Great Portland Estates Stock

Good morning, everybody, and welcome to our results presentation. There are a few seats scattered around if you don't want to stand at the back there are 4 in the front over here, if you wanted. Thank you, everybody, for coming. Great to see so many of you, and we've got a lot to get through, so I'll crack straight on. But I first of all, want to welcome Jayne. Many of you will have met Jayne. Jayne took over as CFO about 5 weeks ago. She's had a cracking start, but these are her first results, so go easy on her. Okay. And what I'm going to do, first of all, is start by summarizing the key messages we'll be giving you over the next 30 or so minutes. And this year has been all about us executing on our growth strategy. We'll tell you about our excellent operational performance, delivering record leasing well ahead of target with acquisitions made at discounts and sales at premier and creating more prime spaces into a Central London market starved of such quality.

And as we think about the next few years, we'll explain how we have both strategic and financial flexibility should we see a macro-driven downturn. But absent that, we are well set to deliver both strong income and value growth across our portfolio, and we fully expect to deliver accretive total accounting returns. So as ever, we have a full agenda for you this morning to help tell this compelling story. I'm going to start with a reminder of our progress against our very clear strategy. Jayne is then going to take you through the results and what to expect next. And I'll then address our market opportunity, look at capital allocation and conclude with our outlook before opening the floor up to you. And as ever, we have the full senior team here to help answer questions. So let's start then with our growth strategy. And you will remember our key strategic themes shown here on the left.

And we've made excellent progress against each throughout the year, doing exactly what we said we would do. First, Prime Central London. It remains the largest city economy in Europe and is growing faster than the U.K. overall. But to really benefit, you need to be in the center, which is where 100% of our attention is focused, and we concentrate on the best only where the outperformance against the rest is accelerating. Second, we create and manage premium HQ and flex spaces. Their quality has enabled us to deliver a record leasing year with deep demand for our space, signing up customers at rents well ahead of ERV. Our rents are still rising. And even after substantial growth, we argue that they remain affordable, especially given the price inelastic nature of many premium customers. Third, contracyclical capital allocation, never more important than in volatile conditions such as we have today and delivering on the promises we made at the time of our rights issue.

We've continued to buy well, almost GBP 500 million, including CapEx since our rights issue at a significant 60% discount to replacement cost. We've been developing some of the best spaces anywhere in Central London, delivering into a market starved of such quality and their valuations were up 22%. And we've sold out of completed business plans, as we said we would, GBP 490 million at a 2% premium to book value. Fourth, driving innovation, leading the market with world firsts in our circular economy activity and with our award-winning CX teams delivering exceptional experiences and an industry-leading Net Promoter Score. And all of this activity always supported by a strong balance sheet and low leverage. Liquidity today is high and LTV is where we want it to be.

As we well remember from the many macro crises we've navigated through over the years, having financial flexibility gives us the luxury of strategic options, however the macro story unfolds, investing for growth and/or returning excess capital to shareholders. Finally, strong EPS and NTA growth. We're delivering here too, with both measures ahead of consensus, and we've raised the dividend. Looking forward, we are on target to deliver 3x EPS growth over the medium term and a 10% plus return on equity this financial year, along with a 3-year annualized ROE well ahead of our cost of capital. So a strong strategy that is right for today's volatile world and a business delivering on its promises.

Turning briefly then to our excellent operational performance. And as you can see on the chart, our leasing has been outstanding with a record GBP 70.9 million let, 10.3% ahead of ERV, with the fourth quarter the strongest at a 15.8% beat. And we are maintaining last year's run rate into Q1 this year with no discernible impact from the current hostilities in the Middle East. Rent roll was up 46%. Rental values were up 5.8%, led by prime offices up more than 7%. Vacancy was better than forecast as was our fully managed customer retention at 64%, where AI-led customers now account for some 27%. We made attractive acquisitions at a 70% discount to replacement cost added only GBP 590 a foot, whilst our GBP 490 million of premium sales closed at more than twice that at over GBP 1,200 a foot. And we made strong progress against our development and our refurbishment activities, finishing 380,000 feet on time and on budget. From here, we've given ourselves a great platform for further growth.

We will be crystallizing sales of more than GBP 1.2 billion of stabilized assets, developing to generate organic surpluses of between GBP 260 million and GBP 430 million and generating significant organic income growth, up 95% with a 2.1x increase in our fully managed net operating income, all of which will, of course, combine to deliver significant NTA and earnings growth from here.

More on all of these opportunities in a minute, but first, over to Jayne to look at our financial results.

Thank you, Toby. Good morning, everybody. Thank you for joining us today. I'm pleased to be presenting my first set of results for GPE. I'm very much looking forward to taking you through our numbers and what has been a great year for the business. So I've been with the business now for a couple of months, and I've received a fantastic GPE welcome, a great business with great people and an outstanding product. What has particularly stood out to me over this period is the discipline with which the strategy has been executed and the consistency of performance driving both earnings and value, supported by the quality of our portfolio.

We are focused on long-term returns, but also have the strategic optionality Toby referenced earlier, which emphasizes the resilience of our business. So turning first to our financial results. These are delivering upon our growth strategy of driving both income and value. Our earnings per share is up by 63% to 8.5p ahead of consensus. This, in part, is as a result of our record leasing year and growing our fully managed space, including the leasing of 100% of Wardour Street within 2 months of completion as well as the full year benefit from Alfred Place and Six St. Andrew Street. Our dividend was 8.2p per share, an increase of 4%, which is a reflection of the confidence in our earnings growth, and this is fully covered. Moving on to our value growth. We saw a like-for-like valuation increase on our portfolio of 4.3% as our assets continue to outperform the wider office market.

Our focus on high-quality buildings continues to support the demand for well-located, high-specification office space in Central London. All this hard work has increased our EPRA NTA to 524p per share, an increase of 6.1%, which is also ahead of consensus. We have maintained our financial strength. And as we set out last year, we have transitioned to a net seller with GBP 490 million worth of sales, which included 1 Newman Street and wells&more. This has contributed to the reduction in our LTV from 30.8% to 28.6%. Liquidity increased to GBP 412 million, an improvement of GBP 36 million, providing good headroom across our facilities. With strong ERV growth of 5.8% in the year, we continue to make progress towards our objective of delivering a return on equity in excess of 10%, achieving 7.9% this year.

If we turn to our property valuation in more detail, you can see from the table on the left that overall, we have seen both valuation and ERV growth of 4.3% and 5.8%, respectively. If we dig a little deeper, you will see that offices, which are 87% of our portfolio have seen the highest valuation and ERV growth. Whilst our retail assets have not fared quite as well, this represents only 13% of the portfolio. The fully managed assets have seen valuation growth of 4.4%, whilst the stabilized portfolio grew by 3.6% and the development saw strongest growth at 22.2% with an GBP 82 million development surplus captured within the valuation, which is not easy when construction costs are still rising. Today, our topped to initial yield is 4.8%, and our true equivalent yield stands at 5.6%. On a reversionary basis, this rises to 7%, but as you can see, much higher at 9.8% on a share price implied basis.

As you'll hear many times today, it's the best versus the rest. 73% of our portfolio is at an EPC of A or B, which saw valuation growth of 6.4% However, the assets that are not in the 73% are buildings which are being repositioned, and they will ultimately have an EPC of A or B and their value will realign accordingly. In addition, 73% of the portfolio has a capital value in excess of GBP 1,000 per square foot, and it's these assets that have also seen the highest increase in valuation at 5.9%. And the West End continues to outperform the rest of London. The 66% of our portfolio here saw a valuation increase of 6%. All of this demonstrates that we have a portfolio positioned for growth, which, as you can see, is reflected in our impressive organic rental growth of 46% over the last 12 months. The rent roll now stands at GBP 153 million.

[ Absent ] sales, we expect this to continue to grow by around GBP 42 million over the next 12 months, with the leasing of vacancy and capturing of reversion adding around GBP 16 million and then our development and refurbishment program delivering a further GBP 26 million. Looking further ahead, with the completion of our on-site developments, including the Delft and Whittington House and 10% rental growth, our potential rent roll would almost double from where it is today to GBP 299 million. But as you know, we are also recyclers of capital. And once our business plans are complete, we are often keen to move them on. Therefore, assuming GBP 1.2 billion of sales over the medium term, rent roll would reduce by approximately GBP 60 million over the same time period. So what does this mean for our earnings?

Ahead of market expectations, our earnings per share have grown by 63% from 5.2 to 8.5p. We expect further growth over the next 12 months, targeting an EPRA EPS of around 10p, an increase of 20%. Beyond this, whilst the journey may not be linear, the growth in rent shown below shows that we are well on our way to tripling our earnings from April 2025. And as you can see from the purple bar, fully managed is set to become a major contributor to rent roll.

And it's this part of the portfolio that continues to go from strength to strength. Looking at the chart, you can see we have grown our net operating income over 3x in the last 2 years from GBP 9 million to GBP 28 million. This is ahead of our target time frame due to the excellent work of our team to complete refurbishments and lettings in short order. Our recent completions, including 170 Piccadilly and -- well Street will deliver a further GBP 6 million.

Beyond this, we're on site with 5 fantastic schemes, including the Howlet and the Courtyard, and these will grow our NOI by GBP 16 million, with a further pipeline of 6 refurbishments, including 175 Piccadilly and the completion of Kent House providing a further GBP 8 million of NOI. This organic growth over the medium term will more than double our NOI to GBP 58 million. The service profit on this growth is also generating additional value on the portfolio of around GBP 150 million as the space is completed and let. This remains a fantastic organic growth opportunity for the business. Our ambition is to continue to grow this product, and we are targeting a GBP 100 million NOI post future acquisitions of around 375,000 square feet of space. And indeed, as you can see from the blue circles, that fully managed is becoming a much larger contributor to our P&L, rising from just 8% of gross profit 2 years ago to 28% today, and we expect this to be more than 40% in the future.

We also continue to drive value growth from our developments. We have a GBP 590 million CapEx program with a gross development value of GBP 1.6 billion, mainly in the West End. Highlighting the dark green bars, we are currently on site with 6 schemes at various stages of completion with a further GBP 223 million of CapEx to come. The light green bars show our pipeline of a further 3 schemes, which have a CapEx of GBP 367 million. If you assume 10% rental growth, we expect to deliver surpluses on these schemes of GBP 260 million. There is also the potential for further growth from this program. For example, if we see further rental growth over the next few years, 20% growth would equal a surplus of GBP 330 million.

And illustratively, if yields were to compress by 25 basis points, the surplus would increase to GBP 427 million. Our growth is underpinned by our financial strength. Our team have been busy putting in a new GBP 525 million ESG-linked RCF and extending our existing GBP 150 million RCF with our partner banks. These facilities give us liquidity certainty and no refinancing needs until October 2028, particularly relevant during these volatile times. Moody's reaffirmed our Baa2 investment-grade rating, and we have significant headroom against our covenants. Looking at the top right, our robust debt metrics highlight the strong position we are in with a low LTV at 28.6% and available liquidity of GBP 412 million. And this means we can be agile in an ever-changing market.

Our weighted average debt maturity has increased to 5.4 years, and our weighted average interest rate has reduced to 4.3%. Altogether, this puts us in a great position as we move forward through 2026 and beyond. This chart is an illustrative pro forma of our loan to value through the cycle of our existing and pipeline activities. Our on-site CapEx, near-term sales of approximately GBP 200 million and development surpluses show that LTV would fall to 28.1% in the next 12 months. And whilst the further pipeline CapEx, development surpluses and rental growth pushed the loan-to-value up to 32.5%, we would expect to realize sales of a further GBP 1 billion over the medium term. This reduces our LTV and gives us flexibility and options around further acquisitions and/or the return of excess capital to our shareholders as we have done previously. Bringing all of these components together, as we look forward, we are excited about the opportunities it presents. We expect to deliver a further 20% earnings growth in the next 12 months as we capture our 95% organic rent roll growth potential.

As we grow, we will deliver -- we will drive both operational and corporate efficiencies through economies of scale and technology. Our developments will deliver surpluses of GBP 260 million. And as we expect to remain net sellers of assets, we will crystallize these surpluses with anticipated sales in excess of GBP 1.2 billion over the next few years. Supporting this will be our disciplined approach to capital and liquidity management. We have a flexible debt book with the ability to support future growth, and we will maintain our 10% to 35% LTV range through the cycle. As we capture the prime rental growth opportunity and complete our development pipeline, we are on track to deliver an above 10% return on equity and maintain our progressive dividend policy. So in summary, this is a business well placed to continue with its growth strategy despite a backdrop of macroeconomic uncertainty. And I'm very much looking forward to being a part of it in the years to come.

And with that, I will hand you back to Toby to talk through the market.

Thank you, Jayne. So let's turn then and look at our market opportunity. And the first point that I want to make is despite all the macro uncertainties around today, leasing conditions in our core markets remain strongly supportive. And we think that best rents are set to rise further. Let me tell you why. In short, it's because demand for space is materially outstripping supply. In fact, demand is at record levels today, perhaps driven by the expectation of further growth in office jobs shown by the blue box on the right, expected to grow by a further 170,000 by 2030 and remarkably up 33% since Brexit in 2016. The green bars show how this jobs growth has been converted into increasing take-up, now well ahead of the 10-year average as well as much stronger levels of active demand shown on the right, up 13% in the last 12 months.

And today, it's circa 40% ahead of the long-run average. And more of these companies are looking to expand than contract 47% versus [ '15 ] . And all this demand is colliding with a supply drought of new offices that remains acute. Bottom left, the bars show the history. And as has been clear to us for many years now, this situation is not going to change anytime soon. Indeed, if you take the annual average speculative supply for the next 4 years, divided by the long-term average take-up of new space, we are some 53% short every year out to 2030. And remember, the vacancy rate of Grade A space in the core is already virtually 0. It's only 0.3% in the West End.

So it's no surprise then that we think there's more rental growth to come, shown on the chart, bottom right, with prime space to continue outperforming strongly as it has done since the end of the pandemic in '21. And despite this growth, we think these rents remain affordable as they still represent only a fraction of the average London business' salary bill, some 7% on average. So growth in prime, absolutely playing to our strengths with our 100% core locations and 91% next to a Lizzy Line Station. Turning then to look at the investment markets, where the story is a mixed picture and a little less clear cut, although we are seeing liquidity for prime assets despite macroeconomic volatility.

Looking at the chart top right, you can see that overall real capital values have been flatlining since our '24 capital raise with the nominal up 6%. Our own assets have been faring rather better, up 8.1%, driven by our focus on the best locations and the rental growth I've just described. Meanwhile, yields in both the city and the West End, shown bottom left are stable, although we would argue that this hides the widening bifurcation between, on the one hand, prime liquid assets where there is some downward pressure and poorly located ex-growth assets on the other that simply aren't selling and remain overvalued.

Helpfully, there are signs of a recovery in investment volumes from 2024's lows shown by the green bars with '25 up 50% versus '24. And as shown by the pink bars, the number of larger transactions was also up strongly last year by 118% for deals of GBP 100 million or more. And we expect this momentum to continue as equity demand for London assets is up again, now standing at more than GBP 25 billion. And this matters to us as we prepare some of our larger prime stabilized assets for sale. Plus, of course, with our healthy liquidity, we stand ready to take advantage of these volatile conditions to acquire future pipeline opportunities at discounts as we have been over the last 2 years.

So to sum up then with our market outlook, which strongly supports our strategy of focusing on the best assets and in prime locations only. For rents, whilst macro uncertainties have increased since our interims, affecting confidence and business investment, the combination of decent demand and the continued supply drought have enabled us to deliver office rental value growth at or above the range we set out in November, as shown by the middle column bottom left. Now these conditions also allow us to maintain our guidance of plus 4% to plus 7% for offices this year, still with a notable outperformance of prime versus secondary quality space. Looking at yields, heightened political risk and a less accommodating interest rate environment will continue to have a dampening effect on yield compression in the near term.

