British Land Company Aktie

Thank you very much for joining us. Today, we'll follow the usual running order. I'll start with a strategic update. Then David will take you through the financial performance and our attractive earnings outlook.

Over the next 30 minutes, you'll see how this is driven by 2 things: first, our market-leading positions in sectors with strong fundamentals; and second, our active approach to asset management. We've long believed that hands-on asset management is a key source of outperformance. Never has that been more evident, and Kelly will give you some great examples later.

So let me start with the occupational fundamentals of our markets and our competitive positioning within them. Our campuses and retail parks now represent 90% of our business, and they're market-leading, both in scale and in quality. And I'm struggling to remember a time when the occupational fundamentals were as favorable as they are today, with net absorption very strong and supply constrained in both our markets.

Together with our active approach to asset management, this is translating into attractive ERV, like-for-like, and earnings growth. This underpins our conviction in delivering 8% to 10% total accounting returns through the cycle.

I thought it would be helpful today to touch on 2 topical themes, inflation and artificial intelligence. As we all know, inflation rose dramatically after the invasion of Ukraine and conflict in the Middle East is likely to exert further upward pressure on prices. So how much of this inflation are we likely to capture in our rents? To answer this, let's look at the portfolio performance since 2022.

Over this period, our ERV growth has tracked inflation and just recently overtaken it. And we've delivered top quartile total shareholder returns. That's down to having well-located, high-quality assets in sectors with strong occupational fundamentals. And this is the important bit. Our markets are tighter today than they were in 2022, with vacancy around 300 basis points lower in both markets. So we expect to outperform inflation going forward and are guiding to ERV growth of 3% to 5%.

Now let's delve into the fundamentals in more detail, starting with the London offices. This is where I want to touch on my second theme, AI. There's a very live debate about AI's potential impact on white-collar jobs. Will this be like previous waves of technological change, the PC, the Internet, the smartphone, where new jobs were created faster than old ones disappeared? Or will it be different this time? The reality is nobody knows for sure.

So as ever, we will stay very close to our customers to be the first to understand what is happening. In the meantime, I think we can say with a high degree of confidence that soft skills will be at a premium, and a new generation of companies will want the best physical environments for these skills to flourish in. And our campuses should sit right at the heart of this.

If we look at the facts as they are today, net absorption of space, which is one of the best measures of the health of demand, is at a record high. And for every company downsizing, 4 are upsizing. This is driven by a strong return to the office and significant growth from a new wave of AI businesses.

Despite geopolitical uncertainty, the forward-looking indicators are very positive. Demand is 57% above the 10-year average and under offers are 50% higher than this time last year. This demand is meeting a severe supply crunch, driven by initial fears about the effect of hybrid working, increased construction costs and higher yields. The crunch is particularly acute in the City, where vacancy for new and refurbished space is forecast to fall below 2% and remain there for the next 4 years.

Historically, when we've seen this, rents have grown at around 10% per annum. Our campuses are ideally positioned to benefit from this environment. As you know, they offer exceptional product next to major transport nodes with rich amenity and space that supports companies at every stage of their growth from Storey, through Work Ready, to global HQ space. The results speak for themselves, a record GBP 143 million of leasing last year. To put that into perspective, we represent around 5% of the London office market, but were 15% of last year's reported leasing and 33% in the fourth quarter.

As said before, the campus proposition is particularly attractive to science and tech businesses. In 2024, we set out a strategy to increase our weighting to this sector. We believed it would be a key growth driver of the U.K. economy. What we didn't fully anticipate was quite how powerful a tailwind AI would prove to be. Growth across AI and data sciences has accelerated, particularly over the last 12 months, and the lead indicators are very compelling.

If you take a look at the U.S., leasing activity in the San Francisco Bay Area reached 11 million square feet last year, the highest since 2017. And there's another 3.8 million square feet in the first quarter of this year. These businesses are now expanding internationally, and London is very clearly the leading destination.

That's due to the fantastic talent on offer. We're currently tracking 2.5 million square feet of active demand. The Knowledge Quarter sits right at the center of this activity, as you can see on this slide, that's benefiting Regent's Place. We've rapidly grown the number of innovation occupiers across our portfolio. Our acquisition of Life Science REIT adds further high-quality assets in the Golden Triangle, serving a wide range of occupiers, such as Wayve in autonomous vehicles, Oxford Ionics in quantum computing, or Thought Machine in banking payments.

On a pro forma basis, science and tech now represents 35% of our campus footprint. The name Life Science REIT understates the opportunity, which spans the entire science and tech ecosystem. Labs represent just 6% of the acquired portfolio. And interestingly, there are no life science companies among the top 5 occupiers, which together account for 50% of the rent roll.

The acquisition delivers attractive economics unlocked through our scalable platform. We expect meaningful cost synergies through the elimination of corporate costs and efficient onboarding of assets. The acquisition is immediately earnings accretive, and we expect further earnings growth through capturing reversion and leasing vacant space, particularly at Oxford Technology Park, where much of the space is newly delivered.

We've already made excellent progress in our first month of ownership, as you'll hear from David. And crucially, earnings accretion was achieved with no impact on NTA. I'm sometimes asked how we manage the higher covenant risk associated with smaller science and tech companies. In practice, we've seen very few failures, as you can see.

But risk management remains critical. Smaller, higher growth occupiers typically take Storey or Work Ready space on shorter leases with limited rent-free periods, supported by rent deposits. Because the fit-out is generic, if a tenant does fail, we can relet quickly with downtime generally covered by the deposit. By contrast, we require strong credit profiles for our HQ space given the longer leases, higher incentives and more bespoke customer fit-outs.

Though, ultimately, owning in-demand real estate is the best mitigant of credit risk. I'd like to now turn to development. It's a more challenging environment for this given higher build and funding costs. So it won't work everywhere, but in very core locations like here at Broadgate, where future supply is close to 0, the economics remain compelling. We are achieving premium rents, yields on costs over 7%, and we're mitigating risk through pre-lets, fixed price design and build contracts and partnerships. This is exactly the approach we're taking at 1 Appold Street, as you'll hear later from Kelly.

And now to retail parks, a growing part of our business where the fundamentals remain very healthy. By now, you'll be very familiar with our 3As, affordability, accessibility and adaptability. These make parks the format of choice for the U.K.'s best-performing retailers, the grocers, essentials and omnichannel operators. Expansion by these retailers has driven strong absorption with vacancy down 340 basis points since 2021, unlike high streets and shopping centers where vacancy remains high.

New supply is very unlikely, values remain below replacement cost and planning is extremely restrictive. Our portfolio is unmatched in terms of quality and scale. We have 10 million square foot of space within 30 minutes of half the U.K.'s population. And our deep long-standing retailer relationships are a key competitive advantage.

This has translated into footfall that's grown more than 13% above the U.K. retail benchmark since 2019. Strong rental growth on our retail parks looks set to continue given the high correlation with occupancy. Our occupancy is 99%, and we delivered 4.4% rental growth last year. The over-rent that emerged post COVID has largely burned off through ERV growth.

And today, we're leasing space around 6% above previous passing rent. Kelly will cover this and how we're also leveraging our retailer relationships to source attractive acquisitions and drive performance. But before that, I'll hand over to David to take you through the finances. David, over to you.

Thanks, Simon. Good morning, everyone. Three things from me today. First, I'll cover our financial performance for FY '26, then I'll update on the balance sheet and our approach to capital allocation. And finally, how our 5 earnings levers drive performance into the current year FY '27.

Starting then with the financials. I'm pleased we delivered earnings growth ahead of the guidance I gave at the start of the year, underpinned by strong like-for-like growth, good progress on development leasing, especially through the second half and continued cost discipline. Like-for-like net rents grew 6%, adding 2.1p to EPS. And within this, campus growth was 12% as EPRA occupancy improved following leasing progress at buildings like Norton Folgate and 155 Bishopsgate.

Retail also performed well, delivering 2% growth despite already high occupancy levels. And the fact we're now doing deals ahead of previous passing rent is a key driver of future like-for-like growth. Development leasing added 1.4p to EPS as recently completed schemes began to contribute to income. And we saw the benefit of our focus on admin costs, which are down 9%. And this, combined with a GBP 1 million increase in fee income, added 0.8p to EPS.

These positive items were partially offset by 2 factors: the negative year-on-year movement in one-off items and higher finance costs. Within the one-off items, there was a provision release last year, mainly related to the receipt of legacy arrears that did not repeat in FY '26, and this movement more than offset the upside from surrender premium.

Surrenders were higher than normal in the year, but in each case, they represent the kind of hands-on asset management as Simon described, allowing us to secure cash receipts and relet the space to new occupiers at higher rents. Higher finance costs reduced EPS by 3.4p. Of this, 1p was due to a 30 basis point increase in our weighted average interest rate to 3.9%, but the bulk of the increase is because interest that was previously capitalized on developments now hits the P&L as these schemes complete.

This, in itself, reduced EPS by 2.4p. Although looking forward, the impact is now more than offset by the leasing we've delivered on these schemes. And that's one of the key reasons why we see earnings growth into FY '27 as being derisked, something I'll touch on later.

Overall then, underlying profit was up 5% with underlying EPS up 1%. And so, in line with our dividend policy of paying out 80% of underlying EPS, the Board has proposed a final dividend of 10.8p, taking the total payout to 23.12p, up 1%. In terms of the more detailed P&L accounts, the 2 metrics I'd focus on here are the net rent margin and cost ratio, both of which have been impacted this year by specific factors.

Firstly, the provision movements I just described; and secondly, increased void costs as developments completed. Going forward, the void cost impact will reduce as we benefit from the development leasing we've already delivered and fill the remaining space. At the same time, we, of course, remain focused on controlling costs. In this context, it's pleasing that admin costs are down 16% since 2022 despite inflationary pressures and down 9% this year alone. This will benefit the cost ratio, which I expect to be around 17.5% in FY '27 before reducing further to mid-teens in future years, whilst margins return to around 90% over time.

Moving on to the balance sheet and NTA. Portfolio values increased 2.3% over the year, which along with profit growth delivered a 4% increase in NTA per share to 590p. Combined with the dividend paid, this delivered an 8.1% total accounting return within our target range of 8% to 10% for the first time since 2022. It's clear that our focus on making smart asset management decisions in the right sectors, driving rents higher while controlling costs has underpinned this performance.

We remained active in the debt markets in the year, completing over GBP 3 billion of financing activity. More recently, the backdrop has, of course, been more volatile, but we've continued to access markets successfully, including a new loan secured on 100 Liverpool Street in April and our new commercial paper program, which is shorter dated by nature, but benefits the P&L.

Looking ahead, with our diverse mix of debt types and duration, we remain well financed with flexibility on when and how we raise new debt. Leverage remains within our target ranges for this stage of the cycle. LTV is 39.2%. Net debt-to-EBITDA on a group basis is 7.7x, and our Fitch rating remains A with a stable outlook. So with GBP 1.6 billion of liquidity and no requirement to refinance until 2029, the balance sheet continues to provide the stable platform we need to grow.

In this context, our approach to capital allocation remains disciplined and consistent. In fact, this slide is unchanged from half year. Our focus is on recycling capital out of more mature, lower-returning assets into higher returning opportunities. Today, that means continuing to invest in retail parks at attractive pricing and progressing best-in-class campus developments, but on a suitably derisked basis. Kelly will talk you through the framework of how we think about derisking development shortly.

As ever, we take all capital allocation decisions in the context of shareholder returns, including the relative returns and EPS accretion available from share buybacks, for example, when we have proceeds to invest following significant disposals.

Our acquisition of Life Science REIT demonstrates how we are alert to opportunities to drive growth in an earnings accretive NTA-neutral manner. It allows us to scale into a sector with strong tailwinds using our existing platform and is immediately earnings accretive, adding 0.3p to EPS in FY '27 with further upside moving forward, primarily from the lease-up of the newly delivered space at Oxford Technology Park.

We've already repaid the legacy company debt using cheaper British Land facilities, integrated the 5 assets into our portfolio at minimal incremental cost, and we're making good progress on initial leasing with 56,000 square foot of newly delivered space under offer at Oxford Technology Park.

Turning now to our 5 earnings levers. This is the framework we use to deliver consistent cash-generative growth. And I'm pleased at how in FY '26, we've delivered well against these, including good like-for-like growth, continued cost rigor and strong progress on development lease-up. Fee growth has been slightly below what we target medium term, and that's largely because capital activity was also lower in FY '26 than we would normally expect. And again, Kelly will expand how we see the outlook for investment markets in a minute.

Principally, though, these levers were about the building blocks of earnings growth for FY '27 onwards. And here, I've set out how we expect them to trend over the medium term, which again is consistent with half year. The first 3 levers demonstrate how we expect to generate around 4% core organic EPS growth per year, with capital activity adding a potential further 2% EPS growth, meaning overall, we expect to deliver sustainable earnings growth of between 3% and 6% per annum going forward.

Specifically for FY '27, there are a few things I would highlight. First, given the occupational strength of our core markets, we are confident in delivering like-for-like growth at the top end of our target range of 3% to 5%. Second, we will benefit from the development leasing completed over the last 18 months, which will deliver around GBP 40 million of rents in FY '27. Third, we remain focused on leasing our remaining development space while retaining a firm grip on admin costs, which will both drive an improvement in our cost ratio to around 17.5% this year based on the expected shape of our P&L.

Partially offsetting this, we do expect a continued further gradual increase in finance costs, likely at the top end of this range of 10 to 20 basis points given our hedging profile. And finally, within the capital recycling lever, as I described, the Life Science REIT acquisition is immediately earnings accretive. All of which underpins our confidence in delivering at least 30.5p of EPS for FY '27. That's 6% EPS growth of FY '26 levels, which is a good place to hand over to Kelly.

Thanks, David, and good morning, everyone. Simon's covered the market backdrop and our strategy. So what I want to do now is bring it to life. I'll talk you through the activity and value creation we're seeing on the ground and share some examples of where our hands-on approach to asset management really delivers.

Starting with valuations. This is fundamentally an occupational story. Portfolio values were up 2.3%, driven by ERV growth of 4.9% and stable yields. ERV growth is at the top end of our 3% to 5% guidance range, reflecting the strength of leasing we've delivered. You can see the same pattern across both campuses and retail. Campuses are up 2% with ERVs up 6.5% and retail and urban logistics are up 2.7% with ERVs up 3.6%.

Geopolitical and macro volatility remains very evident, but the operational performance has shown no signs of pausing with leasing volumes accelerating in recent months. At our campuses, we completed a record 1.7 million square foot of leasing, 6% ahead of ERV and 20% ahead of previous passing rents.

This reflects tight supply for well-located high-quality space. Around half of this annual activity was delivered in the final quarter despite the more volatile macro backdrop. This continues into FY '27 with a further 295,000 square feet under offer as at year-end, 17% ahead of ERV. And in the 6 weeks post year-end, a further 228,000 square foot has gone under offer.

Over half of our deals have been on previously vacant or newly delivered space. This strong leasing drove occupancy to 95% at year-end from 92% in September. That includes Norton Folgate, now 94% let and under offer. Over at Regent's Place, in October, we launched One Triton Square. This building is a perfect example of our hands-on approach. We proactively took the building back from Meta in late 2023, received a GBP 149 million surrender premium, brought in Royal London as a JV partner early 2024 and repositioned it as a world-class science and tech building.

Leasing velocity has exceeded expectations with the building 94% let, including all of the lab space, just 7 months after practical completion and achieving rents 40% ahead of what Meta were paying. Occupiers include Gilead announced earlier this year and more recently, Anthropic, one of the world's leading AI companies who've signed for 158,000 square feet.

This is our sixth deal with Anthropic at Regent's Place and a great illustration of how our campus model supports growing businesses as they scale. Stepping back, Regent's Place as a whole has had a strong year as it continues to transform. The 1.4 million square foot Knowledge Quarter campus benefits from proximity to leading academic and research institutions. Leasing this year has been 12% ahead of ERV and ERVs across the campus are now almost 7% higher year-on-year. This has been driven by a broadening of the occupier base with a science and technology focus. Science and tech occupiers now represent over half the campus rent, up from 1/3, 5 years ago.

Euston Tower is the next chapter. As we move forward with our search for a development partner, it's a great opportunity to build on the campus' position as London's fastest-growing destination for innovation and high-growth businesses. And British Land will be moving head office to the campus in just a couple of months. So we're excited to have a front row seat to everything that follows.

While AI and tech is an important source of incremental demand, professional and financial service activity remains incredibly robust. Our letting to lawyers HSFK at Broadgate 1 Appold Street development signed in February and completing in 2029 is a good example. The 21-year lease for the office space sets new benchmark rents for Broadgate and the project meets all our development criteria. Prime campus location, meaningful pre-let of between 60% and 100% of the office space, construction cost certainty and flexibility to bring in an additional capital partner alongside GIC to manage risk and drive fee income.

Turning to the offices investment market. The occupational backdrop is well recognized as very strong, and that strength will feed through to investment appetite in time. At the start of the year, we were seeing encouraging signs with renewed appetite for larger lot sizes.

Since then, the Middle East conflict and U.K. political situation has weighed on the rates environment, but it's a question of when the recovery continues, not if. The occupational fundamentals are too strong for investors to ignore. Post year-end, we've exchanged or gone under offer on GBP 176 million of asset sales and have a number of other live processes underway. We'll update you on these in due course.

Turning now to our retail parks, which remain virtually full. Leasing volumes are strong with 1.5 million square foot completed at 9% above ERV. Importantly, deals are now being agreed above previous passing rents, reflecting very limited new supply and strong occupier demand. And it marks a key inflection point. For several years, rental growth absorbed historic over rent. We're now through that phase, so rental growth is flowing through into like-for-like growth.

Demand on retail parks also continues to broaden. Compared with a decade ago, more occupier types have moved from marginal to mainstream, including gyms and leisure, drive-throughs, discount grocers like Aldi and Lidl, EV charging and health service uses. This matters because it supports higher footfall, longer dwell times and greater cross spend, which will support the next wave of sustainable rental growth.

To finish, I'll touch on some examples of recent active management in retail parks. This is one of the things we do better than anyone else. In November 2024, we acquired Orbital Retail Park. At underwriting, the plan was upsize M&S Food into the former Homebase unit and relet the smaller vacated M&S space to another leading national operator.

We agreed both deals in principle before we purchased, acquiring with Homebase in situ, recognizing the pressure they were under and with direct visibility from our discussions with M&S that they wanted a larger store. M&S opened pre-Christmas, just over a year after acquisition, and they tell us this is their fastest new store from signing to opening and has been trading extremely strongly. The asset has delivered us a 21% IRR since acquisition.

Telford is another good example of hands-on asset management. We bought Telford Forge Shopping Park in October 2024, followed by the neighboring park last month, acquired at an attractive price, reflecting some vacancy. To create value across both parks, we have agreed a deal to bring a major national retailer to Telford Forge; to make room, we'll relocate some existing tenants into the vacant units next door.

We've also added everyday services and EV charging to drive footfall and dwell time, and we expect combined returns of around 11%. This is exactly the kind of opportunity our expertise allows us to find and execute, less competitive, more attractively priced and difficult for others to replicate. We have more in the pipeline. It's also important that we recycle capital when we've delivered our business plan, and we see more attractive returns elsewhere. That was the case at Harlech, where on completion of a regear and enhancing the scheme's income profile, we sold the park in March this year at 10% ahead of book.

So to summarize, we've had a year of record leasing in campuses, driven by strong occupational fundamentals. Retail park rents are now growing above previous passing, a meaningful inflection point driven by broadening demand. And we're adding value through active asset management and capital recycling. And I'll now hand back to Simon.

Thanks, Kelly. Some great examples there of us sweating the assets. So to wrap up the presentation, as you've just heard, we had a record year of leasing in FY '26, which provides high visibility on earnings into FY '27. And while the external environment remains uncertain, we're confident in our ability to deliver attractive earnings growth and total returns across the cycle.

We have the right real estate in the right sectors and locations where demand is strong and supply is constrained, and we're actively driving value through hands-on asset management. So that concludes the presentation. Thank you very much for listening.

Thank you. And today, we're joined by Sean Pearcey-Stone, who's the IR Manager for British Land, to answer your questions. We've had a number of questions that have been pre-submitted and submitted live. [Operator Instructions] Now, Sean, we're going to go to the first question, which is: offices seem to be doing well, but I thought hybrid working was supposed to reduce demand. What's changed?

Thanks for that question. Yes, it's a great question. I think looking back 5 years ago when we were coming out of the COVID, there were definitely question marks over what does it mean for the future of office demand with regards to hybrid working.

But I think sitting here today, we can say that debate is over. Many companies across London are mandating their staff to come back 4 or 5 days a week. And ultimately, those companies are having to provide space for peak utilization. And today, in London, we're seeing four companies grow versus 1 company contracting in terms of the ratio of contractions versus companies growing.

So yes, it's definitely an area where initially coming out of COVID, we saw people downsizing and potentially contracting space. But since then, we've seen companies realize, actually, people are back in the office 4 or 5 days a week. So the original or more space is now needed.

Now you mentioned AI driving office demand. Is that a real long-term trend or just the latest buzzword?

Yes. Great question. We're obviously getting a lot of questions at the moment about AI. What does AI mean for the future of office space? And is it going to cause disruption to the industry? And obviously, there are some longer-term questions there that need to be answered.

But on the ground today, AI is definitely causing an uptick in demand across London. We've seen that across our own campuses and across various other assets in London. I mean, we started a science and technology strategy in 2021, 2022, where we were focused on fast-growing companies, and we thought this sector was a sector where we could see some growth. Obviously, we were not picturing at that time to see the level of growth we've seen from AI companies.

But ultimately, our campuses are very well placed to help customers who are looking to grow. Anthropic are a great example of that. They started on our campus, and now they've done their sixth deal with us, taking an extra 154,000 square feet of space. So being on a British Land campus has enabled them to grow from 14,000 square feet to 50,000 square feet, and now they're at 200,000 square feet in our campus.

So definitely an area of demand we're seeing today. But also, we're seeing great demand from not just the science and tech tenants. We're also seeing very strong demand from financial services, professional services and law firms like HSFK, who have just taken a large pre-let at our 1 Appold Street development.

Sean, you mentioned Anthropic. The next question is relevant to that. Science and Tech, do they have a greater credit risk as they are not necessarily cash flow positive?

Yes. Again, that's definitely something we think about when we're looking at the covenant risk to our tenants across all of our tenants, of course. And some of these science and technology companies are definitely not necessarily cash flow positive at this point or earnings positive.

But a company like Anthropic, they're valued at close to GBP 1 trillion, $1 trillion today. So although they may not be generating profit today, they are -- they've got a lot of cash flow. And also one area what we're looking at when we're looking at covenant risk for these type of occupiers is the type of space they're taking. So if we're offering large floor plate HQ space, these are long-let spaces to high-quality, strong covenant tenants where we're offering rent-frees, et cetera, tenant incentives.

