Shaftesbury Capital Aktie

Thank you very much. Okay. Yes, we've got the thumbs up. So if we're ready, we'll start. I know you've all got a very busy day and a very busy week. So very much appreciate you coming to our third set of annual results this morning. So we're really very pleased with the results for this year. Another excellent year of progress and performance. I think we're delivering growth as we said we would do. The agenda for this morning, fairly straightforward. I'll give you a bit of an overview of the results.

Situl will then go through the financial review. I'll then update on what's going on in the portfolio, and we'll finish with a summary and outlook and some Q&A. So as I said, another very successful year, delivering strong performance, an increase in rents, values, income and dividends while strengthening our financial position and creating significant optionality for the group. Obviously, macroeconomic issues and geopolitical risks have been well documented.

However, I'm pleased to say that conditions across the West End are very active. We continue to see positive trends in footfall and sales across our prime portfolio, and the team is successfully delivering leasing well ahead of ERV with excellent levels of activity, limited vacancy and a strong pipeline. During the year, we were pleased to have formed a long-term partnership on Covent Garden with the Norwegian Sovereign Wealth Fund, which highlights the fundamental value and attractiveness of our portfolio.

We continue to expand over GBP 100 million invested through acquisitions and capital expenditure and a number of properties are currently under review. And with enhanced liquidity, we're well positioned to take advantage of market opportunities. As one of the largest property owners in London's West End, we play an important role in shaping the area's long-term future. Visitors continue to be drawn to the West End's exceptional cultural, retail and entertainment offering, reinforcing its position as a leading destination for experience-led travel. The portfolio is benefiting from record international arrivals to London airports. Hotel occupancy remains strong, whilst the Elizabeth line continues to broaden catchment for visitors and workers alike.

Shaftesbury Capital's irreplaceable portfolio of properties located at the heart of the West End provides high occupancy, low capital requirements and reliable growing long-term cash flows. Turning to results. Our valuation increased 6.6% like-for-like to GBP 5.4 billion. This was led by a 6% increase in ERV and a small 2 basis point inward yield movement. Total accounting return and total property return of 9.1% and 10.1%, which is in line with our medium-term targets. We continue to deliver rental growth, which increased by 6% and every effort continues to be made to enhance customer service whilst delivering meaningful cost savings. Underlying earnings are up 12%, and the Board has proposed a final dividend of 2.1p per share, which brings the total dividend to 4p per share, which is an increase of 14% for the year.

We have a very strong balance sheet and access to significant liquidity with low leverage. I think the performance overall demonstrates the exceptional qualities of the portfolio, delivering growth in cash rents, dividends, ERV and valuation. So I'll now hand over to Situl for the financial review.

Thanks, Ian. Good morning, everyone. As you've heard, financial performance was positive in 2025 with growth in rental income, earnings, dividends, valuations and net tangible assets. In addition, we have strengthened our balance sheet and enhanced the group's financial flexibility. So starting with the income statement. The main points are that over the year, there was growth in rental income of 6%, earnings were 12% higher, and we've increased the dividend by 14%.

We focus here on group share numbers, that is including Covent Garden at 75% post the transaction with Norges Bank. As is completed partway through the year, we've included in the appendix on Slide 43, a summary of how this affects year-on-year comparisons. Adjusting for this, gross rents were up 5.9% like-for-like to GBP 195.6 million, reflecting a successful year of leasing and asset management. In aggregate, lettings and renewals were 10% ahead of ERV and 14% up on previous passing rents. Management fees from Covent Garden for Q2 to Q4 represent the other income of GBP 3 million.

Administration costs of GBP 41 million reflects an increased share option charge, which was up by nearly GBP 5 million compared with last year. Excluding this, costs were effectively 8% lower. Notwithstanding upward pressures, we are targeting further reductions in the absolute level of cash costs over the next 2 years. During the year, the cash receipt from the Covent Garden transaction lowered net debt significantly. As a result, finance costs have been reduced by almost 30% to GBP 41.4 million. This year, we will refinance or repay GBP 400 million of maturing debt. However, based on current levels of borrowing, we are targeting finance costs to be broadly flat overall. All of these movements taken together resulted in a 12% increase in underlying earnings to GBP 81.9 million, equivalent to 4.5p per share. The proposed final dividend of 2.1p per share takes the dividend for the year to 4p, up 14% year-on-year.

Our leasing activity contributed to an increase in ERV of 6.2% over the year to GBP 270 million. As illustrated in the chart, there is the opportunity to grow passing rent significantly given the 26% uplift as we move through from annualized gross income on the left to current market rents on the right. There is embedded reversion in our portfolio and good visibility on the income growth potential in each of our locations. This includes almost GBP 16 million of income, which is contracted or relates to rent-free periods, the majority of which will convert to running income over the next 12 months. So turning now to the balance sheet. The market value of properties under management was up 6.6% to GBP 5.4 billion.