But beyond that, it's clearly hard to read at present. That said, evidence of deals transacting right now supports our long-held view that the best, most liquid assets will continue to attract more downward yield pressure than the rest. So in this context, let's turn then and look at our capital allocation over the past year and consider what's next. Now you'll remember this, our contracyclical capital allocation model. The blue line shows the long run of real office capital values in Central London. The green bars are net acquisitions above the line, net disposals beneath. We raised capital, the green circles to acquire discounted opportunities when markets are distressed as was the case in '09 through to '13 and again in 2024. We then reposition these assets into the inevitable supply crunch before selling completed HQ business plans as markets recover and returning excess capital to shareholders shown by the pink circles.

Last cycle, following more than GBP 3 billion of realizations, we returned in excess of GBP 600 million to shareholders, more than twice the capital that we raised from them. Now looking at the current cycle, as you can see on the right of the chart, we transitioned over this year from a net buyer to a net seller, shown by the green bar. We've been selling stabilized assets, benefiting from rising prime rents shown by the blue dotted line. But we've also bought well, taking advantage of market weakness for non-prime buildings in prime locations, buying repositioning opportunities off the orange line at sizable discounts. So our model then is alive and well, and we are successfully exploiting the best versus rest bifurcation that we've talked about.

What next? Well, as Jayne highlighted earlier, we expect to be a net seller this year, too, and let's turn and look at some of the detail, but I'm going to start with acquisitions. Six deals done since the rights issue in '24, all in the West End for a total of GBP 231 million or only GBP 756 a foot and at an average discount to replacement cost of more than 60%. Including CapEx to deliver the business plans brings the total to just short of GBP 500 million.

And once completed, we can expect them to deliver stabilized yields of up to circa 7% and ungeared IRRs of up to 15%, and that's before any market yield compression. So plenty of opportunity for income and capital growth. Now here, you can see our Alfred Place cluster. I spoke about the Gable acquisition in November, adding to our pipeline, since which we bought South Crescent for GBP 51 million, paying only GBP 708 a foot or a 67% discount to replacement cost and giving us a running yield of 7.1% with the offices let at only GBP 67 a foot until August 29. The business plan has optionality, either to regear with the existing customer at expiry or undertake a full refurbishment to create a prime HQ building, adding area and radically repositioning the space to a much higher quality, only some 400 yards from the Elizabeth line and of course, hitting all of our target return metrics in the process.

So attractive deals at decent discounts and with good upside to come. We've also had a good year delivering profitable disposals, crystallizing completed business plans. 4 deals for GBP 516 million at a GBP 1,200 a foot, more than twice the price of our acquisitions and in aggregate at a 2% premium. I told you about Challenger House and Newman Street at the interims, since which we've sold wells&more in Fitzrovia on the left and 103 Regent Street on the right. In both cases, we dealt at or near record capital values and crystallizing accretive ungeared whole of life IRRs. And as we finish business plans elsewhere in the portfolio, there's a lot more to come, circa GBP 200 million near term and a further GBP 1 billion plus in the medium term. Let's have a look now at our HQ development activities.

And we have 3 schemes on site and have made good progress this year with their net valuations up 22%. At Duke Street, St. James, we're now 100% pre-let ahead of completion in the autumn, and all our performance numbers are good with a 37% projected profit on cost and an ungeared IRR of more than 30%. Similarly, at the Delft in Southwark, progress has been strong, and we pre-let 40% to data analytics company, Quantexa in January. Our development yield is almost 8%, and our profit on cost is 27% Back in the West End, Whittington House, bottom left, we started this major refurbishment last month and already have leasing interest for what will be a wonderful building and a healthy development yield and profit here, too. Taken together, we're generating a sizable 152% ERV increase and a further circa GBP 60 million of surplus to come, assuming 10% rental growth for the currently unlet space.

They're all prime with exemplary sustainability credentials and a pre-letting well, giving us strong upside potential. Wrapping up then on our program. Here, you can see our 11 major schemes totaling some 700,000 square feet across 27% of the portfolio. They're all in prime locations, all best-in-class product, delivering into the deep supply shortage, meaning they have strong pre-letting and rental growth prospects. Now finally, on our capital allocation. We've continued investing in our market-leading flex offer with record fully managed leasing. GBP 40.9 million of lettings, 7.7% ahead of ERV and outperforming against all our main operating targets shown on the right. 6.7% yield on cost versus our 6% target, 64% customer retention versus our 50% target and a 37% service margin, nearly double our 20% hurdle. Plus over the last 12 months, we've delivered 3 new buildings, taking our flex portfolio to more than 650,000 feet, and they are already 85% let or under offer, beating our underwrites.

And of course, we have significant further growth to come. 136,000 square feet of new deliveries in the next 18 months, some of which are shown on the right, and generating gross rents of some GBP 100 million over the next 3 years. And we'll be working hard to capture operational efficiencies. For instance, at an 8.5% yield, every GBP 1 we save in OpEx translates to an effective valuation increase of GBP 12. We also have a supportive market with broadening demand. Today, there are more corporates taking flex space, 47%, up from 13% in 2020 and often taking larger spaces, too.

Demand for 6,000 square foot units or above has more than tripled since 2023. And as you know, our fully managed spaces are delivering a sizable net income beat, more than 40% over the more traditional ready-to-fit product. So it's working well, and there's much more to come. So bringing it all together, this is a portfolio full of growth opportunity. Our H2 developments at the top of the stack are all prime, majority in the West End and will deliver healthy prospective profits. Our active portfolio management assets, some 56% of the book are the engine room of the business with numerous angles for rent and value growth, for example, through delivering refurbs or capturing our growing reversion. Their valuation remains undemanding at just over GBP 1,100 a foot with limited CapEx requirements, all in prime locations.

And of course, they include our flex assets now around 32% of our total book, full of the growth potential that I've just described. Finally, shown in yellow is the stabilized portion of the portfolio where we will continue selling out of completed business plans at higher capital values per square foot. We're aiming to realize more than GBP 1.2 billion over the next few years, and we will employ our usual discipline in deciding the most productive use for the proceeds, either back into the pipeline for income and value growth or accretive acquisitions with IRRs well ahead of our cost of capital or a return of capital to shareholders where it exceeds to our needs or for that matter, a combination of all 3. So lots to do as we execute our plan to deliver the substantial growth available to us.

So wrapping up then with our outlook. In short, absent a macro-driven downturn, we have more growth to go for doing what we said we would do. It's clear we have a market full of opportunity. London remains Europe's business capital. It has jobs growth, which is creating healthy demand, colliding with a severe supply drought, meaning that rents are rising, particularly for the best spaces with a great customer experience. Whilst the investment market remains more mixed, again, the best is outperforming and prime yield compression remains a possibility, particularly for smaller lot sizes. Meanwhile, we remain fully focused on executing our growth strategy. First, significant further income growth; second, sizable development surpluses of up to 100p per share.

Third, a major sales program of more than GBP 1.2 billion; and fourth, the proceeds from which will go to their most productive use, including a possible capital return of any excess. And always, of course, operating in 100% prime Central London only, never more important than it is right now. So all in all, whatever the macro throws at us, GPE is well set and is in great shape. Our operational infrastructure is delivering. Our amazing team has deep experience honed over multiple cycles and is bound together by our collegiate culture, along with our robust balance sheet, all of which will help us capture our strong potential over the next few years.

Right. Lots of information in there. I hope that all made sense. We are as ever now more than happy to take any questions you wish to throw at us. There are mics going around the room. I've got the members of the Executive Committee here to help answer any questions as well and provide more color. Who would like to go first? Yes.

Neil Green from JPMorgan. Two for me, please. On the rental side, you've had good growth and is expected to continue. Maybe I can ask about the conversations you're having with occupiers around rent reviews, how they're going and where they're landing. And secondly, a lot of leasing activity in your portfolio in the market as a whole. Are you seeing that coincide with any softness in incentives, please?

Okay. Thanks, Neil. Simon, in a second, perhaps you'd like to address the second of those questions. On the rent reviews, we did, I think, about GBP 30 million of increase, the single biggest of which was in Hanover Square in the year. And within that, there were 2 principal done so far. We've got a few more to go down there. And the largest, our financial services friends in that building, we ended up with a circa just short 50% increase there. So a good result. But bear in mind, we leased the building originally in 2020. So given the growth we've seen, not surprising for what is one of the best buildings anywhere, you would expect to see good growth from 2020 through to the review date October last year, I think it wasn't it?

Going forward, we've got a few more to do in that building. And clearly, with the growth that we've seen over the last few years, you would expect us to generate more rent review upside. We tend to generate more growth, that said, from new lettings because our average lease length is typically less than 5 years or around about 5 years. So we've been, as you've seen this year, with GBP 71 million of new lettings, generating the majority of our upside there. In relation to demand for space, Simon, have you seen any softening since the beginning of this year?

Was the question about softening of incentives as in they're going out or actually coming in. Going out. Okay. So the answer to that is no, we aren't. In fact, actually the opposite. So when you have obviously a supply crunch and demand the way it is, as Toby has mentioned, we've seen rental growth. And that rental growth is never linear. It's usually -- you get bumps as you get competition for space and as people actually start to lose out on the space that they were targeting. Over the last sort of 2 years or so, haven't seen a huge amount of that competition. It's kept landlords and customers pretty honest. You tend to get a customer in place and you do a deal and they know that there isn't a lot of supply.

And we know as a landlord that, yes, there's good demand out there, but you want to secure that customer. Recently, we have started to see some competition for space. So there's an example in the West End at the moment, The Ribbon, it's on -- Wells Street. It's 1 of only 4 buildings in the West End that can deliver over 60,000 square feet. They've placed the top sort of 35,000 square feet under offer, rents topping out at GBP 150 per square foot and in doing so, have displaced 2 other customers who would have taken space in that building. The other -- one of those other 4 buildings is under offer in its entirety to Microsoft AI, that's Film House on Wardour Street. And these are the kind of situations which then drive not only rental growth, but then you start to see incentives come in. Typically, incentives at the moment are still about 12 months per 5 years term certain, but there are examples of that actually reducing. And I would expect us to see a little bit more of that, albeit clearly a lot of landlords are going to be driven by maintaining high headline rents.

If you were to turn around and look at the screen behind you, you would see the net effective in the West End where rents -- the package to incoming customers has not moved. But in the city, if you go forward one, it has come in a tiny bit as you can see over the last couple of years.

Yes. I just think that the way the market dynamics are at the moment, I think we're going to see a little bit of compression.

Johnny Huber from Deutsche Numis. It was really useful to have the slide on CapEx and how rental inflation might impact the development gains. It would be useful to also hear how you think over the past couple of years, development economics more broadly have trended. And given that divergence that you mentioned between prime and nonprime capital values that you're effectively trading up has widened, has that benefited? Or has it been dominated by rising construction costs?

Let's come to the rising construction costs in a second. And there is a slide in the back, which Andy, if you wouldn't mind just chatting to as to the key components, that would be helpful. I mean, clearly, in a world of inflation consuming much of the rental growth that we've seen, economics of developments have not been as stellar as they would have been in the last cycle when clearly, construction cost inflation was not a thing and we had rents rising and we had yields compressing. We've not got yields compressing at the minute, although I do think, as we just discussed, there are going to be some opportunities for that at the prime end. and certainly in the smaller scale. But it is the case that clearly development returns are less than they were last cycle.

That said, look at our print this morning with plus 22% of the on-site schemes, largely because rents have come in quite a long way ahead of expectations and our own underwrite and the growth in that rental print is significantly faster than the growth in the inflation that also we've experienced in those schemes off a stable yield. So there are circumstances in which you can make development work. And if we think about the next stage of our program, we're looking at some pretty healthy numbers there, very healthy, as Jayne described earlier, if we see further rental growth and if we get really lucky and see a bit of yield compression, whatever happens to construction costs in a sense will be less relevant.

Don't forget in the West End, for example, land is somewhere between 50% and 75% of the total capital stack, right? So therefore, the construction cost inflation is only applying to somewhere between 25% and 50% of your cost base. And in fact, it's not even that because you've got fees and interest and all the other things that go into the equation. But just on construction cost inflation, Andy, in the back somewhere there you go.

Thank you. Good morning, everyone. So just before we actually talk about inflation, just to set sort of our CapEx to come in context, as you've heard earlier, we've got about 90% of the cost fixed on that and healthy contingency allowances for the rest. So we're feeling very well placed for our current CapEx to come. In terms of for the next cycle, what you're seeing here is this inflation slide is indexed and it's averaged from 4 leading cost consultancies. It's showing about 3.5% to 4% per annum. As ever, you've got upward and downward pricing pressures. output -- construction output is down. PMI for the last 15 months has been below 50. So there is competition for work that is then offsetting, as you see in the bottom right, some of the upward pressures on pricing.

So you've got labor availability and cost right now with what's going on in the Middle East, obviously, energy cost and energy-intensive materials. Steve did ask me to get this one stat in today. So construction costs are not particularly strongly correlated to oil price, a 20% increase in oil price roughly equates to a 1% increase in construction costs. Gas prices are more important, but you've seen they've been a lot more stable recently. And then finally, you've got some carbon-based tariffs coming. When we look at that, say, in relation to our St. Thomas Yard scheme, we think that would have less than a 1% impact on construction pricing were it to be introduced by the government next year. So all in all, for us, we've been here before. It's about early engagement with our supply chain and thinking about advanced sourcing of materials.

It's Tom Musson at Berenberg. Just thinking about the tail risk of a macro-driven downturn. In your going concern statement, you say that property values would have to fall 18.5% before breach. Last year, that was a 45% fall, but values have gone up in the year. Can you just help me understand why that headroom has got a lot tighter?

Sure Steve.

So that statement is essentially is looking at the forward look at the values after applying our going concern scenario to the values. So it's a further 18% fall from the underlying assumptions within that model. So if you look at the valuation as at 31 March, the headroom you have on your covenants is values could fall by 46% before you come anywhere near breaching any of your covenants. So we've got plenty of headroom, as you should expect, given our LTV is only 29% today.

That makes sense. Second one, looks like CBRE have rotated off after valuing the portfolio for 20 years, Knight Frank, they're in their place. Do you think -- do you expect any risk to the comparability of valuations?

No. I don't. They valued -- I think they've actually valued since the inception of the listed entity, [indiscernible] Park originally and then CBRE, I think that's right. The reason I don't expect there to be any comparability issues is because we have had Knight Frank shadowing the last 2 valuations. So they've been in the conversations. Hugh Morgan and the team have done a really good job in getting under the skin of understanding what they're thinking about our valuation. So we've got a pretty clear idea of where they're coming from. And like CBRE, they've got good market share in London. They understand the dynamics of what's happening to rents and values and yields and costs, et cetera. So I'm not expecting there to be dramatic or frankly, any significant noticeable difference in the underlying tone of valuations. There will be differences clearly, but not fundamental to the tone. There shouldn't be.

Okay. And maybe if I can ask last one. By when do you forecast dividends to be fully covered by cash earnings?

That would be a bit unfair to ask you, James. So I'm going to ask [ Steve ].

Good question, Tom. I would say we're going to be some time yet because what you have to remember is the significant growth that's coming through in the cash earnings over the next few years will be driven by development completions. And there, for example, the largest, which will be 2 Aldermanbury square is GBP 25 million worth of rent, but they're on a 15-year term and a 3-year rent free. So it's probably at least 3 years out. But you should see them grow quite materially over that period as we get towards cover.

If you -- not that you are, Tom, but were you to be worried about cash? Clearly, with north of GBP 1 billion of sales coming, the cash component of this business is going up, not down.

Adam Shapton from Green Street. Just one for me on the fully managed flex business. On the overheads, can you help us sort of triangulate, I think you're saying GBP 8 a foot in the sort of waterfall chart. Is that -- does that mean it's about GBP 5 million today based on 650,000 square feet? Or is it less than that?

It's less than that because not all of it is fully managed to the GBP 650,000. So broadly, they're fully managed within the GBP 6500.

Well, it's the majority, but it's probably about 60%. Yes.

Okay. And then looking forward, as that portfolio grows, is that -- are those overheads now pretty much fixed? Obviously, there are staff costs in the OpEx as well, but can we assume that will drop from GBP 8 to GBP 6 to GBP 4 a foot?

I think you can assume that as we grow, those numbers will come down. The forecast is that today at GBP 8 per square foot, we think that's going to be not quite half, but pretty close to half that. We've already got the platform in place to manage a larger scale. What you would see inevitably as we scale up is more junior level additions to the team to help manage customer relationships and those kind of things. But critically, we've got the platform in place for that growth.

