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Hello, everyone, and thank you for joining the SEGRO Half Year 2026 Results Call. My name is Lucy, and I'll be coordinating your call today. [Operator Instructions]

It is now my pleasure to hand over to David Sleath, Chief Executive Officer, to begin. Please go ahead when you're ready.

Thank you, Lucy. Good morning, everybody, and thank you for joining us for today's presentation of our half year results. I'm, of course, joined by Susanne Schroeter, our Chief Financial Officer.

Now we spoke extensively over the last few weeks about the significant growth and value creation opportunities that we have within our business. And so in the context of the offer period we're now in and in light of the recent announcements, we'll be giving a shorter update today, focusing mainly on our business performance in 2026. We will also only be answering questions on these results today rather than anything to do with the potential offer from Prologis. So let's get into the presentation.

We've had a strong first half. The improving occupier market sentiment that we referred to in February and again in April has continued to build. That's fed some good leasing performance and a step-up in development activity. We've made important progress on our data center strategy, adding to our power bank, advancing planning and power infrastructure works and signing a further powered shell pre-let at Slough.

The great work of our asset management teams in capturing reversion, combined with tight cost control has enabled us to report a 5.3% increase in like-for-like net rental income and a 6.6% increase in adjusted earnings per share. The reduction in EPRA NTA reflects a small valuation decline in the U.K. portfolio as we reported with our trading update on the 8th of July. That aside, this is a strong financial performance, and we're well positioned for further growth in the future.

Let's now get into some more detail. And I'll start by covering the industrial and logistics portfolio. In the first half, we contracted GBP 53 million of new headline rent across the portfolio. That reflects a continuation of the improvement in demand that we reported in the second half of last year, both for existing and new space. The red part of the bars represent rents signed on the existing portfolio, which amounted to GBP 27 million. Development lettings, the pink part of the bar contributed GBP 26 million. We signed GBP 24 million of pre-lets during the period versus just GBP 3 million in the first half of 2025. Again, this shows a continuation of the improvement we witnessed in the second half of last year when we signed GBP 23 million worth of pre-lets.

Pre-let deals signed this period included a powered shell data center and transactions with post and parcel companies, third-party logistics operators, a fiber optic cable manufacturer and a number of food and beverage-related businesses, and you can see some of the names on the right-hand side. And in a few moments, I'll talk about the pipeline of future opportunities, which look very encouraging. Expert asset management always remains a key driver of performance for our existing portfolio with a particular focus on supporting our customers' needs whilst also seeking to increase rents and capture reversion.

During the period, we were able to secure GBP 11 million of additional rent through indexation, rent reviews and renewals, driven primarily by the U.K. portfolio, which saw a 44% average uplift. Rent review dates are weighted to the second half of the year, so we expect this number to materially increase for the full year. Occupancy decreased very slightly, but remains well within our target range. Within the period, we saw occupancy improvements in the U.K. following the leasing of a speculatively developed big box unit in Coventry.

And whilst U.K. vacancy remains elevated, particularly in some of the London submarkets, there has been a noticeable pickup in inquiry levels in recent months. With over 1/3 of the vacant space in the U.K. now under offer or in advanced negotiations, we expect to see good progress in the second half of the year.

On the continent, occupancy remains high at 96%. We completed a number of speculative development schemes, which are leasing well, but also have some expected takebacks, which explains the slightly lower than usual customer retention rate of 77%. However, again, the reletting rate looks promising with active negotiations in progress on much of this space. An active approach to asset management continues to translate into attractive like-for-like net rental income growth. This should continue -- which was -- sorry, which was 5.3% in the first half of 2026. This should continue as we have GBP 157 million of current opportunity embedded in the existing portfolio, comprising of GBP 101 million of mark-to-market rental potential and GBP 56 million of ERV from vacant space.

Turning to capital allocation. Our approach remains disciplined and is focused on driving performance through proactive asset recycling and redeploying funds into higher-returning opportunities, primarily in the form of development. Back in February 2026, we said that this year will be an active one for disposals as we increasingly look to self-fund our growth. And we've made great progress with that, having completed or exchanged on GBP 308 million of disposals so far this year. This included a portfolio of bespoke Amazon delivery stations in Italy, an older warehouse in Paris and several holdings in and around London, where we identified special purchases and we were able to crystallize gains over book value.

During the half, we bought GBP 37 million of land, including a very rare and attractively priced 45-acre site near Heathrow Airport in an off-market transaction. And we also secured some good plots in Italy and the Czech Republic for near-term development. We continue to allocate most of our capital to our very profitable development pipeline in which we invested GBP 176 million during the period. With over 750,000 square meters of space now under construction, development CapEx is increasing. Accordingly, we've narrowed our guidance for the full year to a range of GBP 500 million to GBP 550 million. And with a significant number of further pre-lets at various stages of negotiation, this bodes well for 2027 CapEx and development volumes.

We also announced a couple of weeks ago that we've agreed heads of terms on a U.K. big box joint venture to develop out and co-own our completed assets in Coventry, Northampton and Radllet. If this completes as expected in the second half of the year, it will see SEGRO contribute a GBP 1 billion seed portfolio of standing assets and land into the venture with future equity requirements being funded 50-50 with our partner.

On development, during the first half, we completed 116,000 (sic) [ 116,200 ] square meters of space, representing GBP 12 million of headline rent once fully leased. This consisted of mainly speculatively built urban schemes across Germany, Barcelona, Warsaw and a small scheme in West London. Leasing momentum on these spec schemes is excellent with 58% of the rent already secured at the period end and good interest in the remaining space. The average expected development yield of 6.5% reflects the weighting of projects to Germany, where yields on standing assets are also lower.

All the completions were or expected to be BREEAM Excellent or better, reinforcing the sustainability credentials of the portfolio. And looking ahead to the second half, the increased number of projects now under construction means we anticipate a significant step-up in completions over the balance of the year.

So let's bring you right up to date in terms of the ongoing and look forward development program. For the first time with this set of results, we're splitting out the data center opportunities from industrial and logistics. So this is just focused on the industrial and logistics part of the pipeline. And you can see our pipeline of current and near-term projects, which includes those where we've agreed terms but have not yet signed an agreement for lease. They add up to GBP 90 million of new rent, which is a record level. 75% of this rent is associated with pre-lets and the projects are expected to deliver an attractive 7.4% development yield on average. Beyond this, the future pipeline of land already owned by SEGRO represents GBP 223 million of potential rent, and we have options over land which provide GBP 128 million of further potential headline rent opportunity. Overall then, we have GBP 441 million of potential rent from industrial and logistics development.

So I'll now move on to data centers, where we've made further important progress. We provided extensive updated details on our data center strategy during our presentation on the 8th of July, and I'm not going to repeat it all today. However, to summarize, we have a significant opportunity to create value in this super attractive sector by virtue of our unique land holdings, our power reservations and our planning positions.

In aggregate, our power bank now stands at 3 GVA, one of the largest disclosed opportunities in Europe, with all of it focused on established and emerging availability zones. This includes half of GVA of existing operational capacity. We have 1.4 GVA of near to midterm development opportunities with an associated GBP 460 million of potential rent based on an assumption of 12 sites to be developed in joint ventures as fully fitted projects and 2 wholly owned power shells.

On top of this, there's a further 1.1 GVA of additional power, which we haven't included in these numbers as specific plans are still being developed or in some cases, they are longer-dated opportunities.

To briefly summarize the progress we made during the first half of 2026 and to summarize, in fact, the headlines from what we shared on the 8th of July, we signed a powered shell data center pre-let on the Slough Trading state with VIRTUS an existing customer. We've obtained planning approval for our first fully fitted project in West London and are engaging with hyperscalers interested in securing all of that capacity. We remain on track to sign a pre-let there by the end of this year or early 2027. And we've continued to advance and expand the power bank.

We've added 0.5 GVA of further reservations, and we've continued progressing infrastructure works in Slough in anticipation of the significant confirmed power allocation we have coming from the Uxbridge Moor Substation upgrade in 2029 and '30.

So now I'll hand over to Susanne, who will take you through the financial performance and summarize the growth opportunity ahead.

Thank you, David. We delivered a strong financial performance in the first half, driven by the operational performance David has just outlined and our disciplined approach to capital allocation. Adjusted profit before tax increased by 6.3% to GBP 268 million. Adjusted earnings per share increased by 6.6% to 19.3p. The dividend per share increased by 4.5% to 10.14p. This is due to the limit placed by the Prologis best and final offer and not indicative of our full year expectations.

EPRA NTA per share was 902p, down 2.5%, reflecting a modest valuation decline driven by yield expansion. This NTA is consistent with the 905p pro forma adjusted NAV we announced in our H1 2026 trading update after adjusting for profits, dividends and currency movements in the period. The LTV remained stable at 31%, comfortably within our target range.

Now turning to earnings. Adjusted profit after tax increased by 6.5% and adjusted earnings per share increased from 18.1p to 19.3p, an increase of 6.6%. The bridge on this slide shows the key drivers of that growth. The largest contributor was like-for-like net rental income growth, which added GBP 16 million and reflects a 5.3% growth across the portfolio. The U.K. delivered particularly strong growth at 6.6%, while Continental Europe delivered 3.3%. Completed developments contributed a further GBP 5 million and net investment activity added GBP 2 million. These benefits were partly offset by GBP 11 million of higher finance costs following the refinancing activities completed earlier this year and offset in part by GBP 2 billion of tax savings. We still expect around GBP 70 million of capitalized interest in 2026. Our total cost ratio improved to 17.4%, excluding share-based payments, reflecting cost discipline and improved operational leverage.

Overall, this was another period of good earnings growth driven by the quality of the portfolio and supported by active asset management and development completions.

Turning now to the portfolio valuation. At the 30th of June, the portfolio was valued at GBP 19 billion at share, a decline of 1.2%. This was mostly driven by the application of higher yields by the group's incoming U.K. valuer. On that basis, the portfolio's net true equivalent yield is 5.6%. U.K. values declined by roughly 10 -- sorry, 2% for the reasons I've just mentioned. In Continental Europe, values were broadly stable, increasing by 0.1% with development gains offsetting the impact of yield expansion. Encouragingly, ERV growth strengthened during the period to 1.8% across the group, including 2.3% in the U.K. and 1.1% in Continental Europe.

Our balance sheet remains strong and provides flexibility. LTV was at 31% with net debt-to-EBITDA at 8.3x. The average debt maturity was 6.3 years, and the average cost of debt was 2.8%. We ended the period with GBP 1.5 billion of cash and undrawn committed facilities. Our credit rating with stable outlook continues to support good access to a broad range of capital sources. We are, therefore, well positioned to fund future growth opportunities while maintaining a disciplined approach to leverage.

Looking ahead and bringing together the opportunities across our existing portfolio and development pipelines, we see over GBP 1 billion of additional income opportunity embedded within the business. Around GBP 224 million comes from our standing portfolio, including reversion, vacancy reduction and the expiry of rent-free periods. Our industrial and logistics development pipeline represents a further GBP 441 million of potential income. The 1.4 GVA allocated data center pipeline adds approximately GBP 464 million. These figures exclude the impact of future acquisitions and disposals. They also exclude future ERV growth, indexation, selective redevelopment opportunities, and the additional 1.1 GVA of power capacity within the wider data center pipeline.

Taken together, this provides a substantial opportunity to continue growing earnings and dividends over the coming years.

And with this, I will now hand it back to David.

Thank you, Susanne, and thank you all for listening. So to conclude, the first half has seen a strong financial performance with momentum building in our industrial and logistics occupier markets. We're making further encouraging progress with our data center strategy, and we're well placed to deliver further attractive growth in the months and years ahead. So we'll now move to your questions. And as I noted at the start, we're only going to be answering questions about our half year results that we presented. For anything related to the potential offer from Prologis, feel free to reach out to the Investor Relations team separately.

So Lucy, would you please open the line for questions?

[Operator Instructions] The first question today comes from Frederic Renard of Kepler Chevreux.

Okay. Lucy, we can't hear Fred. So maybe go for the next one.

Of course. The next question comes from Suraj Goyal of Green Street.

Just one quick question. Well, given the positive interactions you are experiencing in real time, I know you touched on it a little earlier, but do you expect the occupancy number to increase in the second half? And then on the customer retention ratio, it's significantly lower than last year, and you mentioned that there's sort of higher takebacks during the period. Are you able to share some color on why? Are there maybe some affordability concerns for occupiers?

Sure. Yes, Suraj. Thanks for your question. Occupancy in the second half, yes, we do expect it to improve. We've got, as I said during the presentation, quite a lot of, I'd say, more than just active interest, strong interest in quite a few of the vacant assets in London. And the takebacks that I referred to, which fed into the lower retention rate. I mean, it's just -- it does ebb and flow a bit, it doesn't always stay at that kind of high 80s or 90s level. 77% is fine. We have some space that came back principally in Continental Europe in Poland, for example, and in the Netherlands. And actually, we're not too worried about that because it gives us a chance to reset the rents, capture reversion quicker than we might otherwise have done.

And I think I'm right in saying that all of the space that came back in the first half or a substantial part of it is either already leased or in pretty advanced discussions. So feeling pretty good, as I said, consistent with what we said earlier around the overall occupier markets. It's clearly very demonstrably there in the pre-lets that we've been signing over the last 12 months. And it's also coming through in terms of the vacant space is also looking like they're moving pretty well now.

The next question comes from John Vuong of Kempen.

Just trying to understand the occupier activity a bit better. Are you seeing any difference in demand for, say, different sizes of assets, so say, smaller units versus mid-boxes versus big boxes?

I'd say probably as a general statement, the bigger logistics units are more in demand right now. There's been -- I think a lot of that demand has been held back over the last few years, and that's really been coming back strongly from a variety of retailers, food and beverage and general retailers, third-party logistics operators, either working for or on behalf of consumer goods companies.

There's been, I would say, a resurgence of demand from companies just looking to upgrade best-in-class, more modern, sustainable logistics supply chains, more efficiency. That's a general theme. Plus we've seen quite a lot of e-commerce activity, not just from the established players but also from some of the Asian operators who -- there are several of them, and they're all looking to take space in Europe right now. So that's affected actually big boxes, but also some of the small last mile facilities.

But generally, in terms of the leasing activity that's been done, it's been -- on the pre-lets, it's been more of the larger units in logistics. But what I've mentioned on the call is -- we're also now seeing a lot of great interest in some of the London spaces. And on that theme, Germany is where we've delivered a number of spec schemes, urban schemes in the last few months. And again, they've been leasing up really well. So I wouldn't say the numbers are skewed by some of the big pre-lets on logistics, but I would say, generally across the board, we're seeing pretty good demand in most sizes of units.

Okay. That's clear. And based on your conversations with these occupiers, what has driven them to really start making decisions now?

I mean I think it will always be occupier specific, but a number of them will have had plans that they've perhaps put on hold during the last 2 or 3 years of macro and geopolitical uncertainty, and they've kind of just felt they need to get on. But there are many and varied reasons why people will be taking decisions right now, but there's definitely a sense that decision-making has been delayed and demand has been pent-up for a while and all of the structural drivers that we often talk about, they're still there. They've just been a bit more muted by some of the geopolitical and macro headwinds over the last few years, but they're still there, and they look like they're beginning to reassert themselves.

