Capital & Regional Plc (CAL) Earnings Call Transcript & Summary

Good morning. Welcome to our 2022 full year results presentation. I'm Lawrence Hutchings, Chief Executive, and I'm joined today by our co-presenter, Finance Director, Stuart Wetherly; and we have members of our team in the audience, who will assist us with any Q&A at the end of this presentation. It's great to be back in person and here at Numis, brilliant to see so many familiar faces and also on our webcast, the guests joining us on our webcast, welcome. Let's turn to the headlines. It's comforting despite the turbulence in capital markets last year that the retail sector continues to be resilient. We acknowledge the cyclical challenges and the pressure that is placing on households in the communities that we serve. The role of physical retail is more certain today than at any time over the past 7 years and this is benefiting our business. Our focus on nondiscretionary and needs-based retail and services remains relevant. The high unit cost economics of online and the consumers return to the store post the restrictions have combined to positive effect as evidenced by these operational metrics. Our footfall has continued to recover, 53 million visits last year, which was 2 million up on the previous. We signed 109 new leases, which grew our occupancy to 94.1% and our rent collection at 97.6% is returning to the pre-COVID levels. Combined, this has led us to GBP 10.3 million in adjusted profit for the year, up from a restated GBP 6.5 million in 2021. Our dividend of 5.25p for the full year after declaring this morning the 2.75p dividend for the second half, is a result of this improved adjusted profit performance. It's worth reflecting for a moment on our successful refocus, restructure and recapitalization project that we launched in November 2021. This created balance sheet stability for the business by reducing our leverage from 72% to 41% in 1 step. It enabled us to focus on our operational business last year, which has been both liberating and beneficial to double down on our proven community strategy and to focus our collective energy on accelerating our operational recovery post-COVID. Let's explore this recovery in more detail. We refer to this slide as the building blocks to recovery and growth. We have a considerable amount of control or influence over these building blocks or drivers and they speak to the strengths of our platform in leasing to rebuild occupancy and convert temporary lets to permanent leases in growing our footfall and therefore, our carpark revenue and in delivering CapEx projects and a significant uplift in income that these projects generate. Another factor is the ongoing recovery at Snozone, along with the benefits from the Madrid slope that we took on at the start of COVID. In addition, we were supported by several external drivers or tailwinds. The consumers returning to the physical store known as the second wave of structural change in retailing, an increased focus on stores by retailers, driven by improved store sales and the rising cost of online; and thirdly, by business rate savings, more on that later in the presentation. The combination of these factors will grow our income, our adjusted profit and portfolio value. Stuart will detail more on this later in the presentation. I'd like to look at our operational performance and the levers of these building blocks in more detail. Both for the year-end reporting period, and also some insights into what we're seeing on the ground post the Christmas period. We've learned a lot about our community shopping center strategy since we launched it in December 2017. Globally, these centers have proven to be resilient and continue to be so. They are essential parts of community infrastructure. The key attributes that define these types of centers include accessibility and by a wide range of modes, be it public or private transport, so great bus, tube and overground stations and, of course, car parking, where we are often the largest and most accessible carpark in the town centers in which we operate. We have comprehensive guest services, including amenities, Click & Collect and community spaces, where often the largest enclosed public space in the town center, and therefore, the focal point of our communities. The other key element is merchandising, which we refer to as the core pillars. You can see on the right side of the slide, grocery, pharmacy, health care and beauty, food catering and value apparel. Our leasing focus and CapEx program are delivering this remerchandising and repositioning on the ground. And I'll detail some of these projects in the next few slides. This customer proposition needs to be tailored importantly to the needs of these vibrant and very diverse communities, that's key to our success. I mentioned earlier the return to the physical store and the new role of store. An experienced U.S.-based retail CEO described the shift as the second wave of structural change in our sector, the return to the store. Stores have proven their value and they have 3 emerging core roles in an omnichannel retail world. The first is store-based sales, which is the traditional role. The second, they're lowering the cost of forward and reverse logistics for retailers, accepting that online-only business models have higher costs and therefore, lower profitability for retailers. Consumers also prefer the flexibility and convenience of store-based collection and return, and that is building retailer brand loyalty. The third role is recruiting new customers, a new and growing area as the cost of recruiting a new customer through a store is now cheaper for the first time for many retailers than through digital or online channels. Our footfall performance and recovery is evidence of the importance of physical stores. We're up 27% on 2021, and we're at 84% of the 2019 base year for the full year '22. Importantly, an evidence of this growth and the return to the stores is that the second half was 88% of the 2019 numbers. In total, this footfall growth translated to an additional 2 million visits during last year. Our footfall recovery and the return to the physical stores also drove our leasing performance in 2022. As we rebuild our occupancy back to the 2019 levels, we concluded 71 new lettings and 38 lease renewals, contributing GBP 5.4 million in income. Our affordable GBP 14 per square foot rents, and the improving supply/demand dynamic in our locations has enabled us to conclude deals on average at a 34% premium to the previous passing rent and a 13.7% premium to the ERV. Our leasing is a key element in rebuilding our income and value, one of our building blocks to recovery and growth. We are seeing this leasing momentum continue into 2023 as evidenced by our leasing pipeline on the right side of this slide. 