And sorry, just to be clear, what is the absolute number if it's GBP 8 a foot today?

Let's come back to you on the exact economics. Thanks, Adam.

It's Zachary Gauge from UBS. Just a couple of fairly quick questions. First one, I was just a bit surprised given you probably seem even more bullish on Prime than 12 months ago that you've actually slightly reduced your Prime estimate for this year from, I think it was 6 to 8 to 4 to 7. So effectively now in line with average. So if you could just touch on what's moving that? And the second one is, you mentioned Duke Street as a potential sale. Can we assume that you would then potentially take a capital gains hit to sell that within the 3-year window?

Yes. I don't think we're any more bullish on Prime than we were last year, exactly the same basic messages were delivered last year. The difference being last year, we still had it all ahead of us. This year, we've delivered it. So the risk associated with it last year was higher than it is today in the sense that we've delivered a lot of that. So it's been proven to have been broadly accurate. In fact, last year, we said, as you can see here, 6% to 10% for Prime, and we delivered in the 7s. We're narrowing the range, I think, as we get more data and we understand more what's likely to happen in the market. 6% to 8% -- 6% to 10% in a world of inflation at low single digits feels a lot.

And I think what we're really saying here is we don't need 6% to 10%, and it's probably more the case that you'll see a repetition of this year, next year, last year, this year, whichever you want to look at it. In other words, broadly 7% for prime rents as we go forward into this year. And if we do that, we'll be delighted, right? So that -- was there a second part of your question, sorry...

Duke Street sale.

Duke Street sale. As ever with us, this is all about looking at the forward IRR and thinking about the opportunity cost. We've sold buildings in the past soon after the tax window has expired. We've sold buildings before the tax window has begun, and we've sold them in the tax window and paid the tax. And the analysis is always going to be the same. What do we think is in the best IRR outcome of that particular economic trade? Is it worth waiting? If we do wait, what happens to that IRR, what are the risks associated with it versus taking the money now and moving it on. And we'll do the exact same with that one. You will have eagle-eyed noticed already that the GBP 200 million that we're trading, we're anticipating trading this year. And if you go to the slide, Rich, with the stack on it, whatever that was, you will have noticed that 30 Duke Street is there broadly. In other words, we are thinking about whether we trade that this year, this financial year.

Marc Mozzi, Bank of America. Can we have some color around the 10% return on equity targeted for this year, how you break that down between income, capital and within capital between like-for-like capital growth and development contribution?

Yes, good question. I think, Rich, there's a slide in the back, isn't there? Yes, well done. Thank you. So here you go. So this is essentially building up from the net earnings the company is generating through rental growth, there you go 4% to 5%. So that's broadly in the range. In fact, it's towards the bottom of the range, [ Zach ], that we just chatted about. A bunch of development surpluses. But -- so what we've done there is looked at the likely deliveries of schemes and what we estimate the valuers might do or if we were to sell them, what we think we could sell them for. And there, you get to your 10% plus. No yield compression. in there at all.

That's quite important. Some of them we might -- given some of the evidence in the market right now, we might get some yield compression. We're not assuming we do. But I think it would be foolish to assume that we do because then you're just layering unknowns upon unknowns and the 4% to 5% rental growth clearly is contingent on relative stability in conditions out there going forward, and we clearly can't know that either. But that's how we get to the figure. Thank you.

Eleanor Frew at Barclays. On leasing, how repeatable do you think your strong performance is moving into this year? How much will be kind of timing related from developments? And how should we think about leasing volumes in FY '27 overall? And then linked to that, where do you see your vacancy rate moving over the year?

Okay. Simon, repeatability.

We're being asked to do it all over again. So yes, we think we can certainly deliver. The -- as I mentioned earlier, the dynamics in the market are fully supportive. Now as Toby just mentioned, you cannot necessarily forecast everything in the world. And if you could, you'd be a very rich person. But the feeling in the market right now is that take-up is up. Demand is up. There are over 30 requirements for over 100,000 square feet in Central London at the moment. More about 47% of those are expanding rather than contracting. So there's lots and lots of confidence that we can take into this forthcoming year. On the HQ side of things, -- in the year-to-date, 51% of all take-up has been pre-let.

I do think that we will see this continuing. There is a real lack of stock and people are definitely looking at this with risk in mind, but in a way of I need space. If you look back to COVID back in 2020 to today, companies took expansion options. So lots of people needed that ability to grow. Of all of that expansion space, only 11% was not taken. So people have actually been expanding through the last 5 years. And the other thing is that tenant release space, again, [ Rich ], I think it's in the back in the deck in the back. tenant release space is currently 14% of availability. That's the lowest it's ever been. So the market dynamics are really, really strong, and that's why we feel like we can repeat it on the HQ side.

On the fully managed side, we've done in the last year a deal a week or just over a deal a week and the rental tone has been increasing. And the supply side on the fully managed side of things is no different. We don't see new entrants coming into the market. We don't see new serviced office operators coming into the market. We don't see new landlords creating a platform like we have. And in a world where flexibility, lack of CapEx and giving over the kind of difficulties of managing an office to a landlord who owns the space, that's really attractive. So these are all reasons why we are confident going into this year.

I think we'll do less than this year, partly because we've consumed quite a lot of the obvious leasing challenges in the year just gone, right? So those big pre-lets were a big part of the story. And if you look at the existing on-site schemes, they are now majority pre-let. So I think we will do less this year. In relation to -- if you go to Slide 42, Rich. In relation to -- here you go -- this is the long run of the components of the void rate. Clearly, at the bottom is the investment portfolio. That goes up and down depending on what we want to do with it.

And we wanted it to be higher for the last few years, as we've described, because we knew we could generate rental growth from those vacancies. We've clearly had a lot going on in development and refurbishment. And there, you can see the reduction in green over the last couple of years and the purple as we pre-let stuff. So I think looking forward, it will probably be a lower percentage of leasing. And I would imagine that the vacancy rate will be around the same as we get towards the end of the year. Okay.

Do we have any more? If not, that's great, some good questions. Thank you very much, everybody. And I hope that was helpful. As ever, we are around to answer further questions. The things I would take away from this, stack of income growth to come, load of sales to come. We will buy more, but I think it's -- this year will be all about those sales and what we do with that capital, look out for potentially returns to shareholders as the year progresses, but a sense of optimism, all else equal. Thank you very much for coming.

Amazingly, we're a bit early. We could start, Rich? Yes. Okay. Well, in which case, welcome, everybody. Thank you very much for joining us for our interim results presentation. It's great to see you all, and we really appreciate the time that you give us. So thank you for coming along.

Now, first of all, I'm going to start by summarizing some of the key messages that we'll be giving you over the next 30 or so minutes. And essentially, we have carried on where we left off at the year-end, successfully executing on our growth strategy. You'll hear about our strong operational performance so far this year, delivering some excellent leasing, well ahead of target and leading us to reiterate our rental value growth guidance. We've made further accretive acquisitions and significant sales ahead of book value, and our developers have created more premium spaces, timed to deliver into a market that is starved of such quality, meaning that we are well set to deliver both strong income and value growth.

So to help us tell this story, we have a full agenda as ever for you this morning. I'll start with a reminder of how we're delivering on our very clear strategy before giving you an update on our market opportunity. I'll then run through our successful 6 months of acquisitions, sales and developments before Nick looks at our exciting fully managed growth and our results. And I'll then wrap up with our outlook before opening the floor to you for Q&A. As ever, we have the full executive committee team here to help answer any questions you have. Plus, we also have our newly promoted Rebecca Bradley as Customer Experience Director; and Simon Rowley, as Flex Workspaces Director, and congratulations to them on their appointment.

But before we get into all of that, first of all, can I just say as this is probably Nick's last session before past is new. I just wanted to pay tribute to him, to thank him for his exemplary leadership across multiple facets of life at GPE. He's been a great partner to me and I know to many of you and to all of our colleagues at GPE over the past 14 years. And I know you will join me in wishing him well. Nick, thank you.

So let's start then with our strategy. And to do so, I want to remind you of our investment case, essentially the 6 fundamental pillars upon which our strategy is built, and you can see them here. And in approaching each, it's always been about doing what we said we would do. First, prime central London. It's the largest city economy in Europe, it's outperforming the U.K. overall, and it has decent forecast jobs growth. And so we have been and will continue to be focused on 100% prime locations only.

Second, we create and manage premium luxury offices across our HQ and our Flex products. It's where the richest theme of customer demand exists and our strong leasing and rents rising supports our position with space under offer today materially ahead of ERV. And as I'll show you later, even after substantial growth, they're still affordable, especially given the price inelastic nature of many premium customers.

Third, contracyclical capital allocation. You'll recognize the chart at the top raising capital, the green circles and buying when markets are cheap, as was the case in 2009 through '13 and again last year, developing into the inevitable supply crunch before selling completed business plans as markets recover and then returning excess capital to shareholders, shown by the pink circles.

We bought well, GBP 390 million, including CapEx since our rights issue last year. We're developing some of the best space in town covering 36% of our book, and we have rotated towards sales, as we said we would, more than GBP 290 million sold so far this year, 1.7% above book value and including 1 Newman Street, the largest single asset sale in the West End year-to-date.

Fourth, driving innovation, leading the market in the creation of sustainable spaces and in our customer experience offer. We've delivered a world first in our circular economy activities at 30 Duke Street and our award-winning CX team is helping grow our unique Flex offer towards our 1 million square foot target, and all of this activity always with a strong balance sheet and within an LTV range of 10% to 35%. So far this year, we've delivered a record financing, maintaining high liquidity and have kept LTV low at 28%.

And sixth, strong EPS and NTA growth, and we're on target to deliver a 10% plus return on equity over the medium term with more than 3x earnings per share growth.

So then, with a strong strategy and supportive fundamentals, we've had another successful period of delivering on our promises. So let's then have a quick look at our half year results and our outperformance despite the challenging U.K. economic and political backdrop.

Now, as you can see on the chart on the right, our excellent leasing continues, GBP 37.6 million in 6 months, the same as in the whole of last year, 7% ahead of ERV, leasing faster than underwrite and with strong appeal to AI-led customers now up to 23% of fully managed spaces. And we have a further GBP 10.3 million under offer today, a very strong 31% ahead of ERV. Our rental values were up 2.6%, with prime offices up 3.3%, bringing the total to 6.8% over the last 12 months. Our vacancy rate remains within our target range at 6.9%. Our customer retention rate remains high at 76%, well ahead of target, and we've made an attractive acquisition at a discount and sold at a premium, more on these deals later.

Now, all of this activity has helped us deliver healthy financial results for the period, pro forma rent roll up 29% with our average office rents up almost 10% over the last 12 months. Our valuation was up 1.5% over the first half with developments up 6.1%, delivering NTA growth of 2% and earnings growth of almost 85%, still with low LTV at 28%.

And as we think about what next, we have created a fantastic platform for further growth. Income growth of some 64% by FY '27 or more than 140% in the medium term, led by Flex. Big development surpluses of circa GBP 300 million to come with potential for upside from there. We'll buy more, we'll sell more and all supported by a London economy that continues to deliver GDP growth ahead of the U.K. overall. So significant growth to come.

Now, talking of London, let's have a look at our markets. And in short, we expect supportive leasing conditions to continue with best rents to rise further despite the challenging macro backdrop. Now, why do we think this? In short, because supply and demand conditions in London are both supportive and much stronger than the U.K. picture overall.

First, demand for space is strong, driven by jobs growth. As you can see in the blue bars on the right, today, there are 500,000 more jobs in London than there were at the time of the Brexit vote in 2016. Oxford Economics expect the number to continue rising by some 200,000 between now and 2030, equating to roughly 20 million square feet of new demand.

Second, take-up remains robust with 5.1 million square feet signed in half 1, ahead of the 10-year average. And third, active demand, that's companies looking for space right now, is still way ahead of the long run average, dominated by banking, finance and digital sectors with the latter responsible for some 40% of U.K. GDP growth with AI-led businesses creating jobs in London today. And history shows us that 2/3 of them will only lease prime space. Plus, contrary to many commentators' perception, way more companies today are looking to expand their space take than contracted, 55% versus 14%. Plus, these companies are going to struggle to find that space. They will run into a supply drop that is extreme and shows no signs of abating anytime soon.

Bottom left, we've updated our forecasts, the deliveries shown by the purple bars are very low. And we know that new starts are at lows not seen since 2010. And we think that commentators continue to overestimate deliveries and CBRE's forecast, as shown here by the pink diamonds. Now, either way, if you divide the long-run average take-up of 4.6 million feet per annum into the amount being delivered, we think, we will need to build 84% more every year than is currently planned to meet this demand. That's as higher shortfall as we can remember. And it's not as though customers have much choice from existing space. The current Grade A vacancy rate in the core West End is only 0.3%.

And so as a result, we think further rental growth is coming, focused on prime spaces and continuing the theme of the chart bottom right, highlighting the very clear bifurcation between the best and the rest that we have seen since 2023. And remember, overall, rents in London remain affordable. In both the city and the West End, they are still only 5% to 8% of the average London business's salary cost. So conditions then that most definitely play to our strengths with our 100% core prime locations, 94% near in Elizabeth line station.

So then, turning to our investment markets, and we think that there is good evidence to back up our view of 6 months ago that they are now recovering, albeit slowly. Capital values are rising, up 6% in nominal terms since our capital raise last year, shown on the right, driven by rental growth and tight investment supply.

Prime yields shown bottom left, are now either stable or mildly falling. Investment volumes are also up by 63% in H1 '25 compared to last year, and many more larger lots are now trading, as you can see, bottom right and the green bars with 19 deals of over GBP 100 million already traded so far in '25, up from 11 last year with a further 8 currently under offer. Plus, institutions are buying again, accounting for only 2 of the larger deals done last year, but 10 so far this year, or more than 50%. And with equity demand up since May to GBP 23.5 billion, the multiple of demand to supply at 4.8x remains steady and relatively supportive to pricing. And so we'll continue using these improving conditions to take more selective acquisitions and sales, crystallizing surpluses, and more on this in a minute.

So to sum up then with our market outlook, which supports strongly our strategy, the rents, whilst business confidence has weakened since May, healthy demand and a dearth of prime supply has helped us deliver rental value growth in our forecast range that we set out at our finals, as highlighted at the bottom, and so we maintain our expectations for this year overall of growth between 4% and 7%, driven by prime offices, up 6% to 10%.

Looking at yields, whilst the political backdrop has probably weakened since May, we think improvements in investor confidence and likely lower interest rates could push prime yields in further, especially where rental growth is a real prospect.

So given that, let's turn then and look at our investing and developing activities so far this year. And you'll remember this slide from May, and it shows our successful deployment of the capital that we raised last year. We've added to the 4 deals we told you about back then with the purchase of The Gable, shown on the far right. So that's 5 opportunities acquired since May '24, all in line with our disciplined criteria, all in the West End for a total of GBP 180 million or GBP 390 million, including CapEx and at only GBP 770 per foot and a whopping 57% discount to replacement cost.

Three of our fully managed conversions, 2 offer major HQ repositioning and each with attractive stabilized yields and ungeared IRRs. From here, more acquisitions, we have 2 deals in negotiation or under offer, all in the West End and more sales to build on the GBP 290 million completed so far this year with a further GBP 150 million to GBP 200 million in the near term, and GBP 650 million to GBP 700 million identified for the medium term. So plenty of opportunity with more to come.

So turning then to look at some of the detail and starting with the acquisition of The Gable, shown in yellow on the map. And it sits in an area of London we know inside out and next to The Courtyard, which we bought last year. We paid GBP 18 million, or only GBP 409 a foot, some 77% beneath replacement cost and with a current running yield of 6.4% until July '26. We have 2 possible business plans here. First, a conversion to Flex. We're in design and talking to the planners, and the economics are attractive with a near 7% yield, but this does rely on vacant possession. And if the government-based customer renews their lease, we'll maintain our low-risk running yield of at least 6.4% and probably hold for a future Flex conversion.

Now, since we saw you last, we've also sold our completed and let development 1 Newman Street to a U.K. institution shown at the bottom of the map. We received GBP 250 million, priced off a 4.48% yield, more than GBP 2,000 a foot and 1.8% ahead of book value. So a good sale of this completed business plan and showing both there is liquidity at scale and strong prices for the best assets and reaffirming our long-held commitment to actively recycling capital into the next opportunities for us to drive growth.