The next question comes from Tom Musson of Berenberg.

Just a question on Ofgem's proposed connection fees to access the grid that was in the U.K. press yesterday. Was that new news to you? I'm just interested in any early thoughts on how that might affect how you think about the economics of your data center pipeline? And I guess, is there a reason we might expect similar proposals in Continental Europe?

Well, I don't know about the rest of Europe, but what's happened in the U.K. is the -- is Ofgem has announced a consultation, which if it follows through as the headlines would say you have to pay a lot of money down upfront if you want to make a grid reservation but you get that credited back to you once you energize your scheme. So what is aimed at doing, I understand, is to try and sift out the, let's say, the more speculative applications for someone who's got a bit of land and hopes they can build a data center, slaps an application in for some power and then clogs up the system for everybody else. It's not really targeted at people like us who are serious established data center operators with a strong track record.

So I think it's, overall, Tom, whilst the details have to be worked through, and we don't know quite how it's going to play, always the devil is in the detail. I think overall, it's probably good news for people like us because it will cut away some of the more speculative opportunities and some of our longer-dated sites where we'll be waiting for more grid connections to be established in places like, [ there's more ] for example, if some of those speculative applications are withdrawn because they haven't got the money or they don't -- they're not willing to put the capital down. I think that could be good news for us in terms of accelerating some of our opportunities.

The next question comes from Frederic Renard of Kepler Chevreux.

Can you hear me now? .

Yes, Fred, we can.

Perfect. Yes, I wanted to touch base on the reversion. I see it's slightly increasing GBP 101 million versus GBP 99 million at the end of Q4. I was just wondering because I guess some part of the reversion was captured in H1. Is it just ERV growth? Or is there something else? That's the first question. And then second question, I saw an article yesterday in a French newspaper mentioning a data center in Bourget for which the permit was not granted or was initially granted and now has been pulled back by the new mayor. Anything to add there versus what you communicated a few weeks back?

Sure. Sure, Fred. Thanks for your questions. On the reversion one, yes, I mean, it's basically -- I think the amount of reversionary potential has gone from GBP 99 million to GBP 101 million. You saw that we captured GBP 11 million of uplift. So the rest will essentially be ERV growth. That would be the main movement that's happened in the period. So that's that. On Le Bourget, Le Bourget is one of the opportunities in our data center pipeline in Paris. The situation there is we received a valid building permit. We then had a change of mayor, the recent elections. The mayor is not in favor of data center development at the moment, and he withdrew the building permit. We challenged that, but the court did not accept our initial challenge. But this has got a long way to run. I mean I think what it means is, it proves just how scarce and valuable these rare sites are but it does mean you have to be patient.

And frankly, working through these difficult planning processes is what our team on the ground is particularly good at. So it doesn't change our level of confidence in terms of our ability to bring that through, but it may mean it takes a bit longer to deliver than we had originally hoped for.

Okay. That's clear. Just to come back on the first one, you mentioned that you keep your GBP 11 million. So the rest was ERV growth, but ERV was like 2%. So is it maybe some part of the portfolio which was under reviewed or just the data center increase?

I don't know, Fred. I mean we'll have to dig into detail to work that out. Maybe Claire can help with that.

I'm pretty sure it's all ERV growth because we haven't made any acquisitions, but I'll come back to you.

The next question comes from Marios Pastou of Bernstein.

Just 2 questions from my side. A couple of follow-ups actually. Firstly, just back on those Ofgem proposals. Of course, we need more detail and it's only consultation at this stage. But can I just ask a very basic question over whether that would relate to your existing secured power or whether this would relate to new connections that would be applied for down the line beyond your existing kind of powered land bank as we see it today?

My understanding is that it's only for new applications, not for existing established capacity because the concept of you pay a deposit basically, you pay a refundable deposit upon the application, but you get it back when you energize the scheme. So all of ours are energized, obviously, the existing ones.

Okay. Very clear. And then just turning back to your London-based assets and the leasing discussions you're having there. How are the discussions trending on things like rent levels and incentives? Are they kind of in line with your expectations? Or are tenants coming back with a higher cost base and pushing maybe for some greater incentives to come and take that space again?

Yes, it's fair to say, I mean, we talk about London, London breaks down into various submarkets. We've got -- our biggest concentration is in Heathrow and Park Royal. Heathrow is super strong. There's very little space available. You saw that we've secured a land acquisition there, which we're really excited about because it's so hard to get land around Heathrow and there's very little space that can be developed there. Park Royal is also pretty strong right now and quite a number of good things happening. Where the vacancy in London is where we have a chunk and the market has more vacancy are in the smaller submarkets in places like South London, Croydon; East London, Dagenham, Barking Dagenham; and to the extent, North London, Enfield. There has been more supply there. They're smaller markets, so take-up is -- it takes a while to come through.

And it has been quite slow for a couple of years. But it is, as I said on the call earlier, it is starting to pick up. And it is a bit more competitive. So incentives and rental levels are under a bit more pressure. I don't think they're going down. but they're probably not going to be the ones that are pushing overall headline rents forward. I think the rental performance is probably going to continue to be driven in the near term by what's happening in Heathrow and Park Royal and West London generally rather than some of those other markets.

The next question comes from Paul May of Barclays.

Just a couple on the reversion potential moving forward. Just

[Audio Gap]

super reversion in the portfolio, especially in the U.K., just looking at lease event schedule and uplift does drop off quite materially through the next few years. And then just similarly on that same table, I just wonder if the ERV is headline or net effective?

And then a final one, just on the SELP JV and actually, you could argue including the new U.K. JV, are there any change of control issues or factors that PSP may be able to exercise on in the event of the Prologis situation?

Two questions in there. I think the first one, Paul, is around the -- what happened to the reversionary potential in the coming years. You are right that there is quite a concentration of opportunity which happens this year and a fair bit next year. There's plenty to go at. Now the way the -- this is based upon the dates of rent reviews. So the reality of getting all of it in the year in which it falls is quite -- is limited. So we'll get a good -- we expect to get a very good chunk of it this year. Some will spill over into next year and some the year after. So I think for the next couple of years, we are well set for some very good reversion capture, and that will drive like-for-like rental growth. After that, it's going to depend more on the amount of ERV growth that we're able to drive in the marketplace, which continues to be pretty solid. It's kind of within our target range. So yes, I'm fairly comfortable with that.

Your question around what do we disclose as what is ERV. ERV is -- it does vary a little bit by market, and I think values have different approaches in different geographies. But by and large, it represents the net effect. It should take account of the incentives that you're giving. Although it may vary in some of the smaller markets, it may be a little less clear that, that is the case. But by and large, someone like the U.K., for example, with both the portfolios, it's going to be pretty close to the net effective rather than the headline rent.

And then Susanne, on the SELP question.

Sure. On your second question, Paul, so there was no change of control in SELP that would be triggered by a potential offer from Prologis. I think on the U.K. big box joint venture, as you know, we've only announced heads of terms. So I think that's a separate question. But you could assume that in general, as for SELP with any large JVs, we would not include a change of control provisions given we are a publicly listed company.

Perfect. Sorry, just one last one. When should we be concerned at all by the customer retention declining, for example, the occupancy falling? Is there anything we should be concerned about? Or is it just a timing issue, certain big deals that fell through that sort of thing, I'm wondering it should improve from here?

Yes. I think I covered that earlier. I think it is just timing issues, a couple of takebacks in -- particularly in Continental Europe and the delivery of quite a number of speculative development schemes. I mean the development -- the spec developments are leasing really well, but it's very unusual to have them fully leased before you get to practical completion. That's the nature of that type of urban spec scheme. So those 2 factors have caused both a bit of a pickup in Continental European vacancy, but also the takeback why the retention rate dropped.

But they're really just -- they're just timing factors. We're super confident about the progress that we're making, the leasing of those spec schemes, the re-leasing of the units that have come back to us. And as I said earlier on the call, the leasing progress and the activity in London also giving us cause for confidence that vacancy rates are coming down.

We have no further questions on the phone lines or webcast at this point. So I'd like to hand back to you, David, for closing comments.

Well, Claire is going to just -- any questions on the -- nothing on the webcast right. Okay. Very good. So thank you very much to everybody for listening. I know it's a busy day and a busy time of year for you all. So thanks for joining us, and have a great summer when you get there.

Well, good morning, everybody, and thank you for joining us at such short notice. I'm joined here today by a number of my executive colleagues, but particularly by Susanne Schroeter, our CFO; and Andrew Pilsworth, who's our Managing Director in charge of Data Centers. Plus also, we have our Chair, Andy Harrison, with us in the front row. We are really pleased to be here today to be able to share with you our conviction in SEGRO's strategy and its ability to deliver significant long-term value for shareholders.

This is a company that we've built purposefully over many years. It's evolved repeatedly over its 100-year history, and we'll continue to do so. Simply put, it's not a static real estate portfolio. It's a scarce platform with a great strategy and a clear execution path to create significantly more value from here.

On a personal level, I've been leading SEGRO now for 15 years, and I've never been more excited about the prospects and the opportunities ahead. So there are a few important messages that I hope you'll take away with you from today's presentation. The first is that SEGRO has an irreplicable portfolio concentrated in Europe's most supply-constrained urban and logistics markets. These positions have taken decades to build, and it would be exceptionally difficult to recreate what we have.

Our operating platform is already driving strong performance from this portfolio with sector-leading like-for-like rental growth, but there is much more than that. Within our industrial and logistics land bank, the embedded value is substantial. It's based on sites we already own in some of the tightest and most sought-after corridors in Europe with development momentum now building rapidly.

In data centers, we have a differentiated platform for sustained shareholder value growth. Built on a portfolio that combines power, planning and land positions that are exceptionally hard to assemble. And we have this rare opportunity precisely as the European data center market is poised for significant growth.

So together, we'll show you today how SEGRO can deliver value well above our current NAV and today's share price. We have the operating platform, the power and the capital resources to deliver this plan. So let's start by discussing some of the special features of our business. Our portfolio has been meticulously constructed in the most attractive locations where land is scarce and relationships really matter.

Almost 2/3 of it is in Europe's major cities. We also have a super prime portfolio of larger logistics assets and more than 30 data centers in Slough, built by SEGRO, which is already one of the largest data center clusters in Europe. And we have a unique operating platform with deep local expertise, strong relationships and a proven track record of value creation that has and will continue, in my opinion, to deliver outperformance in the years ahead.

We deliberately overweight urban assets in the largest, most densely populated and congested cities, particularly in London and Paris. These markets are underpinned by population and GDP growth that has outstripped the broader economies of their respective countries. And this drives diverse and dynamic demand.

Meanwhile, supply is heavily constrained by a lack of available land, planning restrictions and competing uses. These assets support superior rental growth and outperformance in total property returns as illustrated for London in the chart at the bottom right-hand side. It's taken many years to build the significant positions, we have in Park Royal, Heathrow, Slough in Paris as well as in other European cities such as Dusseldorf, Berlin and Warsaw.

Our big box portfolio is focused on prime logistics hubs and major transportation corridors, complementing our urban exposure. These are unique strategic sites helping to transform European distribution networks. We've built this position through a development-led strategy. And again, it would be very difficult for anybody to replicate this portfolio from scratch.

Our powered shell data center portfolio is also very rare. Many of you know that our Slough trading estate is one of London's most important data center locations with 0.5 GVA of operational capacity led to some of the world's leading colocation providers. Apart from its proximity to London and an abundance of power and a dense fiber network, the Slough trading estate benefits from a unique simplified planning zone, the only one of its kind in the U.K. with development rights currently secured until 2035 and renewable beyond that date.

Alongside the assets, our unique platform is also a source of differentiation. SEGRO has decades of experience developing and managing industrial assets with deep local knowledge and a partnership approach to stakeholder relationships. Our customer-focused approach ensures we consistently score high levels of customer satisfaction. And this, combined with a hands-on approach to asset management has enabled us to deliver strong like-for-like rental growth and significant new income from our profitable development programme over the course of the last decade.

Our local in-market relationships and expertise enable us to find new opportunities to create value, manage our way through challenging planning regimes and deliver large-scale complex projects. Just allow me for a minute to bring it alive with a few brief examples. So at Hayes, near Heathrow, we sourced land off market, worked with the local authority to agree a mixed-use development plan. We sold part of the plot for residential use, which enabled us to recover virtually all of our original purchase cost and then develop the remaining part as a successful urban industrial scheme. In Park Royal, our relationships and understanding of the local planning environment allowed us to secure planning committee approval in just 210 days at a time when others are waiting years to unlock data center planning opportunities in London. And our scheme at Interporto Bologna, our relationships enabled us to secure an option over the land, obtain a building permit, agree a pre-let and only then complete the purchase of the land. And then finally, Parc des Petits Carreaux also shows the value of patients and long-term relationships.

We purchased this asset through the acquisition of Sofibus, a French listed company, which we originally acquired only a small stake. Today, it's a great industrial estate, which also contains one of our near-term data center development opportunities. So I've mentioned the importance of local relationships. And the quotes on this page, I think, make an important point. Value creation in urban markets is about much more than buildings.

It depends on long-term partnerships with communities, local authorities and other stakeholders. Our unique platform built up over a long period of time is a source of real competitive advantage for SEGRO.

But let's now turn to look at the substantial embedded value that we have within our business and which is not reflected in our adjusted NAV.

And I'll start with our industrial and logistics development pipeline. We have an exceptional land bank for industrial and logistics development. We have land on the balance sheet spanning almost all of our existing markets and which offers GBP 282 million of future income based on today's rents.

That's equivalent to almost 40% of our current rent roll. We also have GBP 147 million of potential rent from land options, which give us access to further growth opportunities in a capital-light manner. Industrial and logistics development remains very profitable for SEGRO with an average expected yield on cost above 7%, meaning that there is significant value upside embedded within our land and optioned land positions.

Now after a couple of quieter years following the COVID boom and the subsequent disruption caused by war in Ukraine, occupational momentum is now clearly improving. We saw this in the second half of 2025 in Continental Europe with the U.K. showing signs of following suit earlier this year.

Those tentative green shoots are now turning into reality. In the U.K. Big box market, for example, DTRE have reported that first half take-up this year reached 16.8 million square feet, the strongest period since the pandemic. In our own case, the work we've been doing over recent years to prepare our sites for development is beginning to bear a lot of fruit. As at the 30th of June, we had a record amount of rent associated with developments under construction or in advanced pre-let negotiations, even higher than during the COVID peaks.

In the last month alone, we've agreed terms on 4 large pre-lets equating to GBP 25 million of headline rent with a number of further projects under active negotiation. Whilst there's no guarantee all of those will convert into signed deals, I would go as far as to say that right now, demand feels as strong as in any period that I can remember in my 21 years with SEGRO.

So taken together, the industrial and logistics projects planned on our existing land bank and on the land options already in place represent almost GBP 430 million of potential additional income. We expect to start construction on projects representing more than GBP 150 million of potential rent within the next 2 years.

