British Land Company PLC ($BLND)

Thank you very much for joining us. Today, we'll follow the usual running order. I'll start with a strategic update. Then David will take you through the financial performance and our attractive earnings outlook. Over the next 30 minutes, you'll see how this is driven by 2 things: first, our market-leading positions in sectors with strong fundamentals; and second, our active approach to asset management. We've long believed that hands-on asset management is a key source of outperformance. Never has that been more evident, and Kelly will give you some great examples later. So let me start with the occupational fundamentals of our markets and our competitive positioning within them. Our campuses and retail parks now represent 90% of our business, and they're market-leading, both in scale and in quality. And I'm struggling to remember a time when the occupational fundamentals were as favorable as they are today, with net absorption very strong and supply constrained in both our markets. Together with our active approach to asset management, this is translating into attractive ERV, like-for-like, and earnings growth. This underpins our conviction in delivering 8% to 10% total accounting returns through the cycle. I thought it would be helpful today to touch on 2 topical themes, inflation and artificial intelligence. As we all know, inflation rose dramatically after the invasion of Ukraine and conflict in the Middle East is likely to exert further upward pressure on prices. So how much of this inflation are we likely to capture in our rents? To answer this, let's look at the portfolio performance since 2022. Over this period, our ERV growth has tracked inflation and just recently overtaken it. And we've delivered top quartile total shareholder returns. That's down to having well-located, high-quality assets in sectors with strong occupational fundamentals. And this is the important bit. Our markets are tighter today than they were in 2022, with vacancy around 300 basis points lower in both markets. So we expect to outperform inflation going forward and are guiding to ERV growth of 3% to 5%. Now let's delve into the fundamentals in more detail, starting with the London offices. This is where I want to touch on my second theme, AI. There's a very live debate about AI's potential impact on white-collar jobs. Will this be like previous waves of technological change, the PC, the Internet, the smartphone, where new jobs were created faster than old ones disappeared? Or will it be different this time? The reality is nobody knows for sure. So as ever, we will stay very close to our customers to be the first to understand what is happening. In the meantime, I think we can say with a high degree of confidence that soft skills will be at a premium, and a new generation of companies will want the best physical environments for these skills to flourish in. And our campuses should sit right at the heart of this. If we look at the facts as they are today, net absorption of space, which is one of the best measures of the health of demand, is at a record high. And for every company downsizing, 4 are upsizing. This is driven by a strong return to the office and significant growth from a new wave of AI businesses. Despite geopolitical uncertainty, the forward-looking indicators are very positive. Demand is 57% above the 10-year average and under offers are 50% higher than this time last year. This demand is meeting a severe supply crunch, driven by initial fears about the effect of hybrid working, increased construction costs and higher yields. The crunch is particularly acute in the City, where vacancy for new and refurbished space is forecast to fall below 2% and remain there for the next 4 years. Historically, when we've seen this, rents have grown at around 10% per annum. Our campuses are ideally positioned to benefit from this environment. As you know, they offer exceptional product next to major transport nodes with rich amenity and space that supports companies at every stage of their growth from Storey, through Work Ready, to global HQ space. The results speak for themselves, a record GBP 143 million of leasing last year. To put that into perspective, we represent around 5% of the London office market, but were 15% of last year's reported leasing and 33% in the fourth quarter. As said before, the campus proposition is particularly attractive to science and tech businesses. In 2024, we set out a strategy to increase our weighting to this sector. We believed it would be a key growth driver of the U.K. economy. What we didn't fully anticipate was quite how powerful a tailwind AI would prove to be. Growth across