For lower-quality tenants where there is a risk that some of these companies could not exist in 5 years' time, they're more often taking smaller footprint buildings and they are giving us rental deposits. They're on fitted managed space, which means that if there is a failure, we can quickly get somebody else in to fill that void, and it's often covered by the rental deposits we take for those customers.

With Central London take-up at a 20-year high, how do you see supply evolving over the next 2 to 3 years?

Yes. Of course, we're always looking at the demand and supply fundamentals across both of our markets, and they're both very tight at the moment. We have a very good view of the pipeline across London. And ultimately, if somebody has not started a development project today, they're not going to be delivering a building in 2 or 3 years' time.

So we're quite clear on what buildings are coming. And Savills have looked at their forecast and they're forecasting over 10 million square foot shortfall of new quality space in London over the next 5 years due to the fact that people are not building. And part of the reason people are not building is obviously the inflation we've seen previously.

And now the latest increase in interest rates has further exacerbated that. And I think you're going to see an even further slowdown in terms of the supply picture that's coming in London.

Now, to what extent is current earnings growth volume-driven (leasing) versus pricing-driven (ERV growth)?

Yes, great question. I mean it's definitely a factor of both of those things. In the retail business, it's definitely -- it's more pricing at the moment. And obviously, we're -- important, it was -- we lease -- we're now leasing ahead of previous passing rents on our retail parks. It was over 6% in the second half of the year, which is very pleasing. In the campus business, it's probably more on the volume side of things. We're definitely getting some like-for-like growth on the pricing side.

But we had a large vacancy coming into this financial year because we just delivered some new space at buildings like Norton Folgate. We're having new developments like One Broadgate come through, One Triton Square. And this year, our EPRA occupancy has increased from 83% to 91%. So obviously, that increase in occupancy has been a key driver of like-for-like growth that we've seen in the campus portfolio.

Thank you, Sean. Now retail parks are clearly strong right now. But isn't that just a rebound story after years of underperformance?

Yes. Thanks for that question. Yes, I mean, retail parks definitely underperformed in the late teens coming into the early 2020s. As rents were rebasing, some of the rents were unaffordable for retailers. But we reinvested into that sector in 2021. And since then, it's been the best-performing sector across real estate. And our retail parks have outperformed the benchmark as well.

So we're very pleased with the performance of retail parks. And I think importantly, what we're seeing in retail parks today is the demand is broadening, if anything. So you have the likes of Lidl, Aldi, they've joined the retail park format and they would not have been there 5 to 6 years ago. And you're also getting more fashion retailers, et cetera.

So we're seeing a broadening of demand, which is very important. And of course, there is very limited supply coming in the retail park market. The planning is very restrictive. And ultimately, today, you can buy a retail park for less than it would cost to develop a new one. So there's going to be no supply coming and the demand remains strong.

And are you seeing any early warning signals from tenants struggling?

Yes. Very good question. I mean we're obviously always looking at our occupiers and making sure that the health of our occupiers is strong. Obviously, I won't give any specific names. But ultimately, we've got a very diverse occupier base. And our -- when we're looking down the list, there are a couple of occupiers where we may be slightly -- have slight concerns around.

I think this is probably more so in the retail market. There are often -- you'd see a CVA or administration every year. But ultimately, with the strong vacancy -- the occupancy we have in the portfolio at 99%, when we've had units come back from CVAs or administrations, we've done very well on those units. We've been able to bring new retailers onto the parks very quickly and ultimately drive rents higher.

So at this point in time, there's no huge concerns that we're looking at. But ultimately, we see if there are some occupiers at risk, ultimately, that's a chance at the moment for us to drive the rents on those parks higher. So yes, no huge concerns about retailers at this point.

And another one about retail parks. In retail parks, are tenants still able to absorb rent increases given cost of living pressures?

Yes. Of course, that's a question for many retailers across the U.K. They've got lots of pressures in terms of their cost basis. Today, occupancy cost ratios have come down from the mid-teens in retail parks to around 9% today. So the format is very affordable, and that's why we like -- one of the main reasons we like them as well. They're affordable for retailers.

They can open up a new unit on a park and trade profitably from that unit. And I think for us today, we're very pleased with that occupancy cost ratio at 9%. We wouldn't want to go materially higher, but there is definitely some room there for it to grow. And I think importantly, what we saw coming, in April is that the business rates bill on our retail parks actually came down about 5%. So that's some benefit to the retailers as well.

But it's something we, of course, keep an eye on. But I think given the strength of the demand, the lack of supply, we definitely see some room for growth on the rents there in the retail parks.

Next question. LondonMetric delivered double-digit income and earnings growth. Why is your growth much lower?

Yes. Thanks for that one. Yes. I mean, yes, LondonMetric reported last week, and they did deliver double-digit growth. In terms of earnings per share growth, I think that was closer to around 2% growth. And obviously, that's the measure that we look at as well. They've done very well in recent years in terms of M&A opportunities and various acquisitions that they've made.

So they've managed to do some -- a good level of growth inorganically, which has been very good for them. Obviously, as a business, we are 2 different businesses. They are a triple net business, probably a lot lighter in terms of the asset management. We're a lot more hands-on in terms of asset management that we do as a business, as Simon and Kelly discussed in the prepared remarks.

And I think at this point, with the strength of the markets, I think it's a great time to actually be a very active manager of assets and drive -- be able to drive those rents and profits higher out of those -- out of the real estate that we own. And of course, we're guiding to 3% to 6% EPS growth over the medium term. And looking into FY '27, we are guiding to a 6% EPS growth.

Now on the EPS growth, the question is you're guiding to full-year '27 EPS of at least 30.5p. What are the key assumptions behind that (leasing, cost of debt, disposals)?

Yes. Thank you for that one. I mean, as we're looking ahead into FY '27, we have our core drivers of earnings growth. So going through those in turn. Looking forward into next year, when we're looking at like-for-like growth, we're expecting that to be at the top end of the 3% to 5% range that we provide. And then we also are expecting to see admin costs remain roughly flat in the year. We'll get some inflationary headwinds, but we will look to offset those cost increases. Then we look down into finance costs.

So looking ahead into next year, we will see finance costs continue to increase, and we're anticipating another about 20 basis points increase in our weighted average cost of debt. And then moving down on to development and capital recycling. So one thing going into the next financial year, we have the benefit of the development leasing that we did at the end of last year, which was very strong.

And as David mentioned, we have GBP 40 million of rents signed on our recently completed developments as we look ahead into FY '27, which will be a key driver of earnings growth. And then in terms of the capital recycling in terms of what we're assuming, there's very limited additional capital recycling that we're assuming at this point. But what we have done going into the year is the acquisition of Life Science REIT, which adds a further 1% EPS growth into next year.

And what is the expected contribution from the Life Science REIT acquisitions to earnings over the next 2 to 3 years?

Yes. Thank you for that one. So as I said, looking into next year, the contribution to earnings is about 0.3p or 1% to EPS growth. So as we look at the Life Science REIT portfolio, essentially starting -- standing there today, there's about GBP 18 million worth of net rents in the portfolio, bringing that portfolio of 5 assets onto the British Land platform, there's very limited incremental cost in terms of admin costs associated to the portfolio.

And then we brought on the Life Science REIT debt, about GBP 130 million worth of debt onto the British Land platform at a lower cost. So all of that's been done. And I think it's -- the further earnings growth is going to come from leasing up vacant space in the portfolio today, which is primarily at Oxford Technology Park.

That's about GBP 3 million of rents. There's also a further GBP 2 million of rent to come from Oxford Technology Park and completing the further development there at that park. And then there's a further GBP 2 million of earnings or rental income to come from capturing reversion across the 5 assets in that portfolio.

Thank you, Sean. Now if interest rates remain higher for longer, how much of your EPS growth is at risk?

Yes. Of course, we look at finance costs as we go down our earnings levers. And when we set our earnings levers in November last year, we guided to around 10 to 20 basis points increase in finance costs per year. We've reiterated that guidance in our results last week. And I suppose sitting here today, 94% of our debt is hedged today. And looking forward over 5 years, that's about 71% of our debt is hedged.

So with the 5-year swaps probably about 4.3% today, when we put on our incremental cost of borrowing on top of that, we're essentially going to -- eventually, our weighted average interest rate is going to increase from around 3.9% today to about 5% of the current cost of debt. And the way our hedging profile works means that, that should happen fairly gradually per year.

So next year, we're guiding to around 20 basis points increase in our, and then we'll see what happens in terms of the rate curve in terms of guidance for future years.

Thank you, Sean. Your debt levels have crept up. Should investors be worried?

Yes. Thanks a lot. I mean we look at a few key metrics when we look at thinking about the debt within our business. So the 2 key metrics we're looking at is LTV and also net debt-to-EBITDA on a group basis. So these are 2 metrics, of course, that Fitch are very interested in as well. We have an A rating from Fitch. And we aim to keep our LTV below 40%, and we want our net debt to EBITDA to be below 8x on a sustained basis.

So sitting here today, our LTV and net debt to EBITDA are within these ranges. So we're comfortable where we are. And importantly, we're also under offer on GBP 176 million of asset disposals since year-end, which will help us fund the future development pipeline, et cetera, within the business. So sitting here today, we're comfortable with where our debt metrics are.

Thank you. Now the next question is, how do you prioritize capital between development, acquisition and debt reduction?

Yes. Yes, that's -- so capital allocation, our framework has been set out quite clearly within the presentation. So when we are looking at getting proceeds in from the disposal of a mature asset, we kind of look at it in 3 parts. So it's either going to be -- we're going to be looking at potential acquisitions of standing investments.

Today, that's retail parks at 7% yields, entry yields and also with the strong earnings growth on that, you get to a double-digit IRR fairly easily on those acquisitions. This also includes committing capital to our development pipeline on a derisked basis, so that means securing a large pre-let on any development, locking in the cost -- getting cost certainty on those developments and also potentially bringing in partners down the line.

And then we look at these things in the context of shareholder returns. So at any point in time, we will, of course, look at the relative returns of a share buyback versus the relative returns of those options to decide where the best place to deploy that excess capital may be.

Thank you. Now the final question that we have today is share price is up 8% in the last 5 days, which is very positive, but you believe the business is undervalued. Is the market wrong? Or are you overestimating the strength of the business?

Yes. Thank you for that one. I mean, yes, very pleased with the share price reaction since our results. Of course, our share price has been influenced by macro events over recent times. And of course, the increase in rates has seen an impact to our share price.

I think ultimately, we, as a business, are very focused on -- we're very focused on earnings growth, and we're very focused on delivering that 8% to 10% income-focused total accounting returns. And we believe if we consistently deliver those 8% to 10% total accounting returns, which we importantly delivered this year. Going into the future, that should lead to a rerating of the stock. So we're very focused on driving that earnings growth and delivering that total accounting return.

Thank you. No further questions at the moment, Sean. So maybe I can just hand back to you for any closing remarks.

Thanks very much for that. So yes, as was said in the main presentation, these are some of the strongest markets we've seen in terms of the campus and retail park portfolios.

In both markets, we're seeing very strong demand, limited supply, which has given us the confidence that we will continue to see strong earnings growth across the portfolio. And ultimately, that should lead to strong earnings growth as well. And we have good visibility of that earnings growth across the portfolio and reiterate our 3% to 6% medium-term earnings-per-share outlook.

We'll make a start. Good morning, everyone, and thank you very much for joining us. Great to have a nice turnout in the room. Probably helpful the Tube strikes were called off. I was a bit worried we'd be presenting to ourselves. But no, here we go.

So today, we'll follow the usual running order. I'll start with a strategic update. Then David will take you through the financial performance and our attractive earnings outlook. Over the next 30 minutes, you'll see how this is driven by 2 things: first, our market-leading positions in sectors with strong fundamentals; and second, our active approach to asset management. We've long believed that hands-on asset management is a key source of outperformance. Never has that been more evident, and Kelly will give you some great examples later.

So let me start with the occupational fundamentals of our markets and our competitive positioning within them. Our Campuses and Retail Parks now represent 90% of our business, and they're market-leading, both in scale and in quality. And I'm struggling to remember a time when the occupational fundamentals were as favorable as they are today, with net absorption very strong and supply constrained in both our markets. Together with our active approach to asset management, this is translating into attractive ERV, like-for-like, and earnings growth. This underpins our conviction in delivering 8% to 10% total accounting returns through the cycle.

I thought it'd be helpful today to touch on 2 topical themes, inflation and artificial intelligence. As we all know, inflation rose dramatically after the invasion of Ukraine, and conflict in the Middle East is likely to exert further upward pressure on prices. So how much of this inflation are we likely to capture in our rents? To answer this, let's look at the portfolio performance since 2022. Over this period, our ERV growth has tracked inflation and just recently overtaken it. And we've delivered top quartile total shareholder returns. That's down to having well-located, high-quality assets in sectors with strong occupational fundamentals. And this is the important bit. Our markets are tighter today than they were in 2022, with vacancy around 300 basis points lower in both markets. So we expect to outperform inflation going forward and are guiding to ERV growth of 3% to 5%.

Now let's delve into the fundamentals in more detail, starting with the London offices. This is where I want to touch on my second theme, AI. There's a very live debate about AI's potential impact on white-collar jobs. Will this be like previous waves of technological change, the PC, the Internet, the smartphone, where new jobs were created faster than old ones disappeared? Or will it be different this time? The reality is, nobody knows for sure. So as ever, we will stay very close to our customers to be the first to understand what is happening. In the meantime, I think we can say with a high degree of confidence that soft skills will be at a premium and a new generation of companies will want the best physical environments for these skills to flourish in. And our Campuses should sit right at the heart of this.

If we look at the facts as they are today, net absorption of space, which is one of the best measures of the health of demand, is at a record high. And for every company downsizing, 4 are upsizing. This is driven by a strong return to the office and significant growth from a new wave of AI businesses. Despite geopolitical uncertainty, the forward-looking indicators are very positive. Demand is 57% above the 10-year average and under offers are 50% higher than this time last year.

This demand is meeting a severe supply crunch, driven by initial fears about the effect of hybrid working, increased construction costs and higher yields. The crunch is particularly acute in the city, where vacancy for new and refurbished space is forecast to fall below 2% and remain there for the next 4 years. Historically, when we've seen this, rents have grown at around 10% per annum. Our Campuses are ideally positioned to benefit from this environment. As you know, they offer exceptional product next to major transport nodes with rich amenity and space that supports companies at every stage of their growth from Storey through Work Ready, to Global HQ space. The results speak for themselves, a record GBP 143 million of leasing last year. To put that into perspective, we represent around 5% of the London office market, but were 15% of last year's reported leasing and 33% in the fourth quarter. I said before, the Campus proposition is particularly attractive to science and tech businesses.

In 2024, we set out a strategy to increase our weighting to this sector. We believed it would be a key growth driver of the U.K. economy. What we didn't fully anticipate was quite how powerful a tailwind AI would prove to be. Growth across AI and data sciences has accelerated, particularly over the last 12 months, and the lead indicators are very compelling. If you take a look at the U.S., leasing activity in the San Francisco Bay Area reached 11 million square feet last year, the highest since 2017. And there's another 3.8 million square feet in the first quarter of this year. These businesses are now expanding internationally, and London is very clearly the leading destination. That's due to the fantastic talent on offer. We're currently tracking 2.5 million square feet of active demand. The Knowledge Quarter sits right at the center of this activity, as you can see on this slide, that's benefiting Regent's Place.

We've rapidly grown the number of innovation occupiers across our portfolio. Our acquisition of Life Science REIT adds further high-quality assets in the Golden Triangle, serving a wide range of occupiers, such as Wayve in autonomous vehicles, Oxford Ionics in quantum computing, or Thought Machine in banking payments. On a pro forma basis, Science and Tech now represents 35% of our Campus footprint.

The name Life Science REIT understates the opportunity, which spans the entire Science and Tech ecosystem. Labs represent just 6% of the acquired portfolio. And interestingly, there are no life science companies among the top 5 occupiers, which together account for 50% of the rent roll. The acquisition delivers attractive economics unlocked through our scalable platform. We expect meaningful cost synergies through the elimination of corporate costs and efficient onboarding of assets. The acquisition is immediately earnings accretive, and we expect further earnings growth through capturing reversion and leasing vacant space, particularly at Oxford Technology Park, where much of the space is newly delivered. We've already made excellent progress in our first month of ownership, as you'll hear from David. And crucially, earnings accretion was achieved with no impact on NTA.

I'm sometimes asked how we manage the higher covenant risk associated with smaller science and tech companies. In practice, we've seen very few failures, as you can see. But risk management remains critical. Smaller, higher growth occupiers typically take Storey or Work Ready space on shorter leases with limited rent-free periods, supported by rent deposits. Because the fit-out is generic, if a tenant does fail, we can relet quickly with downtime generally covered by the deposit. By contrast, we require strong credit profiles for our HQ space, given the longer leases, higher incentives and more bespoke customer fit-outs. Though ultimately, owning in-demand real estate is the best mitigant of credit risk.

I'd like to now turn to development. It's a more challenging environment for this given higher build and funding costs. So it won't work everywhere, but in very core locations like here at Broadgate, where future supply is close to 0, the economics remain compelling. We are achieving premium rents, yields on cost over 7%, and we're mitigating risk through pre-lets, fixed price design and build contracts, and partnerships. This is exactly the approach we're taking at 1 Appold Street, as you'll hear later from Kelly.

And now to Retail Parks, a growing part of our business where the fundamentals remain very healthy. By now, you'll be very familiar with our 3 As, affordability, accessibility and adaptability. These make parks the format of choice for the U.K.'s best-performing retailers, the grocers, essentials and omnichannel operators. Expansion by these retailers has driven strong absorption with vacancy down 340 basis points since 2021, unlike high streets and shopping centers where vacancy remains high. New supply is very unlikely, values remain below replacement cost, and planning is extremely restrictive.

Our portfolio is unmatched in terms of quality and scale. We have 10 million square foot of space within 30 minutes of half the U.K.'s population. And our deep long-standing retailer relationships are a key competitive advantage. This has translated into footfall that's grown more than 13% above the U.K. retail benchmark since 2019. Strong rental growth on our Retail Parks looks set to continue given the high correlation with occupancy. Our occupancy is 99%, and we delivered 4.4% rental growth last year. The over-rent that emerged post COVID has largely burned off through ERV growth. And today, we're leasing space around 6% above previous passing rent.

Kelly will cover this and how we're also leveraging our retailer relationships to source attractive acquisitions and drive performance. But before that, I'll hand over to David to take you through the finances. David, over to you.

Thanks, Simon. Good morning, everyone. Three things from me today. First, I'll cover our financial performance for FY '26, then I'll update on the balance sheet and our approach to capital allocation. And finally, how our 5 earnings levers drive performance into the current year FY '27.

Starting then with the financials. I'm pleased we delivered earnings growth ahead of the guidance I gave at the start of the year, underpinned by strong like-for-like growth, good progress on development leasing, especially through the second half and continued cost discipline. Like-for-like net rents grew 6%, adding 2.1p to EPS. And within this, Campus growth was 12% as EPRA occupancy improved following leasing progress at buildings like Norton Folgate and 155 Bishopsgate. Retail also performed well, delivering 2% growth despite already high occupancy levels. And the fact we're now doing deals ahead of previous passing rent is a key driver of future like-for-like growth. Development leasing added 1.4p to EPS as recently completed schemes began to contribute to income. And we saw the benefit of our focus on admin costs, which are down 9%. And this, combined with a GBP 1 million increase in fee income, added 0.8p to EPS.

These positive items were partially offset by 2 factors: the negative year-on-year movement in one-off items and higher finance costs. Within the one-off items, there was a provision release last year, mainly related to the receipt of legacy arrears that did not repeat in FY '26, and this movement more than offset the upside from surrender premium. Surrenders were higher than normal in the year, but in each case, they represent the kind of hands-on asset management Simon described, allowing us to secure cash receipts and relet the space to new occupiers at higher rents. Higher finance costs reduced EPS by 3.4p. Of this, 1p was due to a 30 basis point increase in our weighted average interest rate to 3.9%, but the bulk of the increase is because interest that was previously capitalized on developments now hits the P&L as these schemes complete. This in itself reduced EPS by 2.4p.

Although looking forward, the impact is now more than offset by the leasing we've delivered on these schemes. And that's one of the key reasons why we see earnings growth into FY '27 as being derisked, something I'll touch on later. Overall then, underlying profit was up 5% with underlying EPS up 1%. And so in line with our dividend policy of paying out 80% of underlying EPS, the Board has proposed a final dividend of 10.8p, taking the total payout to 23.12p, up 1%.

In terms of the more detailed P&L accounts, the 2 metrics I'd focus on here are the net rent margin and cost ratio, both of which have been impacted this year by specific factors. Firstly, the provision movements I just described; and secondly, increased void costs as developments completed. Going forward, the void cost impact will reduce as we benefit from the development leasing we've already delivered and fill the remaining space.

At the same time, we, of course, remain focused on controlling costs. In this context, it's pleasing that admin costs are down 16% since 2022 despite inflationary pressures and down 9% this year alone. This will benefit the cost ratio, which I expect to be around 17.5% in FY '27 before reducing further to mid-teens in future years, whilst margins return to around 90% over time.

Moving on to the balance sheet and NTA. Portfolio values increased 2.3% over the year, which along with profit growth delivered a 4% increase in NTA per share to 590p. Combined with the dividend paid, this delivered an 8.1% total accounting return within our target range of 8% to 10% for the first time since 2022. It's clear that our focus on making smart asset management decisions in the right sectors, driving rents higher while controlling costs has underpinned this performance.

We remained active in the debt markets in the year, completing over GBP 3 billion of financing activity. More recently, the backdrop has, of course, been more volatile, but we've continued to access markets successfully, including a new loan secured on 100 Liverpool Street in April and our new commercial paper program, which is shorter dated by nature, but benefits the P&L. Looking ahead, with our diverse mix of debt types and duration, we remain well financed with flexibility on when and how we raise new debt.

Leverage remains within our target ranges for this stage of the cycle. LTV is 39.2%. Net debt-to-EBITDA on a group basis is 7.7x, and our Fitch rating remains A with a stable outlook. So with GBP 1.6 billion of liquidity and no requirement to refinance until 2029, the balance sheet continues to provide the stable platform we need to grow.

In this context, our approach to capital allocation remains disciplined and consistent. In fact, this slide is unchanged from half year. Our focus is on recycling capital out of more mature, lower-returning assets into higher returning opportunities. Today, that means continuing to invest in Retail Parks at attractive pricing and progressing best-in-class Campus developments, but on a suitably derisked basis. Kelly will talk you through the framework of how we think about derisking development shortly.