CBRE have calculated the undiscounted value of this pipeline using today's rents and costs to be GBP 1.6 billion.

This is not theoretical value. These are real sites in great locations with planning or zoning in place with demand improving and where our teams are equipped and able to deliver. And that's only the opportunity we controlled as at the 31st of December 2025. There is more to come as we replenish the pipeline, add new land, accelerate development if demand supports it and capture further rental growth.

Next, we're going to look at the data center opportunity, which I know you're all waiting for with bated breath. And before I hand over to Andrew Pilsworth, there are a few key messages I'd like to share with you. Demand in key availability zones is expected to be strong, driven primarily by cloud and inference AI uses. Land with proximity to availability zones with power and planning are key to meeting that demand.

These are in scarce supply, and SEGRO is exceptionally well positioned across all 3 factors. We have a growing 3 GVA power bank, which has increased by half a GVA since we last reported, including 1.4 GVA of near and midterm opportunity, giving us strong visibility on future value creation.

Through the use of capital-efficient joint ventures such as announced today for our second project with Pure DC, the cash contributions we will need to make to deliver that pipeline over the coming years are expected to be only GBP 1 billion in aggregate, which is eminently fundable from our own resources and it's expected to be very profitable.

Based upon our assumptions, this midterm pipeline offers us the potential for GBP 2.5 billion of valuation upside and GBP 460 million of additional income. Now as you'll hear from Andrew, we have a further 1.1 GVA of reserved power in some very attractive markets, which has not yet been modeled or valued by CBRE. So let me hand over to Andrew, who will take you through the rest of the details on data centers.

Thank you, David. Firstly, to provide some context, European data center demand is growing very rapidly, driven by the continued shift to cloud and the emergence of AI inference workloads.

Much of that demand is focused on established and emerging availability zones where proximity to major cities, fiber routes and existing data center clusters really matters.

And that plays directly to SEGRO's strength because our powered land bank sits in exactly those markets. By contrast, latency insensitive AI facilities for training and some lower-value inference workloads can be located in secondary and tertiary locations where land and power are less constrained. We are focused on core availability zones because they have the most enduring value.

The 3 key factors in deciding whether a site can become a successful data center location for cloud and inference AI demand are proximity, power and planning. Proximity means being close to major population and business centers and fiber infrastructure. Power is increasingly scarce across Europe and is by far the biggest constraint on new supply. And finally, planning is critical because data centers are large, complex assets and local authority and community engagement matters.

SEGRO has local teams on the ground with deep knowledge of their local markets, the planning regimes and strong stakeholder relationships. And this, combined with our centralized data center and energy expertise means we are very well placed to unlock data center opportunities in these fast-growing but complex data center markets.

Our JV model allows us to execute this strategy in a capital-light resource manner. Our partnership with Pure data centers is an example of our ability to harness the strengths of our chosen partners. And through that relationship, we have been able to benefit from a platform of more than 250 employees with a deep expertise of designing, leasing, financing and delivering fully fitted data centers.

We have expertly built a powered land bank with over 3 GVA of power capacity across key European markets, which gives us substantial embedded growth well beyond today's earnings base. This is an increase of 0.5 GVA since we last reported our power bank back in February. And 0.3 GVA is available to lease today with a further 1.1 GVA available by 2033, creating a visible near to midterm value creation opportunity.

A substantial proportion of that near-term opportunity is in Slough, where we have land, committed power and planning in place through the simplified planning zone. And that matters because hyperscalers value certainty and speed to market, and we can offer both. Beyond that, we have a further 1.1 GVA of additional power, and that is either longer dated or it's still being worked through our development plans.

This slide shows quite clearly that the power positions that I've just highlighted are not hypothetical. They are allocated to specific projects in very attractive data center markets. We intend to deliver the majority of the sites in 2 phases as fully fitted facilities, and we have a clearly identified time line as to when power will be available for each site.

There are 3 more projects in high-quality FLAP-D locations in the third bucket. And that is only part of the opportunity. We have a further 1.1 GVA of power, again, across FLAP-D markets and emerging availability zones, which we are yet to allocate against specific land. And just as a reminder, we intend to pre-let all of our data center projects and we'll be targeting long-term triple net leases with major hyperscalers where we do so.

We have heard clearly that you want more detail on the data center opportunity and how and when we expect to create value from it. So today, we are providing that detail.

Over the next 7 years, based on our assumptions around planning, power and customer demand, we plan to unlock 14 sites through development.

And these could deliver around GBP 460 million of additional rent and almost 700 megawatts of IT capacity. We expect to deliver the majority of the planned sites via fully fitted data centers, mainly in existing FLAP-D markets and selected fast-growing locations. And we intend to do these through joint ventures, which allows us to benefit from our partners' technical development and hyperscale leasing expertise.

It also allows us to share the capital commitment and risk. We know that our pipeline is extremely attractive to high-quality partners, and we are already progressing the first two projects through our joint venture partners with Pure data centers, one in West London and as announced today, a second one in Paris, which will be our first data center on the continent.

CBRE's view of the undiscounted value upside from our entire DC pipeline is GBP 2.5 billion. That GBP 2.5 billion value creation upside is before the additional 1.1 GVA of power that is not yet included either due to its long-term nature or as specific development plans are not yet finalized. As I hope is now clear, the sequencing and the pace of our data center pipeline is dependent on power, planning and leasing and not capital.

It's also important to highlight when we can start to unlock that value. With a fully fitted data center, the income comes through at practical completion and the first phase can take 2 to 3 years to complete. But the value creation starts much earlier. Value starts to be created as soon as you secure power and planning and just under half our data center land bank is held at industrial values, providing substantial upside.

Signing the pre-let crystallizes a significant proportion, around half of the total development profit. So whilst these are long-term assets, there is a very real near-term value creation opportunity as we move projects through the development process.

Our JV structure is highly profitable and has the potential to generate a very attractive return on capital. It also materially reduces SEGRO's cash equity requirement, which means that we can fund the pipeline through our normal capital recycling program supported by selected powered land sales. This is an illustrative example of exactly how our JV model does that. So say the total development cost is GBP 860 million, including the powered land that SEGRO has contributed into the venture.

And assuming a 70% loan to cost, debt funding is around GBP 600 million and total equity is around GBP 260 million. Our partner contributes half of that equity. SEGRO contributes the powered land at fair market value, plus in this example, around GBP 60 million of cash. And that is the reason the structure is so attractive.

It allows us to crystallize the value of our land and power, access specialist delivery expertise and generate a strong return and substantial value creation from the cash we invest. And with that, I will hand over to Susanne to talk about what this means for earnings growth and the balance sheet.

Many thanks, Andrew. And I would like to start with a very clear message. SEGRO is in a position of strength.

We are not capital constrained. We can deliver our strategy without raising equity, and we are doing it while maintaining balance sheet discipline. Before we dive into the capital plan, let's look at why we are so confident about the road ahead.

We have published a trading update this morning and occupier markets are strong despite the conflict in the Middle East. We are seeing strong lettings activity across our portfolio. We are making good progress in capturing the GBP 33 million of reversion available in 2026. Our current and near-term development pipeline stands at GBP 90 million, which is the highest level ever, giving us tremendous visibility of future growth.

On the back of this, we have now narrowed our CapEx guidance to the top end of the range provided earlier this year. Our updated CapEx guidance for 2026 is GBP 500 million to GBP 550 million. The recent increase in development activity will also have a positive impact on our 2027 CapEx numbers.

I would like to highlight that we are self-funding this growth through an active capital recycling program while crystallizing profit. Year-to-date, we have GBP 308 million of disposals completed or exchanged above book value.

We also remain very focused on controlling our cost base. Our EPRA cost ratio, excluding share-based compensation at half year is below 18%, down from 19.8% at year-end 2025.

Our pro forma adjusted NAV per share amounts to 905p, reflecting movements in asset values between the 31st of December and the 30th of June. It is not our reviewed 30 June NTA as it does not yet reflect our half year profit, dividends and other adjustments like FX movements.

These, when combined, are not expected to be material. Our updated reviewed NTA per share will be published with our half year results at the end of the month. The small decrease in asset valuations was driven by our U.K. portfolio as our new U.K. valuer, Cushman & Wakefield have taken a slightly different view on certain yields in some of our urban assets.

Now let me talk about how we fund our growth and what it means for earnings. SEGRO has 3 powerful funding levers, which we can access at the moment, a strong balance sheet, capital recycling and third-party partnerships. We have a strong investment-grade balance sheet that provides us with optionality.

The secondary trading spreads of our bonds are the tightest among our industrial and logistics peers in Europe. We have access to the euro and sterling bond and loan markets at competitive rates. Over the past 5 years, we have raised in total GBP 10 billion in euros and sterling. And our ratios give us headroom. We have already refinanced all 2026 maturities, and we expect net debt and LTV to fall by the end of the year, aided by disposals and the new big box joint venture.

Turning to capital recycling. Since the beginning of 2021, we have recycled about GBP 2.2 billion, returning a 10% gain on disposal and shifting capital from lower return mature assets into higher-yielding development. Every asset undergoes a rigorous annual review to guide that process. We have guided to disposing at the upper end of 1% to 2% of gross asset value in 2026, and we have already completed or exchanged GBP 308 million year-to-date.

Finally, we have established third-party capital relationships that allow us to share capital intensity and to reinvest proceeds into attractive opportunities like our data center pipeline. We have successfully partnered with PSP on our European Big Box joint venture SELP and with Pure on 2 fully fitted data center joint ventures.

Last week, we have also announced our new U.K. Big Box joint venture. The new joint venture signals strong confidence of international capital in the U.K. logistics market and in SEGRO's portfolio in particular.

The joint venture is a fantastic example of how we increase investment capacity efficiently. It's a GBP 1 billion structure seeded with three of our outstanding sites, Radlett, Northampton and Coventry. These sites include 701 million square meters -- 701,000 square meters of developable logistics space and 220,000 square meters of standing assets across the U.K.'s most strategic distribution corridor.

This JV allows us to deepen our investment capacity and showcases the strength of our development and asset management platform. It reduces our land drag by bringing in partner capital and project level financing to fund future development. It will also increase our fee income because SEGRO will act as manager of the joint venture, providing development, asset and property management together with financial, administrative and advisory services.

The key takeaway, executing our strategy does not come at the expense of balance sheet discipline despite higher CapEx. Assuming the industrial and logistics as well as the DC pipelines progress as outlined by David and Andrew, and we execute our new U.K. Big Box joint venture, we remain well inside our LTV and net debt-to-EBITDA targets, which support our BBB+ rating by Fitch.

The look-through LTV improves in the medium term before returning to the current level in the low 30s by 2035, even after full pipeline build-out. Our net debt-to-EBITDA will strengthen over the same period. These numbers do not assume any disposals of completed data centers, which would give us further room to maneuver.

David and Andrew have spoken about the value creation from our strategy. Let us now focus on the income opportunity. There is more than GBP 1 billion of income upside on top of the GBP 755 million of current rent passing. We can create GBP 220 million of additional income from our existing portfolio, driven by rent-free roll-off, vacancy leasing and reversion.

The industrial and logistics development pipeline is expected to contribute up to GBP 429 million from near-term, long-term and options land and data centers. Our strategy assumes a GBP 460 million base case with significant further upside from a growing pipeline. The 3 buckets do not yet reflect the upside from further ERV growth and selective acquisitions. And here is what this means for earnings. Earnings per share will grow in the coming years from 36.6p at the end of 2025 to 50p by 2030.

This growth will be supported by like-for-like rental growth, development completions, cost efficiencies and growing fee income. We expect data centers to become a true growth driver moving from 7% of rental income in 2025 to circa 15% in 2030 and to above 30% by 2035. This creates significant structural growth beyond 2030. And to wrap up, we are not capital constrained.

Our EPS will grow in the coming years, and our data center strategy provides an additional layer of medium- and long-term earnings momentum. This is a credible, deliverable growth story grounded in financial strength and operational excellence. And with that, I will hand it back to David.

Thanks very much, Susanne, and indeed, Andrew. Let's now turn to the final section of today's presentation and why it is that we believe the Prologis proposal is opportunistic, one-sided and inadequate.

Firstly, it's opportunistic. It's been timed to take advantage of a period of share price weakness since the start of the Middle East conflict despite SEGRO having started the year strongly, outperforming Prologis up to the start of the conflict. Between the 27th of February and the 23rd of June this year, however, SEGRO's share price declined by 12%, whilst Prologis's has increased by 2%.

These relative performances are pretty much in line with what happened to the broader European and U.S. REIT sectors, respectively. And their approach comes just as momentum is improving across our markets and just before some of the most significant value in our pipeline is expected to come through.

As we've already mentioned today, pre-leasing activity within our industrial and logistics platform is very strong right now. And the proposed U.K. logistics venture that we announced last week is a clear vote of confidence in the outlook.

We're also now moving from potential opportunities in data centers to execution. Secondly, the Prologis proposal is one-sided. I'm not surprised that they're interested in our business. SEGRO has unique qualities, including a very high urban weighting, whilst Prologis is more focused on larger logistics assets.

SEGRO also has, we believe, a much greater relative opportunity in data centers. When measured against market value, SEGRO's 3 GVA of data center opportunity represents around 5x the relative exposure of Prologis' disclosed 5.6 GVA power bank. That matters because we believe the European data center market is entering a period of exceptional growth, whilst, as we've said, sites with the 3 Ps of proximity, power and planning remain scarce.

Under the Prologis proposal, shareholders would be exchanging their 100% ownership of our business with all the qualities and the embedded upside that we've outlined today, diluting it to a materially lower share of a much larger and different business with different asset weightings and one that is that has a much smaller relative data center opportunity.

So I can see why the Prologis is attractive why the proposal is attractive to Prologis, but it's one-sided transfers value away from our shareholders. And then finally, I'm going to explain why the Prologis proposal falls a long way short of our views on value. There are 4 main components to this. The first is our NAV.

The next is the value upside we expect to accrue from our exceptional industrial and logistics and data center pipelines. And finally, there are a series of additional components of value, which are not reflected in our NAV and which should be paid to our shareholders by any acquirer.

So let me explain. We start with our adjusted pro forma NAV of 905p. This reflects, amongst other things, the value of the undeveloped industrial land that we own today. However, it does not reflect the additional value upside that will accrue to our shareholders from developing this land into completed industrial and logistics assets. That's the second block you see here. We showed you earlier that CBRE have valued this upside at GBP 1.6 billion, which discounted to today represents 103p.

Next, we have the GBP 2.5 billion of value that CBRE have attributed to our near to midterm data center pipeline associated with the 1.4 GVA of allocated power, and that equates to a further 139p of discounted value. The further 1.1 GVA of power in respect of which we are still finalizing detailed development plans has not yet been modeled nor valued in CBRE's numbers. However, it is valuable reserve power and represents a significant additional opportunity embedded within our business today.

On top of this, there are meaningful other components of value that any acquirer should pay for, which together equate to over 160p of value. The appendix sets out details, but just to highlight a couple, the cluster premium reflects our strength in locations such as Slough, Heathrow and Park Royal, where we have an ability to exercise greater control by virtue of our market position. Then there are certain costs and taxes that any acquirer of individual assets would incur in assembling this portfolio through individual asset purchases, which a buyer of the shares would avoid.