So talking of growth, let's have a look then at our development program, and taken together, we now have 11 schemes with 3 on-site HQ projects, already 71% pre-let, and 3 further Flex schemes on site. Across our 4 pipeline HQ schemes, we achieved 2 new planning consents in the past few months. And with The Gable purchased, we now have more than 1 million square feet in the program covering 36% of our book by area and delivering into the deep supply shortage that I referenced earlier.

So looking then at our On-site HQ schemes, progress has indeed been good. At 2 AS, we're on time to finish in Q1 next year, although the surplus to come has reduced as the valuer has adjusted the cap rate up by 15 basis points. At 30 Duke Street, we signed our pre-let with CD&R, 6.5% ahead of ERV and nearly 12% ahead of the underwrite. As a result, we've captured some significant surplus, but there's more to come as we deliver our expected profit on cost of almost 40%.

At Minerva, shown on bottom left, we are on time to finish in Q1 '27, and although costs are up since May, reducing the forecast profit to circa 15%, we are under offer on about 40% of the space at a substantial premium to ERV, which would drive our returns materially higher. Taken together, total area is up 66%. ERV is 174% higher, 99% of the CapEx to come is fixed, and we have GBP 65 million of surplus to come of current rents and current yields. They are all prime with exemplary sustainability credentials and have strong pre-letting potential for the remainder with, therefore, healthy upside to capture.

For the next phase of our HQ program, we have 4 fantastic schemes, each timed to deliver into the supply drought with 3 in the West End, next to the Elizabeth line, and 1 next to London Bridge Station. At Soho Square, we're starting imminently, and strip out has begun. At Whittington, we've just received consent for our rooftop pavilion, and we're on site with proprietary works for this major refurbishment.

We've also finally achieved planning at St. Thomas Yard on the South Bank for an exceptional 184,000 square foot park refurb, part newbuild project, but will be significantly more profitable than our original tower proposals, and we'll be starting here in Q3 next year.

And finally, back in the West End, our Chapel Place project is in design with planning discussions ongoing for a submission next summer. So, big area and ERV gains and targeting a healthy minimum profit level all next to major transport hubs and all with strong upside potential.

Now, of course, we also have multiple growth opportunities across the rest of our portfolio, too. You'll remember this portfolio stack. I've talked about our HQ developments at the top, and in the middle, sits our active portfolio management assets, representing 50% of the book, and in many ways, the engine room of the business. They are full of opportunity for us to grow rents and values, for example, on-floor refurbishments and their subsequent leasing to generate some GBP 47 million of income, capturing reversions of almost GBP 14 million, restructuring and regearing our interests and prepping assets for major repositioning.

And this presents us with real upside. Their valuation is undemanding at just over GBP 1,000 a foot, but with limited CapEx needed. And all of them are in prime locations. And, of course, they include our Flex assets covering some 29% of our total book and where the growth potential is significant, as you'll hear from Nick in a minute.

And shown in yellow is the stabilized proportion of the portfolio, where we will rotate out of completed business plans at high capital values per foot, potentially releasing more than GBP 800 million of capital to employ for much higher returns towards the top of the stack. So lots then to do for us as we execute our plan to deliver the substantial growth available to us, on which topic and probably for the last time over to Nick to dig into our Flex options.

Thank you, Toby. Good morning, everyone. I certainly didn't need these when I started 14 years ago, nor was I talking about our unique and well-established fully managed growth strategy, where we are successfully delivering premium hassle-free spaces for our customers. Our leasing volumes continue to grow with more than a deal a week over the last 12 months, representing nearly 90% of all our sub-5,000 square foot office lettings.

Rents are growing strongly, too, with these deals securing rents of GBP 37 million, and as shown in purple, regularly achieving more than GBP 250 a foot. As you can see top right, this is driving outsized performance, well ahead of our targets. We're generating strong absolute returns with an average yield on cost of 6.5% and service margin of 35%. And relative to ready to fit, we delivered a 103% rent beat and a 61% 10-year cash flow beat, and we've secured good lease duration, too, at just under 3 years.

Our fully managed spaces are today generating GBP 50 million of annualized rent, and we're currently managing GBP 25 million of OpEx and other costs across the categories shown in the green bar. So with a gross to net of 50%, our annualized NOI is GBP 25 million or GBP 107 a foot. Once we factor in CapEx, along with fully managed specific corporate overheads, this results in an annualized net cash return, averaging GBP 80 a foot or 40% higher than the ready-to-fit net rent. So much higher net cash returns than on a traditional basis, and the customer base dominated by corporates, not SMEs.

Our retention rate is strong at 75%, well ahead of our 50% underwrite, as our award-winning customer experience team delivers outstanding customer satisfaction. The most common driver for customer nonrenewal is needing more space than we can currently provide, as we experienced with our largest departure to date, a fast-growing unicorn status AI business, who we'd already moved twice within our portfolio. Pleasingly, we were able to relet their space within a month at a higher passing rent to Vanta, another high-growth company, with AI-led businesses now representing 23% of our fully managed customers.

And our recently completed schemes are leasing quickly, too. In the heart of Soho, Wardour Street is 100% let within 2 months of launch, including 2 pre-let floors. We've secured average rents per foot of GBP 279 with more than 1/4 of the space let above GBP 300 together, driving a valuation uplift of 10% in the half.

Our customers include those we've relocated from adjacent GPE fully managed space, an occupier of a GPE developed HQ building on Broadwick Street as well as a new customer who decided to double their space take within a month of moving in.

And over at Piccadilly, which launched last month, 35% of the space is already let or under offer at an average rent of GBP 296 a foot, although we're breaking through GBP 400 on a smaller space. So with an 11% beat to ERV and healthy interest in the balance of the building, the prospects look strong.

So, having more than tripled NOI over the last 2 years and our leasing velocity ahead of target, there's plenty more growth to come from today's GBP 25 million. We'll generate GBP 7 million of additional NOI, as we finish leasing up the recent completions. Our 3 on-site schemes, all in the West End, will deliver a further GBP 12 million with our pipeline schemes expected to add another GBP 15 million, taking our fully managed NOI to GBP 59 million, so an organic growth uplift of 2.4x.

And as we execute more acquisitions, total NOI would increase to around GBP 90 million if we grow Flex of 1 million square feet. And with more than GBP 19 million of additional service profit, shown in blue, we'll be creating additional value of more than GBP 200 million or more than GBP 200 per foot. So lots more income and value growth to come on top of the strong outperformance we're already delivering with fully managed ERV growth and valuation growth of 11% over the last 12 months.

Now a few comments on our overall performance in the half year. We delivered like-for-like value growth of 1.5%, as the best continues to outperform and EPRA NTA rose 2% to 504p per share. As expected and in line with consensus, EPRA EPS increased 70% to 3.9p, and we're paying an interim dividend of 2.9p. Our consistent financial strength saw EPRA LTV falling to 28.2%, and available liquidity rising to more than GBP 450 million, as we transition to a net seller and secured our largest ever bank facility. Overall, we generated positive TAR of 3% and 7.5%, respectively, over the last 6 and 12 months, delivering prime spaces against the backdrop of ERV growth with more to come as we continue to execute our growth strategy.

Our opportunity-rich GBP 3.1 billion portfolio is 83% in offices, where we experienced the strongest value growth of 1.8% and ERV growth of 2.7%, with retail ERVs up 1.9% in the half year and fully managed rents up 3.5%. And with an overall valuation uplift of 1.5%, developments delivered the strongest performance, up 6.1%, with GBP 30 million of surpluses captured in the half year valuation. Yields were broadly stable with our portfolio equivalent yield today at 5.5% and our reversionary yield at 6.7%, higher still at 8.7% on a share price implied basis.

Finally, the best continues to relatively outperform at both an ERV growth level in purple and by evaluation shown in green. In particular, our West End properties, representing nearly 3/4 of the portfolio, again, outperformed with capital growth of 2.9%. And as we continue to allocate capital to drive value growth, our almost GBP 700 million CapEx program is predominantly in the West End, combining GBP 290 million to complete our 6 on-site schemes shown in black with approximately GBP 400 million for pipeline schemes in gray. You'll find the usual scheme-by-scheme detail in the appendices.

With a total GDV of GBP 1.8 billion, we'll deliver further surpluses of more than GBP 300 million based on conservative 10% cumulative rental growth. And you can see by the solid line, more than GBP 125 million should come through within the next 18 months based on profit release at scheme PC although our pre-letting activities typically accelerate these, plus there's serious upside potential with further rental growth and some mild prime yield compression taking the surpluses to more than GBP 500 million or 130p per share.

On the right, our investing and leasing activities will clearly change the portfolio composition, with stabilized properties shown in yellow, growing from 19% to 55%, all else equal. However, our recycling activities will evolve the portfolio mix further with prospective sales of around GBP 800 million in the next few years, meaning active portfolio management properties, shown in blue, will, again, dominate with Flex also representing around 40% of the office portfolio.

In reality, our sales will likely be higher still, given our disciplined capital management, as they were in the last cycle with more than GBP 3 billion of disposals. Plus, I imagine there'll be some acquisitions, too, to replenish the GPE development hopper.

Now, we'll also be driving more income growth. Like-for-like rental income was up 5% over the last 12 months, whilst rent roll was up almost 30%, standing at the GBP 127 million today following the sale of Newman Street. Over the next 18 months, this builds by more than GBP 80 million or 64% and rises to around GBP 30 million in the medium term, an uplift of 142%, including the market rental growth we expect to capture.

Of course, some of this uplift will be tempered through sales of stabilized properties, but there's still lots of growth to go for, and we reiterate our guidance for a threefold increase in EPRA EPS over the medium term. Nearer term, we expect EPRA EPS to roughly double to around 10p by FY '27, as we lease up our on-site development and refurb program with more growth to come as we deliver our pipeline and capture market rental growth.

Once we factor in finance and other costs to deliver this growth, along with our likely earnings accretive sales, we anticipate annual EPRA EPS of 15 to 20p in around 4 years' time. As a result, we expect a stable dividend for FY '26 with potential DPS growth thereafter.

Whilst continuing to invest for growth, we've maintained our financial strength and capacity, including through proactive management of our debt profile. We've recently issued a new 5-year GBP 525 million ESG-linked RCF, allowing us to redeem an early '27 maturing facility and repay a higher-margin term loan. We've also extended the maturity of our smaller RCF, and Moody's reaffirmed our Baa2 credit rating.

When combined with our successful sales activity, LTV today is 28%, as we continue to operate within our 10% to 35% through the cycle target range. Interest cover is strong at 15x, with more than GBP 450 million of liquidity, and we have extended our average debt maturity to almost 6 years, whilst our weighted average interest rate remains in the 4s.

Looking ahead, as the bar chart shows, we expect LTV to remain above the midpoint of our through-the-cycle range as we invest for growth in a rising market. But remember, a couple of big sales can really move the needle and give us significant incremental acquisition capacity.

So wrapping up with a positive financial outlook, we expect to deliver further property value and NTA growth in the second half and beyond, based on current market outlook and our active business plans. H2 EPS will likely be broadly in line with H1, and the capture of our organic rental growth opportunity will drive significant income and EPRA EPS growth moving forward with an expected threefold EPS increase supporting our progressive dividend policy.

Our through-the-cycle LTV range and disciplined capital management will be maintained. And through the capture of attractive prime rental growth and the delivery of our development-led growth strategy, we expect FY '26 TAR to at least match FY '25 as GPE moves towards delivering a 10% plus annual return on equity. And of course, shareholder returns would be higher still should the share price discount narrow. So I'll certainly be holding on to my GPE shares.

And whilst I'm not leaving just yet, as Toby said, this will likely be my last set of GPE results. It's, of course, been a privilege to have been part of such an awesome GPE team. And I'm also proud of my contribution to both the strategic evolution of the business and its very special culture. But I'm also departing happy in the knowledge that GPE is in great shape with an exciting growth strategy to deliver for shareholders and customers alike, and as I look around the room with slightly blurry glasses and massive thanks to all of you for your support, your challenge, and most importantly, your good humor and camaraderie.

And given this is the 29th time that I've run through this presentation, I think it merits a very special thanks to both Stevie and to Rich and their teams for the uniquely special work that they put into putting this presentation together. Not only do I know that footnote 13 on Page 99 will be accurate, I know that it will be accurate to at least 1 decimal place. So a massive thanks to you guys for leaving Toby and I do the easy work of tapping the ball over the line.

And as I hand back to you, Toby, I must say it's certainly been fun. You're a good man, a great colleague, and there are many things I will miss at GPE, including your exceptional taste in wine.

Over to Toby for the wrap up.

But not I should add at this time of day. Thank you, Nick. Very good. Okay. So let's wrap up then with our outlook. And in short, it's all about delivering more growth, as we continue doing what we said we would do. We think that our market opportunity is strengthening. London remains Europe's Business Capital, will outperform the U.K. economically and will generate jobs growth, driving healthy demand for space that will collide with a supply drought, meaning rents are and will continue to rise with the best buildings materially outperforming the rest. As a result, office values are rising, the invest market continues its recovery with prime yield compression a real possibility.

Meanwhile, we are focused fully on executing our growth strategy, first, capturing significant income growth of more than 140% in the medium term. Second, delivering development surpluses of between GBP 180 million and GBP 520 million, just from our existing program, some GBP 130 per share. Third, more acquisitions. And fourth, significant further sales of more than GBP 800 million and always operating only in prime Central London, majority West End, 94% near an Elizabeth line station.

So all in all then, GPE is well set. Our operational infrastructure is in place and is delivering, and our deeply experienced team, bound together by our collegiate culture, along with our strong balance sheet will help us generate an attractive return on equity, even more so for shareholders should our share price continue its re-rating to properly reflect the group's exciting prospects. So GPE is in great shape with all to play for, and we can look forward to capturing our strong potential over the next few years.

Now I know some of you will have questions, maybe even for Nick, last chance. We'll have some microphones running around the room. As I say, we've got the team, home team to help answer any of those questions that you may have.

Who would like to raise something? Any hands?

Yes, here at the front. Good morning, Tom.

Yes, I guess I'll ask the question to Nick. You -- it's Tom Musson from Berenberg by the way. You talked about the big growth potential in the business, and I think a tripling of EPS probably stands alone in the sector in terms of the growth outlook. If you can achieve that, there's lots of development surplus to come that will drive NAV growth. Fully managed is a big part of that. Nick, I think you've led the charge on. So given the growth prospects, why is now the right time for you to move on from the business?

And then, I had a couple of follow-ups on a couple of the numbers if that's all right afterwards.

Sure. Well, I joined GPE 14 years ago. I thought I'd be here for 5 years, and I've been here for 14 years, and I absolutely love -- I love GPE. Equally, hopefully, as we've articulated, not just in this presentation, but in all the presentations that lead up to this, there is a very clear strategy in place. There is very clear and strong team in place. I love the sector. I'm just looking for something a little bit different. I think I was talking to one of our advisers, who works at a similar business to Savills. His comment was, "You love it because it's very similar to what you're doing now, but it's very different". And so I'm moving to a business that like GPE absolutely loves real estate. Unlike GPE, only Central London, I'm moving to a global business, moving from a team of 150,000 to 42,000. And I'm very much -- whilst GPE, I'm confident in the EPS growth that it will deliver, Savills is absolutely an EPS business rather than the balance sheet business. So something to keep you energized. But as I said, I will remain very invested in GPE, both financially, but also emotionally.

If you asked any question, I'll be delighted to leave it at that.

I did have just a couple on the numbers. The fully managed services income, net of fully managed services expenses, has just moved from being slightly profitable last year to slightly loss making this year. Can you just help explain that dynamic there? Is that just a reflection of growth? And then the second one was I think I saw that there was a material, sort of, GBP 3 million reduction in other property expenses in the EPRA P&L from GBP 4.1 million down to GBP 1 million. What was driving that?

Nick, do you want to try the first one?

Yes. Tom, you were referring to what's actually in the P&L? Yes. I mean, look -- so one of the things that we've done this year within our own targets, so as to you know, we are now incentivized specifically around delivering NOI returns in the P&L. At the moment, they are still lumpy because not -- they're not particularly reflecting a significant amount of the income that, yes, we're generating. But it also -- we tend to take a hit upfront for the agent fees that we're -- broker's fees that we're incurring in putting the customers in place.