Net debt has been taken down from GBP 1.4 billion to GBP 0.8 billion on a group share basis with loan-to-value of 17%. NTA was up 7% over the year to [ 2.15p ] per share, driven primarily by the valuation movement. The main driver for the uplift in property valuations was rental growth with ERV up across all sectors and in all of our estates with retail and Carnaby Soho being the strongest performers. Yields moved in marginally by 2 basis points to 4.43% overall, and the commercial portfolio is valued at an equivalent yield of 4.6%. Our assets continue to demonstrate attractiveness and affordability to our customers with average ERV for the portfolio under GBP 100 per square foot and customer sales significantly ahead of 2019 levels, outstripping ERVs.

The balance sheet is in a strong position with low leverage and access to significant liquidity. With loan-to-value under 20% and the EBITDA multiple under 7x, there is flexibility to deploy capital towards growing our business through investment in existing assets and new opportunities. In October 2025, we entered into a new 5-year loan facility of GBP 300 million for Covent Garden. The maturity of the group's other banking facilities totaling GBP 450 million of undrawn firepower has been extended to 2029 and 2030. We've also taken the opportunity to reduce the margins on these facilities to better reflect current market conditions and the strengthened position of the group.

Part of the proceeds from the Covent Garden partnership were used to reduce gross debt and we are positioned for repayment of the GBP 275 million of exchangeable bonds, which mature at the end of March '26. As well as the new financing extensions and repricing, we have protected finance costs from interest rate movements by capping GBP 300 million of SONIA exposure at 3% for this year. We will continue to review financing opportunities, taking advantage of the attractive credit profile of the group.

So to summarize, financial performance has been strong, and we have enhanced flexibility. Total accounting and property returns of 9% and 10% have been achieved in 2025, driven by growth in ERV and cash rents, which, together with cost management, have resulted in good progression in our key financial metrics. We will continue to focus on our priority areas: earnings and dividend growth, deploying capital accretively and balance sheet strength and flexibility. And with that, I will hand back to Ian.

Thanks very much, Situl. I can tell you a little bit about the portfolio, a little bit of color for you. We own an impossible to replicate portfolio. It's located in some of the most iconic destinations across London's West End, Covent Garden, Carnaby Soho and Chinatown. The GBP 5.4 billion portfolio under management comprises 2.8 million square feet of lettable space across 640 predominantly freehold buildings with approximately 1,900 individual lettable units. Portfolio is broadly 1/3 retail, 1/3 F&B, with the balance in the upper floors, which offer office and residential accommodation.

Portfolio offers a diverse occupational mix and variety of income streams with a range of unit sizes and rental tones. Occupational demand continues to prioritize the best locations. Availability now on many of our streets is at near record lows, and this supports competitive pricing. Leasing success has been achieved across the portfolio with continued ERV growth. This slide shows some of the new brands introduced, which are attracted by the 7 days a week footfall and trading environment. 434 leasing transactions completed in the year, representing nearly GBP 40 million of contracted rent. They were achieved at an average of about 10% ahead of December '24 ERV and 14% ahead of previous passing rents.

Vacancy is very low at 2.6%. The team's active and creative approach, which is informed by a deep knowledge of the West End, positions Shaftesbury Capital to deliver further rental growth. Seeing very strong conditions in leasing -- in retail. Leasing demand is very positive and trading conditions are good. In recent months, we welcomed a number of new brands to Carnaby Street as we enhance the customer mix there. Charlotte Tilbury opened a new flagship store, and they'll shortly be joined by Sephora and also by Edikted over the coming months. Covent Garden continues to attract new high-quality brands, including Nespresso and Byredo, which were introduced during the course of the year.

All of this has contributed to a 10.4% retail valuation growth across the portfolio. We're home to approximately 400 food and beverage outlets. Operators are attracted to the vibrant pedestrian-friendly, well-managed estates. And there have been a number of signings across Covent Garden, including Borough in Floral Court, Harry's Restaurant and Bar on the Piazza and Buvette in Neal's Yard. There continues to be strong demand for Soho for the Soho portfolio with the introduction of several new concepts, including Padella and the Shaston Arms.

In Chinatown, we've introduced more variety to the area, increasing the pan-Asian offering at a range of price points. So across the portfolio, 37 new lettings and renewals signed 15.7% ahead of December 2024 ERV. Our vibrant locations and the quality of accommodation continue to attract leasing demand for office space. The Carnaby and Covent Garden portfolios offer high amenity value and excellent environmental credentials. And we continue to see customers relocating from other parts of Central London as employers recognize the importance of location and amenity value in attracting and retaining talent.

