously been a lot of focus on the pivot towards resi, but just kind of interested to see how that's kind of evolving. And have you looked at many more opportunities since Liverpool ONE, has a lot come across your desk?

I appreciate you're going to be very selective in what you're going to be looking at. But just with regards to that sort of GBP1 billion over the next three years, should we think about that as possibly one asset, maybe two?

Is that the way to think about it?

So the GBP1 billion that we've indicated over the next three years is -- roughly GBP200 million is accretive CapEx into the existing portfolio and that will be selectively expanding space and expanding the rent roll, so delivering a very clear return upside. And that sort of development is viable with rents growing or when you're effectively adding to existing retail space rather than needing to put all of the sort of fundamental base in to build from.

So the development is clearly not viable for any new shopping centers nor is it likely to be viable anytime soon, which is one of the really important things that underpins our sort of investment thesis. That chart that we've shared a couple of times now and was again in the presentation here of the top 1% of destinations effectively having access to 30% of all in-store spend, that's the other side of the investment thesis for us.

And so that's where we are looking. So let's put that in context, that's 6,000 destinations at CACI tracking that data.

So that is 60 locations is the top 1%. They're not all shopping centers, that's going to have Bond Street, Regent Street, et cetera, those locations in there.

But it roughly equates to the top 30 shopping centers in the UK. So that's effectively where we are looking to add to our portfolio.

We know that a number of those are held in capital structure that are unlikely to be the right long term structures and long term earnings going forward, that's likely to offer the best opportunity to invest. I would say the other GBP800 million is probably assuming probably two acquisitions over the next three or so years.

Investment market more widely, there's certainly more coming forward in shopping centers. Most of the stuff that's coming forward at the moment is at the smaller end and it's not the stuff that I would see us being naturally interested in.

But we would expect to see over the next sort of two to three years more opportunity at that sort of top 30 end of the market. I mean Liverpool, as a transaction took roughly 18 months, I think, from sort of beginning to end.

So you get decent visibility of what's coming through.

Paul May from Barclays. Just a couple from me.

First one, on the strategy, a lot of it is the office selling and the residential investment, which, as you mentioned, doesn't necessarily generate much income differential. And we're probably looking at 10 year plus before you start to get the real income growth being a beneficiary.

Just wondered, have you -- or did you consider selling those schemes given the strong operating performance you mentioned in the office portfolio and the retail portfolio versus that risk of execution of selling and investing in residential? Why not just sell those residential schemes, and what's the issue there?

And I'll do the second one in a minute.

So I'll take that one first. So exactly how we capitalize those three, I mean, those three projects together are roughly GBP4 billion to GBP5 billion of investment.

And so I don't think we're necessarily sat here today saying we're going to put GBP4 billion to GBP5 billion of our balance sheet, which is kind of half -- getting off half the portfolio into those three projects. So at some point going forward, we're likely to be looking to bring other forms of capital into those.

Exactly when and how we bring that capital in and the extent to which it might participate in some aspects of development or it may be taking out stabilized assets, I think those are things that we will consider and still need to consider. And we have to look at, ultimately, when we nail down the build cost, we're absolutely clear on the rents and the operating costs in these projects, we have to be absolutely confident that the return we're going to make on those justifies the shift across that.

So what we're signaling very clearly is an expectation that will be the case but not an absolute commitment that we're going to press ahead with those projects sort of come what may. What however makes residential developments for build to rent in principle so attractive is the political support to see homes built in urban locations.

The very significant shortage in housing, the very significant correlation with inflation over many decades, we think that combination of factors is a relatively rare confluence of things that will support us positively on those projects. And so selling them now and continuing to focus on something that is retail where we've got very clear long term confidence in the sector, office where we can see very clearly short term, but on a medium to longer term, judging where supply is being able to consistently capture uplift through the lease model within the UK, those are all things which we think are quite challenging to translate into a consistent, sustainable EPS growth story in a way that residential isn't.

Residential very clearly aligns to that. And as our focus is EPS growth, income growth and demonstrating the sustainability of that for the long term that's what underpins the steady rotation towards residential on a five year view.

That feeds quite nicely into my second question around, I suppose, the impact on the shares today, I think, coming from that slight miss on the NTA that we talked about on the one-offs that have come through versus the strong operating results that you highlight and outlook for earnings growth, which must be quite frustrating for you seeing, because that's what you want to focus on and yet the market doesn't seem to want to. At what point do you just drop reporting NTA?

I don't think it's rather difficult in the context of accounting standards and against [Multiple Speakers] for us to do that. Look, we've said -- NTA is not irrelevant.

I mean, you've got to be clear what the underlying value of your assets are, and it should be a function of the ability of those assets to generate cash flows and returns over the long term. They're just valued with a different investment market in mind, which is much less liquid than the real estate market, which I think often contributes to the differential between the two.

But whether it's real estate or whether it's equities for the long term, if you take away some of the variability in multiples, it's income growth longer term that drives value. At the end of the day, we are managing a business for the long term.

We're confident that, that long term strategy is what's going to deliver value. And what we can't do is be unduly swayed by how a market might respond to things from one sort of year to the next.

There's a very high degree of conviction and confidence increasingly from investors and questions about why can't we invest more into retail. That's very different to the questions we were getting from the same investors two years ago about why would you do anything in retail.

And I think it's a decent illustration of we've got to be confident in what we're doing with our business and be prepared to sell it. Clearly, what we're trying to do so investors can judge for themselves, ultimately, their view on the strategic view that we try to set out clearly.

Okay, thank you.

I don't think there are any further questions in the room, so I'm going to open it up to the conference call now to see if there are any further questions to pick up from anyone who has dialed in this morning.