So I think you'd expect to see the P&L reported NOI will be a little bit volatile as we go through the lease-up of the space. I would hope that over time, those margins improve because the cost of customer acquisition will reduce if we don't have a cost of customer acquisition, i.e., we keep customer retention rate high. And that's why I think you should expect to see over time an even bigger focus, particularly on the fully managed side around customer retention.

And as I think I alluded to in the presentation, the single biggest cause for us losing customers out of fully managed is we don't have enough space for them. So that is not the only reason, but it's one of the reasons why we are looking to grow this part of the footprint.

On the -- I'm looking Stevie here on the property cost, my guess is probably on empty rates will have been lower over this period. Anything else material to cover?

Nothing materially. This is largely due to empty rates, but we can get into the weeds offline.

Yes. Callum Marley from Kolytics. Two questions, one on vacancy and one on artificial intelligence. Is the new vacancy range that you've set of, 6% to 7.5% a new target for this period? And then how do you explain the divergence relative to your close peer who has a vacancy of about half that?

Yes. Thanks, Callum. So if you think -- can we just go back to the contracyclical chart right upfront, please, Rich, you do not want your portfolio full when everybody else has put their cranes away, okay? You want to be contracyclical in the delivery of space when everybody else has run for cover, especially when there is an 84% shortage of demand against supplies. So we actively want our vacancy rate up. So right at the beginning, I talked about being countercyclical in our approach, and that's exactly what we're doing here. We're developing into a serious shortage of supply. And we've now got CEOs from large financial institutions around the world saying London does not have enough space.

We've got companies looking 6 years ahead to try and forward purchase space. We pre-let most of our H2 developments, as you saw with CD&R during this year. And you will have heard this morning that we're under offer on a good chunk of the space down at Minerva. So you want to have vacancy at this point in the cycle, especially with rents rising. 6% to 7.5%, we're in the range, the single biggest vacancy that we've got at the -- in the portfolio at the minute, we've just finished, which is our Piccadilly Holdings, where we've just completed the repositioning of that building for fully managed. That's leasing up pretty well.

Simon, I'll come to you in a second, just for a bit of color on that lease-up. But again, great locations, great buildings, rents rising, it's now that you want vacancy. So I would think we would be failing if our vacancy was 0, okay? I want vacancy. So with that point made, just talk a little bit about the color on how that's going and maybe just what we experienced in the core markets and maybe draw the distinct between the peripheral markets.

Yes. So Callum, we've -- we completed 170 in September, which was about a month after Wardour Street and some people might have thought, well, why has Wardour Street let faster than 170? One of the principal reasons for that is that Wardour Street was a building that was really easy to understand through construction. So if anyone attended our Capital Markets Day back in February, one of the things I said at the time was that I thought we would pre-let some of Wardour Street. It wasn't in our underwrite. We don't tend to underwrite pre-lets and fully managed. But we did manage to pre-let 2 floors in there because it was easy to understand.

Conversely, 170 Piccadilly finished a month later. There are 13 units in that building. It's a heavy intervention as mentioned earlier. It's a Grade 2 listed building. And so it's a much harder building to understand. Nevertheless, once completed, it looks absolutely fantastic. And there are a number of you in the room who have seen it. And that, in turn, has driven some absolutely incredible ERV beats. As you can see, moving through GBP 400 per square foot on some of this building was definitely not in our underwrite. But an average ERV of 296 so far for the deals that we've done, 35% of the building let are under offer, we are really, really confident with the rest of that building.

And we are more certain than ever that core locations, prime core locations are where we would like our space to be. There are examples around the market of fully managed space being released in areas where, frankly, the price of a cup of coffee that we make is the same irrespective of where you are in London. We want our fully managed buildings to be in these core locations, these clusters. We are building a much better portfolio of clusters of buildings and that has allowed us to move companies such as, we mentioned, Wunderkind earlier, but others around the portfolio, that is helping that retention rate. Nick mentioned that, that is a big focus for the business.

We have, in just this part of this year, done a really good job retaining customers, that's about 70% of the retention rate that we have managed to create. It does not involve broker fees. So as Nick mentioned, the cost of doing that business is far less for us. So it's a really important area. That's why the clusters work. The clusters will also work for reducing some of our operational costs as we are able to transfer some of the cost of our customer experience team across a wider portfolio. So I'm really excited. I mean, we've been doing this for about 5 years now. Looking forward to some of the projects that we have got on site, and the team that we've created really gives us a lot of confidence.

Brilliant. Thank you, Simon. AI.

Yes. Second question, stating that entry-level positions in white collar jobs are potentially being displaced by AI. How do you think about that long term, the different scenarios to your job's growth figures that you publish in which AI adoption materially changes, hiring needs, and then, ultimately the impact on office?

Yes, a really important question, one that we could spend all week talking about, so we won't do that. But just to give you a couple of thoughts to take away. And Marc, I'll come to you in a second, if you wouldn't mind, just expanding a bit on the sorts of companies you've seen in the market today in that space.

I mean, one view, in fact, we asked AI, what AI thought about white collar jobs in London. And it started with an analysis of white collar jobs globally. And one version of AI said to us that it thought 90-odd million white collar jobs would be essentially disintermediated by AI. But 185 million would be created globally. Now, they won't all come to London, unfortunately, but it is an interesting debate as to exactly where they do go.

And our experience would suggest that, by and large, they're going to places with talent, with infrastructure, with magnetism, with great buildings, clearly part of the equation, with universities that are world leading in some of these topics, and it's for that reason that places in and around California and some of the Eastern seaboard in the U.S. and the golden triangle around London are performing relatively well. It's why 23% of our customer base in fully managed is AI led. They're not AI businesses, but they have AI in the description as a heavy part of what they're all about.

So I actually think there is an opposite side to this coin that you should take, which is that you should consider it as an opportunity. You should consider this as something that great commerce centers, like London, are going to capture more of the opportunity than most other locations. Just in terms of demand, what are we actually seeing right now from businesses in that tangentially related?

Yes. So as an overview, active demand is about GBP 12.4 million, which is 26% up on this time last year. And of that, TMT is around 15%. And of that, about 12% is AI-focused companies and 88% is non-AI. Now, if you look, Toby has obviously mentioned about the dominance of London in terms of its tech ecosystem, the deepwater talent, world-class universities and that regulatory environment. There are currently 382 companies that are being founded in H2 in London with more than 50 people employed. So it is really quite a mature market.

And if you look at AI as a catalyst for demand, there's currently around 0.5 million square feet today of well-established companies and some of the names that are out there that are either under offer, regearing on a short term, either have searches or in negotiation. Names such as OpenAI, obviously, ChatGPT, they are currently under offer on 100,000 square feet. You've got Databricks who are looking for 100,000 square feet and rumored to be in negotiation. Anthropic, who are behind Claude, 50,000 square feet. Palantir, who we know very well, next door to Soho Square, regearing on a short term because they can't find what they need. And we're obviously hopeful that we may have further conversations with them next door. Synthesia which is obviously the AI company that Nick referred to without referring by name, but we took them at 1,500 -- sorry, yes, 1,500 square feet in Dufour's. They grew 3x with us and then have moved to a managed facility of 21,000 square feet. So there's quite a lot of names that are out there.

And the other thing I would also say in terms of is it a net promoter or a detractor in terms of jobs, if you look at the case study for San Francisco, currently, in 2025, there are 5.6 million square feet occupied by AI companies. That's moved up from 2.7 million in 2021. And if you look at the prospective job numbers, which is around 50,000 new jobs accretive, then that could lead to about 16 million square feet of new jobs of -- sorry, new requirements up to 2030. So that averages out at about 2.7 million square feet per annum through to 2030. So we believe, if you look at what's going on in London, what is -- what we're seeing in San Francisco, we think that the prospects are positive rather than negative for us.

Not complacent, mind you. And we would always make sure that we are realistic when coming to market with spaces, but we've got some good interest in businesses in that line of work.

Okay. Where else can we go? Yes, Neil, right at the back. We'll need a microphone, please. Thank you.

Neil Green from JPMorgan. Just one question. Given the progress you've already made on disposals and quite sizable pipeline of disposals that you're earmarking, how do you think about leverage and potentially even excess capital down the line should acquisition opportunities become harder to find, please?

Yes. Good question. Thank you, Neil. So we have a long track record, as you know, of -- thanks, Rich, of returning when we have not been able to find a more productive use for the capital post-sale. So you can see that from the pink circles in the middle there, and we gave back probably GBP 600 million to shareholders, having raised GBP 300 million at the beginning of the cycle last time around. This time around, we've already raised the GBP 300 million, and let's see what happens.

But the same mantra applies. We will give back where it is excess to our needs and we can't make an attractive return for shareholders on it. Last time around, it was interesting, a number of shareholders said, "Well, why don't you hold on to it because you might be able to use it, and we don't really want it back". And we said, well, it's frankly, that's your problem, not ours. Our problem is whether we can use it accretively or not. And if we can't, you are going to get it back. And we did share buybacks. We did a capital restructuring and a capital return. So we've done all variations of it. And we would do them again if we were not able to find enough accretive opportunities to reemploy that capital post-sales.

Scale is one reason I hear people arguing for not giving back capital, that is not relevant to us. Return on capital employed is the thing you should look at, and we will not simply hold capital for the sake of feeling a bit bigger if you can't use it productively. So shareholders should know that we will give it back if it's excess. If we don't give it back, it's because we felt we've found a great series of opportunities to employ it for an accretive return.

Yes, Max.

Max Nimmo at Deutsche Numis. Maybe just kind of follow-up question to Neil on that capital recycling point. And talking about kind of liquidity at the larger end of the market, and if you can't sell some of those assets, are there other assets you can kind of pull in and out? And perhaps a theme that we're seeing a little bit at the moment is this sort of disposals below book value, which I think it hasn't really been a problem for you guys so far, but just some of your views on that well.

Okay. If you wouldn't mind coming in Dan in a second on how you're seeing the landscape playing out from here, but first up, Max, again, good question, what I think the correlation, I think, you need to be clear about is between sales ability, getting that deal done and quality of asset, right? And quality isn't just the way it looks. It's where it is, who's in it, what the rental position looks like, what its transport interchange, the hub near it looks like, the public realm immediately around it. There I say, even it's feng shui, right? So this whole idea of the way that building sits and feels matters.

Now we've just sold the largest single asset trade in the West End. So we have not encountered a problem with scale, and it was ahead of book value. So that tells you that our values are broadly getting right what the market is willing to pay for an asset as they should. As we go from here, one thing that is very clear is that Hanover Square is in that list of stabilized assets, 2 Aldermanbury, both buildings where we've essentially will have delivered our business plan. We've got some rent reviews to do, as you know, in Hanover, before we consider that. And Wells & More is currently in the market. So these are quite big assets, especially to AS and Hanover

So we'll be testing the outer envelope, I think, of scale when we get there, but we're not there at the minute. So the evolution of the market will be interesting to see. We will not be overly concerned about hitting book value, okay? We will be principally concerned about the forward IRR from the price on offer. And if we do not think that, that is sufficiently accretive to shareholders, the opportunity cost is much more powerful. We'll take the money.

But given the quality, and I said before, I think Hanover Square is one of the best buildings in Europe, therefore, the world, and I mean that. It's an unbelievably good asset. And Wells & More is out there testing the market at the minute, and 2 AS will be a 20-year lease to Clifford Chance. So of a rent, which was struck in 2021, '22, there or thereabouts. So probably reversionary. So these are great quality assets, and I think they will do well.

Dan, just in terms of market dynamic.

Thank you. And so, I think, at the moment, the market dynamics are such that we've seen lot sizes start to go up. I think, the Newman Street asset we sold a few weeks back, that was the biggest asset in the single asset deal in the West End through this part of the cycle, and so for several years. So it really sets a marker. And I think the -- you're starting to see -- so not only a lot sizes, you're starting to see new investors in the market as well.

So against that backdrop, the volumes are up to, I think it was, 63%. On the top left there is the stat that we've quoted. So not only are you selling bigger assets, there's more institutions in the market who are typical buyers of the mature finished product that we've got -- stabilized product that we get at the end of our recycling process. So I think the landscape for sales is very good and definitely improving. So Newman Street set a new benchmark, the likes of Hanover and 2 AS, which again are a step up in scale.

And as the market evolves, those larger lot sizes, they will become digestible by the market. And if you look at -- Rich, I think it's Page 4, if you just look at our cyclical part of the chart that we always look. This is where we want to be buying, these pieces here, and that's why we've been conducting such an intensive acquisition strategy over the last 18 months, 5 done, 1 under offer, hopefully done by Christmas, no pressure, Alexa.

So that's -- we are buying exactly the right time. And then also, you'll -- so we -- and we're selling those mature, stabilized assets as that part of the market. And we talked about it 6 months ago, different parts of the market get hot at a different time. At the moment, those core assets become attractive because those institutions are coming back in, like the stabilized assets. The value-add part of that curve has been hot for a while. But obviously, we don't want to be selling into that. That's a product we want to be buying.

So have we been going into the market and buying value-add assets in competition with a bunch of other people? Not really. Most of the stuff that we've been doing has been off market. So if you look at the map of the acquisitions that we've done, 2 or 3 have come from the city of London, and those have been one-on-one interactions, not in processes. So we're seeing that our acquisitions are playing to the curve there. Our disposals are playing to that part of the market that's warming up, and the general landscape is improving such that over the next 12 months, the larger assets such as 2 AS and Hanover will become liquid at the right times.

Rich, can you just jump to Slide 6? Because one of the things you might be thinking is selling at that point on the curve isn't necessarily the right answer. The reason, there's a complicated bifurcation going on between the best and the rest, right? If you are slightly off pitch or there's something wrong with your building, you're going to struggle to sell it, which is a sort of stuff that Dan has described we've been buying.

But if you look bottom right, the reason we're now willing to sell some of the buildings we are is because we have seen this bifurcation run riot through rent. And those prime rents have really grown. And it's that differential that is now allowing us to sell prime assets at really strong numbers that I don't think was the case even 12 months ago. And that change is quite dramatic.

And it says institutions with a low cost of capital who are buying. And our forward look on those doesn't hit our cost of capital, but it's fine for those buyers.

Yes. Thank you, Dan. Thank you, Max.

Any more for any more. We are just past the hour. Yes, we've got a couple over here. Yes. Zach?

This is Zachary Gauge from UBS. A couple of questions related to returns, and then, hopefully quite straightforward one just on EPRA earnings. But firstly, you seem quite bullish on near-term yield compression. I'm just wondering how you reconcile that with the valuers moving out the yield on Aldermanbury Square by 15 basis points. And I'm sure you have seen the latest MSCI data for the London office market in West End turning negative in October and flat ERVs for the last 2 months in the West End.

And sort of following on from that, looking at your 10%-plus ROE medium-term target, can you give any more color on when you expect that to be realized? And I think at the end of FY '25, you guided to more growth to come, and now, it sounds a little bit like this year is in line with last year as opposed to necessarily growing from there. And then the straightforward question was, is the tax credit you received included in the EPRA earnings number?

Fabulous question, Zach. I mean, you say I sound a bit more bullish. You sound a bit more bearish, and we will get you to the right place at some point over the next few years. But putting that aside for a second, Nick, if you could deal with the second one, and maybe the third, and then, Stevie, you want to deal with it.

So on the yield point, well, funny enough, the further they move the yields out, the more bullish we're going to get on compression, especially in an environment where yields are going to be -- and we know they're driven by interest rates, and in an environment where interest rates are likely to come in.

And -- I mean, I think the issue with that is scale. It's just -- it's a big building. It's going to be GBP 400-ish million, there or thereabouts, and that is a rare part of the market. So that's my challenge for the team when we come to selling that one. But more broadly, we are bullish on prime product. I mean, we -- for reasons Dan has just described. We think that really good assets in really good locations are gold. They are irreplaceable, by and large, and we're not talking about the peripheral central London markets. We're talking about core 100% prime, which is where we're focused. And that's why, if anything, we have concentrated even more over the last 5 years than you would have seen us.