AI and data sciences has accelerated, particularly over the last 12 months, and the lead indicators are very compelling. If you take a look at the U.S., leasing activity in the San Francisco Bay Area reached 11 million square feet last year, the highest since 2017. And there's another 3.8 million square feet in the first quarter of this year. These businesses are now expanding internationally, and London is very clearly the leading destination. That's due to the fantastic talent on offer. We're currently tracking 2.5 million square feet of active demand. The Knowledge Quarter sits right at the center of this activity, as you can see on this slide, that's benefiting Regent's Place. We've rapidly grown the number of innovation occupiers across our portfolio. Our acquisition of Life Science REIT adds further high-quality assets in the Golden Triangle, serving a wide range of occupiers, such as Wayve in autonomous vehicles, Oxford Ionics in quantum computing, or Thought Machine in banking payments. On a pro forma basis, science and tech now represents 35% of our campus footprint. The name Life Science REIT understates the opportunity, which spans the entire science and tech ecosystem. Labs represent just 6% of the acquired portfolio. And interestingly, there are no life science companies among the top 5 occupiers, which together account for 50% of the rent roll. The acquisition delivers attractive economics unlocked through our scalable platform. We expect meaningful cost synergies through the elimination of corporate costs and efficient onboarding of assets. The acquisition is immediately earnings accretive, and we expect further earnings growth through capturing reversion and leasing vacant space, particularly at Oxford Technology Park, where much of the space is newly delivered. We've already made excellent progress in our first month of ownership, as you'll hear from David. And crucially, earnings accretion was achieved with no impact on NTA. I'm sometimes asked how we manage the higher covenant risk associated with smaller science and tech companies. In practice, we've seen very few failures, as you can see. But risk management remains critical. Smaller, higher growth occupiers typically take Storey or Work Ready space on shorter leases with limited rent-free periods, supported by rent deposits. Because the fit-out is generic, if a tenant does fail, we can relet quickly with downtime generally covered by the deposit. By contrast, we require strong credit profiles for our HQ space given the longer leases, higher incentives and more bespoke customer fit-outs. Though, ultimately, owning in-demand real estate is the best mitigant of credit risk. I'd like to now turn to development. It's a more challenging environment for this given higher build and funding costs. So it won't work everywhere, but in very core locations like here at Broadgate, where future supply is close to 0, the economics remain compelling. We are achieving premium rents, yields on costs over 7%, and we're mitigating risk through pre-lets, fixed price design and build contracts and partnerships. This is exactly the approach we're taking at 1 Appold Street, as you'll hear later from Kelly. And now to retail parks, a growing part of our business where the fundamentals remain very healthy. By now, you'll be very familiar with our 3As, affordability, accessibility and adaptability. These make parks the format of choice for the U.K.'s best-performing retailers, the grocers, essentials and omnichannel operators. Expansion by these retailers has driven strong absorption with vacancy down 340 basis points since 2021, unlike high streets and shopping centers where vacancy remains high. New supply is very unlikely, values remain below replacement cost and planning is extremely restrictive. Our portfolio is unmatched in terms of quality and scale. We have 10 million square foot of space within 30 minutes of half the U.K.'s population. And our deep long-standing retailer relationships are a key competitive advantage. This has translated into footfall that's grown more than 13% above the U.K. retail benchmark since 2019. Strong rental growth on our retail parks looks set to continue given the high correlation with occupancy. Our occupancy is 99%, and we delivered 4.4% rental growth last year. The over-rent that emerged post COVID has largely burned off through ERV growth. And today, we're leasing space around 6% above previous passing rent. Kelly will cover this and how we're also leveraging our retailer relationships to source attractive acquisitions and drive performance. But before that, I'll hand over to David to take you through the finances. David, over to you.