Our shareholders should be paid for this. Beyond these blocks of value, we should note this is not a static business. The opportunity set continues to grow with our market position, local expertise and relationships, constantly creating new accretive opportunities. And lastly, I don't need to speculate on the significant synergies that Prologis envisages, but it is value that should be shared with our shareholders.

So to summarize and conclude, SEGRO is a unique business. We have an irreplicable portfolio built over decades and a unique operating platform that continues to deliver value. We have a compelling value creation opportunity in both industrial and logistics and data centers at a time when occupational momentum is building and Europe's data center market is set for exceptional growth. And importantly, we have the capabilities and the balance sheet to unlock that value ourselves. And our team is excited to deliver that opportunity for our shareholders.

So thank you very much for listening, everybody. We're going to move to questions, and I'm going to invite Susanne and Andrew to come and join me at the front. Just whilst they're coming up, please, everybody remember that since we are in an offer period, we're heavily restricted by the takeover code in terms of what we are able to say beyond what is already documented in our public statements. But with that, who'd like to go first?

It's Marios Pastou here from Bernstein. Just a few questions from my side, maybe kicking off with the data center strategy. It feels like this is another partial shift really in the strategy here, moving more towards a fully fitted approach and moving away from your -- should we call it, the bread and butter powered shell approach? Excuse me. What has prompted this and the timing of it now? And in some ways, is there enough tenant demand out there, especially across your Slough platform to take hold of this fully fitted approach?

I'll let Andrew just answer the detailed question in a second, but I think it's a really great question. I would actually say we're not announcing anything new today. We're giving more detail of the plan that we already had established several months ago.

If you look back at what we've been saying about data centers over the last couple of years, it's been an evolving strategy. We made it very clear more than a year ago about moving into fully fitted space, and that's built further momentum. So, the plan isn't new.

I'd say momentum has been building and so has our level of disclosure. We've heard loud and clear, as Andrew said, from investors, particularly over the last 6 months that investors would like more detail on what our plans are.

We were planning on sharing a number of those details, some at the half year results and some in the Capital Markets Day later this year. The only thing that's changed is because of the approach from Prologis, we've accelerated the disclosure. But the plan, which was evolving and has evolved over a couple of years, hasn't really changed.

It's just we're giving you more detail about it now. But in terms of the specific -- what gives us confidence to actually deliver this fully fitted strategy, and you asked specifically about Slough. I mean, Andrew, maybe you should talk about that.

Yes. Thank you. No, absolutely. I mean, first of all, I'll refer you to -- in terms of demand, I have never been more confident in terms of the weight of demand.

I mean it is true to say it is concentrated not exclusively, but largely with the hyperscalers. But if we just look at -- take Park Royal as an example, I'll come to Slough in a minute. But if you take Park Royal as an example, we've announced today that we are -- there's a small pool of hyperscalers, but we are in active discussions with 2 of them, which is obviously a fantastic position to be in and a real bit of evidence of the strength of demand.

And in Slough also, we have numerous discussions ongoing with regard to Slough, which is an absolutely fantastic location for data centers. We have the planning already in place through the simplified planning zone, and we've got a very strong power position.

That comes through -- the power on date for that is late '29, 2030. But with the lead time to deliver data centers of 3 years, that means we will be in a window very, very shortly, back end of this year, start of next year to start having active discussions in Slough. And I have absolutely no doubt from the conversations that I have with DC operators and hyperscalers that there's really strong demand in Slough for fully fitted DCs.

Just a bit of a follow-up. I think the plan also now assumes that there's going to be no disposals of these fully fitted data centers or at least with the assumptions anyway. And I think originally, the plan was to crystallize those development profits once it was delivered. Is that also a bit of a shift? Do you now see yourselves as being a longer-term holder of these types of schemes?

It's completely -- that one's -- sorry, were you're going to go, Susanne. Sorry, that's completely consistent with our wider strategy is we develop, we will develop where it's the right thing to do and crystallize value. And then as part of our wider strategy, we'll assess the portfolio as to whether we hold on to those assets for the income or recycle them out of the portfolio, and that will be no different with our fully fitted data centers. Is there anything you want to add to that?

I mean we think we're going to have tremendous optionality. I think the point that we were trying to illustrate today is we've got the capacity to fund a number of these, but we have made it very clear in previous discussions that we would expect to recycle.

We're not going to put huge amounts of capital in without greater evidence and proof of where liquidity and where pricing is. But the point about the presentation today is we're not reliant on that in order to be able to deliver this plan.

Okay. One more, if I may, just on the upside potential across the logistics pipeline aside from data centers. I see you've also included the option land and you've also not factored in then the potential JV, which could come or has been announced last week, which should come in the second half.

How secured is that option land in terms of the likes of planning and whether you're able to actually unlock that upside potential? And as a side note, how much of that could then be given away potentially in a joint venture because there's probably an element of double counting kind of unlocking of joint venture to allow you to then invest in the data center side of things.

Yes, there'll be -- I mean, there will be some of that option land upside that could go into a JV in the future. I mean the JV at the moment is on the existing land bank relates to land that was already on the balance sheet. It's interesting.

When you talk about options, Radlett is a great example. Radlett is a site that we've been working on for 15 years, the most complex and difficult planning process we've ever been involved in, I would say. But the fact that we had it under option and only came to exercise the option once the planning had been secured means that we're able to tie up large opportunities in the future without overcommitting our capital. And that's the nature of a number of the other sites that are in the optioned land.

Some of them are in the U.K., some of them are on the continent. They're usually situations where we've either got an option or a conditional purchase and the condition nearly always is around getting planning. So that's how those work. But our history and our track record is that these things eventually come through into land on balance sheet and then they get developed.

In terms of the impact of the JV, which hasn't yet been closed, of course, we've only announced we've agreed heads of terms on the numbers. They're not modeled, but I don't know whether you want to say anything about that, Susanne?

Yes. So the numbers are tied back to the CBRE valuation report, which is based on 2025 with the adjustment for the June valuation. The impact of the joint venture on those values is not material. So we've obviously done scenario calculations there. It doesn't have a material impact on the numbers of the CBRE valuation bridge.

But it will have some impact on the rental upside, which we haven't disclosed, but people can probably make their own estimates based upon the information we have shared.

Thank you.

Tom?

It's Tom Musson at Berenberg. I think as recently as your H1 results presentation last year, you pointed to data centers to be developed at between an 8% and 12% yield on cost. Today, in your illustrative fully fitted DC example, you're using a 9% yield on cost, so just below the midpoint of that previous range. Can you just give a bit of color on why 9% is now the right number? And what's changed perhaps to bring that down slightly at the midpoint?

So yes, that wide range that we previously guided to, a big factor in that, particularly with powered shells given the level of land component is whether the land is held at value or industrial values. So the 9% we have given is a really good pivot in the market, and it is a cost-plus market for fully fitted data center. So 9% is a really good point estimate for a sensible yield on cost for a fully fitted data center, assuming a market value of land.

Okay. And then just a question again on the NPV calculations of the future value creation in the logistics and data center pipelines. What discount rate is being used in those calculations? And do they differ between the logistics and the data center pieces?

It's an 8% real cost of equity discount rate that has been used and is the same for both the logistics and the data center pipeline.

And on the data center pipeline, over how many years are you discounting back?

Well, the pipeline of the 2.5 GVA that CBRE have put in their report, we've set that out in one of the slides. You can see the different buckets, but they are across projects. They're 1.4 GVA, and they are projects that are contracted up to and including 2033. So 7 years worth of contracted rent. Obviously, with data centers, some of the income comes through a little bit later than that with the lead time.

[indiscernible] On the data center detail. So you have different planning status there ongoing or in progress. If you can just specify what that means, please? You have also in the sale -- you're talking about sale for some assets available to lease by 2028.

So if you can highlight when you envisage these sales and what would be exactly the model here? Third question would be, you talked about MVAs on all this slide. What should we assume the key to megawatt IT? Is that a fixed key? Or is that something that is evolving from a PUE perspective? let's stop there and...

Yeah, I was jumping in there. That feels like enough. If I -- and I might need you to just remind me of those. Let me answer the last one first. So the ratio of MVA to megawatt IT. I mean, you're right. You're answering the question that varies site by site.

So you typically see somewhere around 1.2 to 1.4 for a PUE. The factor by which you reduce that is typical, but that really does depend site by site how many megawatt IT you've got planning for and also various technical factors around how much power is lost between the incoming and utilized in the building. So it will vary.

So should we use 1.3?

Well, you can also see, if you look at one of the other slides in the deck, if you look at the -- you get a bit of a clue, although some of these are sold. So if you look at Slide 21, you'll see some of the sites there. We've got 1.4 GVA, and you'll see that the -- there's a lower, you can see the megawatt IT that we're using on the 14 leased sites. So exclude the powered land sales, you can see the 14 leased sites.

So yes, it will vary site by site is the answer. Sorry, can you just repeat the other 2.

Planning status?

So planning status, what's the difference between ongoing and in progress? So ongoing -- that's a bit of a subtle one. Ongoing is a little bit more advanced. So that means we have an active dialogue, whereas in progress, we'd be in the early stages, the earlier stages of making that application.

The third one was you have available to lease by 2028, you have a sales model, which is effectively a third model. How are you envisaging that to work more precisely?

Well, in terms of -- so they are sites -- so these are initial assumptions. We have put some for sale. They are generally -- so it's part of making sure we balance off capital recycling. But really, those sites generally that we provisionally assumed we will sell tend to be in slightly less strong markets.

So they're still great sites, but slightly less strong than those where we are planning to develop. And it will be the same process in terms of the trigger for timing. So when we have a firm power and planning position, we will be ready to contract on all of our sites, whether that is developing them, mainly as fully fitted or offering them for sale.

And Jonathan, that's been yeah that's consistent. That hasn't changed. I mean what we're saying is in super prime locations like London and Slough and probably Paris, we're happy to put a lot of capital in because as Andrew referenced in his presentation, super strong locations, very scarce land, scarce power.

In some of the more emerging markets, the working assumption at the moment and what's been modeled is we just sell some of these land positions to others. But frankly, the market is changing so fast. So I suspect in 12 months' time, if and when we share with you an update on this, the market will have moved and we will have changed some of our plans on these. So it's adaptable, but it's all about putting our capital into the most resilient, strongest markets and getting the best return on that capital.

But you would -- essentially, you would sell the land before pre-letting it. So you try to get permit, power, sell.

Yeah and we did -- we had an example of that a couple of years ago. We sold a great site to a hyperscaler in Milan. We bought the site for something like EUR 8 million, sold it for over EUR 100 million. At the time, it was the right thing to do, having secured planning and power. So it will vary by site according to where we think the supply-demand position is.

I had a last one, sorry, it's very quick. So on the power, you have some power on now and then some is 2028 or 2029 for the year available to lease now and thereafter.

When can you realistically be in a position to have a discussion and then to potentially sign an agreement with a hyperscaler versus when that power is actually technically granted versus power on?

Yes, that's a really nice, easy one. The answer is in terms of actually contracting, obviously, you can start discussions a little bit earlier than that. In terms of contracting, it's 2 to 3 years. Because you can have a really mean and you also need to have planning to have a really meaningful discussion as well. That's the other caveat.

But when you are within 2 to 3 years, because that's the typical time frame to deliver the shell and the fit out, you can have a really meaningful discussion and contract provided you've got planning and you've got a firm power on date, you can do that 2 to 3 years beforehand because then you only need to have the energization and the power on at the point that you deliver the first phase, the fully fitted and that is about 2 to 3 years from when you put a spade in the ground.

And who takes the risks on the delivery of the power because it's contracted, but then it needs to physically arrive to the site. Are you taking the risk on that?

Yes. That is typically a commitment that the developer will make. So you need to be -- that's why power is so crucial to all of this. So you need to be very and clear on the delivery of that power. And that's one of the reasons we mentioned that now we have a dedicated in-house energy team with really experienced experts who know about this -- who know about the power business.

I thought we might get a few questions about data centers. Any more Anybody else?

Suraj Goyal from Green Street. So hopefully, this will be a quick one. But you communicated the potential to develop a fully fitted DC in Paris today with Pure DC. But as we know, planning can be extremely difficult in Paris. So how do you think about this risk to the time line for eventual income generation of this fully fitted DC? And I know -- I think you briefly touched on it, but would you target a yield on cost that's in line with Park Royal?

Yes, I'll take those 2. So planning and yield on cost. In terms of planning, it is challenging in some markets. David mentioned in his script, in London, that was exceptionally -- I wouldn't say a smooth ride. We put an awful lot of time and expertise into that, but that process went very well.

Planning in Paris is the more challenging markets. But I'd say 2 things on that. Firstly, that is the advantage of having our teams on the ground. So we've got a very experienced team on the ground in France. They're French. They understand the local planning requirements. They know the local stakeholders, and they may not be experts in data centers, but they are very expert in working through the matrix structure in bringing powered land through that process.

So I actually see that as a competitive advantage. And if you look in the market, Paris is quite a supply-constrained market anyway. Planning is challenging, but it will be very challenging for all of our competitors and competing supply as well. And that really links very neatly into the second part of your question that yes, I said the whole market, 9% is a very sensible target for yield on cost in high-quality supply-constrained markets, and Paris certainly fits that bill.

I think -- I mean the only thing I'd say about the plan, I already kind of -- just to add to Andrew's comment alluded to it earlier, these timings move around all the time.

There are some sites that will take longer to come through. Others, I think we'll get through faster.

So we've given you a guide. But clearly, I think some of the specific timings will move around. So we just have to adapt to that.

But the one thing that really comes through very clearly, and Andrew has made the point already is that we've got great sites. We think we've got the ability to bring them through the planning process. And we're absolutely sure that there are very few sites coming in these markets that can have those characteristics and get the planning and the power when it's needed.

So we feel really good about the opportunity set we've got.

Thank you.

Okay. Claire, we got some -- we go to the conference line or Yes, can we go to the conference line, please?

Our first question today is from Frederic Renard from Kepler Cheuvreux.

Just 3 questions on my end, if I may. The first question would be on the discount rate. You mentioned 8%. I just wanted to touch base on that. It seems pretty low for different matters in terms of execution risk, like you assume, I guess, that the demand will remain very strong and also the demand for data center will remain strong.

I just want to see a bit if you made some sensitivity analysis on this discount rate. That would be the first question. Then on the question on the difference between the GVA and the megawatt IT. Just you announced this morning that you had an additional 0.5 GVA in your power bank. But actually, it's a bit a different communication than what we had in the full year presentation.

I mean, if you use a factor of 1.3, actually, the total GVA would be lower than what you announced in 2025. So I just want to to be sure that I fully understand that. And then a third element and the last question. And one of the key part of Prologis was to say that the succession of David was not very clear at this stage. And I'm not so sure that the presentation is giving some clear answer to that. So I would also like to have your opinion on that.

Thanks a lot for the questions. Let me start with the discount rate question. So first of all, 8% is the real cost of equity. So it doesn't include any inflation.