I'm not sure we'd buy Whitechapel again, put it that way, unless it was unbelievably cheap. It was quite cheap at the time. But I think as those peripheral markets get less relatively attractive to the prospective customer base, we get less interested from an acquisitions perspective on them, but if you are in the core, I've said it before, it's incredibly powerful. We think we'll sell very well because we're leasing very well. So that's the first point. On the second one.

Rich, you give 54. Look, we were clear that the aspiration around the 10% plus TAR was one for the medium term. We set out the breakdown of that in the appendices. We said at the beginning of this year that we expected this year's TAR to be in line or ahead of where we were last year. We've maintained that. I think it's fair to say it will be my successor who stands up here talks about a 10% TAR rather than me, but I think that is something the -- looking at our own business plans, we look like we're set to deliver in FY '27-'28.

In terms of the tax credit, yes, it is in EPRA earnings in accordance with the guidance. That being said, we are not anticipating it has a material impact on the overall numbers. We still stand by the guidance that we gave on EPRA earnings at the beginning of the year irrespective of that credit. It's a one-off we don't expect to repeat it. But in accordance with EPRA guidance, you include it.

Maybe just a follow-up here, if I can. I think everyone largely understands that the prime versus secondary debate, but how much of your portfolio is prime versus secondary? Because presumably, you have a prime guidance and an ERV guidance, so it must be some form of blend of the 2?

Well, what -- in an ideal world, at this point in the cycle, thinking contracyclically, in an ideal world, what you want is raw material that is in some way needing attention in prime locations, okay? That is, to me, the holy grail. And so what you can see in GPE is some -- if we can go to the capital stack, please, Rich, some buildings in yellow, which are reaching the end of their GPE life because we've done things -- all of the things we can to them and their prospective numbers are not good enough for us, back to Dan's point about there'll be some institutions out there with a lower cost of capital than us will be happier holders than us.

But the majority of your book, in other words, the blue and above, needs to be prime location buildings that you can improve. And then you have a business that's really interesting. If you're simply stuff full of all the yellows, right, and this idea that you just collect, income-producing assets that are yellow, you are a proxy to market moves. You are nothing more than a beta story, right?

If you want to be an alpha story that's creating something of value, you go above the yellow and you focus on things that you can do things, too, to generate rent growth, net area again, higher quality buildings in great locations. And that's the underlying, which is why we started this presentation with 100% prime Central London. So if you look at -- I think you could probably argue that Whitechapel is the only building in our book, which would not qualify in the 100% prime Central London. That's the only one. The rest of them are, and the rest of them will be improved over time, and we will transmission, will basically capture growth in the blue section, turn it into a yellow tradable asset and out shall go. That's been our model for as long as I can remember.

And it feels -- if you go back to slide -- the cycle one, please, Rich, it feels much more alive today than it did in that really difficult period post Brexit, all the way through COVID, where, frankly, markets we felt should have corrected and didn't because the monetary response was so aggressive. And it took inflation, which was the consequence of -- and QE unwind for capital values to come off sufficient for us to get interested again. And so we're back into a really dynamic cycle, which feels like a good place to be.

On that note, I think I'm going to draw proceedings to a close. I think we've given plenty of time for Q&A. Thank you very much.

Just to wrap up for me then, this story today is all about our excellent leasing, which is all about our excellent positioning and our financial strength, looking forward with a lot to do over the second half to your point, but a lot to do over the next few years, and I'm very excited about that. As I hope you are.

Thank you all for coming.

Welcome, everybody. Thank you very much for joining us for our interim results presentation. It's great to see you all, and we really appreciate the time that you give us. So thank you for coming along.

Now first of all, I'm going to start by summarizing some of the key messages that we'll be giving you over the next 30 or so minutes. And essentially, we have carried on where we left off at the year-end, successfully executing on our growth strategy. You'll hear about our strong operational performance so far this year, delivering some excellent leasing well ahead of target and leading us to reiterate our rental value growth guidance. We've made further accretive acquisitions and significant sales ahead of book value, and our developers have created more premium spaces timed to deliver into a market that is starved of such quality, meaning that we are well set to deliver both strong income and value growth.

So to help us tell this story, we have a full agenda as ever for you this morning. I'll start with a reminder of how we're delivering on our very clear strategy before giving you an update on our market opportunity. I'll then run through our successful 6 months of acquisitions, sales and developments before Nick looks at our exciting fully managed growth and our results. And I'll then wrap up with our outlook before opening the floor to you for Q&A.

As ever, we have the full Executive Committee team here to help answer any questions you have. Plus, we also have our newly promoted Rebecca Bradley as Customer Experience Director; and Simon Rowley as Flex Workspaces Director, and congratulations to them on their appointment.

But before we get into all of that, first of all, can I just say as this is probably Nick's last session before past is new. I just wanted to pay tribute to him to thank him for his exemplary leadership across multiple facets of life at GPE. He's been a great partner to me, and I know to many of you and to all of our colleagues at GPE over the past 14 years. And I know you will join me in wishing him well. Nick, thank you.

So let's start then with our strategy. And to do so, I want to remind you of our investment case, essentially the 6 fundamental pillars upon which our strategy is built, and you can see them here. And in approaching each, it's always been about doing what we said we would do.

First, Prime Central London. It's the largest city economy in Europe. It's outperforming the U.K. overall, and it has decent forecast jobs growth. And so we have been and will continue to be focused on 100% prime locations only.

Second, we create and manage premium luxury offices across our HQ and our Flex products. It's where the richest theme of customer demand exists and our strong leasing and rents rising supports our position with space under offer today materially ahead of ERV. And as I'll show you later, even after substantial growth, they're still affordable, especially given the price inelastic nature of many premium customers.

Third, contracyclical capital allocation. You'll recognize the chart at the top, raising capital, the green circles and buying when markets are cheap, as was the case in 2009 through '13 and again last year, developing into the inevitable supply crunch before selling completed business plans as markets recover and then returning excess capital to shareholders, shown by the pink circles. We bought well, GBP 390 million, including CapEx since our rights issue last year. We're developing some of the best space in town, covering 36% of our book, and we have rotated towards sales as we said we would, more than GBP 290 million sold so far this year, 1.7% above book value and including 1 Newman Street, the largest single asset sale in the West End year-to-date.

Fourth, driving innovation, leading the market in the creation of sustainable spaces and in our customer experience offer. We've delivered a world first in our circular economy activities at 30 Duke Street and our award-winning CX team is helping grow our unique flex offer towards our 1 million square foot target. And all of this activity always with a strong balance sheet and within an LTV range of 10% to 35%.

So far this year, we've delivered a record financing, maintaining high liquidity and have kept LTV low at 28%. And sixth, strong EPS and NTA growth, and we're on target to deliver a 10% plus return on equity over the medium term with more than 3x earnings per share growth. So then with a strong strategy and supportive fundamentals, we've had another successful period of delivering on our promises. So let's then have a quick look at our half year results and our outperformance despite the challenging U.K. economic and political backdrop.

Now as you can see on the chart on the right, our excellent leasing continues, GBP 37.6 million in 6 months, the same as in the whole of last year, 7% ahead of ERV, leasing faster than underwrite and with strong appeal to AI-led customers now up to 23% of fully managed spaces. And we have a further GBP 10.3 million under offer today, a very strong 31% ahead of ERV. Our rental values were up 2.6% with prime offices up 3.3%, bringing the total to 6.8% over the last 12 months. Our vacancy rate remains within our target range at 6.9%; our customer retention rate remains high at 76%, well ahead of target; and we've made an attractive acquisition at a discount and sold at a premium. More on these deals later.

Now all of this activity has helped us deliver healthy financial results for the period. Pro forma rent roll up 29% with our average office rents up almost 10% over the last 12 months. Our valuation was up 1.5% over the first half with developments up 6.1%, delivering NTA growth of 2% and earnings growth of almost 85%, still with low LTV at 28%. And as we think about what next, we have created a fantastic platform for further growth.

Income growth of some 64% by FY '27 or more than 140% in the medium term, led by Flex. Big development surpluses of circa GBP 300 million to come with potential for upside from there. We'll buy more, we'll sell more and all supported by a London economy that continues to deliver GDP growth ahead of the U.K. overall. So significant growth to come.

Now talking of London, let's have a look at our markets. And in short, we expect supportive leasing conditions to continue with best rents to rise further despite the challenging macro backdrop. Now why do we think this? In short, because supply and demand conditions in London are both supportive and much stronger than the U.K. picture overall.

First, demand for space is strong, driven by jobs growth. As you can see in the blue bars on the right, today, there are 500,000 more jobs in London than there were at the time of the Brexit vote in 2016. Oxford Economics expect the number to continue rising by some 200,000 between now and 2030, equating to roughly 20 million square feet of new demand.

Second, take-up remains robust with 5.1 million square feet signed in half 1, ahead of the 10-year average.

And third, active demand that's companies looking for space right now is still way ahead of the long-run average, dominated by banking, finance and digital sectors with the latter responsible for some 40% of U.K. GDP growth with AI-led businesses creating jobs in London today. And history shows us that 2/3 of them will only lease prime space. Plus, contrary to many commentators perception, way more companies today are looking to expand their space take than contracted, 55% versus 14%. Plus these companies are going to struggle to find that space. They will run into a supply drought that is extreme and shows no signs of abating anytime soon.

Bottom left, we've updated our forecasts that deliveries shown by the purple bars are very low, and we know that new starts are at lows not seen since 2010. And we think that commentators continue to overestimate deliveries and CBRE's forecasts are shown here by the pink diamonds. Now either way, if you divide the long-run average take-up of 4.6 million feet per annum into the amount being delivered, we think we will need to build 84% more every year than is currently planned to meet this demand. That's as high a shortfall as we can remember.

And it's not as though customers have much choice from existing space. The current Grade A vacancy rate in the core West End is only 0.3%. And so as a result, we think further rental growth is coming, focused on prime spaces and continuing the theme of the chart bottom right, highlighting the very clear bifurcation between the best and the rest that we have seen since 2023. And remember, overall, rents in London remain affordable. In both the City and the West End, they are still only 5% to 8% of the average London business' salary cost. So conditions then that most definitely play to our strengths with our 100% core prime locations, 94% near an Elizabeth line station.

So then turning to our investment markets, and we think that there is good evidence to back up our view of 6 months ago that they are now recovering, albeit slowly. Capital values are rising, up 6% in nominal terms since our capital raise last year, shown on the right, driven by rental growth and tight investment supply. Prime yields shown bottom left are now either stable or mildly falling. Investment volumes are also up by 63% in H1 '25 compared to last year, and many more larger lots are now trading, as you can see bottom right in the green bars, with 19 deals of over GBP 100 million already traded so far in '25, up from 11 last year with a further 8 currently under offer. Plus institutions are buying again, accounting for only 2 of the larger deals done last year, but 10 so far this year or more than 50%.

And with equity demand up since May to GBP 23.5 billion, the multiple of demand to supply at 4.8x remains steady and relatively supportive to pricing. And so we'll continue using these improving conditions to take more selective acquisitions and sales, crystallizing surpluses and more on this in a minute.

So to sum up then with our market outlook, which supports strongly our strategy. For rents, whilst business confidence has weakened since May, healthy demand and a dearth of prime supply has helped us deliver rental value growth in our forecast range that we set out at our finals as highlighted at the bottom. And so we maintain our expectations for this year overall of growth between 4% and 7%, driven by prime offices up 6% to 10%.

Looking at yields, whilst the political backdrop has probably weakened since May, we think improvements in investor confidence and likely lower interest rates could push prime yields in further, especially where rental growth is a real prospect.

So given that, let's turn then and look at our investing and developing activities so far this year. And you'll remember this slide from May, and it shows our successful deployment of the capital that we raised last year. We've added to the 4 deals we told you about back then with the purchase of The Gable shown on the far right. So that's 5 opportunities acquired since May '24, all in line with our disciplined criteria, all in the West End for a total of GBP 180 million or GBP 390 million, including CapEx and at only GBP 770 per foot and a whopping 57% discount to replacement cost. Three offer fully managed conversions, 2 offer major HQ repositioning and each with attractive stabilized yields and ungeared IRRs.

From here, more acquisitions, we have 2 deals in negotiation or under offer, all in the West End and more sales to build on the GBP 290 million completed so far this year with a further GBP 150 million to GBP 200 million in the near term and GBP 650 million to GBP 700 million identified for the medium term. So plenty of opportunity with more to come.

So turning then to look at some of the detail and starting with the acquisition of the Gable, shown in yellow on the map. And it sits in an area of London we know inside out and next to the Courtyard, which we bought last year. We paid GBP 18 million or only GBP 409 a foot, some 77% beneath replacement cost and with a current running yield of 6.4% until July '26.

We have 2 possible business plans here. First, a conversion to Flex. We're in design and talking to the planners and the economics are attractive with a near 7% yield, but this does rely on vacant possession. And if the government-based customer renews their lease, we'll maintain our low-risk running yield of at least 6.4% and probably hold for a future flex conversion.

Now since we saw you last, we've also sold our completed and let development at 1 Newman Street to a U.K. institution shown at the bottom of the map. We received GBP 250 million priced off a 4.48% yield, more than GBP 2,000 a foot and 1.8% ahead of book value. So a good sale of this completed business plan and showing both there is liquidity at scale and strong prices for the best assets and reaffirming our long-held commitment to actively recycling capital into the next opportunities for us to drive growth.

So talking of growth, let's have a look then at our development program. And taken together, we now have 11 schemes with 3 on-site HQ projects already 71% pre-let and 3 further Flex schemes on site. Across our 4 pipeline HQ schemes, we achieved 2 new planning consents in the past few months. And with The Gable purchase, we now have more than 1 million square feet in the program, covering 36% of our book by area and delivering into the deep supply shortage that I referenced earlier.

So looking then at our on-site HQ schemes, progress has indeed been good. At 2AS, we're on time to finish in Q1 next year, although the surplus to come has reduced as the valuer has adjusted the cap rate up by 15 basis points. At 30 Duke Street, we signed our pre-let with CD&R, 6.5% ahead of ERV and nearly 12% ahead of the underwrite. As a result, we've captured some significant surplus, but there's more to come as we deliver our expected profit on cost of almost 40%.

At Minerva, shown bottom left, we are on time to finish in Q1 '27. And although costs are up since May, reducing the forecast profit to circa 15%, we are under offer on about 40% of the space at a substantial premium to ERV, which would drive our returns materially higher. Taken together, total area is up 66%, ERV is 174% higher, 99% of the CapEx to come is fixed and we have GBP 65 million of surplus to come of current rents and current yields. They are all prime with exemplary sustainability credentials and have strong pre-letting potential for the remainder with, therefore, healthy upside to capture.

For the next phase of our HQ program, we have 4 fantastic schemes, each timed to deliver into the supply drought with 3 in the West End next to the Elizabeth line and one next to London Bridge Station. At Soho Square, we're starting imminently and strip out has begun. At Whittington, we've just received consent for our rooftop pavilion, and we're on site with preparatory works for this major refurbishment. We've also finally achieved planning at St. Thomas Yard on the South Bank for an exceptional 184,000 square foot part refurb, part new build project that will be significantly more profitable than our original tower proposals and will be starting here in Q3 next year.

And finally, back in the West End, our Chapel Place project is in design with planning discussions ongoing for a submission next summer. So big area and ERV gains and targeting a healthy minimum profit level, all next to major transport hubs and all with strong upside potential.

Now of course, we also have multiple growth opportunities across the rest of our portfolio, too. You'll remember this portfolio stack. I've talked about our H2 developments at the top and in the middle sits our active portfolio management assets, representing 50% of the book and in many ways, the engine room of the business. They are full of opportunity for us to grow rents and values, for example, on-floor refurbishments and their subsequent leasing to generate some GBP 47 million of income, capturing reversions of almost GBP 14 million, restructuring and regearing our interests and prepping assets for major repositioning.

And this presents us with real upside. Their valuation is undemanding at just over GBP 1,000 a foot, but with limited CapEx needed and all of them are in prime locations. And of course, they include our flex assets covering some 29% of our total book and where the growth potential is significant, as you'll hear from Nick in a minute.