As ever, we take all capital allocation decisions in the context of shareholder returns, including the relative returns and EPS accretion available from share buybacks, for example, when we have proceeds to invest following significant disposals. Our acquisition of Life Science REIT demonstrates how we are alert to opportunities to drive growth in an earnings accretive NTA-neutral manner. It allows us to scale into a sector with strong tailwinds using our existing platform and is immediately earnings accretive, adding 0.3p to EPS in FY '27 with further upside moving forward, primarily from the lease-up of the newly delivered space at Oxford Technology Park. We've already repaid the legacy company debt using cheaper British Land facilities, integrated the 5 assets into our portfolio at minimal incremental cost, and we're making good progress on initial leasing with 56,000 square foot of newly delivered space under offer at Oxford Technology Park.

Turning now to our 5 earnings levers. This is the framework we use to deliver consistent cash-generative growth. And I'm pleased at how in FY '26, we've delivered well against these, including good like-for-like growth, continued cost rigor and strong progress on development lease-up. Fee growth has been slightly below what we target medium term. That's largely because capital activity was also lower in FY '26 than we would normally expect. And again, Kelly will expand how we see the outlook for investment markets in a minute.

Principally, though, these levers were about the building blocks of earnings growth for FY '27 onwards. And here, I've set out how we expect them to trend over the medium term, which again is consistent with half year. The first 3 levers demonstrate how we expect to generate around 4% core organic EPS growth per year, with capital activity adding a potential further 2% EPS growth, meaning overall, we expect to deliver sustainable earnings growth of between 3% and 6% per annum going forward.

Specifically for FY '27, there are a few things I would highlight. First, given the occupational strength of our core markets, we are confident in delivering like-for-like growth at the top end of our target range of 3% to 5%. Second, we will benefit from the development leasing completed over the last 18 months, which will deliver around GBP 40 million of rents in FY '27. Third, we remain focused on leasing our remaining development space while retaining a firm grip on admin costs, which will both drive an improvement in our cost ratio to around 17.5% this year based on the expected shape of our P&L.

Partially offsetting this, we do expect a continued further gradual increase in finance costs, likely at the top end of this range of 10 to 20 basis points given our hedging profile. And finally, within the capital recycling lever, as I described, the Life Science REIT acquisition is immediately earnings accretive, all of which underpins our confidence in delivering at least 30.5p of EPS for FY '27. That's 6% EPS growth of FY '26 levels, which is a good place to hand over to Kelly.

Thanks, David, and good morning, everyone. Simon has covered the market backdrop and our strategy, so what I want to do now is bring it to life. I'll talk you through the activity and value creation we're seeing on the ground and share some examples of where our hands-on approach to asset management really delivers.

Starting with valuations. This is fundamentally an occupational story. Portfolio values were up 2.3%, driven by ERV growth of 4.9% and stable yields. ERV growth is at the top end of our 3% to 5% guidance range, reflecting the strength of leasing we've delivered. You can see the same pattern across both Campuses and Retail. Campuses are up 2% with ERVs up 6.5% and Retail & Urban Logistics are up 2.7% with ERVs up 3.6%.

Geopolitical and macro volatility remains very evident, but the operational performance has shown no signs of pausing with leasing volumes accelerating in recent months. At our Campuses, we completed a record 1.7 million square foot of leasing, 6% ahead of ERV and 20% ahead of previous passing rents. This reflects tight supply for well-located, high-quality space. Around half of this annual activity was delivered in the final quarter despite the more volatile macro backdrop. This continues into FY '27 with a further 295,000 square feet under offer as at year-end, 17% ahead of ERV. And in the 6 weeks post year-end, a further 228,000 square foot has gone under offer. Over half of our deals have been on previously vacant or newly delivered space. This strong leasing drove occupancy to 95% at year-end from 92% in September. That includes Norton Folgate, now 94% let and under offer.

Over at Regent's Place, in October, we launched 1 Triton Square. This building is a perfect example of our hands-on approach. We proactively took the building back from Meta in late 2023, received a GBP 149 million surrender premium, brought in Royal London as a JV partner early 2024, and repositioned it as a world-class science and tech building. Leasing velocity has exceeded expectations with the building 94% let, including all of the lab space just 7 months after practical completion and achieving rents 40% ahead of what Meta were paying. Occupiers include Gilead announced earlier this year and more recently, Anthropic, one of the world's leading AI companies who've signed for 158,000 square feet. This is our sixth deal with Anthropic at Regent's Place and a great illustration of how our campus model supports growing businesses as they scale.

Stepping back, Regent's Place as a whole has had a strong year as it continues to transform. The 1.4 million square foot Knowledge Quarter campus benefits from proximity to leading academic and research institutions. Leasing this year has been 12% ahead of ERV, and ERVs across the campus are now almost 7% higher year-on-year. This is being driven by a broadening of the occupier base with a science and technology focus. Science and tech occupiers now represent over half the campus rent, up from 1/3 five years ago.

Euston Tower is the next chapter. As we move forward with our search for a development partner, it's a great opportunity to build on the Campus' position as London's fastest-growing destination for innovation and high-growth businesses. And British Land will be moving head office to the Campus in just a couple of months. So we're excited to have a front row seat to everything that follows.

While AI and tech is an important source of incremental demand, professional and financial service activity remains incredibly robust. Our letting to lawyers HSFK at Broadgate 1 Appold Street development signed in February and completing in 2029 is a good example. The 21-year lease for the office space set new benchmark rents for Broadgate and the project meets all our development criteria. Prime campus location, meaningful pre-let of between 60% and 100% of the office space, construction cost certainty, and flexibility to bring in an additional capital partner alongside GIC to manage risk and drive fee income.

Turning to the offices investment market. The occupational backdrop is well recognized as very strong, and that strength will feed through to investment appetite in time. At the start of the year, we were seeing encouraging signs with renewed appetite for larger lot sizes. Since then, the Middle East conflict and U.K. political situation has weighed on the rates environment, but it's a question of when the recovery continues, not if. The occupational fundamentals are too strong for investors to ignore. Post year-end, we've exchanged or gone under offer on GBP 176 million of asset sales and have a number of other live processes underway. We'll update you on these in due course.

Turning now to our Retail Parks, which remain virtually full. Leasing volumes are strong with 1.5 million square foot completed at 9% above ERV. Importantly, deals are now being agreed above previous passing rents, reflecting very limited new supply and strong occupier demand, and it marks a key inflection point. For several years, rental growth absorbed historic over-rent. We're now through that phase, so rental growth is flowing through into like-for-like growth. Demand on Retail Parks also continues to broaden. Compared with a decade ago, more occupier types have moved from marginal to mainstream, including gyms and leisure, drive-throughs, discount grocers like Aldi and Lidl, EV charging and health service users. This matters because it supports higher footfall, longer dwell times and greater cross spend, which will support the next wave of sustainable rental growth.

To finish, I'll touch on some examples of recent active management in Retail Parks. This is one of the things we do better than anyone else. In November 2024, we acquired Orbital Retail Park. At underwriting, the plan was upsize M&S Food into the former Homebase unit and relet the smaller vacated M&S space to another leading national operator. We agreed both deals in principle before we purchased, acquiring with Homebase in situ, recognizing the pressure they were under, and with direct visibility from our discussions with M&S that they wanted a larger store. M&S opened pre-Christmas, just over a year after acquisition, and they tell us this is their fastest new store from signing to opening and has been trading extremely strongly. The asset has delivered us a 21% IRR since acquisition.

Telford is another good example of hands-on asset management. We bought Telford Forge Shopping Park in October 2024, followed by the neighboring park last month, acquired at an attractive price, reflecting some vacancy. To create value across both parks, we've agreed a deal to bring a major national retailer to Telford Forge. To make room, we'll relocate some existing tenants into the vacant units next door. We've also added everyday services and EV charging to drive footfall and dwell time, and we expect combined returns of around 11%. This is exactly the kind of opportunity our expertise allows us to find and execute, less competitive, more attractively priced and difficult for others to replicate. We have more in the pipeline.

It's also important that we recycle capital when we've delivered our business plan and we see more attractive returns elsewhere. That was the case at Harlech, where on completion of a regear and enhancing the scheme's income profile, we sold the park in March this year at 10% ahead of book.

So to summarize, we've had a year of record leasing in Campuses, driven by strong occupational fundamentals. Retail Park rents are now growing above previous passing, a meaningful inflection point driven by broadening demand. And we're adding value through active asset management and capital recycling.

And I'll now hand back to Simon.

Thanks, Kelly. Some great examples there of us sweating the assets. So to wrap up the presentation, as you've just heard, we had a record year of leasing in FY '26, which provides high visibility on earnings into FY '27. And while the external environment remains uncertain, we're confident in our ability to deliver attractive earnings growth and total returns across the cycle. We have the right real estate, in the right sectors and locations, where demand is strong and supply is constrained, and we're actively driving value through hands-on asset management.

So that concludes the presentation. Thank you very much for listening. David and Kelly will now join me on stage, and we're happy to take any questions.

So we'll take questions in the room first, I think. I think we've got a microphone available. So any questions in the room? One at the front, Tom.

It's Tom Musson at Berenberg. Just one question about how you underwrite the risk on tenants who are not profitable. I know you touched on it in a slide in the presentation. Do you have limits on, say, the total exposure you're comfortable having to firms who are loss-making? Because I guess it's not just SMEs in Storey space with arguably higher credit risk. Even Anthropic, just as an example, is for now still heavily reliant on external funding.

Sure. No, it's a great question. And as you covered in your question, for the smaller ones, it's really about how quickly they can move in and out of the space. We've seen very few failures and remarkably low actually in this space. But obviously, there's a chance they come. But if you can move tenants in and out quickly, then that's great. But to your point, on our HQ space, it's strong credit profiles. And yes, Anthropic is loss-making today, but I think it has a valuation of about $1 trillion is what they're estimating for it. So look, that feels like a covenant we're comfortable with. But we do think about that. We have tests, and that was a decision. It would have failed our test on income. But given how well the business is performing and growing, we felt that was a bet worth taking.

Okay. And maybe just a second one on the new commercial paper program. At what margin are you drawing that debt? Do you need to hold requisite capacity in your RCF in order to draw on the funding? And what's the total capacity of that program?

Yes, it's back-to-back with RCFs. We're at around, subsequent to year-end, GBP 300 million, GBP 350 million today. I think we'd expect to go up to around GBP 400 million at this point in time. It's something that we like, because as you said, there's a kind of 50 basis point plus margin differential there versus, say, our RCF. So there's a P&L benefit that you trade off versus the shorter duration. So as we look to diversify the debt book, it made a lot of sense to us.

It's Zachary Gauge from UBS. A couple of questions. First one, just quite specifically on the development pipeline, a couple of assets there. Yield on cost and ERV seem to have moved quite a bit over the year. So 1 Triton Square ERV went from 17.3% to 15.7%, yield on cost dropped 50 basis points. And Canada Water Plot A1, obviously small ERV, but 3.6% to 3% and a 200 basis point drop in the yield on cost. If you could just touch on the moving parts behind both of those.

And the second one was just on margins. So obviously, at the start of last year, I think you guided 89% to 90% on the gross to net, ended up at 86.4% this year and 87% to 88% guide for next year. I know we talked about this in the past, and you've mentioned development drag, obviously, leasing up of a void space and the bad debt provisions being 2 main drivers. But I think obviously, both of those would have -- you'd have had visibility on them 12 months ago. So I guess the question is what's incrementally changed on the cost side versus what you expected 12 months ago to today?

Thank you, Zach. So I'll take the questions on the yield on cost. So on 1 Triton, originally, we thought we'd do more floors of fitted labs. So with that, you have the fit-out and that then means that you get the higher rents. But obviously, the fit-out only has a certain shelf life. So we're now more traditional office space. We've got one floor of labs, which are occupied, but that's the key reason there that move from fitted labs to effectively primarily an office scheme. And probably just as Kelly alluded to, it's been a very profitable scheme for us, because we took the GBP 140 million surrender -- GBP 149 million surrender premium. We then brought in a JV partner. We only had 15% of our original economics in it. And then we've delivered a yield on cost of 6.3% on a building that's leased very, very well.

And then at Canada Water, I think you're referring to our Dock Shed scheme. Yes, the scheme there. And the reason the yield on cost moved on that was 2 reasons. Rents came down a bit. So the value has moved the rents down to where we were marketing the space. We've always thought it was about GBP 50 for a day 1 letting. We'd be leasing the space at GBP 50. The valuer has had a bit higher for a while, about GBP 60. And then the other factor is, unfortunately, this building safety regulator, we had a residential and an office scheme combined. And the office scheme is ready to PC, but you can't PC until you've PC'ed the residential scheme. We've now got that through the gateway. As you know, that's been very, very slow for everyone across London. It's through, but it meant it got delivered basically a year later, which impacted the yield on cost, unfortunately. So one of the challenges is we probably won't do one demise with residential and offices going forward. It makes it too tricky.

Yes, then on margin -- yes, thanks, Zach. Good question. You're right. The guidance last year was 89% to 90%. We did update that at half year. So I think we've come in -- that was 87% to 88%. So we've come in 60 basis points light of that. You're absolutely right. And you're also right about the drivers. So provisions this year that we had some legacy cash receipts in the prior year, which drove provision releases. We're back to a more normalized provision position this year, but the year-on-year move is impactful.

And then as you again rightly say, it's void costs. And in terms of guidance, what's harder for me to have visibility on is the timing of the lease-up of the developments, which clearly impacts on the amount of void costs you carry in any particular year as well as when the rental income starts to come through. So it's a double-sided coin. What I would say is, as we've all hopefully reiterated, one of the big most pleasing things about the year just ended is the progress we've made on development lease-up. A lot of that was through the second half. So what we now see is the benefit of that moving into next year. So the void cost impact is therefore mitigated. We get the rental income coming through. And that's why I'd guide over the medium term for that margin to go back up towards 90%.

Valerie Jacob from Bernstein. I've got a question on your asset values. In the West End, they were flat this year despite quite strong ERV growth. So I just wanted to see if you had some color on that. And maybe a follow-up on that. ERVs have been growing quite strongly, and I just wanted to have your opinion on the risk of yields moving out if ERV growth slows down.

Okay. So maybe I'll take the second part of that question first, Valerie. I think we're not seeing a slowdown in ERV growth at the moment. If anything, it's accelerating. There was a slide I put in the deck where occupational markets are really, really tight at the moment. And I think we're going to see less supply come for because of some of the volatility. So we think rental growth accelerates from here, and we've tracked inflation over the last, what was it, last sort of 4 years, but we think we'll outperform inflation because of that tighter market. So not looking at that, I think you've probably got a situation where rental growth is going to be stronger, but there will be some pressure on yields because of higher rates. And so those 2 will kind of be counteracting one another. And then Kelly, do you want to take the question on West End values?

Yes, happy to take that. The standing investment portfolio in the West End was up, reflecting what we covered in the prepared notes, the strong ERV growth leasing ahead of ERV, but there was a relative drag from developments. And that's at Euston Tower. It's to do with updating some cost assumptions around the development. But what we would say here is that we haven't moved the rents on to reflect the progress that we've been having at Regent's Place. At Paddington, there's one move-out assumption on one of the standing investment assets there, but it's space that we're very comfortable getting back, and we're working through our plans with our JV partner.

Any more questions in the room?

Marc Mozzi from Bank of America. If you were to spread and to break down your rental growth between Retail on one side and Urban Logistics on the other side, what would be the numbers? Because it's 2% and it seems to be low from a Retail perspective. I guess it's dragged by the Urban Logistics assets.

Yes. Thanks, Marc. I think that's in the table in the deck. Kelly, you've probably got the figures to hand there.

Yes. So good question. I mean, London Urban Logistics against the backdrop of a slightly softer short-term market there that we flagged before that ERVs were down 4.3%, also reflecting some leasing that we had done in the half, and Retail Parks ERV growth of 4.4%.

To your point, that's why it's slightly softer. Obviously, the Retail Parks are 11x the size of the Urban Logistics.

And do you have the same breakdown for a like-for-like number, the 2% like-for-like?

Sorry, like-for-like rather than ERV. Sorry, Marc, you did say that. Apologies. I don't, but the -- what would the like-for-like have been in the Urban Logistics? We leased up space in the period. So I don't think it was a drag. I don't think Urban Logistics was a drag. It was more the Retail Park like-for-like was 2%, in line with the aggregate. So Urban Logistics was basically flat in that period.

Fine. And for you, David, have you seen credit spread moving out recently in the past couple of months? And if any moves, what would that be?

Yes. Spreads feel relatively stable, actually, Marc. All-in pricing has moved out, obviously. And then as I said in my remarks, the market feels more volatile today. So when it comes to executing transactions, that feels a bit more challenging. So yes, all-in pricing will have moved out, but spreads feel stable. And then we continue to benefit from the fact 94% hedged on a spot basis that gradually declines to 70% over 5 years. So whilst we will see that increase in finance costs over time to prevailing market rates, when you annualize that out, it is that 20 basis point level we expect.

Any more questions in the room? No, I don't think so. So maybe if we go to the calls.

Yes, it's just the webcast today. Yes. So we have a few questions on the webcast. We've got 2 questions here from Eleanor Frew at Barclays. The first question is, given the limited lease events to capture reversion, can you clarify how much of your 3% to 5% like-for-like growth guidance is driven by letting up of past developments as well as factors such as surrender premiums? And then the second part of the question is, the U.K. government is considering price caps for retailers who already have thin margins. Do you have any thoughts on the potential impact on tenant health and rental growth?

Yes. So the like-for-like growth is standing portfolio growth, Eleanor. So yes, standing portfolio growth is what we expect to be 3% to 5%. And as I said, next year at the top end of that range.

We're capturing good rental growth at rent reviews and regearing leases and renewals. So that's how it's coming through. Obviously, there's a pretty big reversion now in the office business and an increasingly growing one in Retail. On the outlook for Retail, we've given, I think, a fairly clear view that demand is very good on our parks. There's lots of retailers wanting to move, and they're moving from high street secondary shopping centers on to the parks. And one of the things that drives that is the efficiency of the park space. You've got an occupancy cost ratio of 9%. So when margins are under pressure, I think that just accelerates that shift from high street to retail parks. Grocers have been trading well and other occupiers on the Retail Parks have traded well. So we'll have to see what this means. But to this point, the demand is very, very healthy, and I would only expect it to accelerate that shift.

We have another question from Jonathan Kownator here at Goldman Sachs. He asked how is the search for partners progressing at Regent's Place given the leasing pace at the Campus? Would you commit in today's environment?

Thanks, Jonathan. Kelly, do you want to take that one?

Yes, sure. Happy to. All the progress that we've had at Regent's Place over the half, it's a campus that's going under a really strong transformation. We're moving rents on. We're moving ERVs on. So it's an optimal time to be out there looking for a development partner. We don't have anything to report as yet, but it's a really attractive proposition, and we see a lot of future growth coming out of that campus. So we feel good about it.

I would almost certainly do it on a sort of derisked basis as you've seen with our other schemes where we put in a pre-let, get a fixed price contract. That's normally the point in time where a partner wants to come in when it's been derisked like that.

I have a question here from Adam Shapton at Green Street. On Retail Parks, 89% retention rate. Is there a pattern in the 11% that are departing in terms of retailer type or location? What types of re-leasing spreads did you achieve on those?

Do you want to say that one, Kelly? I'm not sure I know the answer to that one.

I can give it a go. So no particular pattern. That retention rate, it's been fairly steady the last few years. And I mean, it's a good retention rate for all the reasons that we've covered in the prepared notes. Occupiers are not looking to give up space. They are acquisitive, if anything. So no discernible pattern there about the 11%. And then the re-leasing spread, that might be one that we need to come back to you on.

The only data point I can think that will give you directionally the answer to that, Adam, is when you look at renewals versus new lettings in the Retail Parks, the re-leasing spreads are much higher on the new lettings, because one of the things, I guess, with leases inside the act is providing the evidence. It's harder, obviously, to provide the evidence when you're doing a regear than when you've got competitive tension on a new deal. So on those new deals, our re-leasing spreads are much higher. So I think that probably gives you the direction of travel.

We have a question here from Nikita May at HSBC Asset Management. She asks, are there any updates on Canada Water?

Yes. No, happy to provide an update on Canada Water. Probably the biggest thing to update on is the Section 73. So probably aware that in London, there's an acceleration package for housing where the affordable housing requirement was reduced from 35% down to 20%, still was halved, and more grants available. So we've taken advantage of that at Canada Water with our Section 73. So that's moved the affordable housing down from 35% to 9%. It's also given us more massing on the scheme, which is very helpful, and more flexibility on the range of living uses. We had lots of flexibility, but we've got more now.

So that's good news. We will deliver the affordable homes. The idea is less affordable, but we will deliver those and then future plots will basically be unencumbered by affordable housing. So that's good. It means we can deliver our plan, which is a capital-light one, where we continue with the place making. We probably sell off plots to the uses like build-to-rent, student, as well as co-living to the dedicated operators there. So capital-light for us and lots of momentum on Canada Water.

And on the office side of it, it has been quiet over the last sort of 2 years, but there's been a real noticeable pickup in viewings and negotiations at Canada Water. And I think that's a function of very good rental affordability, GBP 50 rents down there, and also the place making really feeling like it's taking shape now.

We have 3 questions here from Mike Prew at Jefferies. The first question is, why are valuers cautious on your retail warehouses with passing rents at GBP 21.70 versus a lower ERV at GBP 21.40? The second question is, in a London office supply crunch, should you not be buying secondary vacant offices to refurbish or reposition? And the third question is, how much of the office portfolio is occupied by Storey? And what is the Storey utilization rate?

Okay. Thanks for those questions, Mike. Happy to take the one on secondary offices, and then Kelly, if you take the other 2. So on secondary offices, I think there is an opportunity there. I think they need to be in the absolute right locations. Our campuses clearly benefit from great transport links. I think if you've got great transport links and good bones and you can upgrade to high-quality space, that is a great opportunity. The returns have been particularly strong on our Broadgate Tower project where we're taking a building. It's a good building, but we're adding amenity and we're pushing the rents on. And part of the thinking there was there's just an absolute shortage of tower floors in the city. So we're getting rents that are at a discount to 2 FA, but not much of a discount. So that's been good economics. And then I think the first one was on Retail Park performance, Kelly, on the rents.

The rents, I mean, valuers can only use the evidence that they have. So there will generally always be a bit of a lag in terms of ERVs on the value. So nothing unusual there, but I hope we've shown today that we're able to lease ahead of ERV and also now crucially ahead of passing.

And then on Storey, we can come back to you with the exact figure unless one of the gentlemen next to me has it sitting in their heads.

Just under 10%.

Just under 10%. Fair enough. And it's been a really good period for Storey. So like-for-like income growth has been 16%, and we're operating at 94% occupancy there. So it's doing well.

Do you have any more questions?

We do. Yes, we have 2 further questions. One is from Marcus Phayre-Mudge at Columbia Threadneedle. He asked on the Life Science REIT deal. What were the total cost of acquisition, both in pounds million and a percentage of asset value? Did you pay a full break fee on the management contract? And is that included in the total costs?