I think you can take your own example or assumptions on what it would be in nominal terms. So I think that's number one to be aware of. And that is really because the numbers that CBRE is using to calculate the value also assume today's cost and also don't include any assumptions on inflation, rising rental income, et cetera.

Secondly, on that point, CBRE has also given in their report the undiscounted value of EUR 2.5 billion that we have cited in the presentation. So if you would like to use a different rate yourself, I think you can also proceed with that and use whichever rate you think is more appropriate.

Shall I take the GVA. So I think the question was we reported 2.5 gigawatts total power bank at our year-end results. And now we're GVA, has it actually gone down because of the PUE factor?

No is the answer. They are directly comparable. So the 2.5 that we reported at year-end and the 3 GVA are exactly the same metric. We are using a slightly different terminology to try and be clearer that where we are talking about our total power bank to the question earlier, that is total incoming power. And therefore, we will use MVA and GVA for that. When we are talking about specific sites that we are developing, such as in the illustrative example that we put in the slides, we will use megawatt IT. But to be really clear, we tried to use slightly clearer terminology, but we are not changing the basis that 2.5 gigawatts we reported at year-end, if we reported that now, it would be 2.5 GVA, and that has genuinely grown by half a GVA to 3 GVA now.

Very good. And I think, Fred, you were asking about succession. So let me take that one head on. As far as I'm concerned, I mean, I serve at the pleasure of the Board, and it's a Board issue ultimately. But as far as I'm concerned, I mean, I think this business is in a great position.

I think we've got a great opportunity set. And I think as it came through in the presentation earlier, I've never been more excited about what's in front of us. Personally, I'm very fortunate that I'm in good shape. I'm healthy. I've got tons of energy. I've got a great team around me. I think virtually all of the executive team has been put in place in the last 3 or 4 years.

So it is a question for the Board at some point. But right now, I'm enjoying what I'm doing and fully committed.

And don't get me wrong. I'm happy that you're here.

Any more questions?

Our next question is from Paul May from Barclays.

I've got 3 questions, if I may. First one, why do you think SEGRO should trade on more than 2.9% or less than 2.9% earnings yield or 3.8% by FY '30.

The 6.5% EPS CAGR you highlight is not materially different to other U.K. REITs likes of British Land and Landsec and so on, yet they trade significantly cheaper valuations.

So I just wondered what your basis of valuation is for your business. Second one, did you consider kind of a revamped thought process? And I appreciate you said today, this isn't new stuff.

It's just more information -- and you should thank Prologis for sort of highlighting the value in your business and the new found cheaper cost of equity that they've given you? And could you use that to fund an expansion and acquisitions moving forward, as I say, doing a step change in terms of your thought process? Probably those first two and then there's a specific one that we can ask afterwards.

I mean maybe I'll make a couple of comments and then Susanne can jump in. I think the first thing to say is what I mentioned earlier is this isn't new.

What we've been sharing today, we've got an update in terms of some of the trading updates and the metrics and the new data center announcement and the fact that we've announced we're adding half a GVA to the pipeline of opportunity. That's all new.

But we are always planning on sharing this information with shareholders. The purpose of today really was to share that and to share the road map we have, the path we think we have to deliver the intrinsic value that is within this business. We're not going to try and speculate or guess what the share price should be at any one particular date because that's for other people to do.

But what we wanted to highlight is that there's a lot of value in this business that is not reflected in either the share price or in the spot NAV. And I think that's what we've tried to do today.

What was the second part of the question or was that it? I think that's probably it, Paul. unless you want to.

Well, the second part was just saying you've -- Prologis has obviously increased the value of your shares through the bid that's made your -- should we say cost of equity on an immediate basis lower. And have you thought about using that and going on an acquisition spree of your own to grow the business and to drive value to shareholders?

It was wrapped up in my -- if you like, in my first answer, which is we've laid out a plan. We don't think we need equity to deliver this plan. We're focused on delivering the growth in front of us, using the resources we've got.

We've been saying consistently for several months, our plan is to self-fund the growth opportunities. And I hope today, people have realized that we've got the capacity and ability to do exactly that.

So no, we're not changing our plan just because the share price has had a bump as a result of the approach from Prologis.

Okay. And sorry, just on the first one, you mentioned you don't think that you're not saying -- you said you're not saying what the value of the business is, but isn't that exactly what you're saying in the statement?

No, what I said I'm not going to -- sorry to interrupt. What I'm saying is we're not going to speculate on where the share price should be at any point in time. What we are sharing with the market today is more insight as to the embedded value that's within this business, which is not yet reflected in NAV or in the share price.

Perfect. And sorry, just a specific one on the -- you mentioned, I think, rent-free periods burning off in your 50 in the paragraph around the 50p of earnings, but my understanding is the rent freeze are sort of straightlined already through that. So that wouldn't necessarily be a benefit. And I just wondered what is the capitalized interest you're assuming for that 50p of earnings in FY '30?

Well let's take this question offline and discuss it separately.

Our next question is from Oli Woodall from kolytics. Your line is now open. Please go ahead.

Just a follow-up on the discounted value upside. Just curious on what your view is on whether this value or at least part of the value should be captured in the NAV now rather than when the lease is signed or practical completion in order to provide investors in the market with a more accurate view of the present value in your portfolio?

Oli, If I get the question right. I mean sorry good morning. I should have said, first of all. I mean the valuation, that's not what a valuation of Red book valuation does. It recalls the estimated market value of assets today.

So in the case of land, undeveloped land, it has the book value of and the market value of undeveloped land. What we're highlighting today is the future upside that if we deliver the plans that we've laid out, it will accrete to us and accrete to our shareholders.

But I don't think that's what we would expect in a normal Red book valuation, any valuer to put into their numbers.

Yes. That's fair. And then a quick second one, if I may just your embedded upside of argument rests on this being unique to stand-alone SEGRO, but presumably, a larger entity would be able to keep the teams and relationships that SEGRO curated to also capture this upside. So just what am I missing there?

Well, I think that may or may not be the case, and I'm not going to try and comment on that. What we did say was that there's a lot of upside embedded within SEGRO. And based upon the approach and the share ratio exchange ratio being discussed, that disproportionately transfers what is today 100% interest in that upside that our shareholders hold today to being a much smaller percentage of an enlarged business.

So it's a question of dilution of that upside and exposure to it. And by the way, just reflecting on your previous question, just to add a bit of another point actually that maybe I should have made.

On the valuation, so it doesn't change what I said about the Red book valuation. But Andrew did lay out that chart in his presentation that indicated that quite -- there is quite a chunk of value. You don't have to wait until it's income-producing cash flowing until we would expect to get that value reflected in the Red book valuation.

So in particular, the point of getting both planning and power certainty and then subsequently getting a hyperscale lease, we believe, translates into quite a significant uplift in value at that point.

Sorry to interrupt, David. If you refer Oli to Page 22 on the presentation, you'll see exactly to that point, something like on that indicative chart there, we've got something like 65% of the total value creation. is actually realized at the point of securing the lease.

Thank you, Oli. We will now move on to questions on the webcast.

[indiscernible] question on the rental. The GBP 460 million in data center rent roll, is this at SEGRO share?

Yes.

Yes, it is. Sorry. Yes, it is.

And then another one on earnings. So the 50p adjusted EPS target is underpinned by a substantial income bridge. Could you confirm whether the target accounts for the increase in net finance costs associated with the cash deployed across this pipeline?

Not sure.

Within the 50p.

The finance -- The 50p based on our midterm plan, which includes all assumptions regarding financing costs.

Perfect. And then another question on financing. Can you address Prologis' argument around funding constraints? How much liquidity can you deploy? For example, how many fully fitted data centers could you do at once before there are any funding constraints or covenants?

I think we've said clearly in the presentation that we are confident that we can build out the strategy as outlined today with the existing balance sheet so that we have the capacity to build out the pipeline, both on the DC as well as the industrial and logistics side without the need for funding.

And just to add to that, we are -- the pace at which we are developing that out is dependent on all the factors I laid out on the sides. We've not managed the pace of that based on funding constraints.

And then on data centers, what's the current spread between industrial land values that the data center pipeline is currently valued on and the valuation of a completed DC? Or I suppose how much of the land is currently valued as industrial versus powered?

So something like around -- it's just under 50% is industrial values. And then that spread will really vary market by market.

Yes, there's quite a variety of different sites. So -- and we haven't disclosed that detail. Therefore, we can't really give that specific number that I think somebody might there be hunting for.

But as Andrew said, about half of our data center planned land is valued as data center land and the other half is not. So there will be a sizable uplift on those not fully valued sites when they get planning and power and ultimately a pre-lease.

Perfect. And I think everything else we've already covered. All right.

Okay. Well, I appreciate we've bombed everybody's morning. Thank you for those of you that turned up in person and for those online. Really appreciate you giving us your attention. Have a great day, and we'll look forward to speaking to you soon.

Okay. Good morning, everybody. And great to see so many people here on a Friday in half term week. So whether you are here in the room with us or joining us online, we're absolutely delighted to have you with us as we present SEGRO's 2025 full year results.

I'm joined here by a number of my executive colleagues, and I'd particularly like to welcome Susanne Schroeter, who is presenting her first set of results after joining us only in December.

Before getting into the detail, what I'd like to do is share some key messages with you, set the scene as it were and explain why we are confident about the future. And I should just mention, our presentation is going to run a little bit longer than normal today because there's a lot we want to talk about, particularly to give more color on our data center strategy and set out the -- what we think is a really exceptional opportunity for this part of our business.

So 2025 actually turned out to be a very strong year for SEGRO, both operationally and in financial terms as well despite the rather challenging macro. We signed a record GBP 99 million of new headline rent, including GBP 33 million of development signings. Within our existing portfolio, we delivered GBP 37 million of reversion uplifts from lease renewals and rent reviews, which itself was a key driver of our 6% growth in like-for-like net rental income. All of this translated into a 6% increase in adjusted earnings per share and a 2% growth in adjusted NAV per share. So a strong set of financial outcomes.

But what pleased me most about 2025 was the improving occupier sentiment and a pickup in deal activity in the second half of the year as the structural drivers underpinning demand for our assets began to reassert themselves. That momentum has continued into 2026. Inquiry levels right now are strong. Occupiers are starting to progress their investment plans, and we have an active pipeline of discussions both on existing space and for new pre-lets.

We know that deals can take a long time to convert from active interest into actual signed deals. And no one quite knows how 2026 will turn out in terms of geopolitics. But we're really pleased and very well positioned right now, and it feels much more encouraging here today than it has at any time for at least the last 2 years.

Those results added to our long-term track record of delivering compounding annual growth driven by disciplined capital allocation, operational excellence and an efficient capital structure. Since 2016, we've delivered an average 8% growth in earnings, dividends and net asset values despite the more challenging environment of the last couple of years. And we anticipate that improving market fundamentals and the exceptional opportunities in front of us will enable us to move back towards those longer-term averages.

Onside our financial and operational achievements in 2025, we progressed our responsible SEGRO strategy. We continue to champion low-carbon growth, reducing our carbon intensity significantly and have refreshed our net zero targets, which have been approved by the science-based targets initiative. We added to our community investment plan framework. We achieved record levels of volunteering by our employees, customers and stakeholders, and we delivered 54 community projects.

We also continued investing in our people to further strengthen our market-leading operating platform through our nurturing talent strategy. These initiatives are a really important part of how we sustain high performance across the business and ensure that we continue building for the future.

So let's now get into some detail. We'll start with our strong financial performance presented by Susanne. Then we'll talk about the strong operating performance behind these results. James Craddock and Marco Simonetti will address the U.K. and the Continental European markets, respectively, after which I'll bring it all together to give you a group overview.

And then we'll finish by looking at the future opportunity for SEGRO, which I'll address in 2 parts. Firstly, the multiple levers we have to drive growth within our industrial and logistics business. And then secondly, the compelling opportunity that we have within our exceptional data center pipeline.

So now I'm delighted to hand over to Susanne.

Thank you, David, and good morning also from my side. I had a fantastic start to SEGRO so far. The team has been extremely welcoming and supportive. And I've also already had the chance to visit a number of the offices and assets across London, Midlands, Germany, Netherlands and France. And I must say what I've seen so far has really impressed me both in terms of the quality of the assets and the strength of the team. So I'm very excited about the opportunities ahead and as I continue to get to know the business better.

About 2025. While I can't take credit for the excellent performance the team has delivered in 2025, I'm very happy to talk you through the key numbers. 2025 was defined by strong operational execution across the portfolio. We also continued with our balance sheet discipline, and we saw improving momentum in our key markets. This was reflected in the key financial metrics. Adjusted earnings per share increased by 6.1%, and this was driven by higher net rental income and continued cost discipline.

We have chosen to pay a full year dividend of 31.1p, which also represents a 6.1% increase year-on-year. Portfolio valuation grew by 1% on a like-for-like basis, and this was the first year that both the U.K. and Continental Europe have been positive since the start of 2022. Adjusted NAV per share increased by 2%, and that reflects the like-for-like valuation uplift and additions we made to the portfolio throughout the year. Our balance sheet remains strong. Loan-to-value ended the year at 31% and net debt-to-EBITDA reduced from 8.6 to 8.4x over the course of the year.

Let us now turn to the income statement. Net rental income grew by 8.6%. I will tell you more about this on the next slide. Net interest costs were stable year-on-year. Lower gross interest was offset by lower capitalized interest. And the reduction in gross interest came from lower interest rates, particularly Euribor, which offset the higher net debt figure. Our EPRA cost ratio improved slightly in 2025, and this was also helped by a EUR 3 million reduction in administrative expenses. Operational efficiency will remain a focus going forward.

Adjusted profit before tax increased by 8.3%. And to summarize, this performance demonstrates the resilience of our operating model and the quality of our portfolio.

Let's now look at net rental income in more detail. We delivered EUR 47 million of net rental income growth, and that was driven by 4 factors: number one, the 6% like-for-like rental growth, which was strong both in the U.K. and Continental Europe. The U.K. performance was driven by capture of reversion at the 5 yearly rent reviews and Continental Europe benefited from increased occupancy and asset management initiatives. Number two, development completions. These contributed EUR 31 million last year.

Number three, acquisitions and disposals. The impact of those 2 was neutral due to the sales we did in 2025 and the full year effect of the 2024 disposals. Number four, the other items, these include mainly takebacks for redevelopment, surrender premiums and also some FX impact. We expect like-for-like rental growth to remain strong as we continue to capture reversion to lease vacant space and that we continue our active asset management.

As I said before, 2025 was the first year since the pandemic where both the U.K. and Continental Europe saw positive valuation movements and the total portfolio value increased by 1% on a like-for-like basis. Yields were broadly stable during that period. ERV growth for the group was 2.3%. It was stronger in the U.K. at 3.1%, driven by a standout performance from our West London portfolio, which delivered 4.7% growth. In Continental Europe, it was 1% overall. Spain and Germany outperformed and delivered the strongest growth at 3.2% and 2.4%, respectively.