And shown in yellow is the stabilized proportion of the portfolio where we will rotate out of completed business plans at high capital values per foot, potentially releasing more than GBP 800 million of capital to employ for much higher returns towards the top of the stack. So lots then to do for us as we execute our plan to deliver the substantial growth available to us, on which topic and probably for the last time, over to Nick to dig into our flex options.

Thank you, Toby. Good morning, everyone. I certainly didn't need these when I started 14 years ago, nor was I talking about our unique and well-established fully managed growth strategy where we are successfully delivering premium hassle-free spaces for our customers. Our leasing volumes continue to grow with more than a deal a week over the last 12 months, representing nearly 90% of all our sub-5,000 square foot office lettings.

Rents are growing strongly, too, with these deals securing rents of GBP 37 million and as shown in purple, regularly achieving more than GBP 250 a foot. As you can see top right, this is driving outsized performance well ahead of our targets. We're generating strong absolute returns with an average yield on cost of 6.5% and service margin of 35%. And relative to ready to fit, we delivered a 103% rent beat and a 61% 10-year cash flow beat. And we've secured good lease duration too at just under 3 years.

Our fully managed spaces are today generating GBP 50 million of annualized rent, and we're currently managing GBP 25 million of OpEx and other costs across the categories shown in the green bar. So with a gross to net of 50%, our annualized NOI is GBP 25 million or GBP 107 a foot. Once we factor in CapEx, along with fully managed specific corporate overheads, this results in an annualized net cash return averaging GBP 80 a foot or 40% higher than the ready-to-fit net rent. So much higher net cash returns than on a traditional basis and the customer base dominated by corporates, not SMEs.

Our retention rate is strong at 75%, well ahead of our 50% underwrite as our award-winning customer experience team delivers outstanding customer satisfaction. The most common driver for customer nonrenewal is needing more space than we can currently provide as we experienced with our largest departure to date, a fast-growing unicorn status AI business who we've already moved twice within our portfolio. Pleasingly, we were able to relet their space within a month at a higher passing rent to Vanta, another high-growth company with AI-led businesses now representing 23% of our fully managed customers.

And our recently completed schemes are leasing quickly, too. In the heart of Soho, Wardour Street is 100% let within 2 months of launch, including 2 pre-let floors. We've secured average rents per foot of GBP 279 with more than 1/4 of the space let above GBP 300 together driving a valuation uplift of 10% in the half. Our customers include those we've relocated from adjacent GPE fully managed space, an occupier of a GPE-developed HQ building on Broadwick Street as well as a new customer who decided to double their space take within a month of moving in.

And over at Piccadilly, which launched last month, 35% of the space is already let or under offer at an average rent of GBP 296 a foot, although we're breaking through GBP 400 on a smaller space. So with an 11% beat to ERV and healthy interest in the balance of the building, the prospects look strong. So having more than tripled NOI over the last 2 years and our leasing velocity ahead of target, there's plenty more growth to come from today's GBP 25 million.

We'll generate GBP 7 million of additional NOI as we finish leasing up the recent completions. Our 3 on-site schemes, all in the West End will deliver a further GBP 12 million with our pipeline schemes expected to add another GBP 15 million, taking our fully managed NOI to GBP 59 million, so an organic growth uplift of 2.4x. And as we execute more acquisitions, total NOI would increase to around GBP 90 million if we grow Flex to 1 million square feet.

And with more than GBP 19 million of additional service profit shown in blue, we'll be creating additional value of more than GBP 200 million or more than GBP 200 per foot. So lots more income and value growth to come on top of the strong outperformance we're already delivering with fully managed ERV growth and valuation growth of 11% over the last 12 months.

Now a few comments on our overall performance in the half year. We delivered like-for-like value growth of 1.5% as the best continues to outperform and EPRA NTA rose 2% to 504p per share. As expected and in line with consensus, EPRA EPS increased 70% to 3.9p, and we're paying an interim dividend of 2.9p. Our consistent financial strength saw EPRA LTV falling to 28.2% and available liquidity rising to more than GBP 450 million as we transition to a net seller and secured our largest ever bank facility. Overall, we generated positive TAR of 3% and 7.5%, respectively, over the last 6 and 12 months, delivering prime spaces against the backdrop of ERV growth with more to come as we continue to execute our growth strategy.

Our opportunity-rich GBP 3.1 billion portfolio is 83% in offices, where we experienced the strongest value growth of 1.8% and ERV growth of 2.7% with retail ERVs up 1.9% in the half year and fully managed rents up 3.5%. And with an overall valuation uplift of 1.5%, developments delivered the strongest performance, up 6.1% with GBP 30 million of surpluses captured in the half year valuation. Yields were broadly stable with our portfolio equivalent yield today at 5.5% and our reversionary yield at 6.7%, higher still at 8.7% on a share price implied basis.

Finally, the best continues to relatively outperform at both an ERV growth level in purple and by valuation shown in green. In particular, our West End properties representing nearly 3/4 of the portfolio, again outperformed with capital growth of 2.9%. And as we continue to allocate capital to drive value growth, our almost GBP 700 million CapEx program is predominantly in the West End, combining GBP 290 million to complete our 6 on-site schemes shown in black with approximately GBP 400 million for pipeline schemes in gray. You'll find the usual scheme-by-scheme detail in the appendices.

With a total GDV of GBP 1.8 billion, we'll deliver further surpluses of more than GBP 300 million based on conservative 10% cumulative rental growth. And you can see by the solid line, more than GBP 125 million should come through within the next 18 months based on profit release at scheme PC, although our pre-letting activities typically accelerate these. Plus, there's serious upside potential with further rental growth and some mild prime yield compression, taking the surpluses to more than GBP 500 million or 130p per share.

On the right, our investing and leasing activities will clearly change the portfolio composition with stabilized properties shown in yellow, growing from 19% to 55%, all else equal. However, our recycling activities will evolve the portfolio mix further with prospective sales of around GBP 800 million in the next few years, meaning active portfolio management properties shown in blue, will again dominate with Flex also representing around 40% of the office portfolio.

In reality, our sales will likely be higher still, given our disciplined capital management as they were in the last cycle with more than GBP 3 billion of disposals. Plus, I imagine there'll be some acquisitions, too, to replenish the GPE development hopper.

Now we'll also be driving more income growth. Like-for-like rental income was up 5% over the last 12 months, whilst rent roll was up almost 30%, standing at GBP 127 million today following the sale of Newman Street. Over the next 18 months, this builds by more than GBP 80 million or 64% and rises to around GBP 30 million in the medium term, an uplift of 142%, including the market rental growth we expect to capture. Of course, some of this uplift will be tempered through sales of stabilized properties, but there's still lots of growth to go for, and we reiterate our guidance for a threefold increase in EPRA EPS over the medium term.

Nearer term, we expect EPRA EPS to roughly double to around 10p by FY '27 as we lease up our on-site development and refurb program with more growth to come as we deliver our pipeline and capture market rental growth. Once we factor in finance and other costs to deliver this growth, along with our likely earnings accretive sales, we anticipate annual EPRA EPS of 15p to 20p in around 4 years' time. As a result, we expect a stable dividend for FY '26 with potential DPS growth thereafter.

Whilst continuing to invest for growth, we've maintained our financial strength and capacity, including through proactive management of our debt profile. We've recently issued a new 5-year GBP 525 million ESG-linked RCF, allowing us to redeem an early '27 maturing facility and repay a higher-margin term loan. We've also extended the maturity of our smaller RCF, and Moody's reaffirmed our Baa2 credit rating.

When combined with our successful sales activity, LTV today is 28% as we continue to operate within our 10% to 35% through-the-cycle target range. Interest cover is strong at 15x with more than GBP 450 million of liquidity, and we've extended our average debt maturity to almost 6 years, whilst our weighted average interest rate remains in the 4s. Looking ahead, as the bar chart shows, we expect LTV to remain above the midpoint of our through-the-cycle range as we invest for growth in a rising market. But remember, a couple of big sales can really move the needle and give us significant incremental acquisition capacity.

So wrapping up with a positive financial outlook. We expect to deliver further property value and NTA growth in the second half and beyond based on current market outlook and our active business plans. H2 EPS will likely be broadly in line with H1 and the capture of our organic rental growth opportunity will drive significant income and EPRA EPS growth moving forward with an expected threefold EPS increase supporting our progressive dividend policy.

Our through-the-cycle LTV range and disciplined capital management will be maintained. And through the capture of attractive prime rental growth and the delivery of our development-led growth strategy, we expect FY '26 TAR to at least match FY '25 as GPE moves towards delivering a 10% plus annual return on equity. And of course, shareholder returns would be higher still should the share price discount narrow. So I'll certainly be holding on to my GPE shares.

And whilst I'm not leaving just yet, as Toby said, this will likely be my last set of GPE results. It's, of course, been a privilege to have been part of such an awesome GPE team. And I'm also proud of my contribution to both the strategic evolution of the business and its very special culture. But I'm also departing happy in the knowledge that GPE is in great shape with an exciting growth strategy to deliver for shareholders and customers alike.

And as I look around the room with slightly blurry glasses, a massive thanks to all of you for your support, your challenge and most importantly, your good humor and camaraderie. And given this is the 29th time that I've run through this presentation, I think it merits a very special thanks to both Stevie and to Rich and their teams for the uniquely special work that they put into putting this presentation together. Not only do I know that footnote 13 on Page 99 will be accurate, I know that it will be accurate to at least one decimal place. So massive thanks to you guys for leaving Toby and I to do the easy work of tapping the ball over the line.

And as I hand back to you, Toby, I must say it's certainly been fun. You're a good man, a great colleague, and there are many things I will miss at GPE, including your exceptional taste in wine. Over to Toby for the wrap-up.

But not I should add at this time of day. Thank you, Nick. Very good.

Okay. So let's wrap up then with our outlook. And in short, it's all about delivering more growth as we continue doing what we said we would do. We think that our market opportunity is strengthening. London remains Europe's business capital, will outperform the U.K. economically and will generate jobs growth, driving healthy demand for space that will collide with a supply drought, meaning rents are and will continue to rise with the best buildings materially outperforming the rest. As a result, office values are rising. The investment market continues its recovery with prime yield compression a real possibility. Meanwhile, we are focused fully on executing our growth strategy.

First, capturing significant income growth of more than 140% in the medium term; second, delivering development surpluses of between GBP 180 million and GBP 520 million just from our existing program, some 130p per share; third, more acquisitions; and fourth, significant further sales of more than GBP 800 million and always operating only in prime Central London, majority West End, 94% near an Elizabeth line station.

So all in all then, GPE is well set. Our operational infrastructure is in place and is delivering and our deeply experienced team bound together by our collegiate culture, along with our strong balance sheet will help us generate an attractive return on equity, even more so for shareholders should our share price continue its re-rating to properly reflect the group's exciting prospects. So GPE is in great shape with all to play for, and we can look forward to capturing our strong potential over the next few years.

Now I know some of you will have questions, maybe even for Nick, last chance. We'll have some microphones running around the room. As I say, we've got the team -- home team to help answer any of those questions that you may have.

Who would like to raise something? Any hands? Yes, here at the front. Good morning, Tom.

Yes, I guess I'll ask the question to Nick. It's Tom Musson from Berenberg, by the way. You talked about the big growth potential in the business, and I think a tripling of EPS probably stands alone in the sector in terms of the growth outlook. If you can achieve that, there's lots of development surplus to come that will drive NAV growth. Fully managed is a big part of that. Nick, I think you've led the charge on. So given the growth prospects, why is now the right time for you to move on from the business? And then I had a couple of follow-ups on a couple of the numbers, [indiscernible] afterwards.

Sure. Well, I joined GPE 14 years ago. I thought I'd be here for 5 years, and I've been here for 14 years, and absolutely love -- I love GPE. Equally, hopefully, as we've articulated not just in this presentation, but in all the presentations that lead up to this, there is a very clear strategy in place. There is very clear and strong team in place. I love the sector. I'm just looking for something a little bit different.

I think I was talking to one of our advisers who works at a similar business to Savills. His comment was, you love it because it's very similar to what you're doing now, but it's very different. And so I'm moving to a business that like GPE absolutely loves real estate. Unlike GPE, only Central London, I'm moving to a global business, moving from a team of 150 to 42,000.

And I'm very much -- whilst GPE, I'm confident in the EPS growth that it will deliver, Savills is absolutely an EPS business rather than a balance sheet business. So something you -- something to keep you energized. But as I said, I will remain very invested in GPE, both financially, but also emotionally. If that's the only question, I'd be delighted to leave at that.

I did have just a couple on the numbers. The fully managed services income net of fully managed services expenses has just moved from being slightly profitable last year to slightly loss-making this year. Can you just help explain that dynamic there? Is that just a reflection of growth? And then the second one was, I think I saw that there was a material sort of GBP 3 million reduction in other property expenses in the EPRA P&L from GBP 4.1 million down to GBP 1 million. What was driving that?

Nick, do you want to try the first one?

Yes. Tom, you were referring to what's actually in the P&L. Yes. I mean -- so one of the things that we've done this year within our own targets, so we are now incentivized specifically around delivering NOI returns in the P&L. At the moment, that's still lumpy because they're not particularly reflecting a significant amount of the income that we're yet generating. But it also -- we tend to take a hit upfront for the agent fees that we're -- the broker fees that we're incurring in putting the customers in place.

So I think you should expect to see the P&L reported NOI will be a little bit volatile as we go through the lease-up of the space. I would hope that over time, those margins improve because the cost of customer acquisition will reduce if we don't have a cost of customer acquisition, i.e., we keep customer retention rate high. And that's why I think you should expect to see over time an even bigger focus, particularly on the fully managed side around customer retention.

And as I think I alluded to in the presentation, the single biggest cause for us losing customers out of fully managed is we don't have enough space for them. So that is not the only reason, but it's one of the reasons why we are looking to grow this part of the footprint.

On the -- I'm looking at Steve here, on the property cost, my guess is probably on empty rates will have been lower over this period. Anything else material to cover?

Nothing material. It was largely 2 empty rates, but we can get into the weeds offline.

Callum Marley from Kolytics. Two questions, one on vacancy and one on artificial intelligence. Is the new vacancy range that you've set of 6% to 7.5% a new target for this period? And then how do you explain the divergence relative to your close peer who has a vacancy of about half that?

Yes. Thanks, Callum. So if you think -- can we just go back to the contracyclical chart right upfront, please, Rich. You do not want your portfolio full when everybody else has put their cranes away, okay? You want to be contracyclical in the delivery of space when everybody else has run for cover, especially when there is an 84% shortage of demand against supply.

So we actively want our vacancy rate up. So right at the beginning, I talked about being contracyclical in our approach, and that's exactly what we're doing here. We're developing into a serious shortage of supply. And we've now got CEOs from large financial institutions around the world saying London does not have enough space. We've got companies looking 6 years ahead to try and forward purchase space. We pre-let most of our H2 developments, as you saw with CD&R during this year. And you will have heard this morning that we're under offer on a good chunk of the space down at Minerva.

So you want to have vacancy at this point in the cycle, especially with rents rising. 6% to 7.5%, we're in the range. The single biggest vacancy that we've got in the portfolio at the minute we've just finished, which is our Piccadilly Holdings, where we've just completed the repositioning of that building for fully managed. That's leasing up pretty well. Simon, I'll come to you in a second just for a bit of color on that lease-up.

But again, great locations, great buildings, rents rising. It's now that you want vacancy. So I would think we would be failing if our vacancy was 0, okay? I want vacancy. So with that point made, just talk a little bit about the color on how that's going and maybe just what we experienced in the core markets and maybe draw the distinction between the peripheral markets.

Yes. So Callum, we completed 170 in September, which was about a month after Wardour Street. And some people might have thought, well, why has Wardour Street let faster than 170? One of the principal reasons for that is that Wardour Street was a building that was really easy to understand through construction. So if anyone attended our Capital Markets Day back in February, one of the things I said at the time was that I thought we would pre-let some of Wardour Street. It wasn't in our underwrite. We don't tend to underwrite pre-lets and fully managed, but we did manage to pre-let 2 floors in there because it was easy to understand.