Yes. Thanks for those, Marcus. I'm sorry, off the top of my head, I don't have -- I'm being shown at the back of the room. GBP 10 million was the total cost. And does that include the break fee, Jonty? It does include the break fee.

Thank you. Well done.

This is Jonty's last set of results for British Land. So we are going to miss that. Thank you.

We have one final question from Philip Matthews at Wise Funds. Should we expect a reasonable recycling of assets within the Life Science REIT portfolio? And are there other M&A opportunities open to British Land? Or should we consider labs a bit of a one-off?

On the asset recycling, when we did the GBP 2.7 billion, we were clear that there was no immediate intention to recycle those assets. We like them. We can do some really active management on them and drive performance. And then once we've done that, of course, every asset in the portfolio is a potential disposal at the right pricing.

I don't think you should see labs as a one-off deal. I think we want this business to grow. The things we set ourselves for growth are strategically aligned. So we really like this portfolio, because it grew out our science and tech footprint, as you saw on my slide. And then it's about earnings accretion and hopefully, NTA neutral or not too much NTA dilution. And so there's more deals like that, we would do them. And we are big believers in the science and tech space, particularly around the Campus concept.

That's all on the webcast questions.

And we don't have phone calls on this one? No? Great. Cool. Well, thank you very much for listening today. Hopefully, that was useful, but we really do appreciate you being here. Thank you.

Good morning, everyone, and thank you for joining us at what is quite short notice. We really appreciate that. I'm Simon Carter, CEO of British Land. I'm joined today by David Walker, our CFO; and Jonty McNuff, our Head of IR and Strategy.

Today, we want to take you through our recommended acquisition of Life Science REIT, a transaction that is both strategically and financially attractive. It strengthens our science and technology platform, a part of the business where we're seeing growing demand and real momentum, and it's immediately EPS accretive.

We highlighted in November and in our recent trading update, the accelerating science and technology backdrop in the U.K. VC funding is at its highest level since 2022, with AI and tech demand particularly strong, more than offsetting any softness in Life Science's activity. This deal represents an attractive entry price for a portfolio of well-located assets in the Golden Triangle with significant scope to grow rents through both the lease-up of vacant space, much of it new and the capture of reversion.

Through our scalable platform, we expect to deliver significant cost synergies from day 1 and to grow rents by attracting a broader range of occupiers from the science and tech sector than the previous Life Science's mandate has allowed. This, combined with the entry price, means that we're acquiring assets which are immediately earnings accretive from synergies alone with further accretion to come from the lease-up of the vacant space and the capture of reversion.

Importantly, all this is achieved in an NTA-neutral way. So let's look in more detail at the transaction. This is a portfolio of assets in the Golden Triangle we know well with 2 prime Central London buildings in the Knowledge Quarter, Rolling Stock Yard and Herbrand Street, a 24-acre high-quality modern tech park in Oxford with very affordable rents, a 13-acre value-add campus in Cambridge and a small single-let asset also in Cambridge.

As you know, targeting fast-growing science and tech occupiers is a core part of our campus strategy. So the acquisition portfolio will benefit from being brought on to our British Land platform. We anticipate a significant reduction in portfolio admin expenses, including the cessation of the existing management agreement as well as finance cost savings, leading to immediate day 1 earnings accretion from the existing rent roll.

And as I mentioned, we anticipate further earnings growth through capturing embedded reversion within the portfolio and letting up vacant space, most of this new space at the Oxford Tech Park, which we intend to do by expanding the target occupier base from the previous Life Science's mandate into the far broader and growing science and technology market.

I'll now hand over to David to take you through the terms of the transaction.

Thank you, Simon. Good morning, everybody. Our offer is comprised of 14.1p in cash and 0.07 new British Land shares equating to approximately 43p per share, a 21% premium to yesterday's close and a 15% premium to the 3-month VWAP. The GBP 150 million equity value is funded through a mix of cash and shares in the ratio of 33% to 67%, resulting in minimal impact on our LTV.

The deal is unanimously recommended by the Life Science REIT Board, and we have already secured irrevocable commitments or letters of support from shareholders with interests in 31% of the share register. Subject to shareholder and court approval, we expect the transaction to complete in the next 3 months. The properties being acquired have a combined book value of GBP 333 million and the acquisition price implies a value of GBP 276 million. Rolling Stock Yard and Herbrand Street in London, along with the Merrifield Center in Cambridge are fully let.

The majority of current vacancy is at Oxford Technology Park, where there are some excellent newly completed space to let at very affordable rents in the low to mid GBP 20 per square foot. And we're encouraged by the recent demand we've been tracking there. It's also important to note that less than 6% of the portfolio is lab space and of that, 80% is let. Our conservative underwrite of GBP 18 million of net rent in year 1 assumes just the rent roll today and deals under offer.

What the BL platform then unlocks is the ability to capture significant reversion within the portfolio by accelerating the lease-up of the newly delivered space and continuing to diversify the occupier base from the previous Life Science's mandate to target a much broader group of innovation and technology businesses, just as you've seen us do at Regent's Place and the Peterhouse campus in Cambridge.

When including the on-site developments at the Oxford Technology Park, we anticipate a stabilized accounting net rent of GBP 25 million, which is significantly earnings accretive relative to the size of the deal. At our half year results and our Q3 trading update last week, we spoke about the accelerating demand we're seeing from a broad range of innovation businesses across the science and technology spectrum.

Looking at the acquisition portfolio, whilst it includes several well-known Life Science's businesses, the occupier base overall is well spread across science and tech, with 5 of the biggest occupiers representing almost half of the rent roll being Thought Machine, a fintech business; Oxford Ionics, a quantum computing firm; Fortescue Zero, an advanced engineering business; ZEISS, a leading lens manufacturer; and Wayve, the autonomous driving company.

These fast-growing businesses are where the Golden Triangle is the center of VC funding in the U.K., with growth particularly strong in AI businesses, where there was $8 billion of investment in 2025, more than offsetting the decline seen in Life Science's investment since 2021. This AI growth cements the U.K. as the largest AI market in Europe and the third largest in the world. And this mirrors what we've been seeing across our portfolio.

We now have more than twice as many innovation occupiers compared to 2022 and demand continues to build. VC funding is at its highest level since 2022, and we're currently tracking 1.5 million square feet of active demand from tech and AI businesses across London. And it's this demand that we're benefiting from at our newly launched innovation building, One Triton Square at Regent's Place.

Since the launch in October, we've completed 63,000 square feet of deals to world-class science and tech companies, and we're under offer on a further 166,000 square feet of space, taking the building to 72% let or under offer. This has reinforced our view that we're experiencing a sustained upswing in science and tech demand, a supportive tailwind as we bring this portfolio onto our platform.

You'll be familiar with this slide from our half year results, where we set out the value drivers of our business. These support our confidence in delivering 8% to 10% total accounting returns through the cycle. And this earnings accretive value-add opportunity clearly fits the wider BL opportunity, contributing to each of the drivers, earnings yield, valuation uplift and development upside.

So let me finish where we started. This transaction offers highly accretive economics unlocked by the British Land platform. It strengthens our footprint in the growing science and technology market, is immediately earnings accretive and builds our scale in the Golden Triangle, the U.K.'s most dynamic innovation market. But it also reinforces a broader point. At British Land, we are focused on delivering sustained growth in sectors with the strongest occupational fundamentals, supported by our strong balance sheet and world-class operating platform.

Thank you for your time, and we'll now take any questions you may have coming through online.

So we have the first question from Adam Shapton at Green Street. There are a couple of questions here. So two questions. The first question is, are you underwriting any CapEx beyond the committed GBP 25 million to achieve income upside?

And the second question is, are you in the market for other science and tech assets in the Golden Triangle? Can you acquire a value similar to what you're paying for LABS?

Adam, thank you for those questions. So first one on the CapEx, as you highlighted, at Oxford Tech Park, there's 2 buildings that have just started construction with about GBP 25 million of CapEx. So that's the principal CapEx that we have in. And then effectively, Oxford Technology Park is a new asset, newly delivered. And across the rest of the portfolio, we will have normal low levels of CapEx if required when leases roll, but we're not envisaging a lot of further CapEx on this portfolio. It's in good shape, and the key thing is about driving the occupancy up from the 80% it is today to full occupancy. And as David spoke about, that will drive future earnings growth on the portfolio.

And then are we in the market for further assets in the Golden Triangle? For a while, we've said we'd like to export our campus model to the Golden Triangle. You saw us acquire Peterhouse Technology Park a couple of years ago. That's an asset that's gone well for us. We bought existing assets. We bought a development plot, delivered that development plot and leased it to ARM. So we are looking at further assets. This is a very attractive entry price for the assets we are acquiring here. If we can see similar economics and similar ability to drive value, of course, we'll look at that.

So we have another question here from Mike Prew at Jefferies. He's asked, did British Land undertake its own valuation of the LABS portfolio?

Mike, thank you for that question. So we undertook our underwrite of this portfolio. And actually, we were tracking this for a while. And the -- you saw that there was a write-down in the portfolio in December, which was in line with where we expected it to move to. So very consistent with our underwrite. So we underwrote both value, but also obviously, more importantly, underwriting the cash flows and the returns we can get out of this.

Perfect. So we have another question here from Callum Marley at Kolytics. He's asked, you claim immediate EPS accretion from cost synergies alone. Can you quantify the precise annual cost savings in pounds million?

Thank you for that. Under the terms of the takeover code, I can't go into too much detail on the precise details. However, if you look at the slide pack, I think it's Slide 15 within the appendices, we lay out there an analysis of the admin cost base of the company. Hopefully, that gives you the building blocks to think about how we take that forward and particularly the costs that will fall away such as the fee to the manager, costs associated with being a listed company.

We'd clearly as well finance the business moving forward on our own balance sheet. Our marginal cost of debt around 4.5%. I think that compares to about 6% for the Life Science REIT debt. So there's an uptick there as well. We've talked about the GBP 18 million of rent that we take on day 1. We've talked about our ability to grow that just through reversion and through development lease-up to GBP 25 million as well. So I can't give any more detail on that, but hopefully, that gives you the building blocks you need to think about the accretion numbers.

And Callum has asked one further question. What was the December reported EPRA net initial yield of Life Science REIT?

So the December contracted rent is GBP 18.7 million that's in the 2.7. And if you take the portfolio value of GBP 333 million, that gives you a topped-up net initial yield, so based on contracted rent of about 5.25% by my math.

We have another question here from Matt Saperia at Peel Hunt. Have you put together business plans for the 5 assets? And if so, what are you likely to do different to the incumbent manager to drive occupancy and income?

Thanks, Matt, for that. And as you would imagine, the answer is absolutely yes. So we've underwritten this portfolio in quite a lot of detail, as you would imagine. We've been relatively conservative on lease-up assumptions because as we talked about, this deal is accretive day 1. And then as we lease further space, that will drive further accretion. So we've put in decent periods of time for voids and appropriate rent freeze and being prudent on the rents.

But to answer your question around what will we do differently? I think the key part here is our ability to target a broader range of occupiers. This business had a Life Science's mandate, which I think restricted it initially. So our ability to target a broader range of occupiers, but also just leverage the British Land platform. We've been very successful in lease-up, particularly at Regent's Place in recent months, and I think that reflects the quality of the team.

And also, we'll be able to put CapEx, pay for the GBP 25 million of CapEx to go into those development assets where as Life Science REIT was a little bit restricted on that as they say in the 2.7.

Brilliant. And we have a question here from Eleanor Frew at Barclays. What's the expected time frame on vacancy lease-up and then eventually achieving the GBP 25 million rent roll?

So on our underwrite assumption, it varies asset by asset, but you should think 12 to 15 months lease-up period is what we've underwritten.

Perfect. I have another question from Mike Prew at Jefferies. Has British Land agreed to buy the external manager contract? And if so, for how much?

Mike, no, we haven't agreed to buy it. There was a notice served to cancel the contract by Life Science REIT. So we do envisage that we will cancel that contract.

I have a question here from Marcus Phayre-Mudge at Columbia Threadneedle. He has asked, how much of the GBP 18.7 million contracted rent is subject to rent-free or incentives? Does Oxford Technology Park have all the power provisions for the completed scheme?

So on the GBP 18.7 million of rent, we've shown an accounting rent, GBP 18.7 million is what's contracted per the 2.7, and we've shown an GBP 18 million accounting rent. So that includes the spreading of it. So hopefully that kind of answers your question. And yes, we do have the power necessary for these schemes.

I have one further question from Jonathan Kownator at Goldman Sachs. How long is the notice period for the management contract?

The notice period for the contract was 2 years and the notice was served in November. But we will take on management of the -- we envisage taking on management of the portfolio straight away, and we will provide for the cost of the management contract.

I have a further question here from Andrew Saunders at Shore Capital. Life Science REIT announced its formal sale process in March 2025. What is the rationale for taking this long to make your move?

Great question. This is a portfolio we've been tracking and a situation we've been tracking for a long while. And this felt like an appropriate time to act to get best value for our shareholders.

There are currently no further questions on the webcast. So we'll hand back to Simon for any closing remarks.

Thank you, Sean. Thank you, everyone, for joining us. I think the sort of punchline of what we've been talking about today is this is a business that is far broader than Life Science is and we're really able to lean into that with our expertise in that space and the platform can drive real synergies and accelerate the lease-up of the space, so delivering good EPS for our shareholders. So thank you very much, everyone.

Good morning, everyone. Thank you for joining us. It's great to be back at Broadgate for these set of results. You will have noticed quite a few changes on the campus over the last year since we were last here. And if you do get a little bit of time after the presentation, do check out the retail underneath 1 Broadgate. It launched last week, and it's already 90% let and under offer, which is a pretty good place to be. So in terms of today's agenda, I'll start with an overview. David will take you through the first half performance and also our earnings levers. And then Kelly will look at our strong leasing and accretive asset management over the period.

But before I hand over to David, I'd like to take a step back and look at what's driving the future performance of the business. At the heart of this is the decision we took nearly 5 years ago to build a market-leading position in campuses and retail parks. Together, these now represent 90% of our business. These are sectors with strong occupational fundamentals. Demand is healthy, supply is constrained and rents are very affordable. The investment market is waking up to this. Investors are increasing their allocations to both retail and offices. And we are very well placed to capitalize on this. That's down to the quality of the assets, the experience of our team and our value-add mindset. The result, a very attractive total return profile, underpinned by sustainable earnings growth.

So let's unpack this, starting with prime London offices, where a classic supply crunch is driving strong rental growth. The return to the office has exceeded expectations. Midweek utilization across our campuses is now above pre-pandemic levels. Businesses are short on space. Last year, they expanded by 3.3 million square feet, the highest since 2019. And active demand is now 50% above the long-term average. But supply remains tight. Initial concerns about working from home have been compounded by rising construction costs and higher interest rates. You can see on this slide, vacancy for new and refurbished space in the city is predicted to fall below 2% and stay there for the next 4 years. Historically, when this has happened, it has driven double-digit rental growth.

We've positioned our portfolio to benefit from this supply squeeze. Office occupiers are focused on 4 key areas: quality, location, amenity and flexibility. Our campuses tick all the boxes. We currently account for 7 out of the top 20 leasing deals that are under offer in London. So we're capturing a disproportionate share of a very strong market. That's down to high-quality sustainable buildings, prime locations near transport hubs, excellent amenities in public realm and flexible offerings, ranging from story to fully fitted work-ready space to headquarter space. This flexibility is key for customers in the innovation sectors. This is a fast-growing market, especially in the Knowledge Quarter.

The number of innovation customers in our portfolio has more than doubled since 2022. There's been strong growth from a new generation of AI and tech businesses with high levels of venture capital investment. This is a key source of new demand. We're tracking 1.5 million square feet of new requirements. Kelly will explain in a moment how we're benefiting from this at Regent's Place.

Our on-site developments are achieving record rents, which is driving development yields above 7% and mid-teens IRRs. These record rents also provide valuable evidence for upcoming reviews across our campuses. We're derisking our schemes with pre-lets and fixed price contracts and increasingly bringing in partners such as Modon to reduce capital outlay, accelerate delivery and earn valuable fees.

Let's move on now to retail parks. These continue to be the preferred format for retailers. They're efficient and adaptable, offer easy access, free parking, and they're ideal for a range of retailers, including value, grocery and multichannel. Retailers like M&S, Lidl, Aldi and Home Bargains are expanding into this format. Yet there's been virtually no new supply in the past decade, and we don't see this situation changing.

Development economics are unattractive and planning is restrictive. As you know, we're the largest owner and operator of multi-let retail parks in the U.K. We have a portfolio stretching from the Isle of Wight to Inverness. Half the U.K. population lives within a 30-minute drive of one of our assets. And we have deep reach with the retailers, given our scale, the experience of our team and our in-house property management. Of course, we use demographic and competition data, but nothing beats picking up the phone to a retailer to understand trading.

Our focus on strong trading locations is reflected in our footfall. This has grown 13.5% above the U.K. retail benchmark over the last 5 years. Despite a more competitive investment market, we're still acquiring assets at yields above 7%. And we're comfortable taking occupational risk due to the market strength, our asset management expertise and those retailer relationships.

In real estate, affordability is just as important as supply and demand. For prime offices and retail parks, the picture is very positive. London office rents relative to wages are lower than at the turn of the century, and retail occupancy cost ratios are very healthy. This leaves plenty of room for rental growth. That's why we're guiding to 3% to 5% growth in both sectors.

Investors are taking note of the occupational strength I've just described, and they're increasing their allocation to both offices and retail. This, together with strong credit markets, means we expect investment volumes to grow. London office transactions have been subdued in recent years, as we know, but they've really picked up this year with over GBP 6 billion year-to-date and GBP 3 billion under offer. So far, the number of deals over GBP 100 million this year is already double the whole of last year.

Strong occupational fundamentals, improving investment markets and our high-quality platform provide for an attractive total return profile. The essential building blocks are set out here, they're earnings yield, valuation uplift and development upside. Earnings yield is currently 5% and growing. Assuming stable property yields, valuations will primarily be driven by ERV growth, where we're guiding to 3% to 5%. You need to adjust for a bit of depreciation, the impact of leverage and the fact that ERV growth doesn't feed through 1:1. But you can see how these first 2 building blocks get you to around 8% to 9%. Developments add further upside with mid-teens returns forecast on the committed schemes and the pipeline.

So we're confident in delivering total accounting returns of 8% to 10% through the cycle. The total return outlook is underpinned by attractive earnings growth. We're expecting at least 6% next year, and we have the levers to deliver 3% to 6% over the medium term.

This is an ideal point to hand over to David, who will take you through these levers as well as our numbers. David, over to you.

Thanks, Simon. Good morning, everybody. Three things from me today. First, I'll cover our financial performance for the half year. Second, the balance sheet and our approach to capital allocation. And finally, I'll provide an update, as Simon said, on the 5 levers of earnings growth I outlined in May, and then how we see them translating into medium-term growth of 3% to 6%, including our guidance for FY '26 and then into FY '27.

As you know, we released many of the key metrics in October. That's something you should expect from us going forward. One benefit we see is that it allows us to spend more time today on strategy and outlook, but starting with the numbers.

Underlying profit was up 8% to GBP 155 million, and underlying EPS was 15.4p, 1% ahead of last year. meaning the dividend is also up 1%, in line with our policy of paying out 80% of underlying EPS.

Looking at the EPS bridge, you can clearly see the benefit of our progress against the earnings levers, in particular, driving like-for-like, which was 4% and contributed GBP 6 million or 0.6p, with a positive performance across both offices and retail. Higher rents from developments from completed schemes like 1 Broadgate and The Optic, partially offset by void costs and lowering admin costs. This has been a key focus for me since I became CFO this time last year. I spoke in May about the savings we had already identified, and I'm pleased to see the benefit come through in H1 with admin costs down GBP 5 million or 12% versus last year, adding 0.5p to EPS.

One-off items had only a limited impact on earnings year-on-year as the positive effect of surrender premia offset bad debt provision releases last year. Taken together then, these positives more than offset the GBP 13 million increase in finance costs, which reduced EPS by 1.3p. This is in line with expectations, mainly reflecting the fact that we're no longer capitalizing interest on completed developments and a 10-basis-point increase in our weighted average interest rate to 3.7%.

Here's the summary P&L account. I've covered most things here already, but just to touch on 2 further metrics. First, our NRI margin. This was lower due to the increase in PropEx, mainly because of the movement in provisions I just touched on, which slightly flattered the margin last year and void costs as we lease up developments. Once this is done, I expect our margin to stabilize at around 90%.

The other thing to draw out here is the EPRA cost ratio, which was 17.4% at September as this higher PropEx more than offset the reduction in admin costs. Though I do expect the ratio to come down to the mid-teens in future years as we lease up developments and further leverage the operating platform we have in place, adding income while controlling costs.

Now turning to the balance sheet. NTA has again increased since March, reflecting a 1.2% rise in property values, which added 10p, and underlying profit, which added a further 15p, although this was partially offset by the dividend paid in July and other movements, resulting in NTA per share of 579p, up 2%. This, combined with the dividend paid, equated to a total accounting return of 4% for the half, meaning we're on track to deliver our full year target of 8% to 10%.

Credit markets remain very strong, and we've capitalized through a broad range of activity focused on maintaining our overall maturity and enhancing diversity in our sources of finance. We raised a GBP 450 million green loan secured against 1 Broadgate, extended GBP 930 million of RCFs and renewed GBP 500 million of term loans at improved pricing.

Looking ahead, we have just over GBP 300 million of debt maturities at British Land over the next 12 months. So we remain well financed with flexibility on when and how we raise new debt. And with good access to the bank debt and capital markets, we expect to remain active in a strong market.

I was pleased to have our Fitch rating reaffirmed in July at A with a stable outlook, reflecting the fact that our balance sheet remains strong. We ended September with GBP 1.7 billion of undrawn facilities in cash. Net debt was GBP 3.8 billion. Our LTV was 39.1%, with net debt to EBITDA on a group basis at 7.2x.

This balance sheet stability underpins all of our capital allocation decisions. We focus on recycling capital from mature, lower returning assets into higher returning opportunities. Currently that means investing further into retail parks where, as Simon has described, the investment case remains compelling and we continue to see opportunities to buy at attractive pricing.

Alongside that, we progress best-in-class office developments at our campuses on a derisked, capital-light basis. Securing pre-lets, certainty over build costs and bringing in partners to accelerate returns and reduce risk just as we did over at 2 Finsbury Avenue.

Our London Urban Logistics portfolio has embedded development optionality, and we remain positive about the long-term supply-demand dynamics here so we can progress those schemes when the time is right, but the sector is weaker today so we priorities better uses of capital in retail parks and campus development.

It's important to note that we always make capital allocation decisions in the context of shareholder distributions, including the relative returns and EPS accretion available from share buybacks, for example, when we have the proceeds to invest following significant disposals. And, as ever, all of our capital allocation decisions are based on our assessment of relative returns at any point in time.