Thanks, Simon. Good morning, everyone. Three things from me today. First, I'll cover our financial performance for FY '26, then I'll update on the balance sheet and our approach to capital allocation. And finally, how our 5 earnings levers drive performance into the current year FY '27. Starting then with the financials. I'm pleased we delivered earnings growth ahead of the guidance I gave at the start of the year, underpinned by strong like-for-like growth, good progress on development leasing, especially through the second half and continued cost discipline. Like-for-like net rents grew 6%, adding 2.1p to EPS. And within this, campus growth was 12% as EPRA occupancy improved following leasing progress at buildings like Norton Folgate and 155 Bishopsgate. Retail also performed well, delivering 2% growth despite already high occupancy levels. And the fact we're now doing deals ahead of previous passing rent is a key driver of future like-for-like growth. Development leasing added 1.4p to EPS as recently completed schemes began to contribute to income. And we saw the benefit of our focus on admin costs, which are down 9%. And this, combined with a GBP 1 million increase in fee income, added 0.8p to EPS. These positive items were partially offset by 2 factors: the negative year-on-year movement in one-off items and higher finance costs. Within the one-off items, there was a provision release last year, mainly related to the receipt of legacy arrears that did not repeat in FY '26, and this movement more than offset the upside from surrender premium. Surrenders were higher than normal in the year, but in each case, they represent the kind of hands-on asset management as Simon described, allowing us to secure cash receipts and relet the space to new occupiers at higher rents. Higher finance costs reduced EPS by 3.4p. Of this, 1p was due to a 30 basis point increase in our weighted average interest rate to 3.9%, but the bulk of the increase is because interest that was previously capitalized on developments now hits the P&L as these schemes complete. This, in itself, reduced EPS by 2.4p. Although looking forward, the impact is now more than offset by the leasing we've delivered on these schemes. And that's one of the key reasons why we see earnings growth into FY '27 as being derisked, something I'll touch on later. Overall then, underlying profit was up 5% with underlying EPS up 1%. And so, in line with our dividend policy of paying out 80% of underlying EPS, the Board has proposed a final dividend of 10.8p, taking the total payout to 23.12p, up 1%. In terms of the more detailed P&L accounts, the 2 metrics I'd focus on here are the net rent margin and cost ratio, both of which have been impacted this year by specific factors. Firstly, the provision movements I just described; and secondly, increased void costs as developments completed. Going forward, the void cost impact will reduce as we benefit from the development leasing we've already delivered and fill the remaining space. At the same time, we, of course, remain focused on controlling costs. In this context, it's pleasing that admin costs are down 16% since 2022 despite inflationary pressures and down 9% this year alone. This will benefit the cost ratio, which I expect to be around 17.5% in FY '27 before reducing further to mid-teens in future years, whilst margins return to around 90% over time. Moving on to the balance sheet and NTA. Portfolio values increased 2.3% over the year, which along with profit growth delivered a 4% increase in NTA per share to 590p. Combined with the dividend paid, this delivered an 8.1% total accounting return within our target range of 8% to 10% for the first time since 2022. It's clear that our focus on making smart asset management decisions in the right sectors, driving rents higher while controlling costs has underpinned this performance. We remained active in the debt markets in the year, completing over GBP 3 billion of financing activity. More recently, the backdrop has, of course, been more volatile, but we've continued to access markets successfully, including a new loan secured on 100 Liverpool Street in