Just one on disposals. Just wondering if you can comment on what sort of response you had from the market at large since you publicly stated your sort of intentions and willingness to dispose various assets in February?

And whether any sort of interest that you received is more about full sales or interest in JV-ing on some of those assets? Just trying to get a sense of if the right offer comes along, should we see some of these disposals happen more quickly than some of your commentaries maybe implied so far?

So perhaps, I'll provide a little bit of sort of general comment on what we're seeing happening in the investment market and, in particular, the sort of London investment market. And then I'll try and put a bit more color around the sort of conversations discussions that we've had post our strategy announcement in February.

So as I mentioned in my remarks, we're seeing a steady -- it's not spectacular, but it's a steady return of investor interest into the market. I think there's a whole range of different factors behind that.

But the one that underpins it the most is there is an increasing level of conviction and confidence in the underlying occupier markets and the ability to underwrite rental growth for best-in-class office assets. There are still question marks, of course, about what's the right cap rate and where our rate is going, which I think will act as a -- that will be a key factor in how quickly we see further activity recover from here.

But where the demand is strongest at the moment really, I think, is two areas. Firstly, private equity style investment, which is more at the value-add end of the spectrum, as you would expect, that does fit pretty well with our intention to reduce the capital employed in nonyielding or low yielding assets, because those tend to be development opportunities, and there was a lot of activity in that end of the market.

So the response we've seen from the market to those opportunities, I think, has been a positive one. But as you alluded to in your question, there's quite a wide range of ways in which people want to participate.

So whether that's to put capital in and work alongside Landsec, whether that's to do that themselves. So that's, I think, the things we need to work through.

But unquestionably, the demand at that end of the market, I think, is pretty healthy. The other interest, of course, that we've seen across the wider market activity we've seen is at the very prime end and probably the [indiscernible] Norges deals, with Grosvenor and Shaftesbury] are good examples.

I think there is increasing number of global investors with very long term investment horizons that see this as an opportunity to acquire truly scarce assets in Central London at an attractive point in the cycle. Now we have assets within our own portfolio that, I think, also fit that sort of liquidity as well.

So we're not looking to rush quickly into disposal, certainly, at that end of the spectrum, but we've got to make sure that our strategy to sell can be adapted to where liquidity is in the market at any particular point in time. There isn't a lot of core capital around at the moment.

I think that will start to come back, is starting to come back, but that's still very low. Now Toby does a much better job than I do on going through all of the numbers that sit behind investment liquidity.

But if you look at the most recent sort of CBRE global equities study, which looks at capital that is targeting the London office market at current pricing, I think that peaked in 2021 at around GBP44 billion. It troughed in around this time last year, I think, down at GBP19 billion.

Most recently, I think that's now reported at something in the order of GBP21.5 billion. So it's off of -- the trough is improving steadily and that's very much aligned with what we're seeing.

The last point I would then make, which is just sort of a bit more color for ourselves, is that when you stand up as a business and talk about what you're trying to do strategically and what you might be wanting to sell, et cetera, what you're wanting to buy, perhaps, unsurprisingly, that tends to generate a significant amount of inbound inquiries, and a lot of that can lead to interesting opportunities and options that we or others might not have thought of. So I think it's the important part of stimulating recovery in the investment market.

Maybe just one small follow-up to that. Does the timing or the nature of those disposals have much impact on your overheads?

So it's a JV rather than sale, for example. Is that -- could a sort of surprise on timing or structure impact to what you're guiding in terms of overhead progression?

Now with respect to the income statement, because that's not overhead that's dealing with development activity. So the guidance we provided on the reduction in costs through the P&L, through the EPRA earnings number, that is not presupposing any particular set -- level of development activity, that's all about efficiencies within the wider central overhead functions of the business off the back of primarily the technology investment that we've successfully made and implemented.

Any other conference call questions?

So I'm going to go to questions from the webcast. First one from Mike Prew concerning EPRA cost ratio.

So we expressed the view that the EPRA cost ratio isn't important in isolation. Why is that?

Surely it's a cost component trickling down to earnings and dividend paying capacity. I'll take this one, if I may.

So the first thing I would say is that for the avoidance of doubt, cost and efficiency is incredibly important in a business and we are laser like focused on that. The best way I can talk about why we say the EPRA cost ratio itself in isolation is not so important is I'll give you examples across our shopping center portfolio of car parks.

We could lease a car park to a third party operator who would deal with everything and get GBP1 million a year of income and a cost ratio of effectively zero, or we can run them ourselves, get GBP1.5 billion of revenue and spend GBP200,000 running it and have a cost ratio of 15% to 20%, but make GBP300,000 more income at the bottom line and that is more dividend paying capacity and more earnings. So that's what we mean when we distinguish between the operating cost ratio and the importance of cost and efficiency.

And you can scale that up to operational businesses such as shopping centers, residential going forward. The cost ratio will always be higher than a sort of net lease model, but it gives the opportunity to drive higher earnings and higher growth through operational execution over time.

And then the second question from Marcus Phayre-Mudge. Did we bid on Aberdeen's ownership at Brent Cross?

We did not. Obviously, that's a very longstanding joint venture interest between Aberdeen and Hammerson, and I know Hammerson responded recently to press speculation on it.

Those types of interest, of course, tend to have a very narrow market and tend to lead to transactions taking place between partners, as we've done very successfully in increasing our stakes at Bluewater and Cardiff. No further questions on the webcast, and we've covered the questions in the room and on the conference call.

So all that leaves me to do is to thank you very much for taking the time to attend our results presentation this morning, and wish you all a good day and weekend when it comes. Thank you.