In May, I set out the 5 levers we focus on to drive consistent cash-generative earnings growth so, 6 months on, let's update against each. First like-for-like rental growth. We've made a strong start to the year. Portfolio like-for-like growth was 4%, bang in the middle of our guidance of 3% to 5%. Campuses were up 7% as we drove occupancy and secured rental uplifts on space which had been surrendered.

Our retail business also continued to grow, albeit at a lower rate, reflecting the fact that we're at near full occupancy. Going forward, though, ERV growth should more directly translate into like-for-like growth as we're largely rack rented now on our parks. And, overall, for the full year, I expect 5% like-for-like growth across the portfolio. Kelly will give you more detail on our portfolio performance in a minute.

Fee income is our second earnings lever. We continue to work with a broad range of JV partners, generating fee income for both asset and development management. Although fee income was flat in the first half at GBP 13 million, we do expect to achieve 10% growth for the full year as we continue to earn fees on development mandates, and we're actively pursuing opportunities to leverage our platform in order to drive incremental fees from new and existing partners.

Third, cost control. I'm pleased with the progress we've made over the last 12 months, but this remains a focus and so, for the full year, I expect admin costs to be GBP 75 million to GBP 76 million ahead of the guidance I gave in May, and versus GBP 82 million for last year.

Development leasing is our fourth earnings lever. As I mentioned earlier, we're now benefiting from schemes such as 1 Broadgate and The Optic while leasing on previously delivered schemes at Norton Folgate and Aldgate Place is well on track. 1 Triton Square launched in October, and we're delighted to have our first deals under offer there.

Finally, capital recycling. The fuel in this machine is our ability to dispose of lower returning assets, freeing up capital to rapidly redeploy into higher returning opportunities. As Simon laid out, the office investment market has been quieter than in previous years, but we are seeing signs of improvement. And against that backdrop we've remained active, executing deals where it makes sense, disposing of retail parks where pricing has moved in, or development sites in London, which were not income producing, then rapidly redeploying the proceeds.

Given the improving investment market, we do however, expect activity to increase over the next 12 to 18 months.

Bringing this together, we expect to deliver sustainable EPS growth of between 3% and 6% over the medium term. This slide shows how each of these earnings levers contribute to that. Now, this is purposefully illustrative and, of course, it will not be linear in any particular year, but to me, this is the best way to think about the earnings growth potential of our business. So, let's go through each of them.

In terms of like-for-like, we're confident we can consistently deliver 3% to 5% on our standing portfolio given the strong occupational fundamentals of our core sectors. At the midpoint, this top line of 4% growth drops through to 5% annual EPS growth. 10% fee income growth adds another 1% per year, and, on costs, I do expect further reductions over the next 12 to 18 months, which will of course continue to benefit earnings. Although over the medium term, there is likely to be continued inflationary pressures so modeling broadly flat costs is not unreasonable over, say, 5 years.

Likewise, our weighted average interest rate will gradually increase over time, reflecting prevailing market rates. Based on today's rates, we anticipate a 10- to 20-basis-point increase per year, which would reduce EPS by around 2% per annum.

So overall we see a clear route to core EPS growth of 4% per year, and that's before further capital activity, which really is the kicker on top of this core growth. There are 2 components to consider: development completions and asset recycling. And while the timing and phasing of capital activity is of course hard to predict and is by its nature lumpy, I've assumed around GBP 500 million per year with GBP 200 million for developments and GBP 300 million for asset recycling. Then, to model the earnings impact, for developments, we assume a spread of around 200 basis points between the yield on cost and our funding costs, and, for asset recycling, 100 basis points between what we buy versus what we sell.

Taken together then, this capital activity would contribute a further 2% to EPS growth per year, increasing the annual growth rate to 6%, the top end of the range I described in May.

So, bringing this back to the immediate outlook, moving into the second half, we expect to deliver at least 28.5p of EPS for FY '26, and, from there, at least 6% EPS growth for FY '27 as we benefit from the continued lease up of our developments, capitalize on the compelling fundamentals of our core business, and so move forward with confidence in delivering against our 5 earnings growth leavers.

With that, over to Kelly.

Good morning, everyone. You've heard from Simon on the strength of our markets, so I'll now take you through how that's translated into performance, and outline how we are adding value across the portfolio. I will start with valuations, which have increased by 1.2%. This is the third period of being able to report positive valuation growth and it's a good sign that the inflection point is behind us.

Valuations have been driven by strong rental growth of 2.4% on an annualized basis. This is again at the top end of our guided range of 3% to 5%, and we're confident this rental growth will continue.

Turning to the operational performance, starting with campuses. We've leased 486,000 square feet at 3% ahead of ERV and, at the end of the period, we were under offer on 629,000 square feet, 6% ahead of ERV. And we've been particularly busy since 30 September, with a further 308,000 square feet put under offer. And that's a very busy 6 weeks.

It's worth pointing out, we're seeing particularly strong momentum in leasing up vacancy. Since March, we've let or put under offer 751,000 square feet on vacant or newly delivered space. Our EPRA occupancy now stands at 88%, up 5% this half, up 10% for the year.

As we said in the trading update, Broadgate is practically full. There's just one completed floor to lease across the entire Campus and it's an exceptional floor, the top floor of our newest scheme at 1 Broadgate. We're in negotiations on that floor and will set record new rents for the Campus. This is good news for our onsite developments, which will deliver into a market with very limited supply.

Broadgate Tower is the first to be delivered late next year. This is a 390,000 square foot building with 240,000 square feet of development floors. Since 30 September, we've gone under offer on 59,000 square feet across 5 deals, taking the building to 49% let. This is a very strong position to be in at this stage.

The next to deliver is 2 Finsbury Avenue in 2027, where Citadel are taking up to 50% of the space. Here, we are in negotiations with a number of larger occupiers 2 years ahead of delivery, and this is a fantastic tower building delivering in a year with very little competition.

We've also been proactively identifying where we can take back space and re-let it at higher rents to drive value when there's such little supply. For example, at Exchange House, we proactively took back some floors. We're reinvesting the surrender receipt into much needed on-floor upgrades after 35 years of occupation and have already re-let to MSCI driving rents on by GBP 35 per square foot. This added GBP 10 million to the valuation of the building and sets strong rental evidence for the wider Campus. This is accretive asset management, and we will look to do more of this.

Norton Folgate is a slightly different proposition for us at British Land as the product is smaller floor plates, often fitted, and therefore more suited to let post PC. We've made good progress and are now 89% let, under offer or in negotiations. And we're on track to be fully let by the end of the financial year.

Simon covered the growing demand coming from innovation occupiers, which is driving momentum across the portfolio. To capitalize on that, we launched 1 Triton Square last month. This is an incredible building. It's a campus within a campus and offers real flexibility to tenants. It includes a floor of storey space, a floor of fitted labs, 3 lab-enabled floors, which look like a traditional office floor, but can easily be converted to lab use as demand evolves, and 3 traditional office floors.

You may have picked this up in David's piece, but I'm pleased to confirm that just 6 weeks after PCing, we have put 56,000 square feet under offer to 2 globally recognized science and tech occupiers due to complete later this month, and we have another 211,000 square feet in negotiations. We are very excited about this and look forward to continuing to update you on our progress.

Turning to retail parks, you'll know it's a very competitive occupational landscape and retailers are keen to secure space. Leasing volumes remain strong at 681,000 square feet, 6% ahead of ERVs, and under offers are 554,000 square feet, also 6% ahead of ERVs.

Deals this half have been in line with previous passing rent. And thanks to recent strong rental growth, our portfolio is now largely rack-rented. And, as a reminder, it was over 20% over rented just 2.5 years ago. So, we're in a great position to generate strong like-for-like rental growth from the portfolio.

Retail parks provide strong cash yields and good opportunities to increase value through asset management. I'll cover just a few of the many examples of asset management on our acquisitions, where we've looked to improve the tenant mix and drive footfall, sales and ultimately rents. I will start with the first one we bought when we took the contrarian call to start buying retail parks. When we bought Biggleswade Retail Park in 2021, it had 6 high risk retailers. These are the ones in red. We've re-let all of these to strong category leaders, which has helped drive a 12% IRR since acquisition.

Rolling forward to one of last year's buys, Queens Drive retail park. When we purchased it, there were 2 vacant units, both are now let, including to an M&S anchor, which is a major win for the park. The park is full and leasing well ahead of ERV and has delivered a 14% IRR since acquisition.

And our most recent buy is Turbary Retail Park in Bournemouth, which we purchased earlier this month for a prospective double-digit IRR and a day 1 yield of 7.4% which, with asset management, we've already increased to 7.7%, and we have a strong pipeline of similar deals.

As Simon covered, we're unlikely to see many new retail parks built, but we're actively looking for opportunities across the portfolio where we can add space efficiently. Projects like these ones at Glasgow and Rugby are smaller in scale, shorter in duration and lower risk than traditional developments. But they generate meaningful returns, with a yield on cost of at least 8%, often double digits. And on top of that, they provide strong wash over to the rest of the park by improving lineup and rental tone.

So, I'll leave you with 3 things. Values continue to rise, driven by strong ERV growth at the top end of our guidance. Our standing campus assets are virtually full following a strong 6 months of lettings, and we've made good progress on our newly delivered space. And finally, as the market leader in retail parks, our active asset management is pushing on rents and values, and we will look to buy more in the space as we continue to recycle capital.

Now over to Simon to wrap up.

Thanks, Kelly. So, to wrap up, let's circle back to where we began. We're a market leader in the right sectors, campuses and retail parks, where demand is healthy, supply is constrained, and rents are affordable. Investors are increasing their allocations to these sectors, and we're very well positioned to capitalize on this to deliver attractive total returns going forward.

Thanks for listening. We're now going to take your questions.

Thank you to the management team for the presentation. We have had a number of questions pre-submitted and submitted live. [Operator Instructions] Our first question is, you expect at least 6% EPS growth from FY '27. What are the key growth levers that will drive that?

Yes. Thank you for that question. So I think I'll just remind you again what our EPS guidance is for this year and next year. So we're guiding to at least 28.5p of EPS for financial year '26. And then going into next year, we're guiding to at least 6% EPS growth. And David mentioned it in the prepared remarks in terms of what the building blocks of that growth look like. So just to remind you in terms of next year, how that will look. So given the strength in our markets that Simon discussed in the presentation with very little supply, very strong demand and rents remaining affordable, we expect to continue to see strong rental growth in those markets, and that should drive through to a strong like-for-like growth.

So we expect 3% to 5% like-for-like growth to come through next year, which will kind of -- that will deliver us around 5% of EPS. And then moving down, we would then see fee income. We'd like to grow fee income by about 10%. That will be through existing development mandates that we have with our existing joint venture partners and potentially new mandates as well. That will add around 1% to EPS. Then moving on to cost control. It's something we focused on over the last couple of years. Very pleased to have reduced costs in the first half of the year by GBP 5 million, and we'll continue to look to save costs going forward and expect to save some costs going into the financial year next year.

And then offsetting that, you've then got the impact of finance costs. So we're seeing -- we're expecting to see around a 10 to 20 basis points increase in our average cost of debt over next year, which will have around a 2% drag in terms of EPS. So bring those together, that's around 4% of core EPS growth. And then on top of that, you then have capital recycling, so be that selling assets and putting it into new purchases, or next year, more likely, it's going to be from the developments that we currently have and are delivering and leasing up those developments into next year, such as 1 Triton Square. So that gets you to the top end of that 3% to 6% range.

Thank you, Sean. Our next question is, are there still retail park opportunities out there? You mentioned buy at attractive prices. How much availability is there?

Yes, that's a very good question and one that we've been asked a lot actually by investors. So we are still seeing good opportunity in retail parks. The environment has definitely become more competitive as investors have realized and kind of seen the strong rental growth we're seeing. There's no new supply. They can buy an attractive yield, and you're getting good rental growth on those parks. But we -- given the scale that we have in that market, we are able to identify opportunities where we're willing to take maybe a little bit more occupational risk than some other investors.

So for example, Kelly took you through some examples in the presentation today. We would, for example, buy some parks where we know there's some vacant units or there could be a lower covenant tenant on those parks. But given the scale of our parks that we own and the relationships we have with the retailers, we are able to call up retailers before we buy a park and say, how does this trade? Would you like to be on this park? And it gives us an advantage. So we know that we can buy a park and take some occupational risk and fill those void units, change the tenant mix to improve the returns on those parks.

Thank you. Our next question is, your loan-to-value is creeping up. Are you worried about debt risk, especially if property yields move?

Yes. Thank you for that question. I mean our LTV today, as a reminder, is 39.1%. We've said we'd like to operate within a 30% to 40% range. And at this point in the cycle where it seems that values have dropped and are inflecting, we feel comfortable in that 35% to 40% range for LTV. LTV isn't just the only metric we're looking at. We're focused on a range of metrics and also look quite closely at net debt to EBITDA. That was 7.2x for the period, and we would like that to be below 8x. So both of our metrics are below where we'd like them to be, which is good and something we're focused on.

And obviously, those are metrics that Fitch are very focused on, and we're keen to maintain the rating we have from Fitch. So yes, so going forward, in terms of looking at leverage, we expect to continue to focus on capital recycling and expect, particularly with values inflecting those metrics to move down over time.

And with funding costs rising, how do you prioritize capital? Is it more developments, repurchases or reducing leverage?

Yes, that's a great question. So in the presentation, David obviously touched on our capital priorities and capital allocation framework as a business. You're right, finance costs have obviously been a factor over the last couple of years, particularly when we're looking at new developments and committing to new developments. So in response to finance costs increasing and our cost of capital increasing, we increased the hurdle rates that we require to commit to a new development scheme. So those moved up to around 12% to 14% IRRs in terms of committing to new developments. But going forward, we're still seeing very strong returns in our retail parks today, so we're buying those at good yields. You're getting 3% to 5% rental growth given the strong demand that we're seeing from retailers for parks in particular and given the lack of supply.

So that's giving you a double-digit IRR, which is ahead of our cost of capital. And for developments, as was mentioned in the presentation, we progress those on a derisked capital-light basis. So we are working with joint venture partners to partner with us on those development schemes, which mean we earn good fee income, which boost the returns, and, on a risk-adjusted basis, deliver strong returns for the business. So going forward, we obviously are looking at potentially deploying into retail parks and developments. And of course, as was mentioned, those opportunities are always compared against how a share buyback would compare in terms of returns. So we're looking at total return and also EPS growth of a share buyback versus deploying capital into a retail park or a campus development.

Thank you, Sean. And can you expand on what areas you're cutting costs?

Yes. So I'm very pleased that we've continued to focus on cost reduction in the business. So GBP 5 million cost reduction in the first half. Our business is typically 2/3 people costs and then 1/3 of kind of other admin costs, which are typically costs you would expect as a listed company, so audit fees, listing fees, et cetera. So over the period, we've made good cost savings across both of those buckets. And going forward, you would expect to see cost savings align with those 2/3, 1/3 bucket of savings. Very pleased with the activity and expect to continue to focus on cost reductions over the next 12 to 18 months.

And do you see the mix of tenants changing over time?

Yes, that's an interesting question. So I suppose I can look at it in both lenses from kind of looking at our campus operation and also our retail parks. I suppose starting with retail parks since -- over the last few years, we've seen probably quite strong demand from the discounters and grocery tenants. So we've seen very strong demand from the likes of Aldi, Lidl's and other omnichannel retailers likes of likes of Next and M&S. So definitely continue to see those types of occupiers expand on our retail parks. And also now you're seeing lots more -- lots of other leisure operators come on to parks, and now you're seeing gym operators come on to the retail parks. You're seeing food and beverage operators come on to parks as well, which is probably different to what you would have seen 10 years ago on a typical retail park.

So we'd expect that to continue, and we like to see a diverse range of tenants on our retail parks. And then looking at our campuses, typically, we're leasing to tenants that are looking for HQ space. So typically, these are large law firms. We're seeing it in banking and finance. We have a wide range of tenants on our campuses, including marketing firms, et cetera. What's been interesting actually over the last 6 months or so, we've seen a very strong demand from the tech and AI sector. So at the moment, we're tracking 1.5 million square feet of demand from that sector. And interestingly, that's more often than not new demand, so expansionary space. So I think going forward, over the next 24 months or so, you should probably expect to see some more deals with those tech and AI companies on our campuses as that's where there is a large pool of demand today.

Thank you, Sean. Our next question is, post-COVID, how have you seen people's habits change and the way people are using your buildings? Could you explain how this is affecting investment decisions?

Yes. Great question. So I suppose, again, I look at through both lenses. I'll start with our campuses this time. I suppose that the office today is probably very -- is quite different to where we were 5 years ago before COVID. Since the pandemic, the return to office has actually been very strong. So we're now above pre-pandemic levels Tuesday to Thursday on our campuses. So people have returned to the office probably stronger than was previously expected. But how people use the office now is probably slightly different. So we're expecting -- people expect good end of trip facilities. They expect to see amenities on the campuses to go to lunch or go somewhere else to work. They're expecting to see showers, bike facilities, et cetera, and more collaboration space.

So occupiers now are putting more of their floor plate into collaboration space for people to come and work together at the office, which is maybe different as it were 5 years ago. And actually, we're seeing occupiers now take more space. There's probably per employee now, we're probably taking more space per employee now than they were 5 years ago, given this more collaboration space. And then on our retail parks, in the pandemic, one thing that we did see was that customers like to come to retail parks because they are open air. They felt more safe in terms of shopping because they could drive up outside the front door, go into the shop, it was open air than going to a shopping center.

So we definitely saw an increase in demand for retail parks in that period of time. And I think the trend people still like going to a retail park for the same reasons as I just explained. They're on main arterial routes. They can -- it's free parking. It's often safer than on a high street. So we're seeing that trend continue.

Thank you. And how do you decide whether a property is better refurbished, repurposed or sold?

We're always looking at returns. So whenever we're considering what we should be doing with the property, we are basically -- every single year, we will be looking at every property within the portfolio. We'll be looking at the future returns on that property and deciding whether it should -- we should retain it or whether it should be sold if it's lower returning and we can recycle into something that's more higher returning. Whether it should be redeveloped or not, again, it's returns focused. I suppose a key example recently has been the Broadgate on our Broadgate campus. That's where we've decided to do a fuller scheme on that product. So we essentially had 2/3 of the building handed back to us when Reed Smith left the building to move to our Norton Folgate asset.

And so at that time, we essentially could have chosen different options, whether it was a lighter refurbishment or a more heavy refurbishment in terms of the CapEx spend we required and putting an extension on the front of the building to provide more amenity space to that building. We opted for the latter. So we went for a larger project. And the reason being is because of the supply-demand dynamics we're seeing in our -- across the London office space. So there are pretty much no tower floors left in the city. And that means really, by doing the fuller scheme, we can command higher rents and better returns than doing the lower scheme.

Thank you, Sean. Our next question is, how important are London campuses to your future? And do you see the model working outside of London, too?

Yes, that's a great question. So obviously, today, our campuses are within London, and we have our 3 core operational campuses today at Broadgate, Regions Place and Paddington. So as discussed in the presentation, the supply-demand fundamentals in our campus business are very strong today. We're seeing strong rental growth. So it's an important part of the business, and we expect that to continue going forwards.

And whether the campus would work outside of London, I think it definitely is the case. There are campuses outside of London today. The one thing of outside of London, that return to the office trend probably hasn't happened as quickly as it has in London. So I don't think you're quite capturing the rental growth that we are seeing in London today. So it's not to say that, that will not happen in the regions. It will happen over time, but it will take us a little bit longer. So today, we're seeing better returns in London.

Thank you. Next, we have smaller independent retailers are struggling. How are you helping them stay in your retail parks and centers?

Yes. Thank you for that question. Of course, retailers have come under pressure recently with the budget last year and obviously looking forward to the budget tomorrow. There have been cost pressures on the retailers and particularly smaller retailers. As you can see on our parks, I mean, the tenants on our parks typically are quite large retailers. But ultimately, the one thing with retail parks compared to maybe some other retail sectors is that one of the key parts of the investment thesis is they're affordable for retailers. So today, occupancy cost ratios is where we look at sales versus rents, rates and service charge are very low compared to other areas of the U.K. retail landscape today. So they've come down from 17% in 2016 to around 9% today, which means that many retailers can still operate profitably from our retail parks.

Thank you, Sean. Our next question is, how are you using digital technology to improve how people experience your buildings?

Yes. Thank you for that question. So I suppose it's definitely been a focus for us as we develop new buildings is how we can enhance those buildings with technology. We want to make sure that we're not overspecking buildings if it's not what the customer requires. So it's a case of working with our potential customers and occupiers to say, how do you want this building to work for you? But I mean, one key example of what we're doing today is contactless entry and exit out of the building. So just using your mobile phone to get into the building and out of the building. It's simple things like that and uses of technology, which just makes everybody's everyday life just a little bit more easy.

Thank you. We are now moving on to our final question. If you have any further questions, please e-mail the team who will respond to any questions that weren't covered this afternoon. How do you balance sustainability goals with the cost pressures tenants are facing? And how are you making buildings genuinely greener?

Yes. Thanks for that. So sustainability is obviously something that's very important to our business. And it's not just -- we're not just looking to do sustainability initiatives because it's the right thing to do. There's also a commercial advantage to us and our occupiers as well. So sustain -- the best sustainable buildings generate the best rents and also generate the best values as well. So it's the right thing commercially for us to do to make buildings sustainable, particularly in offices. So the things that we're doing, there're often kind of low-cost interventions that we need to do to make these buildings more sustainable, such as fitting an [indiscernible] heat pump, LED lighting.

And these measures are not only making it cheaper for an occupier to operate that building, it's also important for us as we want to exit that building in the future, those buildings are a lot more attractive in the investment market. And then also, whilst we build those buildings as well, it's ensuring that the embodied carbon within the building as we build them are as low as that can be. So it's reusing materials or using low carbon materials such as steel or glass, et cetera. So those things are the right thing for us to do, but also generate the best rents and the best rental growth for us in the future.

We currently have no further questions. So I'll hand back over to Sean for any closing remarks.

Yes, brilliant. Thank you for today. So -- and thank you for all the questions. I suppose I'll just finish the day as Simon finished the main presentation. So the key messages from us are, we are operating in 2 core markets. 90% of our business today is within our campus business or retail parks. And in those businesses, that's where we are seeing the strongest occupational fundamentals. Demand is still very high, be that return to the office or also from retailers looking to expand on the lower-cost retail park format. And we're seeing very little supply in both of those markets and rents are remaining affordable, which is putting us well placed to continue to see rents grow and see those returns accelerate.

And we see ourselves as quite an active owner of campus assets and retail parks with development expertise being well placed to deliver strong returns from these assets. And then bringing it all together in terms of the return profile for British Land, today, we've got a good strong income return that is growing. So it's 5% of our net asset base today. We see strong capital growth from future rental growth that we'll see across the portfolio of 3% to 5% per year. And on top of that, we expect to generate capital returns from our development portfolio. So yes, that's it from me. Thank you.