The residential portfolio continues to perform well. During the year, 285 transactions were completed with rents achieved around about 4% ahead of previous passing rents. We have the ability to add value through capital initiatives to our 640 properties. Our pipeline of asset management and refurbishment activities represents 4.2% of ERV, and it's expected to be delivered over the coming 12 to 18 months. The scale of our holdings also help us to shape not just the buildings, but the spaces around them, and we're working with local stakeholders to enhance the public realm across our destinations, making them greener and more enjoyable for everybody.

Covent Garden's Henrietta Street public realm is currently being transformed, and we're also undertaking early engagement on improvements to Carnaby Street to enhance the visitor experience whilst preserving the area's unique character. We continue to rotate capital, improving the quality of our exceptional portfolio. And in this year, we disposed of GBP 12 million of assets and invested GBP 80 million in targeted acquisitions. As I said earlier, we have a number of properties under review. Situl mentioned that we introduced sovereign capital to Covent Garden this year.

And by partnering with NBIM, leverages our operational expertise and property portfolio, providing investment and expansion opportunities. So our growth prospects are underpinned by strong fundamentals. The West End market has delivered attractive predictable growth over the long term with an annualized rental growth rate of approximately 4% per annum. Our portfolio has outperformed that with nearly 7% ERV growth delivered since 2010. And this is supported by consistently high occupancy and the scarcity value of the West End, where limited new supply continues to drive demand. A strength of the portfolio is its adaptable mixed-use nature, which allows us to evolve space in line with changing demand and importantly, to do so with relatively low CapEx requirements.

We benefit from aggregated ownership, enabling us to enhance the public realm and shape our places, supported by data-led customer and marketing approach. And finally, we actively manage the portfolio through capital rotation, focusing investment on our chosen assets and improving performance through refurbishment initiatives. So overall, these factors drive consistent long-term rental growth and valuation progression. I'd like to take a moment to thank everybody involved, including our customers, partners and our very experienced team in delivering this strong performance in 2025. Some of our senior leadership colleagues are with us today, and I hope you'll have the opportunity to meet with them afterwards if you didn't see them during coffee.

So in summary, we've had a successful year, and we've made a very good start to 2026. There are obviously a number of challenges in the economy, but the West End continues to perform with high footfall, customer sales growth and low vacancy. There are excellent levels of activity and a strong leasing pipeline. We're confident in our outlook and targets for rental growth of 5% to 7%, a total property return of 7% to 9% and a total accounting return of 8% to 10%. Through active management of our prime West End portfolio, the strength of our operating platform, and we're focused on sustained long-term growth in rental income, value earnings and dividends. And backed by our strong balance sheet, we're well positioned to grow and take advantage of market opportunities. So that concludes the presentation. We're going to move now to Q&A. For those of you that are on the phones, if you could let the operator know that you'd like to ask a question, we'll come to you. But if somebody likes to start the ball rolling in the room, that would be great. Max?

It's Max Nimmo at Deutsche Numis. Just a couple of questions, if I can. One on Carnaby and the ERV growth was exceptionally strong there. Do you expect that, that is likely to continue as you -- as it sort of catches up with some of the other villages within your portfolio, kind of extracting that low-hanging fruit? Should we expect that to be the strongest growth in the near term? And then secondly, just around kind of firepower with where you're at 17% LTV today. Obviously, fully acknowledge you're trying to manage the interest cost for the business, but how you see that and the relationship with Norges and what that does for their ambition to grow as well?

Thanks, Yes, we're really pleased with the progress we've made on Carnaby Street. I think what gives us confidence that it will continue to perform really well is the brands that we brought into the estate are trading at significantly higher sales densities than some of the previous incumbents. And that gives us confidence that it will support rental growth over the medium to long term. And we are seeing reasonably positive improvements in Zone A rents, which is, as you know, is how the market actually looks at it. But they're still well below other locations within our portfolio and well behind the general tone in the West End. So yes, I do think you'll see significant growth, but we're delivering growth across the portfolio. Covent Garden is doing very well as is Chinatown. But yes, we've got high hopes for Carnaby Street, definitely. Do you want to?

Yes, sure. On your point about firepower leverage growth, I think we're in a very strong position. And that's a deliberate strategy so that we are well protected on the downside. And as you say, we're managing interest costs, but it means that we can put money to work when we see interesting opportunities. And one of our priorities is deploying that capital accretively. So there's plenty of room within our leverage ratios and our liquidity to do that. And as you also observed, the formation of the partnership is a further source of capital for growth in Covent Garden. So we see opportunities across all of our estates.

It's James Carswell from Peel Hunt. Maybe just one on -- following on from Max's question. You've got the firepower. What are you seeing in terms of acquisition opportunities? I mean I appreciate the small buildings pretty liquid in your kind of markets. But I mean, are you seeing any [indiscernible] of the larger lot sizes? Do you think that will kind of bring you some opportunities?