April and our new commercial paper program, which is shorter dated by nature, but benefits the P&L. Looking ahead, with our diverse mix of debt types and duration, we remain well financed with flexibility on when and how we raise new debt. Leverage remains within our target ranges for this stage of the cycle. LTV is 39.2%. Net debt-to-EBITDA on a group basis is 7.7x, and our Fitch rating remains A with a stable outlook. So with GBP 1.6 billion of liquidity and no requirement to refinance until 2029, the balance sheet continues to provide the stable platform we need to grow. In this context, our approach to capital allocation remains disciplined and consistent. In fact, this slide is unchanged from half year. Our focus is on recycling capital out of more mature, lower-returning assets into higher returning opportunities. Today, that means continuing to invest in retail parks at attractive pricing and progressing best-in-class campus developments, but on a suitably derisked basis. Kelly will talk you through the framework of how we think about derisking development shortly. As ever, we take all capital allocation decisions in the context of shareholder returns, including the relative returns and EPS accretion available from share buybacks, for example, when we have proceeds to invest following significant disposals. Our acquisition of Life Science REIT demonstrates how we are alert to opportunities to drive growth in an earnings accretive NTA-neutral manner. It allows us to scale into a sector with strong tailwinds using our existing platform and is immediately earnings accretive, adding 0.3p to EPS in FY '27 with further upside moving forward, primarily from the lease-up of the newly delivered space at Oxford Technology Park. We've already repaid the legacy company debt using cheaper British Land facilities, integrated the 5 assets into our portfolio at minimal incremental cost, and we're making good progress on initial leasing with 56,000 square foot of newly delivered space under offer at Oxford Technology Park. Turning now to our 5 earnings levers. This is the framework we use to deliver consistent cash-generative growth. And I'm pleased at how in FY '26, we've delivered well against these, including good like-for-like growth, continued cost rigor and strong progress on development lease-up. Fee growth has been slightly below what we target medium term, and that's largely because capital activity was also lower in FY '26 than we would normally expect. And again, Kelly will expand how we see the outlook for investment markets in a minute. Principally, though, these levers were about the building blocks of earnings growth for FY '27 onwards. And here, I've set out how we expect them to trend over the medium term, which again is consistent with half year. The first 3 levers demonstrate how we expect to generate around 4% core organic EPS growth per year, with capital activity adding a potential further 2% EPS growth, meaning overall, we expect to deliver sustainable earnings growth of between 3% and 6% per annum going forward. Specifically for FY '27, there are a few things I would highlight. First, given the occupational strength of our core markets, we are confident in delivering like-for-like growth at the top end of our target range of 3% to 5%. Second, we will benefit from the development leasing completed over the last 18 months, which will deliver around GBP 40 million of rents in FY '27. Third, we remain focused on leasing our remaining development space while retaining a firm grip on admin costs, which will both drive an improvement in our cost ratio to around 17.5% this year based on the expected shape of our P&L. Partially offsetting this, we do expect a continued further gradual increase in finance costs, likely at the top end of this range of 10 to 20 basis points given our hedging profile. And finally, within the capital recycling lever, as I described, the Life Science REIT acquisition is immediately earnings accretive. All of which underpins our confidence in delivering at least 30.5p of EPS for FY '27. That's 6% EPS growth of FY '26 levels, which is a good place to hand over to Kelly.