The portfolio now stands at EUR 19 billion at share, including our development assets and land holdings. The equivalent yield is 5.5%. Our balance sheet remains strong. The LTV is at 31%, which is a level that we are currently comfortable with. Net debt-to-EBITDA stands at 8.4x, down from 8.6x last year, and that reflects higher EBITDA and disciplined capital management. We continue to benefit from a diverse and long-term debt structure. Our average maturity is 6 years.

We have undrawn RCFs and term loans of circa EUR 1.9 billion and ongoing access to attractive financing through the euro and sterling bond markets, also the private placement and bank markets. Our EUR 650 million bond maturity in March will be refinanced through an undrawn term loan that we have signed in the second half of 2025 and the residual amount will be drawn from our RCF. This robust financing position gives us the flexibility to invest through the cycle and capture future opportunities.

Now let us talk about capital allocation. Our capital allocation framework remains clear, disciplined and aligned to long-term shareholder value. Development on existing land remains our most accretive use of capital. It yields 7% to 8% on total costs and 10% or more based on additional capital required. We expect 2026 development CapEx to be in the EUR 450 million to EUR 550 million range. And the final number will depend on the level of new projects we start in the next few months.

Our CapEx guidance includes about EUR 150 million of infrastructure investment to support the long-term growth from our logistics parks in the U.K. and for power upgrades for our data center pipeline. We will remain very selective on acquisitions. We focus only on the most compelling opportunities in core markets that provide wider portfolio benefits and attractive returns. We do consider additional distributions to shareholders such as share buybacks, but only when we believe that we have material surplus capital and the lack of compelling development and acquisition opportunities.

This is currently not the case, especially given the momentum building in our development pipeline. We continue to take an active approach to capital recycling, and we have an annual planning process to identify assets where we have optimized returns. With the current cost of capital, we continue to be very disciplined when it comes to capital deployment for new investments, but also for the assets that we retain.

We, therefore, expect disposals this year to be at or above the upper end of our longer-term run rate of 1% to 2% of our portfolio. These disposals will generate proceeds that we can invest into opportunities with higher risk-adjusted returns. In addition to disposals, we are regularly considering options to fund our growth pipeline. We also have a successful track record of working with partners to share capital intensity, for example, within our SELP joint venture and now also with Pure on our first fully fitted data center joint venture. This capital allocation framework work continues to support both the near-term delivery and our long-term returns.

To summarize this section, in 2025, we delivered a strong 6% like-for-like rental growth, contributing to 6% earnings and dividend growth. We have a strong balance sheet and a clear disciplined capital allocation strategy aligned to long-term shareholder value creation.

Let's now turn to the operational performance of the business, and I'm delighted to hand it over to James, who will start with the U.K.

Thank you, Susanne, and good morning, everyone. So let me start by talking about the broader U.K. market. So 2025 was the strongest year for logistics take-up since the pandemic. There was about 33 million square feet of logistics occupational activity. Pre-let activity did remain low, however, and take-up was driven more by immediate needs of customers rather than the more strategically planned decision-making.

On the supply side, we've seen things stabilize, and there are encouraging signs of positive net absorption in some markets, which is resulting in vacancy nudging down, and we've seen this in our own portfolio, both in the urban and in the big box markets.

In terms of overall logistics supply in the U.K., it's important to note that about 2/3 of the supply is of second-hand or poorer quality stock. So this continues to favor owners of prime, modern, well-located portfolios like our own. New speculative development starts have fallen materially. They're running at roughly half the long-term averages, and 3PLs are reporting low levels of gray space within their portfolio, both of which are supportive factors as we look ahead.

That said, the market is far from uniform. There were areas of real strength and other areas that remained weaker in 2025. If we turn now to our own portfolio, pre-let levels were low, but we were able to sign a fantastic deal for development on our food campus at SEGRO SmartParc in Derby. We also leased 1 of our 2 speculatively developed sheds at SEGRO Park Coventry, which helped to improve our U.K. occupancy by 50 basis points to 93.1%. We've also been doing some selective speculative development, which included the development -- redevelopment on the Slough Trading Estate, which has been leasing well.

For me, however, the highlight of the year was the standout asset management performance and standing stock leasings with the teams completing on over 250 individual transactions across leasing, rent reviews and lease renewals. Our key urban markets, especially the highly established Heathrow and Park Royal, which together make up 40% of our U.K. portfolio continue to perform well. This is driven by good demand and the depth of our customer relationships.

Transactions have included setting new headline rents to customer segments, including food and beverage, 3PL and pharmaceuticals in these submarkets. This activity demonstrates the continued attraction of prime urban markets for occupiers who are providing value-add goods and services who need to remain located within prime M25 locations to service their end customers and to attract labor.

A major focus for us in 2025 was also preparing our very special U.K. logistics sites for future development, which included hitting key milestones with the groundworks and the strategic rail freight interchange development at SEGRO Park Radlett. We, therefore, now have 3 sites in construction-ready status and the first plots at Radlett will also be ready in the early part of next year. Between them, these can deliver over 9 million square feet of the very best modern logistics space in the U.K., ensuring that we can respond quickly as occupier demand continues to build.

On that topic, over the past 2 to 3 months, inquiry levels have improved materially across both logistics and urban, and we are seeing more activity across a broader mix of occupiers. This is largely being driven by the structural drivers which support our business. Retailers, food, e-commerce and general distribution are particularly active, seeking efficiencies through supply chain optimization, which is driving decision-making.

Taken together, these trends give us confidence in the outlook for the U.K. business and the pickup in inquiry levels and leasing activity since the budget, both on standing stock and for pre-let opportunities provides a solid foundation for 2026.

I'll now hand over to Marco, who will talk you through the performance in Continental Europe.

Thank you, James, and good morning all. Let's move now to Continental Europe. And I would like to cover 4 points: share some key highlights on the overall occupational market, then cover the performance of our existing portfolio, then move into the development pipeline and finally touch on that outlook for 2026.

Starting with the overall occupational market. Leasing activity in 2025 has outperformed the pre-pandemic average. In fact, Q4 was the strongest quarter of take-up in 3 years. Vacancy rates now have stabilized with early indication of a modest downward trend and new speculative development are limited to a few prime locations.

Similar to the U.K., the European market is in uniform and some countries and some regions within countries have performed better than others. Our exposure to the best-performing markets has contributed to a strong performance with a clear momentum in the second part of the year, both on the existing portfolio and on the development side.

Our existing portfolio has performed extremely well. We signed over 180 deals. We had a strong letting activity and high customer retention, bringing occupancy to 98% across the continent with some countries fully occupied. We completed several notable letting transaction above 30,000 square meters like ID Logistics in South of France, GD.com in Germany, GXO in Milan or H&M in Poland.

Moving now to the development side. Structural trends, including urbanization, e-commerce growth and the supply chain organization led to an exceptional quarter 3 and quarter 4 from a development side. In fact, H2 2025 was the best half year ever in Continental Europe for SEGRO, outperforming even the pandemic years. We saw the return of large pre-lets. We signed 9 deals equating to over 300,000 square meters of space, a pre-let to GXO in the south of Paris, a fulfillment center for e-commerce player in Germany, the new distribution facility for Primark in Italy as well as multiple smaller deals across Germany, Italy, Spain and Poland.

The leasing activity was strong on our speculative program as well with our schemes in Germany, in Spain and Poland, all hitting a high level of occupancy before completion. And in the case of Warsaw, we have been able to fully let the space even before starting construction.

So in summary, 2025 was a strong year for SEGRO in Continental Europe. Now looking forward, we enter the year in a stronger position than this time last year. Many of our 2026 lease events have already been secured. We have a healthy development pipeline, partially pre-let and partially spec with some projects in the near-term pipeline already signed in Spain, in France and in Poland, waiting just for the building permit. And we continue to see a good progress in our speculative German urban schemes.

And with that, I will hand back to David.

Thank you very much, Marco and James, and indeed, Susanne. So as you heard, actually 2025 was a very strong year of deal execution for SEGRO. In total, we signed GBP 99 million of new headline rent, which is the highest in our history and even, as you can see, slightly higher than the pandemic peak of 2022. So this reflects strong performance across both existing assets, which is the part shown in red, led by the U.K. and with our development program, which is shown in salmon pink, which is led by the continent.

As Marco and James both commented, though, activity levels strengthened noticeably in the second half of the year, and that momentum has continued into 2026. It was an excellent year for reversion capture, demonstrating the quality of our portfolio, the strength of our diverse customer base and the impressive skills of our leasing and asset management teams.

Overall, we achieved a 36% uplift on rent reviews and renewals, which was 46% on average in the U.K. Despite these higher rents, we also maintained a high 82% customer retention at break or lease expiry, and we increased our overall occupancy by 90 basis points to 94.9%, driven mostly by Continental Europe, but also with some progress in the U.K.

We continue to take a disciplined approach to capital allocation, as Susanne highlighted earlier. Whilst capital deployment into development is our priority, we always remain alert to opportunities to acquire good quality assets that offer attractive returns in our high conviction markets. Such was the case in Germany and the Netherlands with the acquisition by our SELP JV of some excellent assets formerly owned by Tritax EuroBox and in the case of a smaller logistics park close to Prague.

Following a big year of disposals in 2024, we carried out fewer asset sales in '25, whilst investment markets remained quite subdued. But we were pleased to make a number of target disposals at prices above book of smaller non-core assets, including an older estate and a budget hotel in London as well as some small residual land plots. As Susanne mentioned earlier, our rigorous portfolio review process subjects every single asset and land position to a thorough assessment of future returns and risks, and this directly feeds into our disposal planning.

Everything we hold has to justify its place in the portfolio compared to our cost of capital and the expected returns from other opportunities. So 2026 is likely to see an increased level of disposal activity subject to market conditions, but we think those are also starting to improve.

Development offers our most compelling immediate and medium-term return on capital. We invested GBP 413 million into it in 2025. GBP 387 million of it was on development CapEx, including infrastructure and GBP 26 million was on land acquisitions. That was all a little bit lower than our original expectations due to the slower pre-let market in the first half. That, in turn, fed into lower completions in the year with space equivalent to GBP 29 million of headline rent being delivered.

The average development yield of 8.2% was above our normal range as it included a powered shell delivered in Slough -- powered shell data center delivered in Slough, I should say. And despite a lower proportion of pre-lets in the mix, the space we delivered was actually over 90% leased by year-end, suggesting that we picked the right submarkets in which to launch selective, speculative developments. All of the projects were rated BREEAM excellent or better.

At the half year, we did point to an expectation of a recovery in occupier sentiment in the second half, which is indeed what happened with a strong run of pre-let signings, particularly in Continental Europe. So as a result, our on-site development program is now returning to more normal levels. Currently, it represents GBP 53 million of potential headline rent, of which 47% is already leased. And we have a further set of pre-let projects at advanced stages of negotiation, representing another GBP 9 million of rent plus an encouraging set of potential projects behind these, including in the U.K.

So moving on, I'd now like to talk about the attractive growth potential in the coming years. Before covering data centers, what I want to talk about is the significant opportunity within our industrial and logistics business. As you know, we've positioned our portfolio and our business to benefit from a number of enduring structural trends. These have become somewhat muted over much of 2024 and '25, but now appear to be reasserting themselves.

Digitalization, urbanization, supply chain optimization and a continued focus on sustainability once again are prompting occupiers to search for modern, well-located and energy-efficient space. At the same time, securing planning consents for new greenfield sites is increasingly difficult and urban brownfield land is continuing to be lost to competing uses such as residential and now data centers. For landlords and developers with the right assets, land, operational capabilities and balance sheet strength, this creates a supportive backdrop for future performance, which are exactly the things that SEGRO has.

We've built a fantastic portfolio across Europe's most attractive markets. 2/3 of it is in dynamic high-growth and supply-constrained cities like London and Paris, where demand is diverse and long-term rental growth is expected to outperform. Plus, we have one of the best, most modern logistics portfolios and an exceptional land bank for development. And our market-leading operating platform with deep local capabilities across the U.K. and the continent, means we really know our markets, and we're well placed to spot new opportunities and drive further performance.

There's a GBP 152 million of growth opportunity in the existing portfolio alone, including GBP 99 million of reversionary potential, 1/3 of which is available to capture with lease events due this year. There's a further GBP 53 million of opportunity in vacant space, much of which is recently developed or refurbished space that is well located and occupier ready to lease in 2026. Capturing these opportunities will continue to drive strong like-for-like growth and unlocking it requires very limited capital expenditure.

On top of that, we believe that improving occupier demand and constrained supply will also support further rental growth, which we continue to believe will be in the range of 2% to 4% for Big Box logistics and 3% to 6% for Urban assets over the medium term.

Beyond the existing portfolio, our land bank leaves us well positioned to deliver substantial development-led profit growth. The current pipeline plus near-term projects under advanced negotiation represents GBP 62 million of potential rent. The rest of the land bank offers a further GBP 346 million of opportunity at current market rents. Development yields remain attractive at between 7% and 8% with a greater than 10% yield on new CapEx.

As James mentioned earlier, our teams have made great progress to have our super prime U.K. logistics sites construction ready, so we are brilliantly placed to capture improving demand. Combining all of these opportunities together, we set out our updated rental bridge chart. This is based on today's rents, so it doesn't capture any further ERV growth or indexation uplifts.

And you can see that on top of today's GBP 755 million, we can generate another GBP 800 million of new rental income. Almost 1/3 of it comes from our existing portfolio as we lease our vacant space and capture reversion. 2/3 of it comes from our land bank as we complete schemes under construction and develop out the future pipeline. This only factors in powered shell developments in terms of data centers. But in fact, the data center opportunity is much greater than this. And this takes me on to the next part of the presentation.

Demand for data centers in Europe is predicted to grow significantly in the coming years, led primarily by cloud adoption as businesses and individuals move more activity online and by inference AI, which is where the end users interface with the AI models. Most of this demand is being satisfied by hyperscalers who prefer building out their data center capacity in close proximity to major population centers and financial hubs within established availability zones in the so-called FLAP-D markets.

This is because most of the applications running in these systems require low latency and high resilience to meet customer demands. Capacity constraints and demand growth are now pushing development into some newer availability zones such as in Berlin, Marseille and Warsaw. And by contrast, latency insensitive AI facilities for training in some of the inference workloads that don't require low latency, these can be located in secondary and tertiary locations where land and power are less constrained and energy is cheaper.

These are the locations that are of no interest to us because we simply do not like the real estate fundamentals. Rather, our focus is firmly anchored on serving demand in supply-constrained and established and emerging European availability zones, markets that overlap with our existing portfolio of prime industrial assets and where our local platform and expertise provide a competitive advantage.

Our ability to benefit from all of this future growth is underpinned by an exceptional bank of powered land across key European availability zones, which now totals more than 2.5 gigawatts. In addition to the 0.5 gigawatt of operational capacity mainly in Slough, we have a clear route to another 1.1 gigawatt, which can be pre-leased over the next 3 years and a further defined 900 megawatts of power supply in process supporting medium-term growth thereafter and with additional long-term multi-gigawatt opportunities being pursued over and above these amounts.

Our sites are well positioned to secure the necessary planning approvals. And the simplified planning zone in Slough provides a unique advantage with data center development already preapproved and with an additional 0.4 gigawatts of capacity due in 2029, making it, we think, the largest holding of powered land with a live planning consent within any of the London availability zones. All of this puts us at the front of the queue in a number of markets and best placed to address data center customers' key criteria, which is essentially speed of deployment.