Yes. The team has got quite a lot of real estate that they're tracking. Obviously, whilst there's a lot of activity in the West End buildings that are adjacent to our portfolios don't trade very often. So we are focused really on driving value out of the 640 buildings that we've got and being in a position to move quickly when real estate does come available. We bought 1 or 2 things last week -- last year. They are sort of acquisitions that add value to the individual components of the estate. But clearly, at some point, we'd like to expand our ownerships substantially. And I think those opportunities will arise.

Oli Woodall from Kolytics. Congratulations on the strong set of results across the board, particularly your office segment seem to have very strong like-for-like rents. I wonder if you could give an outlook for the demand here for office and then separately for food and beverage and retail looking forward, kind of what your outlook is?

Yes. Thanks very much. Well, all parts of the portfolio are performing well. I mean office is about 20% of what we have split into 2 categories, really sort of purpose-built offices and then converted sort of Georgian properties. And as I said in the presentation, the demand is there, not just because the buildings are good and they're well managed, but the locations are really in demand. So we're seeing strong levels of demand, and I think we'll see continued rental growth in those components of the portfolio.

But the bulk of what we do is retail and hospitality and retail demand is continues to be very strong. I mean many commentators are saying the retail leasing market is as strong as they've ever seen it. I think there was one of the brokers put out a report recently saying demand is significantly higher than it's been for many, many years. So that supports the prime locations that we have. And you can see that in the number of new transactions that we've done and the pipeline.

I think Will Oliver is somewhere in the room. He's in charge of leasing. So he's a very busy man at the moment. So I think you'll see continued activity in that area. F&B also very positive. There's virtually nothing available. And where we do get something available, there's multiple operators want to take the space on. So yes, very, very, very positive conditions across the board at the moment.

Thank you very much. Any questions on the telephones? We've got a nod. We hand over to you Nimmo, excellent.

Okay. We do have one question on the telephone we've taken now. The question will be coming from Zachary Gauge of UBS.

Just a quick one from me. Looking at the sort of the consensus numbers for earnings in 2026. I think it's currently at 5p. So assuming a pretty similar growth rate to the one you saw in 2025. I know you don't give formal guidance, but just thinking considering the exchangeable bond refinancing at the end of March and obviously, interest rates in the U.K. probably coming in a little bit over the year with a slight headwind on cash. Do you think that kind of growth rate is in the right ballpark for the year considering that refinancing headwind?

Let's talk about the building blocks, Zach. As you said, we don't normally comment on consensus forecast, and there is a bit of a range. So if we go through the main components that we think about, rental income growth, we talked about aiming to grow that cash rents in line with ERV growth, and we have an ERV growth target of 5% to 7%. On the other components, you'll see continued improvement over the next couple of years in the property level net to gross, and there are a number of initiatives that underpin that.

And then on admin costs, we've been quite definitive on the guidance around that in terms of bringing down the cash cost element of that. And then the finance cost is, as you say, you've got some maturities and refinancing or repayment of that, and you've got lower leverage in terms of the effects of the transaction from last year. So our target with the current level of leverage is for the finance costs overall to be flat. So hopefully, that gives you a guide on some of the moving parts.

Ian, I will turn the call back over to you as we have no further telephone questions.

Thank you very much. Okay, short and sweet. If you'd like to hang around for coffee, Peel Hunt will be very happy to give you one. Thank you very much, Peel Hunt, for the use of the facilities. We'll be around for a little bit. I'd say most of the team are here, asset management team, investment team, marketing team.

If you'd like to spend some time with them, please feel free to do so. Otherwise, we look forward to seeing you down on the estate. The sun is out. There's plenty of nice places for you to go and eat and drink, plenty of places for you to go shop. So thank you very much for your attention, and we hope you have a good day. And if there are any questions, just call any of us as the day goes on. So thank you very much.

Good morning. Thank you all for coming. I know you've got a very busy day today as we sort of kick off the interim results season in our sector but welcome. Normal agenda for today. We are really pleased with performance in the first half and delighted to present a good set of results to you all. I'm going to begin with a little bit of an overview. Situl will then take you through the financial review. I'll give you a little bit more detail about what's going on in the portfolio, and then we'll finish with a summary and outlook. And then Andrew and Michelle will join for Q&A.

So a very successful first half. We've delivered strong performance with an increase in rents, values, income and dividends, while strengthening our financial position and creating significant opportunity for the group. You will all be aware that macroeconomic issues continue to impact the economy, and these are well documented. However, I'm pleased to report that conditions across the West End's occupational market remain very active indeed and we continue to see positive trends in footfall and sales across our Prime West End portfolio, with the team successfully leasing well ahead of ERV, with excellent levels of activity limited vacancy and a strong pipeline. And during the period, we're pleased to have formed a GBP 2.7 billion long-term partnership on Covent Garden with the Norwegian Sovereign Wealth Fund, NBIN which highlights the fundamental value and attractiveness of our portfolio. And we continue to expand the portfolio with GBP 55 million of acquisitions during the period, and we have a number of properties currently under review.