Thanks, David, and good morning, everyone. Simon's covered the market backdrop and our strategy. So what I want to do now is bring it to life. I'll talk you through the activity and value creation we're seeing on the ground and share some examples of where our hands-on approach to asset management really delivers. Starting with valuations. This is fundamentally an occupational story. Portfolio values were up 2.3%, driven by ERV growth of 4.9% and stable yields. ERV growth is at the top end of our 3% to 5% guidance range, reflecting the strength of leasing we've delivered. You can see the same pattern across both campuses and retail. Campuses are up 2% with ERVs up 6.5% and retail and urban logistics are up 2.7% with ERVs up 3.6%. Geopolitical and macro volatility remains very evident, but the operational performance has shown no signs of pausing with leasing volumes accelerating in recent months. At our campuses, we completed a record 1.7 million square foot of leasing, 6% ahead of ERV and 20% ahead of previous passing rents. This reflects tight supply for well-located high-quality space. Around half of this annual activity was delivered in the final quarter despite the more volatile macro backdrop. This continues into FY '27 with a further 295,000 square feet under offer as at year-end, 17% ahead of ERV. And in the 6 weeks post year-end, a further 228,000 square foot has gone under offer. Over half of our deals have been on previously vacant or newly delivered space. This strong leasing drove occupancy to 95% at year-end from 92% in September. That includes Norton Folgate, now 94% let and under offer. Over at Regent's Place, in October, we launched One Triton Square. This building is a perfect example of our hands-on approach. We proactively took the building back from Meta in late 2023, received a GBP 149 million surrender premium, brought in Royal London as a JV partner early 2024 and repositioned it as a world-class science and tech building. Leasing velocity has exceeded expectations with the building 94% let, including all of the lab space, just 7 months after practical completion and achieving rents 40% ahead of what Meta were paying. Occupiers include Gilead announced earlier this year and more recently, Anthropic, one of the world's leading AI companies who've signed for 158,000 square feet. This is our sixth deal with Anthropic at Regent's Place and a great illustration of how our campus model supports growing businesses as they scale. Stepping back, Regent's Place as a whole has had a strong year as it continues to transform. The 1.4 million square foot Knowledge Quarter campus benefits from proximity to leading academic and research institutions. Leasing this year has been 12% ahead of ERV and ERVs across the campus are now almost 7% higher year-on-year. This has been driven by a broadening of the occupier base with a science and technology focus. Science and tech occupiers now represent over half the campus rent, up from 1/3, 5 years ago. Euston Tower is the next chapter. As we move forward with our search for a development partner, it's a great opportunity to build on the campus' position as London's fastest-growing destination for innovation and high-growth businesses. And British Land will be moving head office to the campus in just a couple of months. So we're excited to have a front row seat to everything that follows. While AI and tech is an important source of incremental demand, professional and financial service activity remains incredibly robust. Our letting to lawyers HSFK at Broadgate 1 Appold Street development signed in February and completing in 2029 is a good example. The 21-year lease for the office space sets new benchmark rents for Broadgate and the project meets all our development criteria. Prime campus location, meaningful pre-let of between 60% and 100% of the office space, construction cost certainty and flexibility to bring in an additional capital partner alongside GIC to manage risk and drive fee income. Turning to the offices investment market. The occupational backdrop is well recognized as very strong, and that strength will feed through to investment appetite in time. At the start of the year, we were seeing encouraging signs with renewed appetite for larger lot sizes. Since then, the Middle East conflict and U.K. political situation has weighed on the rates environment, but it's a question of when the recovery continues, not if. The occupational fundamentals are too strong for investors to ignore. Post year-end, we've exchanged or gone under offer on GBP 176 million of asset sales and have a number of other live processes underway. We'll update you on these in due course. Turning now to our retail parks, which remain virtually full. Leasing volumes are strong with 1.5 million square foot completed at 9% above ERV. Importantly, deals are now being agreed above previous passing rents, reflecting very limited new supply and strong occupier demand. And it marks a key inflection point. For several years, rental growth absorbed historic over rent. We're now through that phase, so rental growth is flowing through into like-for-like growth. Demand on retail parks also continues to broaden. Compared with a decade ago, more occupier types have moved from marginal to mainstream, including gyms and leisure, drive-throughs, discount grocers like Aldi and Lidl, EV charging and health service uses. This matters because it supports higher footfall, longer dwell times and greater cross spend, which will support the next wave of sustainable rental growth. To finish, I'll touch on some examples of recent active management in retail parks. This is one of the things we do better than anyone else. In November 2024, we acquired Orbital Retail Park. At underwriting, the plan was upsize M&S Food into the former Homebase unit and relet the smaller vacated M&S space to another leading national operator. We agreed both deals in principle before we purchased, acquiring with Homebase in situ, recognizing the pressure they were under and with direct visibility from our discussions with M&S that they wanted a larger store. M&S opened pre-Christmas, just over a year after acquisition, and they tell us this is their fastest new store from signing to opening and has been trading extremely strongly. The asset has delivered us a 21% IRR since acquisition. Telford is another good example of hands-on asset management. We bought Telford Forge Shopping Park in October 2024, followed by the neighboring park last month, acquired at an attractive price, reflecting some vacancy. To create value across both parks, we have agreed a deal to bring a major national retailer to Telford Forge; to make room, we'll relocate some existing tenants into the vacant units next door. We've also added everyday services and EV charging to drive footfall and dwell time, and we expect combined returns of around 11%. This is exactly the kind of opportunity our expertise allows us to find and execute, less competitive, more attractively priced and difficult for others to replicate. We have more in the pipeline. It's also important that we recycle capital when we've delivered our business plan, and we see more attractive returns elsewhere. That was the case at Harlech, where on completion of a regear and enhancing the scheme's income profile, we sold the park in March this year at 10% ahead of book. So to summarize, we've had a year of record leasing in campuses, driven by strong occupational fundamentals. Retail park rents are now growing above previous passing, a meaningful inflection point driven by broadening demand. And we're adding value through active asset management and capital recycling. And I'll now hand back to Simon.