Conversely, 170 Piccadilly finished a month later. There are 13 units in that building. It's a heavy intervention, as mentioned earlier. It's a grade 2 listed building. And so it's a much harder building to understand. Nevertheless, once completed, it looks absolutely fantastic, and there are a number of you in the room who have seen it. And that, in turn, has driven some absolutely incredible ERV beats. As you can see, moving through GBP 400 per square foot on some of this building was definitely not in our underwrite, but an average ERV of GBP 296 so far for the deals that we've done, 35% of the building let or under offer, we are really, really confident with the rest of that building.

And we are more certain than ever that core locations, prime core locations are where we would like our space to be. There are examples around the market of fully managed space being released in areas where, frankly, the price of a cup of coffee that we make is the same irrespective of where you are in London. We want our fully managed buildings to be in these core locations, these clusters. We are building a much better portfolio of clusters of buildings, and that has allowed us to move companies such as we mentioned [ Vanta kind ] earlier, but others around the portfolio. That is helping that retention rate. Nick mentioned that, that is a big focus for the business.

We have, in just this part of this year, done a really good job retaining customers. That's about 70% of the retention rate that we have managed to create does not involve broker fees. So as Nick mentioned, the cost of doing that business is far less for us. So it's a really important area. That's why the clusters work. The clusters will also work for reducing some of our operational costs as we are able to transfer some of the costs of our customer experience team across a wider portfolio.

So I'm really excited. I mean we've been doing this for about 5 years now. Looking forward, some of the projects that we've got on site and the team that we've created really gives us a lot of confidence.

Brilliant. Thank you, Simon. AI?

[Technical Difficulty] stating that entry-level positions in white-collar jobs are potentially being displaced by AI. How do you think about that long term, the different scenarios to your jobs growth figures that you publish in which AI adoption materially changes hiring needs and then ultimately, the impact for an office tomorrow?

Yes, really important question, one that we could spend all week talking about, so we won't do that. But just to give you a couple of thoughts to take away. And Marc, I'll come to you in a second, if you wouldn't mind just expanding a bit on the sorts of companies you've seen in the market today in that space.

I mean, one view -- in fact, we asked AI what AI thought about white-collar jobs in London. And it started with an analysis of white-collar jobs globally. And one version of AI said to us that it thought 90-odd million white-collar jobs would be essentially disintermediated by AI, but 185 million would be created globally.

Now they won't all come to London, unfortunately, but it is an interesting debate as to exactly where they do go. And our experience would suggest that by and large, they're going to places with talent; with infrastructure; with magnetism; with great buildings, clearly part of the equation; with universities that are world-leading in some of these topics. And it's for that reason that places in and around California and some of the Eastern Seaboard in the U.S. and the Golden Triangle around London are performing relatively well. It's why 23% of our customer base in fully managed is AI-led. They're not AI businesses, but they have AI in the description as a heavy part of what they're all about.

So I actually think there is an opposite side to this coin that you should take, which is that you should consider it as an opportunity. You should consider this as something that great commerce centers like London are going to capture more of the opportunity than most other locations. Just in terms of demand, what are we actually seeing right now from businesses in that tangentially related...

So as an overview, active demand is about 12.4 million, which is 26% up on this time last year. And of that, TMT is around 15%. And of that, about 12% is AI-focused companies and 88% is non-AI. Now if you look, Toby has obviously mentioned about the dominance of London in terms of its tech ecosystem, the deep pool of talent, world-class universities and that regulatory environment.

There are currently 382 companies that are being founded and HQ'd in London with more than 50 people employed. So it is already quite a mature market. And if you look at AI as a catalyst for demand, there's currently around 0.5 million square feet today of well-established companies. And some of the names that are out there that are either under offer, regearing on a short term, either have searches or in negotiation.

Names such as OpenAI; obviously, ChatGPT; they are currently under offer on 100,000 square feet. You've got Databricks, who are looking for 100,000 square feet and rumored to be in negotiation; Anthropic, who are behind Claude, 50,000 square feet; Palantir, who we know very well, next door to Soho Square, regearing on a short term because they can't find what they need, and we're obviously hopeful that we may have further conversations with them next door. Synthesia, which is obviously the AI company that Nick referred to without referring by name, but we took them at 1,500 -- sorry, yes, 1,500 square feet in Dufour's. They grew 3x with us and then have moved to a managed facility of 21,000 square feet.

So there's quite a lot of names that are out there. And the other thing I would also say in terms of is it a net promoter or a detractor in terms of jobs? If you look at the case study for San Francisco, currently, in 2025, there are 5.6 million square feet occupied by AI companies. That's moved up from 2.7 million in 2021. And if you look at the prospective job numbers, which is around 50,000 new jobs accretive, then that could lead to about 16 million square feet of new jobs of -- sorry, new requirements up to 2030. So that averages out at about 2.7 million square feet per annum through to 2030.

So we believe, if you look at what's going on in London, what we're seeing in San Francisco, we think that the prospects are positive rather than negative for us.

Not complacent, mind you. And we will always make sure that we are realistic when coming to market with spaces, but we've got some good interest in businesses in that line of work. Okay. Where else can we go? Yes, Neil, right at the back. We need a microphone, please.

Neil Green from JPMorgan. Just one question. Given the progress you've already made on disposals and the quite sizable pipeline of disposals that you're earmarking, how do you think about leverage and potentially even excess capital down the line should acquisition opportunities become harder to find, please?

Yes, good question. Thank you, Neil. So we have a long track record, as you know, of -- thanks, Rich, of returning when we have not been able to find a more productive use for the capital post sale. So you can see that from the pink circles in the middle there. And we gave back broadly GBP 600 million to shareholders, having raised GBP 300 million at the beginning of the cycle last time around. This time around, we've already raised the GBP 300 million, and let's see what happens.

But the same mantra applies. We will give back where it is excess to our needs, and we cannot make an attractive return for shareholders on it. Last time around, it was interesting, a number of shareholders said, "Well, why don't you hold on to it because you might be able to use it, and we don't really want it back." And we said, well, it's frankly, that's your problem, not ours. Our problem is whether we can use it accretively or not. And if we can't, you are going to get it back. And we did share buybacks, we did a capital restructuring and a capital return.

So we've done all variations of it. And we would do them again if we were not able to find enough accretive opportunities to reemploy that capital post sales. Scale is one reason I hear people arguing for not giving back capital. That is not relevant to us. Return on capital employed is the thing you should look at, and we will not simply hold capital for the sake of feeling a bit bigger if you can't use it productively.

So shareholders should know that we will give it back if it's excess. If we don't give it back, it's because we felt we've found a great series of opportunities to employ it for an accretive return. Yes, Max.

Max Nimmo at Deutsche Numis. Maybe just kind of follow-up question to Neil on that capital recycling point and talking about kind of liquidity at the larger end of the market. And if you can't sell some of those assets, are there other assets you can kind of pull in and out? And perhaps a theme that we're seeing a little bit at the moment is the sort of disposals below book value, which I think it hasn't really been a problem for you guys so far, but just some of your views on that as well?

Okay. If you wouldn't mind coming in, Dan, in a second on how you're seeing the landscape playing out from here. But first up, Max, again, good question. What I think -- the correlation I think you need to be clear about is between sales ability, getting that deal done and quality of asset, right?

And quality isn't just the way it looks, it's where it is, who's in it, what the rental position looks like, what its transport interchange, the hub near it looks like. The public realm immediately around it, dare I say even it's [ Feng Shui ], right? So this whole idea of the way that building sits and feels matters. Now we've just sold the largest single asset trade in the West End. So we have not encountered a problem with scale, and it was ahead of book value. So that tells you that our valuers are broadly getting right what the market is willing to pay for an asset as they should.

As we go from here, one thing that is very clear is that Hanover Square is in that list, stabilized assets to Aldermanbury, both buildings where we've essentially will have delivered our business plan. We've got some rent reviews to do, as you know, in Hanover before we consider that. And wells&more is currently in the market. So these are quite big assets, especially 2AS and Hanover.

So we'll be testing the outer envelope, I think, of scale when we get there, but we're not there at the minute. So the evolution of the market will be interesting to see. We will not be overly concerned about hitting book value, okay? We will be principally concerned about the forward IRR from the price on offer. And if we do not think that, that is sufficiently accretive to shareholders, the opportunity cost is much more powerful, we'll take the money.

But given the quality, and I said before, I think Hanover Square is one of the best buildings in Europe, therefore the world, and I mean that, it's an unbelievably good asset. And wells&more is out there testing the market at the minute and 2AS will be a 20-year lease to Clifford Chance. So off a rent which was struck in 2021, '22, there or thereabouts, so probably reversionary. So these are great quality assets, and I think they will do well. Dan, just in terms of market dynamic?

Thank you. So I think at the moment, the market dynamics are such that we've seen lot sizes start to go up. I think the Newman Street asset we sold a few weeks back, that was the biggest asset in the single asset deal in the West End through this part of the cycle and so for several years. So it really sets a marker. And I think the -- you're starting to see -- so not only lot sizes, you're starting to see new investors in the market as well.

So against that backdrop, the volumes are up too, I think it was 63%. On the top left there is the stat that we've quoted. So not only are you selling bigger assets, there's more institutions in the market who are typical buyers of the mature finished product that we've got stabilized product that we get at the end of our recycling process. So I think the landscape for sales is very good and definitely improving.

So Newman Street set a new benchmark, the likes of Hanover and 2AS, which again are a step-up in scale. And as the market evolves, those larger lot sizes, they will become digestible by the market. And if you look at -- Rich, I think it's Page 4, if you just look at our cyclical part of the chart that we always look, this is where we want to be buying, these pieces here, and that's why we've been conducting such an intensive acquisition strategy over the last 18 months, 5 done, 1 under offer, hopefully done by Christmas, no pressure Alexa.

So that's -- we are buying exactly the right time. And then also -- and we're selling those mature stabilized assets as that part of the market, and we talked about it 6 months ago and different parts of the market get hold at a different time. At the moment, those core assets are becoming attractive because those institutions are coming back in like the stabilized assets. The value-add part of that curve has been hot for a while. But obviously, we don't want to be selling into that. That's the product we want to be buying.

So have we been going into the market and buying value-add assets in competition with a bunch of other people? Not really. Most of the stuff that we've been doing has been off market. So if you look at the map of the acquisitions that we've done, 2 or 3 have come from the city of London, and those have been one-on-one interactions, not in processes. So we're seeing that our acquisitions are playing to the curve there. Our disposals are playing to that part of the market that's warming up and the general landscape is improving such that over the next 12 months, the larger assets such as 2AS and Hanover will become liquid at the right times.

Rich, can you just jump to Slide 6? Because one of the things you might be thinking is selling at that point on the curve isn't necessarily the right answer. The reason, there's a complicated bifurcation going on between the best and the rest, right? If you are slightly off pitch or there's something wrong with your building, you're going to struggle to sell it, which is the sort of stuff that Dan has described, we've been buying.

But if you look bottom right, the reason we're now willing to sell some of the buildings we are is because we have seen this bifurcation run riot through rents. And those prime rents have really grown. And it's that differential that is now allowing us to sell prime assets at really strong numbers that I don't think was the case even 12 months ago and that change is quite dramatic.

And it says institutions with a low cost of capital who are buying that and our forward look on those doesn't hit our cost of capital, but it's fine for those buyers.

Yes. Thank you, Dan. Thank you, Max. Any more for any more? We are just past the hour. Yes, we've got a couple of it here. Yes, Zach.

Zachary Gauge from UBS. A couple of questions related to returns and hopefully quite a straightforward one just on EPRA earnings. But firstly, you seem quite bullish on near-term yield compression. I'm just wondering how you reconcile that with the valuers moving out the yield on Aldermanbury Square by 15 basis points? And I'm sure you've seen the latest MSCI data for the London office market in West End turning negative in October and flat ERVs for the last 2 months in the West End.

And sort of following on from that, looking at your 10% plus ROE medium-term target, can you give any more color on when you expect that to be realized? And I think at the end of FY '25, you guided to more growth to come. It now sounds a little bit like this year is in line with last year as opposed to necessarily growing from there. And then the straightforward question was, is the tax credit you received included in the EPRA earnings number?

Fabulous question, Zach. I mean you say I sound a bit more bullish. You sound a bit more bearish, and we will get you to the right place at some point over the next few years. But putting that aside for a second, Nick, if you could deal with the second one and maybe the third and then Steve, you want to deal with.

So on the yield point, well, funny enough, the further they move the yields out, the more bullish we're going to get on compression, especially in an environment where yields are going to be -- and we know they're driven by interest rates and in an environment where interest rates are likely to come in. And I mean, I think the issue with that is scale. It's just -- it's a big building. It's going to be GBP 400-ish there or thereabouts, GBP 1 million, and that is a rare part of the market. So that's my challenge for the team when we come to selling that one.

But more broadly, we are bullish on prime product. I mean we -- for reasons Dan has just described, we think that really good assets in really good locations are gold. They are irreplaceable, by and large. And we're not talking about the peripheral Central London markets, we're talking about core 100% prime, which is where we're focused. And that's why, if anything, we've constant even more over the last 5 years than you would have seen us.

I'm not sure we'd buy Whitechapel again, put it that way, unless it was unbelievably cheap. It was quite cheap at the time. But I think as those peripheral markets get less relatively attractive to the prospective customer base, we get less interested from an acquisitions perspective on them. But if you are in the core, I've said it before, it's incredibly powerful. We think we'll sell very well because we're leasing very well. So that's the first point. On the second one...

[indiscernible]. I mean, we were clear that the aspiration around the 10% plus TAR was one for the medium term. We set out the breakdown of that in the appendices. We said at the beginning of this year that we expected this year's TAR to be in line or ahead of where we were last year. We've maintained that. I think it's fair to say it will be my successor who stands up here and talks about a 10% TAR rather than me. But I think that is something the -- looking at our own business plans, we look like we're set to deliver in FY '27 and '28.

In terms of the tax credit, yes, it is in EPRA earnings in accordance with the guidance. That being said, we are not anticipating it has a material impact on the overall numbers. We still stand by the guidance that we gave on EPRA earnings at the beginning of the year, irrespective of that credit. It's a one-off. We don't expect to repeat it. But in accordance with EPRA guidance, you include it.

Maybe just a follow up, if I can. I think everyone largely understands the prime versus secondary debate. But how much of your portfolio is prime versus secondary because presumably, you have a prime guidance and an ERV guidance, so it must be some form of blend of the 2?

Well, what -- in an ideal world -- at this point in the cycle, thinking contracyclically, in an ideal world, what you want is raw material that is in some way needing attention in prime locations, okay? That is to me the holy grail. And so what you can see in GPE is some -- if you can go to the capital stack, please, Rich. Some buildings in yellow, which are reaching the end of their GPE life because we've done things -- all of the things we can to them and their prospective numbers are not good enough for us, back to Dan's point about there will be some institutions out there with a lower cost of capital than us will be happier holders than us.

But the majority of your book, in other words, the blue and above needs to be prime location, buildings that you can improve. Then you have a business that's really interesting. If you're simply stuff full of all the yellows, right, and this idea that you just collect income-producing assets that are yellow, you are a proxy to market moves. You are nothing more than a beta story, right?

If you want to be an alpha story that's creating something of value, you go above the yellow and you focus on things that you can do things to, to generate rent growth, net area gain, higher-quality buildings in great locations. And that's the underlying, which is why we started this presentation with 100% prime Central London.

So if you look at -- I think you could probably argue that Whitechapel is the only building in our book, which would not qualify in the 100% prime Central London. That's the only one. The rest of them are, and the rest of them will be improved over time, and we will transmission, we'll basically capture growth in the blue section, turn it into a yellow tradable asset and out shall go. That's been our model for as long as I can remember. And it feels -- if you go back to the cycle one, please, Rich, it feels much more alive today than it did in that really difficult period post Brexit, all the way through COVID, where, frankly, markets we felt should have corrected and didn't because the monetary response was so aggressive.

And it took inflation, which was the consequence of -- and QE unwind for capital values to come off sufficient for us to get interested again. And so we're back into a really dynamic cycle, which feels like a good place to be.

On that note, I think I'm going to draw proceedings to a close. I think we've given plenty of time for Q&A. Thank you very much. Just to wrap up for me then, this story today is all about our excellent leasing, which is all about our excellent positioning and our financial strength looking forward with a lot to do over the second half, to your point, but a lot to do over the next few years, and I'm very excited about that as I hope you are.

Thank you all for coming.