With enhanced liquidity, we're well positioned to take advantage of market opportunities as they arise. So the West End continues to thrive as the premier destination for culture, retail, dining, leisure and entertainment, attracting some 200 million visitors a year. Shaftesbury capital is irreplaceable portfolio of properties located at the heart of the West End, provides the prospects of high occupancy, low capital requirements and reliable growing long-term cash flows. Our deep customer relationships and creative approach enable us to achieve value creation in must-have locations across the West End.

So just turning to some of the highlights of the results. Valuation increased 3% like-for-like to GBP 5.2 billion, and this was led by a 2.9% increase in ERV with stable valuation yields. NTA increased 3.3%, resulting in total accounting return of 4.2% for the period, which is in line with our medium-term targets. Rental income increased by 8% with underlying earnings up 16% for the half year. The Board has declared an interim dividend of 1.9p per share. We have a strong balance sheet and access to significant liquidity with low leverage. And I think the performance over the period demonstrates the exceptional qualities of our portfolio, delivering growth in cash rents, dividends, ERV and valuation.

So I'll hand over to Situl just to take you through the detail of the financial review.

Thank you, Ian. Good morning, everyone. As you've heard, there has significant progress across the business. H1 financial performance was positive with growth in rental income, earnings, dividends, valuations and net tangible assets.

We strengthened our balance sheet and enhanced the group's financial flexibility. Following the sale of a 25% interest in Covent Garden to Norges Bank, we present the numbers here on a proportionately consolidated basis. As a transaction completed midway through the period, Covent Garden is effectively included at 75% from Q2 onwards. The IFRS number set out in the results announcement consolidate Covent Garden full with a one-line adjustment for the noncontrolling 25% interest. During the period, there was a gross cash inflow to the group of GBP 574 million.

So starting with the income statement. Gross rents increased to GBP 98.7 million, up 8.2% like-for-like, reflecting a successful period of leasing and asset management. In aggregate, commercial lettings and renewals were 10% ahead of ERV and 24% ahead of previous passing rents. Management fee income in respect of the 25% of Covent Garden owned by our partner, forms most of the other income of GBP 1.1 million.

Administration costs of GBP 20.4 million reflects the effect of ongoing efficiencies and an increased share option charge, which was up GBP 2.5 million compared with H1 last year. Further income growth and operational efficiencies are targeted for H2 and future periods. Finance costs have been reduced to GBP 23.7 million as a result of interest income on cash and lower net debt. Underlying earnings increased by 16% to GBP 40.6 million, equivalent to 2.2p per share.

We have increased the interim dividend to 1.9p. Our leasing and asset management activity contributed to an increase in ERV of 2.9% over the period to GBP 260.8 million. As illustrated in the chart, there's the opportunity to grow passing rents significantly. There is embedded reversion in our portfolio and good visibility on the income growth potential in each of our locations. In particular, GBP 18.7 million of income is contracted or relates to rent-free periods, the majority of which will convert to running income over the coming months.

Turning to the balance sheet. The market value of the portfolio under management was up 3.1% like-for-like to GBP 5.2 billion. Net debt has been taken down from GBP 1.4 billion to GBP 0.8 billion on a group share basis and results in loan-to-value at 17%. NTA per share was up 3.3% over the period to 207p driven primarily by the valuation movement. The main driver for the increase in property valuations was rental growth, ERV was up across all sectors, and in all of our states. The equivalent yield is unchanged at 4.5% overall and 4.6% for commercial assets. Average ERV for the portfolio is GBP 95 per square foot and overall valuations are now at GBP 1,893 per square foot. We estimate that customer sales are some 30% higher in nominal terms than 2019 levels, significantly outstripping ERVs. This underlines the relative affordability and attractiveness of our estates.

The balance sheet is in a strong position with low leverage and access to significant liquidity as well as reducing loan to value, net debt to EBITDA has been enhanced now at a multiple of 6 versus 11x previously. With leverage well within our indicated range, this provides flexibility to deploy proceeds towards growing our business through investment in existing assets and new opportunities, both in Covent Garden and across Chinatown, Soho and Carnaby.

During the period, we repaid part of the Canada Life term loan and are positioned in due course for the repayment of GBP 275 million of exchangeable bonds, which mature in 2026. We will continue to review financing opportunities, taking advantage of the attractive credit profile of the group.

So to summarize, there has been strong financial performance in the first half, and we have enhanced flexibility. We will continue to focus on our priority areas. One, rental growth and further efficiencies, resulting in higher earnings and dividends; two, deploying capital accretively and three, maintaining balance sheet strength and flexibility.

And with that, I will now hand back to Ian.