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

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

Thanks for that question. Yes, it's a great question. I think looking back 5 years ago when we were coming out of the COVID, there were definitely question marks over what does it mean for the future of office demand with regards to hybrid working. But I think sitting here today, we can say that debate is over. Many companies across London are mandating their staff to come back 4 or 5 days a week. And ultimately, those companies are having to provide space for peak utilization. And today, in London, we're seeing four companies grow versus 1 company contracting in terms of the ratio of contractions versus companies growing. So yes, it's definitely an area where initially coming out of COVID, we saw people downsizing and potentially contracting space. But since then, we've seen companies realize, actually, people are back in the office 4 or 5 days a week. So the original or more space is now needed.

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

Yes. Great question. We're obviously getting a lot of questions at the moment about AI. What does AI mean for the future of office space? And is it going to cause disruption to the industry? And obviously, there are some longer-term questions there that need to be answered. But on the ground today, AI is definitely causing an uptick in demand across London. We've seen that across our own campuses and across various other assets in London. I mean, we started a science and technology strategy in 2021, 2022, where we were focused on fast-growing companies, and we thought this sector was a sector where we could see some growth. Obviously, we were not picturing at that time to see the level of growth we've seen from AI companies. But ultimately, our campuses are very well placed to help customers who are looking to grow. Anthropic are a great example of that. They started on our campus, and now they've done their sixth deal with us, taking an extra 154,000 square feet of space. So being on a British Land campus has enabled them to grow from 14,000 square feet to 50,000 square feet, and now they're at 200,000 square feet in our campus. So definitely an area of demand we're seeing today. But also, we're seeing great demand from not just the science and tech tenants. We're also seeing very strong demand from financial services, professional services and law firms like HSFK, who have just taken a large pre-let at our 1 Appold Street development.

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

Yes. Again, that's definitely something we think about when we're looking at the covenant risk to our tenants across all of our tenants, of course. And some of these science and technology companies are definitely not necessarily cash flow positive at this point or earnings positive. But a company like Anthropic, they're valued at close to GBP 1 trillion, $1 trillion today. So although they may not be generating profit today, they are -- they've got a lot of cash flow. And also one area what we're looking at when we're looking at covenant risk for these type of occupiers is the type of space they're taking. So if we're offering large floor plate HQ space, these are long-let spaces to high-quality, strong covenant tenants where we're offering rent-frees, et cetera, tenant incentives. For lower-quality tenants where there is a risk that some of these companies could not exist in 5 years' time, they're more often taking smaller footprint buildings and they are giving us rental deposits. They're on fitted managed space, which means that if there is a failure, we can quickly get somebody else in to fill that void, and it's often covered by the rental deposits we take for those customers.

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

Yes. Of course, we're always looking at the demand and supply fundamentals across both of our markets, and they're both very tight at the moment. We have a very good view of the pipeline across London. And ultimately, if somebody has not started a development project today, they're not going to be delivering a building in 2 or 3 years' time. So we're quite clear on what buildings are coming. And Savills have looked at their forecast and they're forecasting over 10 million square foot shortfall of new quality space in London over the next 5 years due to the fact that people are not building. And part of the reason people are not building is obviously the inflation we've seen previously. And now the latest increase in interest rates has further exacerbated that. And I think you're going to see an even further slowdown in terms of the supply picture that's coming in London.

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

Yes, great question. I mean it's definitely a factor of both of those things. In the retail business, it's definitely -- it's more pricing at the moment. And obviously, we're -- important, it was -- we lease -- we're now leasing ahead of previous passing rents on our retail parks. It was over 6% in the second half of the year, which is very pleasing. In the campus business, it's probably more on the volume side of things. We're definitely getting some like-for-like growth on the pricing side. But we had a large vacancy coming into this financial year because we just delivered some new space at buildings like Norton Folgate. We're having new developments like One Broadgate come through, One Triton Square. And this year, our EPRA occupancy has increased from 83% to 91%. So obviously, that increase in occupancy has been a key driver of like-for-like growth that we've seen in the campus portfolio.