Thank you to British Land for joining us today, and that concludes the British Land investor presentation. Please take a moment to complete a short survey following this event. A recording of this presentation will be made available on Engage Investor. I hope you enjoyed today's webinar.

Good morning, everyone. Thank you for joining us. It's great to be back at Broadgate for these set of results. You will have noticed quite a few changes on the campus over the last year since we were last here. And if you do get a little bit of time after the presentation, do check out the retail underneath 1 Broadgate. It launched last week, and it's already 90% let and under offer, which is a pretty good place to be. So in terms of today's agenda, I'll start with an overview. David will take you through the first half performance and also our earnings levers. And then Kelly will look at our strong leasing and accretive asset management over the period. But before I hand over to David, I'd like to take a step back and look at what's driving the future performance of the business.

At the heart of this is the decision we took nearly 5 years ago to build a market-leading position in campuses and retail parks. Together, these now represent 90% of our business. These are sectors with strong occupational fundamentals. Demand is healthy, supply is constrained and rents are very affordable. The investment market is waking up to this. Investors are increasing their allocations to both retail and offices. And we are very well placed to capitalize on this. That's down to the quality of the assets, the experience of our team and our value-add mindset. The result, a very attractive total return profile, underpinned by sustainable earnings growth. So let's unpack this, starting with prime London offices, where a classic supply crunch is driving strong rental growth.

The return to the office has exceeded expectations. Midweek utilization across our campuses is now above pre-pandemic levels. Businesses are short on space. Last year, they expanded by 3.3 million square feet, the highest since 2019. And active demand is now 50% above the long-term average. But supply remains tight. Initial concerns about working from home have been compounded by rising construction costs and higher interest rates. You can see on this slide, vacancy for new and refurbished space in the city is predicted to fall below 2% and stay there for the next 4 years. Historically, when this has happened, it has driven double-digit rental growth. We've positioned our portfolio to benefit from this supply squeeze. Office occupiers are focused on 4 key areas: quality, location, amenity and flexibility.

Our campuses tick all the boxes. We currently account for 7 out of the top 20 leasing deals that are under offer in London. So we're capturing a disproportionate share of a very strong market. That's down to high-quality sustainable buildings, prime locations near transport hubs, excellent amenities and public realm and flexible offerings, ranging from story to fully fitted work-ready space to headquarter space. This flexibility is key for customers in the innovation sectors. This is a fast-growing market, especially in the Knowledge Quarter. The number of innovation customers in our portfolio has more than doubled since 2022. There's been strong growth from a new generation of AI and tech businesses with high levels of venture capital investment. This is a key source of new demand. We're tracking 1.5 million square feet of new requirements. Kelly will explain in a moment how we're benefiting from this at Regent's Place.

Our on-site developments are achieving record rents, which is driving development yields above 7% and mid-teens IRRs. These record rents also provide valuable evidence for upcoming reviews across our campuses. We're derisking our schemes with pre-lets and fixed price contracts and increasingly bringing in partners such as Modon to reduce capital outlay, accelerate delivery and earn valuable fees. Let's move on now to retail parks. These continue to be the preferred format for retailers. They're efficient and adaptable, offer easy access, free parking, and they're ideal for a range of retailers, including value, grocery and multichannel. Retailers like M&S, Lidl, Aldi and Home Bargains are expanding into this format. Yet there's been virtually no new supply in the past decade, and we don't see this situation changing.

Development economics are unattractive and planning is restrictive. As you know, we're the largest owner and operator of multi-let retail parks in the U.K. We have a portfolio stretching from the The Isle of Wight to Inverness. Half the U.K. population lives within a 30-minute drive of one of our assets. And we have deep reach with the retailers, given our scale, the experience of our team and our in-house property management. Of course, we use demographic and competition data, but nothing beats picking up the phone to a retailer to understand trading. Our focus on strong trading locations is reflected in our footfall. This has grown 13.5% above the U.K. retail benchmark over the last 5 years. Despite a more competitive investment market, we're still acquiring assets at yields above 7%. And we're comfortable taking occupational risk due to the market strength, our asset management expertise and those retailer relationships.

In real estate, affordability is just as important as supply and demand. For prime offices and retail parks, the picture is very positive. London office rents relative to wages are lower than at the turn of the century and retail occupancy cost ratios are very healthy. This leaves plenty of room for rental growth. That's why we're guiding to 3% to 5% growth in both sectors. Investors are taking note of the occupational strength I've just described, and they're increasing their allocation to both offices and retail. This, together with strong credit markets means we expect investment volumes to grow. London office transactions have been subdued in recent years, as we know, but they've really picked up this year with over GBP 6 billion year-to-date and GBP 3 billion under offer. So far, the number of deals over GBP 100 million this year is already double the whole of last year.

Strong occupational fundamentals, improving investment markets and our high-quality platform provide for an attractive total return profile. The essential building blocks are set out here. Their earnings yield, valuation uplift and development upside. Earnings yield is currently 5% and growing. Assuming stable property yields, valuations will primarily be driven by ERV growth, where we're guiding to 3% to 5%. You need to adjust for a bit of depreciation, the impact of leverage and the fact that ERV growth doesn't feed through 1:1. But you can see how these first 2 building blocks get you to around 8% to 9%.

Developments add further upside with mid-teens returns forecast on the committed schemes and the pipeline. So we're confident in delivering total accounting returns of 8% to 10% through the cycle. The total return outlook is underpinned by attractive earnings growth. We're expecting at least 6% next year, and we have the levers to deliver 3% to 6% over the medium term. This is an ideal point to hand over to David, who will take you through these levers as well as our numbers. David, over to you.

Thanks, Simon. Good morning, everybody. Three things from me today. First, I'll cover our financial performance for the half year. Second, the balance sheet and our approach to capital allocation. And finally, I'll provide an update, as Simon said, on the 5 levers of earnings growth I outlined in May and then how we see them translating into medium-term growth of 3% to 6%, including our guidance for FY '26 and then into FY '27. As you know, we released many of the key metrics in October. That's something you should expect from us going forward. One benefit we see is that it allows us to spend more time today on strategy and outlook, but starting with the numbers. Underlying profit was up 8% to GBP 155 million, and underlying EPS was 15.4p, 1% ahead of last year, meaning the dividend is also up 1%, in line with our policy of paying out 80% of underlying EPS.

Looking at the EPS bridge, you can clearly see the benefit of our progress against the earnings levers, in particular, driving like-for-like, which was 4% and contributed GBP 6 million or 0.6p with a positive performance across both offices and retail, higher rents from developments from completed schemes like 1 Broadgate and The Optic, partially offset by void costs and lowering admin costs. This has been a key focus for me since I became CFO this time last year. I spoke in May about the savings we had already identified, and I'm pleased to see the benefit come through in H1 with admin costs down GBP 5 million or 12% versus last year, adding 0.5p to EPS.

One-off items had only a limited impact on earnings year-on-year as the positive effect of surrender premium offset bad debt provision releases last year. Taken together then, these positives more than offset the GBP 13 million increase in finance costs, which reduced EPS by 1.3p. This is in line with expectations, mainly reflecting the fact that we're no longer capitalizing interest on completed developments and a 10 basis point increase in our weighted average interest rate to 3.7%. Here's the summary P&L account. I've covered most things here already, but just to touch on 2 further metrics. First, our NRI margin. This was lower due to the increase in PropEx, mainly because of the movement in provisions I just touched on, which slightly flattered the margin last year and void costs as we lease up developments.

Once this is done, I expect our margin to stabilize at around 90%. The other thing to draw out here is the EPRA cost ratio, which was 17.4% at September as this higher PropEx more than offset the reduction in admin costs. Though I do expect the ratio to come down to the mid-teens in future years as we lease up developments and further leverage the operating platform we have in place, adding income while controlling costs. Now turning to the balance sheet. NTA has again increased since March, reflecting a 1.2% rise in property values, which added 10p and underlying profit, which added a further 15p, although this was partially offset by the dividend paid in July and other movements, resulting in NTA per share of 579p, up 2%.

This, combined with the dividend paid, equated to a total accounting return of 4% for the half, meaning we're on track to deliver our full year target of 8% to 10%. Credit markets remain very strong, and we've capitalized through a broad range of activity focused on maintaining our overall maturity and enhancing diversity in our sources of finance. We raised a GBP 450 million green loan secured against 1 Broadgate, extended GBP 930 million of RCFs and renewed GBP 500 million of term loans at improved pricing. Looking ahead, we have just over GBP 300 million of debt maturities at British Land over the next 12 months. So we remain well financed with flexibility on when and how we raise new debt. And with good access to the bank debt and capital markets, we expect to remain active in a strong market.

I was pleased to have our Fitch rating reaffirmed in July at A with a stable outlook, reflecting the fact that our balance sheet remains strong. We ended September with GBP 1.7 billion of undrawn facilities in cash. Net debt was GBP 3.8 billion. Our LTV was 39.1% with net debt-to-EBITDA on a group basis at 7.2x. This balance sheet stability underpins all of our capital allocation decisions. We focus on recycling capital from mature, lower-returning assets into higher returning opportunities. Currently, that means investing further into retail parks where, as Simon has described, the investment case remains compelling, and we continue to see opportunities to buy at attractive pricing. Alongside that, we progress best-in-class office developments at our campuses on a derisked capital-light basis, securing pre-lets, certainty over build costs and bringing in partners to accelerate returns and reduce risk, just as we did over at 2 Finsbury Avenue.

Our London Urban Logistics portfolio has embedded development optionality, and we remain positive about the long-term supply-demand dynamics here, so we can progress those schemes when the time is right. But the sector is weaker today. So we prioritize better uses of capital in retail parks and campus development. It's important to note that we always make capital allocation decisions in the context of shareholder distributions, including the relative returns and EPS accretion available from share buybacks, for example, when we have the proceeds to invest following significant disposals. And as ever, all of our capital allocation decisions are based on our assessment of relative returns at any point in time.

In May, I set out the 5 levers we focus on to drive consistent cash-generative earnings growth. So 6 months on, let's update against each. First, like-for-like rental growth. We've made a strong start to the year. Portfolio like-for-like growth was 4%, bang in the middle of our guidance of 3% to 5%. Campuses were up 7% as we drove occupancy and secured rental uplifts on space which have been surrendered. Our retail business also continued to grow, albeit at a lower rate, reflecting the fact that we're at near full occupancy. Going forward, though, ERV growth should more directly translate into like-for-like growth as we're largely rack rented now on our parks. And overall, for the full year, I expect 5% like-for-like growth across the portfolio.

Kelly will give you more detail on our portfolio performance in a minute. Fee income is our second earnings growth lever. We continue to work with a broad range of JV partners, generating fee income for both assets and development management. Although fee income was flat in the first half at GBP 13 million, we do expect to achieve 10% growth for the full year as we continue to earn fees on development mandates, and we're actively pursuing opportunities to leverage our platform in order to drive incremental fees from new and existing partners. Third, cost control. I'm pleased with the progress we've made over the last 12 months, but this remains a focus. And so for the full year, I expect admin costs to be GBP 75 million to GBP 76 million, ahead of the guidance I gave in May and versus GBP 82 million for last year.

Development leasing is our fourth earnings lever. As I mentioned earlier, we're now benefiting from schemes such as 1 Broadgate and The Optic, while leasing on previously delivered schemes at Norton Folgate and Aldgate Place is well on track. 1 Triton Square launched in October, and we're delighted to have our first deals under offer there. Finally, capital recycling. The fuel in this machine is our ability to dispose of lower returning assets, freeing up capital to rapidly redeploy into higher-returning opportunities.

As Simon laid out, the office investment market has been quieter than in previous years, but we are seeing signs of improvement. And against that backdrop, we've remained active, executing deals where it makes sense, disposing of retail parks where pricing has moved in or development sites in London, which were not income-producing, then rapidly redeploying the proceeds. Given the improving investment market, we do, however, expect activity to increase over the next 12 to 18 months. Bringing this together, we expect to deliver sustainable EPS growth of between 3% and 6% over the medium term. This slide shows how each of these earnings levers contribute to that. Now this is purposefully illustrative. And of course, it will not be linear in any particular year. But to me, this is the best way to think about the earnings growth potential of our business. So let's go through each of them.

In terms of like-for-like, we're confident we can consistently deliver 3% to 5% on our standing portfolio given the strong occupational fundamentals of our core sectors. At the midpoint, this top line of 4% growth drops 3% to 5% annual EPS growth. 10% fee income growth adds another 1% per year. And on costs, I do expect further reductions over the next 12 to 18 months, which will, of course, continue to benefit earnings. Although over the medium term, there is likely to be continued inflationary pressures. So modeling broadly flat costs is not unreasonable over, say, 5 years. Likewise, our weighted average interest rate will gradually increase over time, reflecting prevailing market rates. Based on today's rates, we anticipate a 10 to 20 basis point increase per year, which would reduce EPS by around 2% per annum. So overall, we see a clear route to core EPS growth of 4% per year, and that's before further capital activity, which really is the kicker on top of this core growth. There are 2 components to consider: development completions and asset recycling.

And while the timing and phasing of capital activity is, of course, hard to predict and it's by its nature, lumpy, I've assumed around GBP 500 million per year, with GBP 200 million for developments and GBP 300 million for asset recycling. Then to model the earnings impact for developments, we assume a spread of around 200 basis points between the yield on cost and our funding costs and for asset recycling, 100 basis points between what we buy versus what we sell. Taken together then, this capital activity would contribute a further 2% to EPS growth per year, increasing the annual growth rate to 6%, the top end of the range I described in May.

So bringing this back to immediate outlook. Moving into the second half, we expect to deliver at least 28.5p of EPS for FY '26 and from there, at least 6% EPS growth for FY '27 as we benefit from the continued lease-up of our developments, capitalize on the compelling fundamentals of our core business and so move forward with confidence in delivering against our 5 earnings growth levers. With that, over to Kelly.

Good morning, everyone. You've heard from Simon on the strength of our markets. So I'll now take you through how that's translated into performance and outline how we're adding value across the portfolio. I'll start with valuations, which have increased by 1.2%. This is the third period I've been able to report positive valuation growth, and it's a good sign that the inflection point is behind us. Valuations have been driven by strong rental growth of 2.4%. On an annualized basis, this is again at the top end of our guided range of 3% to 5%, and we're confident this rental growth will continue. Turning to the operational performance, starting with campuses, we have leased 486,000 square feet at 3% ahead of ERV.

And at the end of the period, we were under offer on 629,000 square feet, 6% ahead of ERVs. And we have been particularly busy since 30 September with a further 308,000 square feet put under offer, and that's a very busy 6 weeks. It's worth pointing out, we're seeing particularly strong momentum in leasing up vacancy. Since March, we've let or put under offer 751,000 square feet on vacant or newly delivered space. Our EPRA occupancy now stands at 88%, up 5% this half, up 10% for the year. As we said in the trading update, Broadgate is practically full. There's just one completed floor to lease across the entire campus, and it's an exceptional floor, the top floor of our newest scheme at 1 Broadgate. We're in negotiations on that floor, and we'll set record new rents for the campus. This is good news for our on-site developments, which will deliver into a market with very limited supply.

Broadgate Tower is the first to be delivered late next year. This is a 390,000 square foot building with 240 square foot development floors. Since 30 September, we've gone under offer on 59,000 square feet across 5 deals, taking the building to 49% let. This is a very strong position to be in at this stage. The next to deliver is 2 Finsbury Avenue in 2027, where Citadel are taking up to 50% of the space. Here, we are in negotiations with a number of larger occupiers, 2 years ahead of delivery, and this is a fantastic tower building delivering in a year with very little competition. We've also been proactively identifying where we can take that space and relet it at high rents to drive value when there's such little supply. For example, at Exchange House, we proactively took back some floors. We're reinvesting the surrender receipt into much needed on-floor upgrades after 35 years of occupation and have already relet to MSCI, driving rents on by GBP 35 per square foot.

This added GBP 10 million to the valuation of the building and sets strong rental evidence for the wider campus. This is accretive asset management, and we will look to do more of this. Norton Folgate is a slightly different proposition for us at British Land as the product is smaller floor space, often fitted and therefore, more suited to let post PC. We've made good progress and are now 89% let, under offer or in negotiations. And we're on track to be fully let by the end of the financial year. Simon covered the growing demand coming from innovation occupiers, which is driving momentum across the portfolio. To capitalize on that, we launched 1 Triton Square last month. This is an incredible building. It's a campus within a campus and offers real flexibility to tenants. It includes a floor of storey space, a floor of fitted labs, 3 lab-enabled floors, which look like a traditional office floor, but can easily be converted to lab use as demand evolves and 3 traditional office floors.

You may have picked this up in David's piece, but I'm pleased to confirm that just 6 weeks after PCing, we have 56,000 square feet under offer to 2 globally recognized science and tech occupiers due to complete later this month. And we have another 211,000 square feet in negotiations. We are very excited about this and look forward to continuing to update you on our progress. Turning to retail parks. You'll know it's a very competitive occupational landscape and retailers are keen to secure space. Leasing volumes remain strong at 681,000 square feet, 6% ahead of ERVs. And under offers are 554,000 square feet, also 6% ahead of ERVs. Sales this half have been in line with previous passing rents. And thanks to recent strong rental growth, our portfolio is now largely rented. And as a reminder, it was over 20% over-rented just 2.5 years ago.

So we're in a great position to generate strong like-for-like rental growth from the portfolio. Retail parks provide strong cash yields and good opportunities to increase value through asset management. I'll cover just a few of the many examples of asset management on our acquisitions, where we've looked to improve the tenant mix and drive footfall, sales and ultimately, rents. I'll start with the first one we bought when we took the contrarian call to start buying retail parks. When we bought Biggleswade Retail Park in 2021, it had 6 high-risk retailers. These are the ones in red. We've relet all of these to strong category leaders, which has helped drive a 12% IRR since acquisition.

Rolling forward to one of last year's buys, Queens Drive Retail Park. When we purchased it, there were 2 vacant units, both are now let, including to an M&S anchor, which is a major win for the park. The park is full and leasing well ahead of ERV and has delivered a 14% IRR since acquisition. And our most recent buy is Turbary Retail Park in Bournemouth, which we purchased earlier this month for a prospective double-digit IRR and a day 1 yield of 7.4%, which with asset management, we've already increased to 7.7%. And we have a strong pipeline of similar deals.

As Simon covered, we're unlikely to see many new retail parks built, but we're actively looking for opportunities across the portfolio where we can add space efficiently. Projects like these ones at Glasgow and Rugby are smaller in scale, shorter in duration and lower risk than traditional developments, but they generate meaningful returns with a yield on cost of at least 8%, often double digits. And on top of that, they provide strong wash over to the rest of the park by improving lineup and rental tone.

So I'll leave you with 3 things. Values continue to rise, driven by strong ERV growth at the top end of our guidance. Our standing campus assets are virtually full following a strong 6 months of lettings, and we've made good progress on our newly delivered space. And finally, as the market leader in retail parks, our active asset management is pushing on rents and values, and we look to buy more in the space as we continue to recycle capital. Now over to Simon to wrap up.

Thanks, Kelly. So to wrap up, let's circle back to where we began. We're a market leader in the right sectors, campuses and retail parks, where demand is healthy, supply is constrained and rents are affordable. Investors are increasing their allocations to these sectors, and we're very well positioned to capitalize on this and to deliver attractive total returns going forward. Thanks for listening. We're now going to take your questions.

Thank you to the management team for the presentation. We have had a number of questions pre-submitted and submitted live. [Operator Instructions] Our first question is, you expect at least 6% EPS growth from FY '27. What are the key growth levers that will drive that?

Yes. Thank you for that question. So I think I'll just remind you again what our EPS guidance is for this year and next year. So we're guiding to at least 28.5p of EPS for financial year '26. And then going into next year, we're guiding to at least 6% EPS growth. And David mentioned it in the prepared remarks in terms of what the building blocks of that growth look like. So just to remind you in terms of next year, how that will look. So given the strength in our markets that Simon discussed in the presentation with very little supply, very strong demand and rents remaining affordable, we expect to continue to see strong rental growth in those markets, and that should drive through to a strong like-for-like growth.

So we expect 3% to 5% like-for-like growth to come through next year, which will kind of -- that will deliver us around 5% of EPS. And then moving down, we would then see fee income. We'd like to grow fee income by about 10%. That will be through existing development mandates that we have with our existing joint venture partners and potentially new mandates as well. That will add around 1% to EPS. Then moving on to cost control. It's something we focused on over the last couple of years. Very pleased to have reduced costs in the first half of the year by GBP 5 million, and we'll continue to look to save costs going forward and expect to save some costs going into the financial year next year.

And then offsetting that, you've then got the impact of finance costs. So we're seeing -- we're expecting to see around a 10 to 20 basis points increase in our average cost of debt over next year, which will have around a 2% drag in terms of EPS. So bring those together, that's around 4% of core EPS growth. And then on top of that, you then have capital recycling, so be that selling assets and putting it into new purchases or next year, more likely, it's going to be from the developments that we currently have and are delivering and leasing up those developments into next year, such as 1 Triton Square. So that gets you to the top end of that 3% to 6% range.

Thank you, Sean. Our next question is, are there still retail park opportunities out there? You mentioned buy at attractive prices. How much availability is there?

Yes, that's a very good question and one that we've been asked a lot actually by investors. So we are still seeing good opportunity in retail parks. The environment has definitely become more competitive as investors have realized and kind of seen the strong rental growth we're seeing. There's no new supply. They can buy an attractive yield and you're getting good rental growth on those parks. But we -- given the scale that we have in that market, we are able to identify opportunities where we're willing to take maybe a little bit more occupational risk than some other investors.

So for example, Kelly took you through some examples in the presentation today. We would, for example, buy some parks where we know there's some vacant units or there could be a lower covenant tenant on those parks. But given the scale of our parks that we own and the relationships we have with the retailers, we are able to call up retailers before we buy a park and say, how does this trade? Would you like to be on this park? And it gives us an advantage. So we know that we can buy a park and take some occupational risk and fill those void units, change the tenant mix to improve the returns on those parks.

Thank you. Our next question is, your loan-to-value is creeping up. Are you worried about debt risk, especially if property yields move?

Yes. Thank you for that question. I mean our LTV today, as a reminder, is 39.1%. We've said we'd like to operate within a 30% to 40% range. And at this point in the cycle where it seems that values have dropped and are inflecting, we feel comfortable in that 35% to 40% range for LTV. LTV isn't just the only metric we're looking at. We're focused on a range of metrics and also look quite closely at net debt to EBITDA. That was 7.2x for the period, and we would like that to be below 8x. So both of our metrics are below where we'd like them to be, which is good and something we're focused on.

And obviously, those are metrics that Fitch are very focused on, and we're keen to maintain the rating we have from Fitch. So yes, so going forward, in terms of looking at leverage, we expect to continue to focus on capital recycling and expect, particularly with values inflecting those metrics to move down over time.