Thanks, Situl. A little bit of a recap on the on the portfolio. As you know, we've got an impossible to replicate portfolio of properties. These are some of the most iconic destinations in London's West End. And they're focused on Covent Garden, Canopy Soho and Chinatown. It's a GBP 5.2 billion portfolio under management. It comprises of approximately 2.7 million square feet of lettable space across around 640 mainly freehold buildings, and there's some 1,900 individual tenancies.

The portfolio is broadly 1/3 retail, 1/3 F&B and the balance is in the upper floors, which offer office and residential accommodation. We have a diverse occupier mix and therefore, have a wide range of income streams and a wide range of unit sizes and rental tones. As I mentioned, leasing activity has been particularly positive with strong occupational demand. We're noticing that tenants tend to prioritize the best locations, and we've achieved leasing success right throughout the portfolio with continued ERV growth. This slide shows some of the new brands that the team has introduced and they range from independent to global concepts. They're generally attracted by the 7 days a week footfall and trading environment that we offer.

So in total, some 193 new leasing transactions completed GBP 19.2 million of contracted rent, about 9% ahead of the December '24 ERV, pleasingly 16% ahead of previous passing rents. Portfolio vacancy is low at 2.5%. The team has -- takes a very active and creative approach, which is informed by a very deep knowledge of what's going on in the West End and it does position the company to deliver rental growth through converting the portfolio's embedded reversionary potential into contracted income.

A little bit about the subsectors, very strong retail market. We've recorded particularly strong demand across the range of activities with generally positive trading conditions. We've noticed very good performance from some of the more productive categories such as premium, lifestyle and accessories. And in recent months, we welcomed a number of new brands to Carnaby Street, which particularly pleased about as we enhance and evolve the offer there. Charlotte Tilbury will open a new flagship on Conoby Street later this year, and this follows their recent upsizing to a new flagship on the corner of the Piazza at Covent Garden.

Covent Garden in turn, continues to attract high-quality brands, including Nespresso Tula to name but a couple and these were introduced during the first half of the year. And all of this contributed to a 4% improvement in retail ERV across the portfolio. We're home to around about 391 individual food and beverage outlets.

I think operators are attracted by the vibrant locations, the pedestrian-friendly environment that we provide and the managed estate feeling that they have by being one of our customers. I've been a number of signings across Covent Garden. These include Harry's restaurant and bar, which will open on the flagship site of the Piazza and there continues to be strong demand in Soho, many new signings through the period. And in Chinatown, we've introduced more variety to the area. We've increased the Pan Asian offer at a range of different price points.

So across the portfolio, about 21 new lettings in total and renewals signed about 18.8% ahead of December 2024 ERV. It's those vibrant locations and the quality of accommodation and management that continues to generate demand for office leasing. Carnaby and Covent Garden offer high amenity value, excellent environmental credentials, and we're continuing to lease in excess of GBP 100 a square foot with positive demand. During the period, we also entered into 100 new residential transactions, and these were achieved at rents about 3% ahead of previous passing levels.

We've got a strong pipeline of asset management opportunities, refurbishment initiatives across the portfolio. About 4.5% of ERV is currently under refurbishment, and it's expected that these properties will be delivered in the coming 12 to 18 months. We also continue to rotate assets within and out of the portfolio as we continue to enhance the quality of the overall portfolio. And this year, we disposed of around about GBP 12 million worth of assets, whilst investing approximately GBP 55 million in target acquisitions in Soho and Covent Garden.

As I mentioned earlier, we've got a number of properties currently under review. As you know, during the period, we did introduce sovereign capital to the Covent Garden portfolio and partnering with NBIM. Leverage is our operational expertise and our property portfolio as we enhance investment and expansion opportunities in years to come.

So in summary, we've had a successful first half of the year and positive momentum has been carried into the second half, notwithstanding those macroeconomic challenges the West End continues to perform strongly with high footfall and low vacancy. There are excellent levels of activity and a strong leasing pipeline. Our partnership with NBIN brings together 2 long-term investors with shared confidence in and ambitions for growth -- for the growth of Covent Garden.

Shaftesbury Capital's irreplaceable portfolio is anticipated to deliver sustainable income and value growth and our active approach and the positive market fundamentals of the West End give us confidence in our medium-term targets of 5% to 7% rental growth. And with stable yields, we anticipate that this should deliver accounting returns of 8% to 10%. With that enhanced liquidity, we will pursue accretive opportunities for investment and expansion of assets under management. And backed by a strong balance sheet, we're well positioned to grow the business and take advantage of market opportunities in the West End.

So that concludes the formal remarks. Thank you for listening. For those of you that are on the lines, if you'd like to ask a question, please let the operator know, and they'll let us know, and we'll come to you. But if anybody has a burning question from the room, we'd be delighted to answer it. Who'd like to go first?

It's Matt Saperia from Peel Hunt. One quick 1 from me. You talked about introducing Charlotte Tilbury to Carnaby. Clearly, there's already some momentum in terms of sort of reenergizing and some sort of retenanting going on there. Just how important could that addition to Carnaby to sort of, I guess, push on the next phase of the retenanting of Carnaby I mean the ERV growth has obviously been very strong in the second half. I'm guessing there is good momentum beyond that.