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

Yes. Thanks for that question. Yes, I mean, retail parks definitely underperformed in the late teens coming into the early 2020s. As rents were rebasing, some of the rents were unaffordable for retailers. But we reinvested into that sector in 2021. And since then, it's been the best-performing sector across real estate. And our retail parks have outperformed the benchmark as well. So we're very pleased with the performance of retail parks. And I think importantly, what we're seeing in retail parks today is the demand is broadening, if anything. So you have the likes of Lidl, Aldi, they've joined the retail park format and they would not have been there 5 to 6 years ago. And you're also getting more fashion retailers, et cetera. So we're seeing a broadening of demand, which is very important. And of course, there is very limited supply coming in the retail park market. The planning is very restrictive. And ultimately, today, you can buy a retail park for less than it would cost to develop a new one. So there's going to be no supply coming and the demand remains strong.

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

Yes. Very good question. I mean we're obviously always looking at our occupiers and making sure that the health of our occupiers is strong. Obviously, I won't give any specific names. But ultimately, we've got a very diverse occupier base. And our -- when we're looking down the list, there are a couple of occupiers where we may be slightly -- have slight concerns around. I think this is probably more so in the retail market. There are often -- you'd see a CVA or administration every year. But ultimately, with the strong vacancy -- the occupancy we have in the portfolio at 99%, when we've had units come back from CVAs or administrations, we've done very well on those units. We've been able to bring new retailers onto the parks very quickly and ultimately drive rents higher. So at this point in time, there's no huge concerns that we're looking at. But ultimately, we see if there are some occupiers at risk, ultimately, that's a chance at the moment for us to drive the rents on those parks higher. So yes, no huge concerns about retailers at this point.

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

Yes. Of course, that's a question for many retailers across the U.K. They've got lots of pressures in terms of their cost basis. Today, occupancy cost ratios have come down from the mid-teens in retail parks to around 9% today. So the format is very affordable, and that's why we like -- one of the main reasons we like them as well. They're affordable for retailers. They can open up a new unit on a park and trade profitably from that unit. And I think for us today, we're very pleased with that occupancy cost ratio at 9%. We wouldn't want to go materially higher, but there is definitely some room there for it to grow. And I think importantly, what we saw coming, in April is that the business rates bill on our retail parks actually came down about 5%. So that's some benefit to the retailers as well. But it's something we, of course, keep an eye on. But I think given the strength of the demand, the lack of supply, we definitely see some room for growth on the rents there in the retail parks.

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

Yes. Thanks for that one. Yes. I mean, yes, LondonMetric reported last week, and they did deliver double-digit growth. In terms of earnings per share growth, I think that was closer to around 2% growth. And obviously, that's the measure that we look at as well. They've done very well in recent years in terms of M&A opportunities and various acquisitions that they've made. So they've managed to do some -- a good level of growth inorganically, which has been very good for them. Obviously, as a business, we are 2 different businesses. They are a triple net business, probably a lot lighter in terms of the asset management. We're a lot more hands-on in terms of asset management that we do as a business, as Simon and Kelly discussed in the prepared remarks. And I think at this point, with the strength of the markets, I think it's a great time to actually be a very active manager of assets and drive -- be able to drive those rents and profits higher out of those -- out of the real estate that we own. And of course, we're guiding to 3% to 6% EPS growth over the medium term. And looking into FY '27, we are guiding to a 6% EPS growth.

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

Yes. Thank you for that one. I mean, as we're looking ahead into FY '27, we have our core drivers of earnings growth. So going through those in turn. Looking forward into next year, when we're looking at like-for-like growth, we're expecting that to be at the top end of the 3% to 5% range that we provide. And then we also are expecting to see admin costs remain roughly flat in the year. We'll get some inflationary headwinds, but we will look to offset those cost increases. Then we look down into finance costs. So looking ahead into next year, we will see finance costs continue to increase, and we're anticipating another about 20 basis points increase in our weighted average cost of debt. And then moving down on to development and capital recycling. So one thing going into the next financial year, we have the benefit of the development leasing that we did at the end of last year, which was very strong. And as David mentioned, we have GBP 40 million of rents signed on our recently completed developments as we look ahead into FY '27, which will be a key driver of earnings growth. And then in terms of the capital recycling in terms of what we're assuming, there's very limited additional capital recycling that we're assuming at this point. But what we have done going into the year is the acquisition of Life Science REIT, which adds a further 1% EPS growth into next year.