We've delivered excellent progress in our 2025 strategy for data centers. We strengthened our specialist in-house data center and energy team. We formed a joint venture with Pure data centers, giving us access to the technical expertise needed to deliver fully fitted data centers. On the ground, we completed a powered shell for Iron Mountain on the Slough Trading Estate. We secured a building permit for our first French data center and submitted the planning application for the Park Royal joint venture project, which is expected to be determined in the first half of this year.

From a power perspective, we initiated infrastructure works to support the power upgrades in Slough, and we secured a separate 190 MVA power offer in West London. We maintain the strategic flexibility across our portfolio, choosing the optimal route for each project based upon the site-specific characteristics, local market conditions and the expected returns. And while we expect to deploy capital through all 3 strategies, we are now increasingly focused on fully fitted projects.

We believe that on certain sites, this model can generate development profits for SEGRO of up to 3x greater than for the equivalent powered shells, and we believe we can effectively manage the additional risks and complexity involved. And for the avoidance of doubt, this approach does not expose us to the obsolescence risks associated with innovations in chip technology because we will not be investing in the racks or in any of the compute capacity.

Our fully fitted approach is designed to be capital efficient and operationally low risk. We will develop only within key availability zones on the basis of pre-let agreements to major hyperscalers before construction starts. We'll be targeting long-term net leases to avoid operational exposure, and they'll be delivered through JV structures that combine specialist expertise with strong governance.

Project level financing and SEGRO's contribution in most cases of powered land will keep our cash equity requirements limited. In fact, broadly in line with, if not lower than the equivalent powered shell developments delivered on balance sheet. And although we have capacity to fund several fully fitted projects from existing resources, we expect to actively recycle capital from stabilized assets through a range of potential exit routes, recycling capital into other opportunities.

Based on our assessment of the exceptional sites in our pipeline, we expect to bring forward 1 or 2 data centers per year for the next several years with a mixture of some powered shells, but mostly fully fitted data centers. We'll be carefully sequencing the delivery and monitoring the overall evolution of the European data center market to ensure that we manage our overall exposure to fully fitted data centers and to joint venture structures.

So in summary on this piece, our data center platform represents a substantial incremental and value -- income and value creation opportunity. It's underpinned by unmatched European land and power positions, the capabilities to deliver both powered shells and fully fitted data centers as well as powered land sales, a disciplined approach to capital management and the strength of the SEGRO operating platform, including local market insights, planning expertise, energy capabilities and robust governance.

This strategy gives us exposure to one of Europe's strongest structural growth markets and adds significant upside to the growth drivers already embedded within our industrial and logistics business.

So let me conclude by bringing all of this together. 2025 was a strong year of operational and financial performance for SEGRO. Momentum that started building across our occupier markets in the second half of the year has continued to grow and become more widespread in 2026, and we are primed for significant growth in the coming years, thanks to our high-quality reversionary potential supporting strong like-for-like growth, upside from industrial and logistics development and a compelling opportunity with data centers, underpinned by a clear strategy, strong balance sheet and a market-leading operating platform.

With that, I thank you for your attention, and we'll now turn to questions. Susanne, James and Marco, if you'd like to come and join me on the stage, so we can do that. And also Andrew Pilsworth, who's leading on data centers, he's going to join for this part as well.

Okay. Thank you. We're going to start taking questions in the room. [Operator Instructions] John, yes. Thank you.

It's John Cahill from Stifel. Thanks for the presentation. Really good to hear a U.K. REIT, both positive looking backwards and forwards. With regard to the data center business, you're clearly backing the right horse here, and this will no doubt be a great success, I'm sure, in the future. But there's one of the big change that's happening in terms of European and U.K. industrial space, which is obviously the investment in defense manufacturing capabilities.

Your contemporary at Sirius have obviously gone in that direction and the market has clearly liked that. Is that something you would perhaps seek to look to become more involved in, particularly in Germany. It sounded at the Munich Security Conference that there's going to be an awful lot of investment in that space. Would you be looking to go that way, notwithstanding the data center route?

Yes. I mean I'll give -- maybe just make an overall comment and then Marco specifically can add a Continental and a German flavor to it. I think what I'd say is, so far, it's -- I think it's a small thing in terms of impact on a business like ours. There may be some significant investment in some large defense capabilities around Europe. But generally, they're going to be in locations where governments want to encourage investment and the creation of jobs and not in prime locations where we want to keep our capital invested. Having said that, undoubtedly, there will be some spin-off.

There will be some particularly logistics needs to actually move goods and services and support capabilities around. So it's something we are looking at. But I don't -- right now, I mean, it's a very helpful additional demand driver at the margin. I don't think it's going to have the same impact that, for example, e-commerce had over the last decade. But Marco, do you want to add anything in terms of what we're actually seeing?

Yes, I think you covered that well. So it's clearly a sector that we are monitoring. But at the moment, what we see that in terms of location are more bespoke locations. So those locations are not -- do not match with our strategy. But it's an additional demand and there will be some opportunities. So clearly, we are monitoring that across all the European countries where we are active.

Max Nimmo at Deutsche Numis. And -- just 2 questions, if I can. One on London. It feels like you feel a little bit more confident around kind of Western corridors, A40. Perhaps if you could just talk a little bit about the wider London market, North, South London, how are you seeing supply in that market?

And then secondly, just on the data centers, I fully appreciate that you're not exposed to the kind of the chip risk. But just in terms of the build-out requirements, hearing lots in terms of the progression on liquid cooling, things like that. Where are the risks for what you're doing in the fully fit-out space?

Two good questions, Max. So obviously, the first one, James can make some comments on. And Andrew, maybe you can pick up on the depreciation and the obsolescence risk, which are slightly different things, but yes, do that. So James, do you want to do U.K.

I think you're right. I mean, London is not one thing, and our urban markets are not one thing. And actually, the markets have quite different characteristics at the moment. So we were super pleased with the results we saw in terms of West London. It's a very mature market. There's a huge depth of number of customers. We've got a very good level of customer relationships in those markets. So that performed exceptionally well.

And if you take Park Royal, you take Heathrow and you take Slough as our kind of urban markets, 70% of our U.K. portfolio is in those, and we're very confident about those and they're not particularly high vacancy markets. If you look at perhaps South and East, these are markets which are a little bit more fragile in terms of occupier -- in terms of vacancy. But again, we have seen a tick up in inquiries as we talked about as part of the presentation since probably, well, the back end of last year. So we are more confident in those markets, but it's definitely right to not see London and the urban markets as one thing. So as I say, we feel confident and look forward.

Andrew, data centers?

Yes. on data centers, yes, as you say, we are -- our end customers will be investing in the servers, the racking and as David mentioned, the GPU chips where we see that having the highest level of obsolescence risk. And actually, if you look at what we are investing in, we're investing in long-term power-enabled cooling technology. So it's all the mechanical and electrical equipment, which we think has long-term intrinsic values in those very attractive markets that we're investing in. So we think there's very -- they have a very long economic life and certainly longer than the leases that we're investing in.

So on -- one of the risks is definitely obsolescence, but we feel that's covered off by that point. As David said, a slightly different issue on the depreciation. We are targeting a net lease structure to SEGRO, so very similar to what we do in the rest of our business. And the exact accounting treatment will depend on the structure of the lease, but certainly, the advice we've got that by targeting a net lease, that will be treated as investment property in a similar way to the rest of our portfolio. And indeed, if you look at other asset classes, offices where there's fit out and therefore, treated investment lease and no depreciation.

And I think on the point around the risk of obsolescence of technology moving on, I mean, clearly, it does -- it has evolved. The cooling technology has changed. I mean there was a big thing about water usage when water cooling was introduced a couple of years ago. Now the latest technology is basically it's a closed-loop system. So it's a bit like a car radiator, you put water in at the start and you don't need a huge amount of water then to run it thereafter. These things do change.

But actually, if you go back and look at when we started 20 years ago with data centers in Slough, the first-generation data centers we built, they don't have the latest cooling technology and the latest engineering, but they're still fully used and fully occupational because, frankly, the growth of demand and the growth of need for data storage and processing capacity just outstrips the ability to build more.

So it's very rare that people are going to just strip out the old stuff and say, we've got to write that off. This stuff seems to -- it's all additive. But each data center we build will have the latest technology, but the fundamental fabric of the building and the main cooling isn't going to change that dramatically. Yes, Zach.

It's Zachary Gauge from UBS. A few questions sort of all tied into each other. Firstly, just starting on the 7% yield on cost on the current pipeline. I appreciate that's ex data centers, which aren't under construction at the moment. But am I right in thinking that for sort of logistics space, 7% is kind of the run rate yield on cost now and to get up towards 8% plus, you need the higher-yielding data centers to sort of get that blended yield on cost higher?

The second question is on the 300 megawatts of immediately available power. I think we sort of know about Park Royal and some power available in Slough. Is sort of the residual power in that the new opportunity in Paris? If so, that's a very large amount. And could you touch on what the plan is for that in terms of whether it's going to be fully fitted powered shell and whether you'll obviously bring in a JV partner if it is fully fitted?

And then sort of lastly, on the wider data center strategy, I mean, it feels like a bit of a change in tone leaning towards more fully fitted. Obviously, the CapEx on that is going to be substantially more. I think for the Pure DC, we're looking at almost GBP 400 million for one project alone. You obviously guided to the 1% to 2% recycling, saying it might be slightly above that this year.

Just how do we think about how this potential pipeline gets funded if it is successful and hyperscalers are there to take it? Because obviously, the CapEx numbers will go up very, very quickly. The income won't catch up as quickly. And would -- should we expect to see just an increased level of recycling well above the 2%? Or is equity raise potentially on the table if this is a success and you have the demand there to build them out?

Okay. I should have said at the beginning, one question, please. So we can keep up. But there's quite a few -- just briefly on -- and I'll throw the data center piece back to Andrew and maybe Susanne can comment on the capital side of it. In terms of development yields, we've always said that we should be shooting for between 150 to 200 basis points premium for a development yield over and above the equivalent investment yield of a prime product.

Now if you think that equivalent yields now around -- somewhere around the 5%, 5% to 5.25%, something like that, maybe 5.5%, then in most markets, getting a development yield around 7% is actually a pretty good outcome and very profitable. Now we've said there's a range of 7% to 8% because we've got a mix of geographies. We've got a mix of, frankly, land holding costs or land values on the books. And we've got some markets where there's going to be some projects where we're going to do much better than that even in core industrial and logistics.

So the reality is there's a range. But I think broadly, if we can be getting 7% to 7.5% on our industrial and logistics and closer to 8% when you blend in some powered shells, that's a very attractive overall development yield, but it will vary by geography and by product. Data center power, Andrew?

So that 0.3 gigawatts, we're not going to give details on individual sites and what we might pursue on them. However, what I can say that the 0.3 gigawatts that you referred to, Zach, that's spread across a number of opportunities, both in Slough. We do have some immediately available power in Slough, and we're in advanced negotiations with the customer on that power. But also within that 0.3 gigawatts, that's spread across a number of projects, not only in Slough and the U.K., but also across the markets in which we're present in Continental Europe as well.

And as I said, I won't comment on the route we will pursue on individual sites, but we are likely to go for a fully fitted route with a JV partner to get the capability to utilize the capability on fully fitted -- their capability on fully fitted, and we're likely to pursue fully fitted in the strongest and most attractive markets.

Okay. Susanne, do you want to talk about CapEx?

Yes. Very happy to. So first of all, you are right that we are leaning towards more fully fitted data centers on suitable sites. So the best sites in our portfolio are suitable for that, and we are looking for joint venture partners to work on those fully fitted data center opportunities. What does that mean? So first of all, in terms of the equity contribution to the joint venture, we don't foresee this to be substantially higher than an investment that we would make into a powered shell because we are obviously contributing powered land to the joint venture. So that is as a starting point for us a favorable outcome.

And then the CapEx financing for these projects is planned to be in the joint venture, meaning it's going to be project debt that is raised together with the joint venture partner at the joint venture level. This will initially have a relatively high loan-to-cost, but these longer data center projects will see a valuation uplift as we complete the phases of the construction, meaning that naturally, the leverage will come down as a result of it.

Project debt is available at the moment. We have already a lot of discussions with interested providers. So we feel that this is a good strategy to fund the CapEx needs. And based on that approach, the currently envisaged strategy would not require an equity raise.

And maybe just to add to that, I mean, even if we've obviously -- we've got a view we've modeled out. We're not quite ready to share the detail of the forecast with the market. But we've modeled out what it will look like if we build -- I alluded to 1 or 2 per year. They won't all be fully fitted, but I think probably an increasing number will become fully fitted. We've modeled out what that looks like over the next several years.

And frankly, even if you do it on a look-through basis, the impact on our LTV and indeed, the impact on our proportion of assets in data centers is very manageable. As long as we continue to actively recycle broadly across the whole portfolio, this is all very doable. So we think we've got plenty of capital to pursue this. And they're going to be 1 or 2 at a time or 1 or 2 a year. They're not going to be 5 in 1 year that would put an unnecessary strain on the balance sheet. Tom?

Tom Musson at Berenberg. Just a question on Europe. I appreciate countries like Spain and Germany performed well. Can you just give a bit more color on the market dynamics in Poland and the Czech Republic, in particular, I think those are the 2 markets where asset values fell and rent growth was sort of flat there.

Yes, sure, Tom. Marco, do you want to comment on Czech and Poland?

Yes. So starting from rental growth, and we have 1% across Continental Europe. As Susanne said, a few countries that performed well, like Spain and Germany. Eastern Europe is a little behind in terms of rental growth. What we have seen, as I mentioned in my presentation, is that there was a recovery of the activity in the second part of the year, especially from September to December.

And even in Poland, we had some spec development in Warsaw that has been fully let even before starting completion. We have done some major lettings like H&M in Central Poland. So there is a recovery of the market there. We don't see that yet in ERV growth because it was in -- those letting and pre-let have been finalized in the second part of the year. And so our values need a little more time in order to factor that in ERVs.

But we are confident in our guidance that we give between the 2% and 4% on Big Box logistics, so we think that as soon as the occupational market is going to recover even more, we will see those level again. And in terms of rental growth, when we look to the performance of the European portfolio, I think that we have not to focus too much on just 1-year number because if you look to the 3-year rolling average in Continental Europe, ERV growth is above 3% and the average over the past 10 years is above 3% as well. So yes, it's just a matter of time.

But I think generally, in terms of Poland and Czech, in terms of places to invest, I mean, we -- Poland -- Czech has been an amazing success story for a long time. In Poland, I think GDP growth was 4% last year, expected to be top performing in Europe -- in the EU country this year or thereabouts, above 4%. So I think we've got very -- clearly, there's a lot of issues around geopolitics and what happens in Ukraine. But we've got -- we've got long-term conviction over Poland as a place to do business. So I think we'll continue to invest.