Yes. Look, we're really pleased with progress safer. I mean the response from the customer from our tenants has been really positive to what we're trying to achieve, which is to introduce forward-looking brands in categories that are going to generate higher sales densities and Charlotte Tilbury is a great example of that.

We're particularly pleased that that's an upsizing from within the overall portfolio. And that is a theme that we're seeing across the -- all 3 of our locations where a number of tenants are taking second or third locations or introducing additional brands and they're stable. But in addition to [indiscernible], we've had 4 or 5 brands opened up on the south southern end of Carnaby. I'm sure you shop at Farm Rio quite regularly, and you'll be a major user of Pure cell. We're a really cool K-Beauty brand. I'm sure it's right out of your street, Matt.

But we're really excited about that. And you can see that the consumers have got much more choice now and also some of the existing customers like Mac, they're opening new concepts as well. And I think when you see the changes at Kingly Court and over the medium to longer term, the improvements that the team have got planned for the streetscape, I think it will be a really exciting destination, and we're really, really looking forward to good rental growth over the next 3 to 5 years.

A couple of questions. On the like-for-like rental growth, you saw retail was marginally negative. I was a bit of surprised if you could just touch on what some of the moving parts were in the like-for-like number. And then on the debt side, obviously, you're expecting to pay the exchangeable bond with cash. You've still got the PPA and GBP 163 million at 2.7% expiring.

Next year. If you could just touch on what the plans are for that and what you expect the interest rate might be if you do refinance that or pay it down with cash? And also with a substantial cash balance, if you could touch on what your sort of interest rate is, do we just assume sort of base rate minus a little bit of margin for that going forward?

I'll answer the easy bit. I mean the retail market is very strong. So I wouldn't read too much into the small technicalities of that. It's really a function of what goes on in a particular period. But I would say that I'm sure Michelle agree that it's probably the strongest retail market we've seen now, and that's been a feature for the last 18 months, and that continues to generate very strong demand for our 3 locations, been particularly interesting at the moment in the new brand lineup that we're anticipating or the additions were anticipated in the Carnaby Street.

Yes. On the balance sheet, great to be in a position we're in gives us a lot of flexibility and a lot of optionality. And at the same time, we have access to a number of different markets, which is very encouraging as well and spreads seem to be coming in, which is a good indicator.

So in terms of the specifics on the exchangeable bond, our assumption is or our base case is that we will repay that next year. In the meantime, it's a good piece of financing. It's 2% cash coupon. On the private placements, remember, they sit within the Covent Garden business, which we now own 75%. That market is very much open. So whether it's the bank market, PP market, other markets for Covent Garden, we think that's absolutely accessible. So I expect to hit more on that over the coming months. But we think Covent Garden has very low leverage. So it will be a very attractive credit for any lender. And as far as the cash is concerned, we generate an interest income marginally below the base rate.

One person on the telephone. So I'd like to hand over to Saskia.

[Operator Instructions] And we do have a question from Rob Jones from BNB Pariba.

I had 3. One was on -- do you want to go with three or you want a time?

Gave through all 3 and then give us time to think about them, Rob.

Good stuff in. All right. So look, the first 1 on reversionary potential. You talked about -- or you talked about the embedded reversion potential and converting that to contracted income. I appreciate you made the point that you've got customer sales up 30% in nominal terms versus '19, ERV is obviously down 2%. And given your reversion of 25% or a bit less, a 21% if I hold portfolio vacancy constant. I could quite easily take the view that we can capture all that reversion and rents in nominal terms are still more affordable from a tenant perspective, given how much retailer sales have moved on in the last 5.5, 6 years.

Is there a bit more of a nuance to that, though, in thinking what has tenant profitability done over that time since 2019, and therefore, are we still super comfortable in the capacity for that tenant to pay up in terms of capturing that reversion and obviously marking the portfolio to market over the next coming years.

Second question was around balance sheet. Obviously, appreciate leverage down substantially post the GBP 600 million Norges transaction. It's naturally as it is always the case for your portfolio, not that easy to reinvest capital because you're very selective about the opportunities they only come up on a relatively irregular basis in terms of acquisitions, for example. So should we think about the portfolio leverage as remaining at that 6, 7, 8x net debt to EBITDA in the shorter term with a sub-20% LTV? Or is there a genuine opportunity, say, on a 12-month view to reinvest? And then the final 1 is just a clarification, 18.7 million of contracted uplifts you said as rent-free burn off. And I think you said in the coming months, did I get that wrong in terms of that time frame?

Thanks very much, Rob. Good questions. I think the first 1 is the embedded reversion is really the difference between passing rent and the ERV effectively. So the ERV for the portfolio under management. I don't know why I'm looking at the speaker, but the ERV for the portfolio under management is now about GBP 260 million.