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

Yes. Thank you for that one. So as I said, looking into next year, the contribution to earnings is about 0.3p or 1% to EPS growth. So as we look at the Life Science REIT portfolio, essentially starting -- standing there today, there's about GBP 18 million worth of net rents in the portfolio, bringing that portfolio of 5 assets onto the British Land platform, there's very limited incremental cost in terms of admin costs associated to the portfolio. And then we brought on the Life Science REIT debt, about GBP 130 million worth of debt onto the British Land platform at a lower cost. So all of that's been done. And I think it's -- the further earnings growth is going to come from leasing up vacant space in the portfolio today, which is primarily at Oxford Technology Park. That's about GBP 3 million of rents. There's also a further GBP 2 million of rent to come from Oxford Technology Park and completing the further development there at that park. And then there's a further GBP 2 million of earnings or rental income to come from capturing reversion across the 5 assets in that portfolio.

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

Yes. Of course, we look at finance costs as we go down our earnings levers. And when we set our earnings levers in November last year, we guided to around 10 to 20 basis points increase in finance costs per year. We've reiterated that guidance in our results last week. And I suppose sitting here today, 94% of our debt is hedged today. And looking forward over 5 years, that's about 71% of our debt is hedged. So with the 5-year swaps probably about 4.3% today, when we put on our incremental cost of borrowing on top of that, we're essentially going to -- eventually, our weighted average interest rate is going to increase from around 3.9% today to about 5% of the current cost of debt. And the way our hedging profile works means that, that should happen fairly gradually per year. So next year, we're guiding to around 20 basis points increase in our, and then we'll see what happens in terms of the rate curve in terms of guidance for future years.

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

Yes. Thanks a lot. I mean we look at a few key metrics when we look at thinking about the debt within our business. So the 2 key metrics we're looking at is LTV and also net debt-to-EBITDA on a group basis. So these are 2 metrics, of course, that Fitch are very interested in as well. We have an A rating from Fitch. And we aim to keep our LTV below 40%, and we want our net debt to EBITDA to be below 8x on a sustained basis. So sitting here today, our LTV and net debt to EBITDA are within these ranges. So we're comfortable where we are. And importantly, we're also under offer on GBP 176 million of asset disposals since year-end, which will help us fund the future development pipeline, et cetera, within the business. So sitting here today, we're comfortable with where our debt metrics are.

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

Yes. Yes, that's -- so capital allocation, our framework has been set out quite clearly within the presentation. So when we are looking at getting proceeds in from the disposal of a mature asset, we kind of look at it in 3 parts. So it's either going to be -- we're going to be looking at potential acquisitions of standing investments. Today, that's retail parks at 7% yields, entry yields and also with the strong earnings growth on that, you get to a double-digit IRR fairly easily on those acquisitions. This also includes committing capital to our development pipeline on a derisked basis, so that means securing a large pre-let on any development, locking in the cost -- getting cost certainty on those developments and also potentially bringing in partners down the line. And then we look at these things in the context of shareholder returns. So at any point in time, we will, of course, look at the relative returns of a share buyback versus the relative returns of those options to decide where the best place to deploy that excess capital may be.

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

Yes. Thank you for that one. I mean, yes, very pleased with the share price reaction since our results. Of course, our share price has been influenced by macro events over recent times. And of course, the increase in rates has seen an impact to our share price. I think ultimately, we, as a business, are very focused on -- we're very focused on earnings growth, and we're very focused on delivering that 8% to 10% income-focused total accounting returns. And we believe if we consistently deliver those 8% to 10% total accounting returns, which we importantly delivered this year. Going into the future, that should lead to a rerating of the stock. So we're very focused on driving that earnings growth and delivering that total accounting return.

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

Thanks very much for that. So yes, as was said in the main presentation, these are some of the strongest markets we've seen in terms of the campus and retail park portfolios. In both markets, we're seeing very strong demand, limited supply, which has given us the confidence that we will continue to see strong earnings growth across the portfolio. And ultimately, that should lead to strong earnings growth as well. And we have good visibility of that earnings growth across the portfolio and reiterate our 3% to 6% medium-term earnings-per-share outlook.