And with funding costs rising, how do you prioritize capital? Is it more developments, repurchases or reducing leverage?

Yes, that's a great question. So in the presentation, David obviously touched on our capital priorities and capital allocation framework as a business. You're right, finance costs have obviously been a factor over the last couple of years, particularly when we're looking at new developments and committing to new developments. So in response to finance costs increasing and our cost of capital increasing, we increased the hurdle rates that we require to commit to a new development scheme. So those have moved up to around 12% to 14% IRRs in terms of committing to new developments. But going forward, we're still seeing very strong returns in our retail parks today. So we're buying those at good yields. You're getting 3% to 5% rental growth given the strong demand that we're seeing from retailers for parks in particular and given the lack of supply.

So that's giving you a double-digit IRR, which is ahead of our cost of capital. And for developments, as was mentioned in the presentation, we progress those on a derisked capital-light basis. So we are working with joint venture partners to partner with us on those development schemes, which mean we earn good fee income, which boost the returns and on a risk-adjusted basis, deliver strong returns for the business. So going forward, we obviously are looking at potentially deploying into retail parks and developments. And of course, as was mentioned, those opportunities are always compared against how a share buyback would compare in terms of returns. So we're looking at total return and also EPS growth of a share buyback versus deploying capital into a retail park or a campus development.

Thank you, Sean. And can you expand on what areas you're cutting costs?

Yes. So I'm very pleased that we've continued to focus on cost reduction in the business. So GBP 5 million cost reduction in the first half. Our business is typically 2/3 people costs and then 1/3 of kind of other admin costs, which are typically cost you would expect as a listed company, so audit fees, listing fees, et cetera. So over the period, we've made good cost savings across both of those buckets. And going forward, you would expect to see cost savings align with those 2/3, 1/3 bucket of savings. Very pleased with the activity and expect to continue to focus on cost reductions over the next 12 to 18 months.

And do you see the mix of tenants changing over time?

Yes, that's an interesting question. So I suppose I can look at it in both lenses from kind of looking at our campus operation and also our retail parks. I suppose starting with retail parks since -- over the last few years, we've seen probably quite strong demand from the discounters and grocery tenants. So we've seen very strong demand from the likes of Aldi, Lidl's and other omnichannel retailers likes of likes of Next and M&S. So definitely continue to see those types of occupiers expand on our retail parks. And also now you're seeing lots more -- lots of other leisure operators come on to parks and now you're seeing gym operators come on to the retail parks. You're seeing food and beverage operators come on to parks as well, which is probably different to what you would have seen 10 years ago on a typical retail park.

So we'd expect that to continue, and we like to see a diverse range of tenants on our retail parks. And then looking at our campuses. Typically, we're leasing to tenants that are looking for HQ space. So typically, these are large law firms. We're seeing it banking and finance. We have a wide range of tenants on our campuses, including marketing firms, et cetera. What's been interesting actually over the last 6 months or so, we've seen a very strong demand from the tech and AI sector. So at the moment, we're tracking 1.5 million square feet of demand from that sector. And interestingly, that's more often than new demand, so expansionary space. So I think going forward over the next 24 months or so, you should probably expect to see some more deals with those tech and AI companies on our campuses as that's where there is a large pool of demand today.

Thank you, Sean. Our next question is, post-COVID, how have you seen people's habits change and the way people are using your buildings? Could you explain how this is affecting investment decisions?

Yes. Great question. So I suppose, again, I look at through both lenses. I'll start with our campuses this time. I suppose that the office today is probably very -- is quite different to where we were 5 years ago before COVID. Since the pandemic, the return to office has actually been very strong. So we're now above pre-pandemic levels, Tuesday to Thursday in our campuses. So people have returned to the office probably stronger than was previously expected. But how people use the office now is probably slightly different. So we're expecting -- people expect good end of trip facilities. They expect to see amenities on the campuses to go to lunch or go somewhere else to work. They're expecting to see showers, bike facilities, et cetera, and more collaboration space.

So occupiers now are putting more of their floor plate into collaboration space for people to come and work together at the office, which is maybe different as it were 5 years ago. And actually, we're seeing occupiers now take more space. There's probably per employee now, we're probably taking more space per employee now than they were 5 years ago, given this more collaboration space. And then on our retail parks, in the pandemic, one thing that we did see was that customers like to come to retail parks because they are open air. They felt more safe in terms of shopping because they could drive up outside the front door, go into the shop, it was open air than going to a shopping center.

So we definitely saw an increase in demand for retail parks in that period of time. And I think the trend people still like going to a retail park for the same reasons as I just explained. They're on main arterial routes. They can -- it's free parking. It's often safer than on a high street. So we're seeing that trend continue.

And how do you decide whether a property is better refurbished, repurposed or sold?

We're always looking at returns. So whenever we're considering what we should be doing with the property, we are basically every single year, we will be looking at every property within the portfolio. We'll be looking at the future returns on that property and deciding whether it should -- we should retain it or whether it should be sold if it's lower returning and we can recycle into something that's more higher returning. Whether it should be redeveloped or not, again, it's returns focused. I suppose a key example recently has been the Broadgate Tower on our Broadgate campus. That's where we've decided to do a fuller scheme on that product. So we essentially had 2/3 of the building handed back to us when Reed Smith left the building to move to our Norton Folgate asset.

And so at that time, we essentially could have chosen different options, whether it was a lighter refurbishment or a more heavy refurbishment in terms of the CapEx spend we required and putting an extension on the front of the building to provide more amenity space to that building. We opted for the latter. So we went for a larger project. And the reason being is because of the supply-demand dynamics we're seeing in our -- across the London office space. So there are pretty much no tower floors left in the city. And that means really by doing the fuller scheme, we can command higher rents and better returns than doing the lower scheme.

Thank you, Sean. Our next question is, how important are London campuses to your future? And do you see the model working outside of London, too?

Yes, that's a great question. So obviously, today, our campuses are within London, and we have our 3 core operational campuses today at Broadgate, Regions Place and Paddington. So as discussed in the presentation, the supply-demand fundamentals in our campus business are very strong today. We're seeing strong rental growth. So it's an important part of the business, and we expect that to continue going forward.

And whether the campus would work outside of London, I think it definitely is the case. There are campuses outside of London today. The one thing of outside of London, that return to the office trend probably hasn't happened as quickly as it has in London. So I don't think you're quite capturing the rental growth that we are seeing in London today. So it's not to say that, that will not happen in the regions. It will happen over time, but it will take us a little bit longer. So today, we're seeing better returns in London.

Thank you. Next, we have smaller independent retailers are struggling. How are you helping them stay in your retail parks and centers?

Yes. Thank you for that question. Of course, retailers have come under pressure recently with the budget last year and obviously looking forward to the budget tomorrow. There have been cost pressures on the retailers and particularly smaller retailers. As you can see on our parks, I mean, the tenants on our parks typically are quite large retailers. But ultimately, the one thing with retail parks compared to maybe some other retail sectors is that one of the key parts of the investment thesis is they're affordable for retailers. So today, occupancy cost ratios is where we look at sales versus rents, rates and service charge are very low compared to other areas of the U.K. retail landscape today. So they've come down from 17% in 2016 to around 9% today, which means that many retailers can still operate profitably from our retail parks.

Thank you, Sean. Our next question is, how are you using digital technology to improve how people experience your buildings?

Yes. Thank you for that question. So I suppose it's definitely been a focus for us as we develop new buildings is how we can enhance those buildings with technology. We want to make sure that we're not overspecking buildings if it's not what the customer requires. So it's a case of working with our potential customers and occupiers to say, how do you want this building to work for you? But I mean, one key example of what we're doing today is contactless entry and exit out of the building. So just using your mobile phone to get into the building and out of the building. It's simple things like that and uses of technology, which just makes everybody's everyday life just a little bit more easy.

We are now moving on to our final question. If you have any further questions, please e-mail the team who will respond to any questions that weren't covered this afternoon. How do you balance sustainability goals with the cost pressures tenants are facing? And how are you making buildings genuinely greener?

Yes. Thanks for that. So sustainability is obviously something that's very important to our business. And it's not just -- we're not just looking to do sustainability initiatives because it's the right thing to do. There's also a commercial advantage to us and our occupiers as well. So the best sustainable buildings generate the best rents and also generate the best values as well. So it's the right thing commercially for us to do to make buildings sustainable, particularly in offices. So the things that we're doing, there are often kind of low-cost interventions that we need to do to make these buildings more sustainable, such as fitting natural heat pump, LED lighting.

And these measures are not only making it cheaper for an occupier to operate that building. It's also important for us as we want to exit that building in the future, those buildings are a lot more attractive in the investment market. And then also, whilst we build those buildings as well, it's ensuring that the embodied carbon within the building as we build them are as low as that can be. So it's reusing materials or using low carbon materials such as steel or glass, et cetera. So those things are the right thing for us to do, but also generate the best rents and the best rental growth for us in the future.

We currently have no further questions. So I'll hand back over to Sean for any closing remarks.

Yes, brilliant. Thank you for today. So -- and thank you for all the questions. I suppose I'll just finish the day as Simon finished the main presentation. So the key messages from us are we are operating in 2 core markets. 90% of our business today is within our campus business or retail parks. And in those businesses, that's where we are seeing the strongest occupational fundamentals. Demand is still very high, be that return to the office or also from retailers looking to expand on the lower-cost retail park format. And we're seeing very little supply in both of those markets and rents are remaining affordable, which is putting us well placed to continue to see rents grow and see those returns accelerate.

And we see ourselves as quite an active owner of campus assets and retail parks with development expertise being well placed to deliver strong returns from these assets. And then bringing it all together in terms of the return profile for British Land, today, we've got a good strong income return that is growing. So it's 5% of our net asset base today. We see strong capital growth from future rental growth that we'll see across the portfolio of 3% to 5% per year. And on top of that, we expect to generate capital returns from our development portfolio. So yes, that's it from me. Thank you.

Thank you for taking the time to British Land for joining us today, and that concludes the British Land investor presentation. Please take a moment to complete a short survey following this event. A recording of this presentation will be made available on Engage Investor. I hope you enjoyed today's webinar.

[Audio Gap] results. You will have noticed quite a few changes on the Campus over the last year since we were last here. And if you do get a little bit of time after the presentation, do check out the Retail underneath for 1 Broadgate. It launched last week, and it's already 90% let and under offer, which is a pretty good place to be.

So, in terms of today's agenda, I'll start with an overview. David will take you through the first half performance and also our earnings levers. And then Kelly will look at our strong leasing and accretive asset management over the period.

But before I hand over to David, I'd like to take a step back and look at what's driving the future performance of the business. At the heart of this is the decision we took nearly 5 years ago to build a market-leading position in Campuses and Retail Parks.

Together, these now represent 90% of our business. These are sectors with strong occupational fundamentals. Demand is healthy, supply is constrained, and rents are very affordable. The investment market is waking up to this. Investors are increasing their allocations to both Retail and Offices. And we are very well placed to capitalize on this. That's down to the quality of the assets, the experience of our team and our value-add mindset. The result, a very attractive total return profile, underpinned by sustainable earnings growth.

So, let's unpack this. Starting with prime London offices, where a classic supply crunch is driving strong rental growth. The return to the office has exceeded expectations. Mid-week utilization across our Campuses is now above pre-pandemic levels. Businesses are short on space.

Last year, they expanded by 3.3 million square feet, the highest since 2019. And active demand is now 50% above the long-term average. But supply remains tight. Initial concerns about working from home have been compounded by rising construction costs and higher interest rates.

You can see on this slide, vacancy for new and refurbished space in the city is predicted to fall below 2% and stay there for the next 4 years. Historically, when this has happened, it has driven double-digit rental growth. We've positioned our portfolio to benefit from this supply squeeze.

Office occupiers are focused on four key areas: quality, location, amenity and flexibility. Our Campuses tick all the boxes. We currently account for 7 out of the top 20 leasing deals that are under offer in London. So, we're capturing a disproportionate share of a very strong market. That's down to high-quality sustainable buildings, prime locations near transport hubs, excellent amenities and public realm and flexible offerings, ranging from story to fully fitted work-ready space to headquarter space.

This flexibility is key for customers in the innovation sectors. This is a fast-growing market, especially in the Knowledge Quarter. The number of innovation customers in our portfolio has more than doubled since 2022. There's been strong growth from a new generation of AI and tech businesses with high levels of venture capital investment. This is a key source of new demand. We're tracking 1.5 million square feet of new requirements. Kelly will explain in a moment how we're benefiting from this at Regent's Place.

Our on-site developments are achieving record rents, which is driving development yields above 7% and mid-teens IRRs. These record rents also provide valuable evidence for upcoming reviews across our Campuses. We're derisking our schemes with pre-lets and fixed price contracts and increasingly bringing in partners such as Modon to reduce capital outlay, accelerate delivery and earn valuable fees.

Let's move on now to Retail Parks. These continue to be the preferred format for retailers. They're efficient and adaptable, offer easy access, free parking, and they're ideal for a range of retailers, including value, grocery and multichannel.

Retailers like M&S, Lidl, Aldi and Home Bargains are expanding into this format. Yet there's been virtually no new supply in the past decade, and we don't see this situation changing.

Development economics are unattractive and planning is restrictive. As you know, we're the largest owner and operator of multi-let Retail Parks in the U.K. We have a portfolio stretching from the Isle of Wight to Inverness. Half the U.K. population lives within a 30-minute drive of one of our assets. And we have deep reach with the retailers, given our scale, the experience of our team and our in-house property management. Of course, we use demographic and competition data, but nothing beats picking up the phone to a retailer to understand trading.

Our focus on strong trading locations is reflected in our footfall. This has grown 13.5% above the U.K. Retail benchmark over the last 5 years. Despite a more competitive investment market, we're still acquiring assets that yields above 7%. And we're comfortable taking occupational risk, due to the market strength, our asset management expertise and those retailer relationships.

In real estate, affordability is just as important as supply and demand. For Prime Offices and Retail Parks, the picture is very positive. London office rents relative to wages are lower than at the turn of the century and Retail occupancy cost ratios are very healthy. This leaves plenty of room for rental growth. That's why we're guiding to 3% to 5% growth in both sectors.

Investors are taking note of the occupational strength I've just described, and they're increasing their allocation to both Offices and Retail. This, together with strong credit markets means we expect investment volumes to grow. London office transactions have been subdued in recent years, as we know, but they've really picked up this year with over GBP 6 billion year-to-date and GBP 3 billion under offer.

So far, the number of deals over GBP 100 million this year is already double the whole of last year. Strong occupational fundamentals, improving investment markets and our high-quality platform provide for an attractive total return profile. The essential building blocks are set out here. Their earnings yield, valuation uplift and development upside.

Earnings yield is currently 5% and growing. Assuming stable property yields, valuations will primarily be driven by ERV growth, where we're guiding to 3% to 5%. You need to adjust for a bit of depreciation, the impact of leverage and the fact that ERV growth doesn't feed through 1:1. But you can see how these first two building blocks get you to around 8% to 9%.

Developments add further upside with mid-teens returns forecast on the committed schemes and the pipeline. So, we're confident in delivering total accounting returns of 8% to 10% through the cycle. The total return outlook is underpinned by attractive earnings growth. We're expecting at least 6% next year, and we have the levers to deliver 3% to 6% over the medium term.

This is an ideal point to hand over to David, who will take you through these levers as well as our numbers.

David, over to you.

Thanks, Simon. Good morning, everybody. Three things from me today. First, I'll cover our financial performance for the half year. Second, the balance sheet and our approach to capital allocation. And finally, I'll provide an update, as Simon said, on the five levers of earnings growth I outlined in May and then how we see them translating into medium-term growth of 3% to 6%, including our guidance for FY '26 and then into FY '27.

As you know, we released many of the key metrics in October. That's something you should expect from us going forward. One benefit we see is that it allows us to spend more time today on strategy and outlook, but starting with the numbers.

Underlying profit was up 8% to GBP 155 million, and underlying EPS was 15.4p, 1% ahead of last year. meaning the dividend is also up 1%, in line with our policy of paying out 80% of underlying EPS.

Looking at the EPS bridge, you can clearly see the benefit of our progress against the earnings levers, in particular, driving like-for-like, which was 4% and contributed GBP 6 million or 0.6p with a positive performance across both Offices and Retail, higher rents from developments from completed schemes like 1 Broadgate and The Optic, partially offset by void costs and lowering admin costs.

This has been a key focus for me since I became CFO this time last year. I spoke in May about the savings we had already identified, and I'm pleased to see the benefit come through in H1 with admin costs down GBP 5 million or 12% versus last year, adding 0.5p to EPS. One-off items had only a limited impact on earnings year-on-year as the positive effect of surrender premia offset bad debt provision releases last year. Taken together then, these positives more than offset the GBP 13 million increase in finance costs, which reduced EPS by 1.3p. This is in line with expectations, mainly reflecting the fact that we're no longer capitalizing interest on completed developments and a 10 basis point increase in our weighted average interest rate to 3.7%.

Here's the summary P&L account. I've covered most things here already, but just to touch on two further metrics. First, our NRI margin. This was lower due to the increase in PropEx, mainly because of the movement in provisions I just touched on, which slightly flattered the margin last year and void costs as we lease up developments. Once this is done, I expect our margin to stabilize at around 90%.

The other thing to draw out here is the EPRA cost ratio, which was 17.4% at September as this higher PropEx more than offset the reduction in admin costs. Though I do expect the ratio to come down to the mid-teens in future years as we lease up developments and further leverage the operating platform we have in place, adding income while controlling costs.

Now turning to the balance sheet. NTA has again increased since March, reflecting a 1.2% rise in property values, which added 10p and underlying profit, which added a further 15p, although this was partially offset by the dividend paid in July and other movements, resulting in NTA per share of 579p, up 2%. This, combined with the dividend paid, equated to a total accounting return of 4% for the half, meaning we're on track to deliver our full year target of 8% to 10%.

Credit markets remain very strong, and we've capitalized through a broad range of activity focused on maintaining our overall maturity and enhancing diversity in our sources of finance. We raised a GBP 450 million green loan secured against 1 Broadgate, extended GBP 930 million of RCFs and renewed GBP 500 million of term loans at improved pricing.

Looking ahead, we have just over GBP 300 million of debt maturities at British Land over the next 12 months. So, we remain well financed with flexibility on when and how we raise new debt. And with good access to the bank debt and capital markets, we expect to remain active in a strong market.

I was pleased to have our Fitch rating reaffirmed in July at A with a stable outlook, reflecting the fact that our balance sheet remains strong. We ended September with GBP 1.7 billion of undrawn facilities in cash. Net debt was GBP 3.8 billion. Our LTV was 39.1% with net debt-to-EBITDA on a group basis at 7.2x.

This balance sheet stability underpins all of our capital allocation decisions. We focus on recycling capital from mature, lower-returning assets into higher returning opportunities. Currently, that means investing further into Retail Parks, where, as Simon has described, the investment case remains compelling, and we continue to see opportunities to buy at attractive pricing.

Alongside that, we progress best-in-class office developments at our Campuses on a derisked capital-light basis, securing pre-lets, certainty over build costs and bringing in partners to accelerate returns and reduce risk, just as we did over at 2 Finsbury Avenue.

Our London urban logistics portfolio has embedded development optionality, and we remain positive about the long-term supply-demand dynamics here. So, we can progress those schemes when the time is right, but the sector is weaker today. So, we prioritize better uses of capital in Retail Parks and Campus development.

It's important to note that we always make capital allocation decisions in the context of shareholder distributions, including the relative returns and EPS accretion available from share buybacks, for example, when we have the proceeds to invest following significant disposals. And as ever, all of our capital allocation decisions are based on our assessment of relative returns at any point in time.

In May, I set out the five levers we focus on to drive consistent cash-generative earnings growth. So 6 months on, let's update against each.

First, like-for-like rental growth. We've made a strong start to the year. Portfolio like-for-like growth was 4%, bang in the middle of our guidance of 3% to 5%. Campuses were up 7% as we drove occupancy and secured rental uplifts on space which have been surrendered.

Our Retail business also continued to grow, albeit at a lower rate, reflecting the fact that we're at near full occupancy. Going forward, though, ERV growth should more directly translate into like-for-like growth as we're largely rack rented now on our parks. And overall, for the full year, I expect 5% like-for-like growth across the portfolio. Kelly will give you more detail on our portfolio performance in a minute.

Fee income is our second earnings growth lever. We continue to work with a broad range of JV partners, generating fee income for both asset and development management. Although fee income was flat in the first half at GBP 13 million, we do expect to achieve 10% growth for the full year as we continue to earn fees on development mandates, and we're actively pursuing opportunities to leverage our platform in order to drive incremental fees from new and existing partners.

Third, cost control. I'm pleased with the progress we've made over the last 12 months, but this remains a focus. And so for the full year, I expect admin costs to be GBP 75 million to GBP 76 million, ahead of the guidance I gave in May and versus GBP 82 million for last year.

Development leasing is our fourth earnings lever. As I mentioned earlier, we're now benefiting from schemes such as 1 Broadgate and The Optic, while leasing on previously delivered schemes, Norton Folgate and Aldgate Place is well on track. 1 Triton Square launched in October, and we're delighted to have our first deals under offer there.

Finally, capital recycling. The fuel in this machine is our ability to dispose of lower returning assets, freeing up capital to rapidly redeploy into higher-returning opportunities. As Simon laid out, the office investment market has been quieter than in previous years, but we are seeing signs of improvement. And against that backdrop, we've remained active, executing deals where it makes sense, disposing of Retail Parks where pricing has moved in or development sites in London, which were not income-producing, then rapidly redeploying the proceeds. Given the improving investment market, we do, however, expect activity to increase over the next 12 to 18 months.

Bringing this together, we expect to deliver sustainable EPS growth of between 3% and 6% over the medium term. This slide shows how each of these earnings levers contribute to that. Now this is purposefully illustrative. And of course, it will not be linear in any particular year. But to me, this is the best way to think about the earnings growth potential of our business.

So, let's go through each of them. In terms of like-for-like, we're confident we can consistently deliver 3% to 5% on our standing portfolio given the strong occupational fundamentals of our core sectors. At the midpoint, this top line of 4% growth drops 3% to 5% annual EPS growth. 10% fee income growth adds another 1% per year. And on costs, I do expect further reductions over the next 12 to 18 months, which will, of course, continue to benefit earnings. Although over the medium term, there is likely to be continued inflationary pressures. So, modeling broadly flat costs is not unreasonable over, say, 5 years.

Likewise, our weighted average interest rate will gradually increase over time, reflecting prevailing market rates. Based on today's rates, we anticipate a 10 to 20 basis point increase per year, which would reduce EPS by around 2% per annum. So overall, we see a clear route to core EPS growth of 4% per year, and that's before further capital activity, which really is the kicker on top of this core growth.