In terms of location, we are very selective in this market. And there are some markets like if you take the example of Czech Republic, we are just investing in Prague. We've done an acquisition last year, and Prague has been historically a strong market and benefit of the proximity to the German border. So we are just investing in selected location in Czech and in Poland as well.

Any more...

Marios Pastou here from Bernstein. So I got a couple of questions from my side. So firstly, we obviously saw an improvement in the occupancy levels overall. I think there was a more mild improvement in the urban occupancy levels, both in the U.K. and on Continental Europe. Just in terms of the supply levels, the discussions you're having on that urban portfolio and your urban exposures. What are your expectations in terms of the trajectory ahead for a recovery in occupancy in those markets towards more normalized levels?

And then secondly, you were talking about the use of third-party capital. And obviously, you've got some quite large schemes in the U.K. You mentioned the 9 million square foot of potential space. And just any thoughts around whether you could utilize third-party capital there and how that structure could potentially look?

Sure. I mean, James has already sort of covered a bit about the U.K. market. So I won't repeat all of that. But I mean, for us, most of our urban vacancy is in London. We actually -- the bulk of our exposure is to West London in Heathrow and Park Royal and indeed Slough. That's a pretty strong market. In fact, in Heathrow, there's a real shortage of good space right now. There's not much supply in any of these markets.

Where there is a bit more vacancy for us and in the market is in the East and the South, in particular, to Croydon and Barking and Dagenham area. We don't have a huge amount of space in those markets, but there has been more supply, particularly going out east because land is a bit more available. So that's one to watch. And I think we need to see a bit of a recovery in the London economy before that's going to pick up.

But we're optimistic about North London. It's a pretty tight market around Enfield. We've got a bit of vacancy there, but -- and they're good units, but optimistic that will improve this year and further performance to come in West London as well. I think Croydon and East London, we've got a bit of interest. We'll see if it all actually crystallizes, but those are the stickier markets right now in terms of our whole portfolio. Urban elsewhere in SEGRO. We're building speculatively in Germany. It's leasing up really well ahead of expectations, quite often leased before we get to completion. So that's that.

In terms of funding, third-party capital, as we said in the presentation, we keep that option open. We've had some success clearly over a long period of time with our SELP vehicle in Continental Europe. We do have a new JV model for working on data centers, which is partly around access to skills and capabilities and partly around share and capital intensity.

And as we look at the significant opportunities we've got ahead of us in all parts of our business, including in the U.K. logistics piece, we're thinking about, is it best to do it ourselves on balance sheet? Is it best to do it in partnership. And we're having, as you'd expect, conversations on those, but nothing is sufficiently far advanced that we can say any more about that other than nothing is off the table, and we're always looking at these things.

Suraj Goyal from Green Street. Just one quick question. So there's mention of positive demand from e-commerce players returning to the market, including sort of Asian players. Big picture, what are your sort of thoughts on where the U.K. e-commerce penetration rate could land in the next 5 years, particularly with the potential boost from Agentic commerce? And then what do you think that sort of means for your expected market rent growth over the next sort of 5 years?

The U.K. question, particularly, was it? James, why don't you comment on what we're seeing on e-commerce and where you think it's going?

Yes, you're right. So in e-commerce, we are seeing the return of a couple of big players who've been out of the market for a period of time, which obviously is good in driving the market. We've also seen some of the Chinese players also come into the U.K. market, in our own portfolio. We've seen that more in the last mile piece around London and our urban markets.

In terms of a look forward, as I say, there's a couple of things that make us feel quite confident. I think that the absorption of gray space, which I mentioned in the presentation, is an important factor because -- and that should drive more pre-let activity as we look forward in those markets.

And then on the supply side, the ability to find sites in specific locations, which can deliver large boxes is very challenging actually. And there's a theme around consolidation in the U.K. market. So customers who are looking to drive efficiencies, consolidating into more efficient facilities, which are generally larger, we've seen an uptick in the demand for larger buildings.

So again, that favors companies like SEGRO who do own those sites in those right locations. And on a look-forward basis, again, if you look back on a long-run average for the U.K. Big Box, we delivered over 4% ERV growth over the past 10 years. So again, no reason to adjust that look-through guidance of 2% to 4% on a look-forward basis.

I think the other thing about e-commerce, I mean, clearly, there was a time back in the pandemic when there was a bit of a narrative around we're only ever going to shop online from here. Clearly, there was a massive expansion. That's now slowed down. There's been a lot of consolidation over the last 2 or 3 years. But our expectation -- our firm view is clearly, physical retail will continue to play a very important part in how consumers want to buy stuff.

But there's no doubt that the amount of shopping that's done online will continue to increase as a proportion. Where it gets to, I don't know, but it's definitely on the up. And as James says, people need to invest in better facilities, better distribution networks to do that, and that goes to both the big logistics units for fulfillment, but also last mile. The real battleground continues to be in the major cities like London and Paris around delivery of last mile, getting the product to the consumer faster and more sustainably. And to do that, you need to have the right last mile facilities as well.

So we feel really positive that after the boom and the quiet period post pandemic, e-commerce is going to continue to be a factor. It's not going to be the whole thing, but it's going to be a factor. I think we probably -- unless any more in the room, we ought to go to the conference line. So if the operator is listening, could you please take some calls -- take some questions from those online, please.

[Operator Instructions] We have our first question from Frederic Renard from Kepler.

I have 2, if I may. The first one is on the CapEx range, which has been around EUR 500 million over the last few years at the start of the year for quite some year now. But you mentioned delivering between 1 and 2 DC assets from here. I was wondering what would be then the CapEx on a run rate basis and on a true basis, if you consider that? That would be my first question.

And then I would like to come back on the third-party capital. And you look quite enthusiastic there. Of course, there was an article also in the press in January mentioning potentially opening the U.K. Big Box business to a partner. How do you evaluate the trade-off between short-term earnings, potential decline and long-term value creation?

Well, that's a very good question on the latter one, and that's exactly what we're thinking about as we decide how to fund our development opportunities going forward. So I'm not really going to try and answer that now other than to say that's exactly what we're thinking about is what's the impact on near-term and longer-term performance for us. And also how does -- if we were to create another vehicle, how does that fit with the overall capital stack and the way we're funding the whole business. So unfortunately, we just have to wait and see on that one.

In terms of the capital expenditure, the run rate about GBP 500 million per annum historically, if you sort of average it out, we've guided to GBP 450 million to GBP 550 million this year, which, as Susanne said, will depend on the rate of pre-lets. There -- that does not yet include any fully fitted data centers. The first fully fitted data center, if we -- assuming we get planning, will probably be in Park Royal this year or next year. I mean they're very big projects. We'll get planning, I'm sure, this year, whether we sign a pre-let. If we do this year, it will be back end of the year. So I don't think it will have a dramatic impact on this year's CapEx.

But going forward, if one of the 1 to 2 data centers turns out to be fully fitted, then as Susanne said, the actual -- in fact, I did it in my bit of the presentation, the actual cash impact for us is going to be similar. If we do it in a JV off balance sheet, the cash is going to be similar. So somewhere around GBP 75 million or GBP 100 million of cash equity contribution is typically what we'd expect. But if you do it on a look-through basis, I mean, the CapEx on these things is about GBP 800 million, something of that order. So you're going to be taking half of GBP 400 million, but that would be spread over a couple of years or so.

We have our next question from Paul May from Barclays.

Just I got 3 quick ones, hopefully. First one for Susanne, just a quick question on the old bug there around capitalized interest. Just wondered coming in from the outside, what were your views on the policy and the assumptions behind it? And can you just confirm what the main sort of assumptions are, the financing cost that's used? What is actually interest capitalized on? Is this just current developments? Is there any future developments, land infrastructure, et cetera, within there? Should I ask them one by one or...

Yes. Well, why don't you give all 3 and then we -- and then we can deal with them. The 3 quick ones, Paul.

Yes. The second one, given the subdued investment market, as you mentioned, and I think if you look around, there's been relatively limited capital raising for warehouse or logistics funds. Just wonder what gives you the confidence that you're going to sell more? And what yields would you be willing to sell at?

And then on the London market, what we've heard is that rental levels or ERVs have become not necessarily unaffordable, but not affordable for many tenants, I think, is the comment that we've had. Does this go some way to explain the higher vacancy in that market and the comment in the report that tenants remain more discerning in London and Paris.

Okay. Right. So I think Susanne is going to talk about capitalized interest. Maybe I'll pick up on the investment market and what we're seeing in terms of yields and pricing and volumes. And then James, back to you on London ERV. So Susanne.

Okay. So on capitalized interest, Paul, we do capitalize interest, of course, on developments, but also on land where we are doing significant infrastructure or preparatory work to get the sites to a construction-ready state. And we have larger sites, as you are probably aware, across the U.K. that do require infrastructure investment, and this is also part of the capitalized interest that we apply.

In terms of the cost or the interest that we are using to calculate, we are using where available, the specific funding rate that is related to where the source of capital comes from for those works that we are doing and where there is no such specific rate available, we would use the marginal cost of funding. In my view, this approach is the most realistic approach that we can find to match with what is actually ongoing.

And if you also look at, for example, the 2025 numbers, we have GBP 63 million in total of capitalized interest and the vast majority was capitalized at the specific rate. Only about GBP 2.5 million of that were done on the marginal rate. So it's a very minor portion where we don't have the specific rates. The approach we take is, of course, fully aligned with accounting standards and also discussed with our auditors. So I feel comfortable with that approach.

Okay. Investment markets, I think you're asking what gives us confidence [indiscernible] that we're going to be able to trade more in these markets. Well, we are talking to the market, talking to our advisers and sources of capital. And I would say there's more capital coming into real estate generally and within real estate, industrial logistics and residential, the 2 favored sectors other than data centers.

Time will tell, but there's definitely more signs that investors are willing to start putting money to work in the early weeks of this year, Paul. But we -- time will tell, but I think people have been sitting on the sidelines long enough. And I think given the relatively attractive outlook and the improving occupier fundamentals that we were chatting about, I think there's a very good chance that a lot of that capital will be put to work this year. We'll see. London ERVs, James.

Yes. Look, I mean, of course, there are customers who continue to feel cost pressures. And there are customers that don't choose to be in London and can't afford to be in London. But for every customer that can't afford to be in London, there are multiple customers that do need to be in London and can afford London because of the nature of services they're providing, which typically the higher-value goods and services. And look, I don't think you can ignore what the portfolio is telling us. We have seen a nudge down in vacancy from an urban standpoint from 9.6% to 9.4% during the course of 2025.

And also our ability to continue to capture reversion, drive ERV growth, see low insolvencies in that market, again, points to a relatively favorable position. The other thing I'd say is there is a narrower discount now between prime home counties in London. So again, on a look-forward basis, I think that drives really positive retention rates for our London markets. And if you look at our highest rental market, which is Park Royal and West London, our in-place ERV is actually only GBP 23 per square foot and you compare that to the top rents that are achieved in the market of GBP 32 to GBP 35 per square foot. So we see plenty of room for growth in those markets and a resilient occupier base.

I think maybe one more question on the phone line.

We have our next question from Marc Mozzi from Bank of America.

I have some follow-up questions on your data centers, if I may. And the first one would be, could you please quantify the quantum of CapEx we should expect over the next 3 to 5 years related to data centers? And the second related question to that is, when do you think we should start to forecast any rental income or any income coming into your P&L on which yield basis, knowing that it's going to be a blend between powered shell and fully fitted data centers?

Yes. You're not going to like this, Marc, but we're not really going to answer those questions just yet. I mean we've talked already about the scale of some of these projects and the likely CapEx, whether done on balance sheet for powered shell or off balance sheet fully fitted. I think when we've signed some deals, we will share some updates to our CapEx expectations, and that will also enable us to talk about timing of rental flow. So unfortunately, we're going to have to hold fire on that one for now. Sorry.

Fair enough. And I have another question, which is related to your infra CapEx, which is going to be GBP 300 million, if I'm correct, from last year and this year. Is that a non-yielding asset or non-yielding CapEx on the year of deployment of the project? And is that part of the yield on cost of 7% you're mentioning? Or is it something which is going to drive the yield lower 1, 2 and then it's going to ramp up?

So is the GBP 300 million of infra spent last year and this year, is that accretive? Is it -- and how is it accounted for in our development yield guidance? The answer is, it is obviously enabling works that will allow those projects to go ahead, including the power upgrades in Slough. And so when we give our guidance on development yields, that's with each project taking its proportionate share of that infrastructure spend. So it's not an additional non-yielding part of capital. It's factored into our development yield guidance.

Thanks a lot, Marc. We've got just a couple of questions maybe coming through the webcast, and Claire is going to read them out.

Yes, we have. A couple on data centers to start with. How much of the 1.1 gigawatts of land or power available to lease by 2028 is secured and within your control?

All of it.

And then we had a question on the simplified planning zone in Slough. That needs regular renewing. When is the next renewal date?

Of these SPZ. We've got -- it was just renewed at the end of 2024. So the SPZ, it runs for 10 years. This is the fourth iteration. We've had 3-year renewals. So it's got 9 years to go before we have to renew again. It's a big process to get that renewed, and we never take it for granted, but we have a very good working relationship with Slough Borough Council, and I think they see the benefits that the SPZ has brought. So 9 years for, every expectation that it will continue thereafter as well.

And then another one on power. Grid connections are difficult and subject to queue management issues. Have you ever lost a place in a queue?

No. We -- no, we haven't. And particularly in West London, what we're able to do is lock things in early. We've been planning for the upgrade Uxbridge Moor Power Station for quite a while. So in fact, our position in that is kind of clear of any NESO review of the queue process. And we're bringing it through elsewhere as well. So no, we haven't lost a position.

And then the last one on data centers. Can you remind us of the income recognition differences between powered shell and fully fitted? And when will we -- but more importantly, when do we start to expect to see the income?

Well, the -- yes, I mean, in theory, the data center, whether we lease the powered shell or we build fully fitted, it is going to become active and operational at the same time. If we do a powered shell, it's quite possible that with a rent-free period in there that the income for us in P&L terms at least can start earlier because we would typically build the shell, might take 12 or 15 months to build it, then we would hand over the keys, rent-free starts and we start accounting for the income at that point.

Whereas if we do a fully fitted data center, the income is going to take another probably 18 months to 2 years because of the extra fit-out time, so really 3 years in total. So there is an 18-month or 2-year lag between income recognition on powered shell versus fully fitted in broad terms. But we think it's worth the wait.

A question on capital allocation. Your comment on assets having to justify their place in their portfolio and increase target disposals. Does that mean you think assets generate less -- do you think less assets generate sufficient returns relative to your cost of capital right now?

What we're saying is we rank all our assets according to return expectations and risk profile. And given that we have a lot of high returning opportunities ahead of us, we want to accelerate and increase the volume of disposals we do so we can self-fund a lot more of that capital investment.

And therefore, the -- if you like, the line below which assets that fall under -- become disposal candidates has raised throwing up more opportunities or more situations where we think, you know what we should -- it's done very well for us. It's performed well over the years. Now it's time to take our money out and put it into new opportunities.

Thank you very much. I think we're done. I'm sorry, it's been a long session. Hopefully, interesting, and thanks all very much for your questions and your attention. Have a great day.