So obviously, the ERV should continue to grow. If you look at the long-term trend over the last 30-odd years or so, barring a hiccup during COVID, you generally had rental growth for hospitality and retail in the West end of 3% or 4%. It's really a function of London GDP plus inflation. So it's a very resilient asset class. And the ERV is not a forecast. It's what the valuers think the rent should be today if everything was available to let.

So the difference between passing at 225 and 260, that should burn through relatively quickly. And the ERV should continue to grow. What we found over the years is that by an active approach to managing the mix, then you'll get an ERV growth trajectory above that long-term average. And that can be very high during a period of repositioning. I think in the early days of Covent Garden, we saw ERV growth of 12% to 14% over sort of a 2, 3-year period. And we're seeing a similar sort of opportunity in Carnaby Street, whilst we're still delivering quite significant ERV growth, as you've seen from the numbers across all parts of the portfolio, but it takes a while for that to be recognized by the valuers in the valuation.

So you should get top line ERV growth over time, and that should be captured relatively straightforwardly in the reversions as leases full due. So we have about 20% of the leases are mark-to-market, if you like, every year. So that sort of also answers the last question. Some of that reversionary income is already contracted through rent freeze we've already entered into.

So on top of the GBP 225 million, you'll get about GBP 18 million, which will burn through quite quickly, probably over the next 12 to 15 months or so. The balance of that to the GBP 260 million will take a little bit longer. So I think we're in really good shape. And if you look at the RV improvements on the transactions over the last years have consistently been ahead of the mean and very good first half this year. The other component of the improvement in nominal sales relative to ERV, it's quite interesting. It generally means that, obviously, some of the cost base has gone up in different parts of the portfolio for occupiers. But it means that the portfolio as a whole is more affordable. That's good for us because we're trying to pick this growth up over the medium to long term rather than just on an annualized basis. So we're really pleased with the trajectory of the portfolio at the moment.

Just to provide a bit more color on that...

Can I just ask a quick follow-up?

Yes.

It was just on your point you made around 3% to 4% kind of long-term London retail hospitality rental growth. When I think on Page 3 of your press release about the comment where you say confidence in target 5% to 7% ERV growth -- should I think of the delta between the 3% to 4% and the 5% to 7% has your London micro locations ability to curate a mix that drive stronger growth as the drivers between that delta?

Well, I'd like you to give us all the credit for that, Rob, but I don't think that would be fair. I mean the West End is actually doing quite well at the moment. So I think the West End currently is above the mean. Because vacancy has reduced so significantly over the last 18 months. You've gone from very high vacancy levels to below 5% now for the premium location. So the whole of the West End is doing well. I think with my colleagues sitting here, I have to give them some credit for the outperformance to the West End mean. But that's what we try and do. And that's really by being quite careful about the environments that we create and trying always to find the best-in-class brands that are going to have the most residents with the consumer.

And that's worked very well within our locations so far, whether it's introducing a broader range of Asian cuisine in Chinatown or whether it's introducing higher value, higher density cosmetics or in Covent Garden, we've seen very high sales densities as a result of introducing premium watch and jewelry. So there's lots of things that we can do. And with the coverage that we've got and that customer relationship and knowledge we've got about the market and the consumer I think we're well positioned to outperform the long-term trend and also outperform the short-term West End trend, which is currently the case.

So I think your other question was about balance sheet leverage and...

To provide a bit of input for your modeling as well, Rob, on that comment about contracted and rent freeze. You should assume something like 2/3 of that will burn off over the next 6 to 9 months. On to the balance sheet. Yes, we've acquired GBP 55 million or so of assets. We're looking at a few other things. So kind of the pipeline is quite good. I think more broadly on leverage, the kind of starting point is that we would like to maintain net debt to EBITDA well below 10%.

We're at 6 because there's quite a lot of room. We've got a kind of printed, if you like, LTV upper limit of 40%. I think in the near term, that's more likely to be 20% to 30% and probably in the lower half of that and what we're actually thinking about as we kind of approach balance sheet and liquidity management is also solving for a finance cost number, which is consistent with earnings growth.

So it's all of those things.

Any more on the phone?

[Operator Instructions]

I think that means no. Would anybody else like to ask a question in the room? I think that's great. We've just have half an hour, which I think is nearly a record. And we know you got a really busy day and a busy couple of weeks for you to spur off whatever you're doing in the summer. Thank you very much for coming. Really appreciate your attendance and your support. If you do have any follow-up questions, then obviously, you know where we are. And you're all very welcome to come and see us in Covent Garden and Carnaby Street and Chinatown anytime, and we live above the shop. It's quite a nice shop, it's called Tiffany. But we're always available to show you around. And if you'd like to walk the state delighted to host you.

Thank you very much for attending.