There are two components to consider: development completions and asset recycling. And while the timing and phasing of capital activity is, of course, hard to predict and it's by its nature, lumpy, I've assumed around GBP 500 million per year with GBP 200 million for developments and GBP 300 million for asset recycling. Then to model the earnings impact for developments, we assume a spread of around 200 basis points between the yield on cost and our funding costs. And for asset recycling, 100 basis points between what we buy versus what we sell.

Taken together then, this capital activity would contribute a further 2% to EPS growth per year, increasing the annual growth rate to 6%, the top end of the range I described in May.

So, bringing this back to immediate outlook. Moving into the second half, we expect to deliver at least 28.5p of EPS for FY '26 and from there, at least 6% EPS growth for FY '27 as we benefit from the continued lease-up of our developments, capitalize on the compelling fundamentals of our core business and so move forward with confidence in delivering against our five earnings growth levers.

With that, over to Kelly.

Good morning, everyone. You've heard from Simon on the strength of our markets. So, I'll now take you through how that's translated into performance and outline how we're adding value across the portfolio.

I'll start with valuations, which have increased by 1.2%. This is the third period I've been able to report positive valuation growth, and it's a good sign that the inflection point is behind us. Valuations have been driven by strong rental growth of 2.4%. On an annualized basis, this is again at the top end of our guided range of 3% to 5%, and we're confident this rental growth will continue.

Turning to the operational performance, starting with Campuses. We have leased 486,000 square feet at 3% ahead of ERV. And at the end of the period, we were under offer on 629,000 square feet, 6% ahead of ERVs. And we have been particularly busy since 30 September with a further 308,000 square feet put under offer, and that's a very busy 6 weeks.

It's worth pointing out, we're seeing particularly strong momentum in leasing up vacancy. Since March, we've let or put under offer 751,000 square feet on vacant or newly delivered space. Our EPRA occupancy now stands at 88%, up 5% this half, up 10% for the year.

As we said in the trading update, Broadgate is practically full. There's just one completed floor to lease across the entire Campus, and it's an exceptional floor, the top floor of our newest scheme at 1 Broadgate. We're in negotiations on that floor, and we'll set record new rents for the Campus. This is good news for our on-site developments, which will deliver into a market with very limited supply.

Broadgate Tower is the first to be delivered late next year. This is a 390,000 square foot building with 240 square foot development floors. Since 30 September, we've gone under offer on 59,000 square feet across five deals, taking the building to 49% let. This is a very strong position to be in at this stage.

The next to deliver is 2 Finsbury Avenue in 2027, where Citadel are taking up to 50% of the space. Here, we are in negotiations with a number of larger occupiers, 2 years ahead of delivery, and this is a fantastic tower building delivering in a year with very little competition. We've also been proactively identifying where we can take back space and re-let it at higher rents to drive value when there's such little supply.

For example, at Exchange House, we proactively took back some floors. We're reinvesting the surrender receipt into much needed on floor upgrades after 35 years of occupation and have already re-let to MSCI, driving rents on by GBP 35 per square foot. This added GBP 10 million to the valuation of the building and sets strong rental evidence for the wider Campus. This is accretive asset management, and we will look to do more of this.

Norton Folgate is a slightly different proposition for us at British Land as the product is smaller floor plates, often fitted and therefore, more suited to let post PC. We've made good progress and are now 89% let, under offer or in negotiations. And we're on track to be fully let by the end of the financial year.

Simon covered the growing demand coming from innovation occupiers, which is driving momentum across the portfolio. To capitalize on that, we launched 1 Triton Square last month. This is an incredible building. It's a Campus within a Campus and offers real flexibility to tenants. It includes a floor of storey space, a floor of fitted labs, three lab-enabled floors, which look like a traditional office floor, but can easily be converted to lab use as demand evolves and three traditional office floors.

You may have picked this up in David's piece, but I'm pleased to confirm that just 6 weeks after PC-ing, we have put 56,000 square feet under offer to two globally recognized science and tech occupiers due to complete later this month. And we have another 211,000 square feet in negotiations. We are very excited about this and look forward to continuing to update you on our progress.

Turning to Retail Parks. You'll know it's a very competitive occupational landscape and retailers are keen to secure space. Leasing volumes remain strong at 681,000 square feet, 6% ahead of ERVs and under offers are 554,000 square feet, also 6% ahead of ERVs.

Deals this half have been in line with previous passing rent. And thanks to recent strong rental growth, our portfolio is now largely rack rented. And as a reminder, it was over 20% over-rented just 2.5 years ago. So, we're in a great position to generate strong like-for-like rental growth from the portfolio.

Retail Parks provide strong cash yields and good opportunities to increase value through asset management. I'll cover just a few of the many examples of asset management on our acquisitions, where we've looked to improve the tenant mix and drive footfall, sales and ultimately, rents.

I'll start with the first one we bought when we took the contrarian call to start buying Retail Parks. When we bought Biggleswade Retail Park in 2021, it had 6 high-risk retailers. These are the ones in red. We've re-let all of these to strong category leaders, which has helped drive a 12% IRR since acquisition.

Rolling forward to one of last year's buys, Queen Drive Retail Park. When we purchased it, there were two vacant units, both are now let, including to an M&S anchor, which is a major win for the park. The park is full and leasing well ahead of ERV and has delivered a 14% IRR since acquisition.

And our most recent buy is Turbary Retail Park in Bournemouth, which we purchased earlier this month for a prospective double-digit IRR and a day 1 yield of 7.4%, which with asset management, we've already increased to 7.7%. And we have a strong pipeline of similar deals.

As Simon covered, we're unlikely to see many new Retail Parks built, but we're actively looking for opportunities across the portfolio where we can add space efficiently. Projects like these ones at Glasgow and Rugby are smaller in scale, shorter in duration and lower risk than traditional developments, but they generate meaningful returns with a yield on cost of at least 8%, often double digits. And on top of that, they provide strong wash over to the rest of the park by improving lineup and rental tone.

So, I'll leave you with three things. Values continue to rise, driven by strong ERV growth at the top end of our guidance. Our standing Campus assets are virtually full following a strong 6 months of lettings, and we've made good progress on our newly delivered space. And finally, as the market leader in Retail Parks, our active asset management is pushing on rents and values, and we'll look to buy more in the space as we continue to recycle capital.

Now, over to Simon to wrap up.

Thanks, Kelly. So to wrap up, let's circle back to where we began. We're a market leader in the right sectors, Campuses and Retail Parks, where demand is healthy, supply is constrained and rents are affordable. Investors are increasing their allocations to these sectors, and we're very well positioned to capitalize on this and to deliver attractive total returns going forward.

Thanks for listening.

We're now going to take your questions. Kelly and David are going to join on stage. And I think we'll start with questions in the room. Who's going to be first? We've got a microphone over there. Any questions in the room? Rob?

Someone's going to start. It's Rob Jones, BNP Paribas. I think two. The first one, I don't know if we can go back to a slide on the screen, but if you wanted to, it's Slide 4, which, Simon, was the one where you had the stars looking at times in the past where we've had less than 2% vacancy.

Yes, I'm sorry about that. One could read into this that, if we're forecasting less than 2% vacancy '26 onwards, and I guess the '27 to '29, I don't know if that's even right, maybe it's just, I'm not sure, but even if it was, it implies that one could assume a 10% ERV growth going forward.

Now obviously, at the moment your levels that you need to achieve -- and David has helped us probably by break down the levers of earnings growth going forward. You don't need anywhere near that to hit your target. So, do you think that, that kind of level of ERV growth, if we have such low vacancy and acceptable levels of credit demand still coming through can actually be a 2%? I assume in '27 to '29 based on the forecast. Surely that must be wrong, because even when you look at your own Slide 36, you got [indiscernible] Bank, Appold Street, likely getting committed with a '28 delivery, I think, which is in that period. Either the brokers are assuming you own 100% net on completion or they're a bit too bullish in terms of that.

Yes. It's a great question. This is directional. It's what the brokers are forecasting. Inevitably, you'll have a little bit of vacancy. But what you're seeing at the moment, the amount of supply that's coming through. So, we think there's something like 5 million square foot of new -- so this is new and refurbished. This isn't the whole city. This is new and refurbished stock coming through. 5 million square feet over this period of time. A lot of that's pre-let. And if you have normal levels of demand of about 2 million square foot a year, you can see how you eat into that supply very, very quickly.

And I do think that the schemes that are on site, not everyone, but the schemes that are on site, particularly the BL projects will be delivered with a very, very high level of pre-let. I mean you're already seeing that.

Look, we've only just started 2 FA, and we've got 33% let, up to 50% of Citadel exercised their options. We'll probably move to 1 Appold in the future, but that will be on a pre-let derisked basis. So, the market is very, very tight at the moment. Of course, there will always be a bit of vacancy, but that is what is being forecast at the moment.

I think by Knight Frank, I think Cushman's have the vacancy rate a little bit higher than that. But what we're saying is sub 2%, you get very strong rental growth. But that is on the new and refurbished space. So look, I think you will have that. And we've seen that on our own new and refurbished space. That is what the rental growth is doing at the moment.

Sorry, you had a second question. I just thought answer that one first, and then we'll move on to the second.

I'll pass on to someone else.

Okay. Very generous. Next will be Max.

I'll try my best. Max Nimmo, at Deutsche Numis. Yes, I guess perhaps a slightly higher-level question just around office development. There's obviously quite a bit of debate about the buy-to-sell model or the develop to sell and the sort of develop to hold. You talked about kind of mid-teens IRRs, but also mentioned the fact that depreciation could be 1%, maybe it's higher, the ERV growth perhaps doesn't always flow through one for one. Just in terms of your thinking about how you get comfortable with that and is it the JV angle? Is it the kind of derisking it? Just kind of some of your thoughts on that, if that's okay.

Sure. It's a really good question. As you saw on the slide on the schemes that are on site and the pipeline, we're projecting yields on cost north of 7%, mid-teens IRRs, so compelling returns. And those are derisked returns by the point we commit, because we place a fixed price contract, normally with an element of pre-let.

And then also, as you say, we've brought in partners. So that's very compelling returns. The MO of British Land as it has been for the last 5 years is create this great product, lease it up, deliver compelling returns.

And then yes, in time, we look to recycle. I think David referred to it as the fuel in the machine. The investment market has been quieter as we know. That's now catching up because everyone can see the rental growth we've just been speaking about. And so, we think we'll see increasing activity that then allows that engine of growth to go for us.

We're not necessarily the best long-term owner of a stabilized office asset, because there is depreciation, and that will be a lower return. And we've got other uses of our capital. Today, we have more opportunity than we have capital. So we would like to do more of that development, more of that buying of Retail Parks that we've spoken about.

Tom Musson at Berenberg. Just a question on the fee income growth that you hope to grow 10% a year, which obviously becomes more material to earnings growth as that compounds. Just wonder how you balance the decision between growing an income stream that's based around development mandates with the fact that future income that is aligned to development work inherently comes with a higher cost of equity, at least in the eyes of the listed market.

Yes. Good question. I'll give you an initial thought and then hand over to David on this one. It's the kicker on top. So, we're getting those type of returns. And then, we bring in partners, we're using their capital. We're normally selling ahead of where we would have been before we derisked the scheme. So, we're locking in some profits. And then those fees -- the fees on development mandates are good. It's a relatively high margin business. So, I think, it's a nice add-on. I don't know, David, if you would add anything to that.

Yes, not really other than to say we clearly we wouldn't commit to a development simply to drive fee income. Often, it's a result of the fact that we've already derisked that scheme by bringing in a partner. There are two principal -- or three principal chunks to it. The first is development fees. That's where we earn the highest margin. There's asset management fees, which is also an increasingly important part of the business, and then there's property management fees on top of that. So, 10% a year on average. Some years, it will be higher, some years, it will be lower, subject principally to, as you described, the developments we commit to.

It's Zachary Gauge from UBS. A few questions around development. Just looking at the updated guidance on Page 47, you've dropped your NRI margin by a couple of percentage points from the end of last year. And the reason given is additional void costs reflecting timing of development completions and lease-up. And obviously, you would have known the timing of development completions at the end of last year. So, can I back out of that, that the lease-up is going slightly slower than you had anticipated at the end of last year. And then following on from that, on the individual assets and where we are on ERV, sounding quite encouraging on Triton Square, so potentially getting to 50% by the end of the year, but nothing at Canada Water and nothing at Southwark. So, if you could just touch on the prospect for those individual schemes by the end of FY '26, that would be great.

And the other one is on the under offers at 1 Triton Square. I think it breaks out to GBP 115 per square foot. Could you just touch on where that sits in relation to underwrite on the floor space they are taking, whether it's labs, fitted labs or offices?

No, happy to go through all of those. On leasing activity, we were probably slower throughout the period in terms of where we thought we would be. But actually, we saw an acceleration at the end of the period. Kelly, I don't know if you want to talk to some of the activity we've had on the development leasing front.

Yes, sure. I covered in the prepared notes, but we've having completed 1 Triton and being able to show people around the building, we've had really good progress there in the last 6 weeks. We've also had good traction at Broadgate Tower. And again, just in the matter of about 5 or 6 weeks, we've put a huge amount under offer there, another one just recently as well. So with those schemes, we're tracking well in line and ahead of where we would want to be at this stage.

I think it's one of the themes of these results that momentum has built as we've gone through the period and particularly strong post period end in the market, which I think is pretty encouraging. And then I think you had a question on Canada Water and Mandela Way, office lease-up. Kelly, do you want to take those ones?

Yes. I mean -- so Canada Water, we're having some encouraging conversations there. We're also encouraged by the spillover effect that Simon spoke about at the last set of results, where the lack of supply in the core is meaning affordable locations are getting a bit more business. So we'll keep you updated on Canada Water. What I would say is that the Canada Water leasing is not included in our guidance. So, any leasing that we do in pre-FY '27 is upside.

And maybe on Mandela Way.

Yes, Mandela Way. So Mandela Way, that's -- it's a great asset in a very, very central location, which we have, again, only recently PC-ed on as we have always said and as our underwrite set out, that is a product that will lease post PC, because it's multi-let, smaller floor plates and it needs to be seen. But it's a great product. We've been getting people around, and we're in negotiations, and we'll again continue to keep you updated on that one.

And then, I think there was a question, which was sort of unpicking the rental deals under offer. We're probably not going to comment on deals under offer and where the rents are, but we're really happy with where demand is for 1 Triton, I'll say as much as that.

Just clarify one of those points. If you're 0% Canada Water at the end of the year, you're still confident on the guidance outlined for GRI?

Yes.

The leasing risk on 28.5p from here is de minimis.

Adam Shapton from Green Street. I had two. One on office, one on Retail Parks. We'll do both, one off the other. Yes. So, office back to the indicative broker forecast, and maybe this is one with your BPF hat as well, Simon. Is the city of London concerned about the effectiveness or the attractiveness of the city as a business district if there's no space available? I mean, we've had high-profile comments from Larry Fink and so on about that. So do you think the city of London is concerned that the sort of supply barriers balance is not quite in the right place?

And then on Retail Parks, just interested in your commentary on sort of QSR and casual dining. There's some evidence that profitability is being squeezed in that sector. It's been a success story for a lot of Retail Parks. What are you seeing in your portfolio from the drive-throughs and the QSRs in that sector?

Sure. Interesting question around city and lack of space. Just to flag that new and substantially refurbished space there. I think what you will see and what we are seeing today is because there isn't enough of that, customers are making compromises and taking good secondhand space. We have definitely benefited at Broadgate and the standing investments, as you saw from Kelly's slide. I think that's the fullest we've been. This is a 4.5 million square foot estate. And we've got one floor at the top of 1 Broadgate, which we're obviously being a little bit demanding on given that supply picture out there.

So there is space. But I think it will -- you'll continue to see this ripple effect. There's some parts of the city that are not -- haven't done as well as Broadgate. It's right above Liverpool Street. It's got the Elizabeth line. That will ripple out. So, there is space for people to take. But they might not get that brand-new headquarters space.

Because if you look today, just to sort of cement this point, we think if you want 150,000 square feet of new space, you've only got three buildings to choose from and one of those is 2 FA, if you want new. So look, something to happen. The city supply comes on stream. We know it's a cyclical market. At some point, supply will come back on stream. But obviously, you can't deliver in the next 2, 3, 4 years unless you've got planning, you've -- you started on site.

And then, I think, on QSR has been a softer market, and we have seen some insolvencies. You don't tend to have a huge amount on Retail Parks. We've done fairly well when we've seen those insolvencies at reletting those units. But Kelly, I don't know if you want to touch on what we're seeing. You had it on your slide on the drive-thrus. And that's been a fantastically strong market.

Yes. I mean, exactly that. Drive-thrus is just increasing demand for them. And as Simon said, we have limited casual dining when there have been failures and I won't name names, but when that does happen, it's not been an issue for us. We've always been able to just get out and get new formats in there.

Jonathan Kownator, Goldman Sachs. To follow up on 1 Triton, please. Obviously, you repositioned the building with labs, office. Where do you see the take-up in that space? Is it for regular office space? Or is it for the lab type space? And more broadly, perhaps on occupier demand, how wide is it? Because obviously, tech is driving a lot of that demand right now. Do you see any demand from other sectors, please?

Kelly, do you want to take that one?

Yes, sure. I mean, the beauty of that building is that three of the floors that are lab-enabled, we're able to convert them to office use depending on where the strongest demand and where the best returns are. Exactly as you identify, we are seeing really strong demand from science and tech that is -- that's definitely not letting up. It seems to be getting more and more on a week-by-week basis. So, we expect that to continue.

So just to clarify, we're talking about office space, not lab space.

For office space. Correct.

But we have seen demand for the lab space as well at Regent's Place. The incubator space has done well. We did an incubator at Drummond Street, where there was some existing lab space we were able to use, and that filled up very, very quickly. And we're now seeing those businesses graduate into our Crick space at 20 Triton. So that's quite an interesting theme.

But I think today, the AI tech demand is definitely stronger than the sort of Life Science demand in London. But both feel like they've got pretty good prospects at this point.

That's probably questions in the room, unless anyone's got a last-minute burning question. So should we go to the calls and see if anyone's on the line?

Yes, it's all on the webcast today.

It's all on the webcast. Okay.

Exactly. So we have one question from Nikita May at HSBC Asset Management. She says, you mentioned that AI-driven businesses are driving new demand for office space. Is this at the expense of other sectors like financial services? Do you have a limit of how much AI tenant exposure you would want to have?

Great question from Nikita. We haven't got enough data points, I think, to determine whether that's at the expense of other parts of demand in the sector. Today, it feels very much like new demand. These are businesses that weren't there 2 years ago. They've grown very, very rapidly in the portfolio. I think, I spoke to a number of you this morning. We've seen people take space at Regent's Place, very well-known names in the AI market. They've taken 7,000 square feet, they've then 14,000, then 21,000, and then they want more space after that. That feels like it's not today cannibalizing demand elsewhere. But obviously, we'll have to keep an eye on it.

If Fintech grows at the expense of traditional banking, you'd look at that. But I think that will take sort of many years to feed through. And then on covenant exposure, we don't tend to set limits, but what we do look is at the covenant strength of every occupier we sign a lease with. Sometimes if it's start-up space, we're more relaxed to look at weaker covenants. But generally, if it's HQ space like 1 Triton, these are strong covenants taking the space in our portfolio. And the bulk of that 1.5 million square feet of additional demand that we're seeing is strong covenants.

Yes. I've got one more question here. I've got two more questions. One is from Eleanor Frew at Barclays. She's asked, do you have a possible timeframe for larger asset disposals, noting you're seeing the market pick up?

The market is picking up. I think you should think next 6 to 12 months, but it will be dependent on when that strong core money comes back to the market, and we're seeing it come back now, but we'd want to see it there in depth. And I think you'll get that given the conversations we've been having. Clearly, we've got a budget around the corner. People will keep an eye on what's happening on the budget. But I think with these occupational fundamentals, that investment demand will be there, and that will be the market we'll look to take advantage of. So 6 to 12 months on that.

And I have -- finally, I've got three questions from Mike Prew at Jefferies. The first part, I'll give you all three at once, but you exclude recently completed developments in the last 12 months from your 95% occupancy number. Are Norton Folgate and Canada Water schemes backed out of this? The second part of the question is Retail warehouse price performance seems to have slowed markedly from 2025. Is the repricing maturing/mature? And the final part of the question is, was the Southern multi-let logistics scheme profitable? And what is the progress at Thurrock, please?

Okay. So on -- David, I might need you to help on this on the occupancy numbers. I think -- am I right in saying that Norton Folgate, Kelly, it looks like you've got the answer to this one.

Yes. Yes, you are.

So Norton Folgate isn't excluded. That is in our...

That's correct. So, one of the things that's driven that delta over the last 6 months, Mike, would be the move from Norton Folgate into that kind of standing portfolio mix, if you like, from an occupancy perspective. We exclude developments that completed in the last 12 months.

And Canada Water hasn't -- didn't complete 12 months ago, so it is excluded. Is that right?

Correct. Correct.

Okay. Retail warehouse market slowing performance. What you're seeing now is the key driver is ERV growth. I think we've said that for a while. But we are seeing more and more people want to buy Retail warehousing. That's tending to focus on the very core long-let Southeast product, some of the product we create. I think Kelly alluded to it in the presentation.

We tend to buy schemes with a bit of vacancy. We then lease them up, get to a really nice yield on them and then institutional capital, I think, will increasingly come in and drive performance there. But at this point, we're not assuming yield shift. I think you will see further yield shift, but what will be good is the ERV growth, and that will drive performance there. So, that would be the view there.

And then Kelly, I don't know if you wanted to pick up on Southwark and Thurrock.

Yes. I mean, Mandela Way, it's probably a bit early to be asking that question, where we've just PC-ed. And we're looking to get that leased up. So we'll keep you updated on that one. And on Thurrock, we are at 90% EPRA occupancy.

And that's as a Retail Park. So we decided to keep that as a Retail Park given the depth of demand in that market. That was the best thing to do there. And I think actually on Southwark, there was a profit release in the period, because we've delivered the scheme, and so there was an element of profit that came through in the period.

So any more questions? One more?

Yes. There's one more question. It's from Marcus Phayre-Mudge, Columbia Threadneedle. Congratulations on the cost efficiency improvements. I presume this has been driven by headcount restructuring. Is there more streamlining of decision-making to help bring overheads down in the future?

David, one for you, I think.

Yes. Thank you. Obviously, really delighted with the progress that we've made over the last 12 months, costs down 12% year-on-year for the first half. It's been quite a holistic view of the cost base, Marcus. So some headcount cost is included in that. But more generally, I'd just point to a sharper mindset on what we're spending and how and making sure that all of our teams are as efficient and effective as possible at what they're doing. More to go, it will remain a focus, but really pleased with the progress so far.

Any more questions? Great. Well, thank you very much for coming over to Broadgate. It's great to see you here today, and we'll see a number of you on the road over the next couple of weeks. And thank you very much for your time.