36 deals are either signed or in solicitor's hands, reflecting in excess of GBP 1.5 million in income. We have a further 12 deals where terms are agreed. This leasing momentum is enabling us to rebuild occupancy through firstly leasing vacant shops. Secondly, by converting our temporary or short-term lets that typically just cover costs like business rates and service charges, we call this our headline occupancy. We're in the process of converting these temporary lets to permanent longer-term leases, which also contribute towards our base rent. This is our base occupancy or economic occupancy. Our continued performance in leasing in both leasing vacant shops and converting temporary let shops is building our income and recovery in earnings and value and we're making solid progress on this converting temporary lets. The gap last year fell from 7% to 4%, as we can see on the table on the left. Our activity is not -- leasing activity is not just reducing vacancy and driving our income. It has a critical role in remerchandising and repositioning our centers into the proven community center model. Since launch in 2017, we've increased representation in our key nondiscretionary categories, our merchandising pillars. This includes grocery, pharmacy, health and beauty and services. At the same time, we've been reducing our exposure to discretionary categories like homeware and fashion, where our focus is increasingly on value apparel segment, which continues to perform strongly. And it appeals to our family market, representing our largest customer segment. An additional benefit is the transformation of our occupier base towards the community center pillars. These value-orientated retailers have continued to perform well over the Christmas peak trading period, consistent with what we're seeing in other markets globally. We are conscious that the debt markets are making refinancing events challenging for retailers. However, retailer restructuring remains at very low levels by recent historic standards. The other area I wanted to pick up was business rates. Our leasing progress and momentum is being supported by long overdue changes in business rates. We're providing -- these are providing a much welcome boost to physical retail. Where we balance -- where the rebalancing of the burden of business rates across the property sector. Our communities, retailers and income will benefit through a typical 30% to 35% reduction in business rates. This is lowering the total cost of occupation for our retailers and importantly, supporting the role of the store in the ongoing evolution of retail services and leisure. These cost reductions and business rates mean our community centers are more compelling and will support growth in rents in the medium term. I wanted to turn to our CapEx projects. This is the third area that's driving our recovery and the future growth of our business. It is an additional benefit that we've seen from our balance sheet stability is our ability to return back to delivering CapEx projects into our portfolio. We adopt a master plan approach to our shopping centers, which encapsulates all the projects we believe are required to maximize income and value in line with the community strategy. We then break fees down into a series of discrete and stand-alone projects. And this gives us a lot of control over the speed and timing of delivery. These projects are accelerating the remerchandising of our centers, consistent with the community strategy, they're leasing let, typically fully let and they're growing our income and value. The current pipeline includes the NHS and TK Maxx projects in Ilford, which is phase 2 and 3 of a 6-phase master plan. In Wood Green, we're subdividing the former WHSmith into 3 units, and we're delivering the NHS diagnostics facility phase 2. Our ESG upgrades are also part of this to meet our net carbon zero targets. We are relentless and exploring ways to improve our relevance and add value to our assets. Let's take a closer look -- Let's take a closer look at these pipeline projects. Our Walthamstow food hall project will redefine food service delivery in a community shopping center. It's pleasing to be on site with this project, following signing agreements for lease with local operator, CRATE which we announced in December last year. We have taken the former 1980s food court and transformed it following the fire in the summer of '19 into a 15,000 square foot contemporary space. CRATE, operate an existing facility in Walthamstow, and they've impressed us with their detailed knowledge of the local market and their proposals for the space. We selected them from the 7 offers that we've received. CRATE will have 7 food and beverage offers, including a bar, a community space for events and a mini golf leisure offer. We're on site and we're programmed to open this summer. Over to Ilford, we were making really good progress on our repositioning master plan. Following successful leasing and opening of the Department of Work and Pensions and the majority of the top floor of the former Debenhams department store, which was phase 1. We're on site with phases 2 and 3, a new 25,000 square foot TK Maxx store, which will open late this year and phase 3, 20,000 square feet of primary care facility for the NHS, which will open in May next year. We have offers on kids play for the balance of the top floor of the Debenhams space, which we're calling phase 4. And the final 2 phases on the lower level, we're targeting grocery and convenience offers between the new Crossrail station and our carpark. We're in the planning and pre-leasing phase on both these phases and their forecast for delivery late next year or early 2025. Turning to Wood Green, and the NHS Whittington Health Trust are progressing with phase 2 of the Diagnostics Hub. The first diagnostics facility in the U.K. shopping center. It adds 30% of additional floor space in an underutilized basement area. Phase 2 provides space for MRI and 1 CT scanner to increase capacity following the success of phase 1. There's further discussions with the Whittington Trust on additional patient-facing facilities in Wood Green. The NHS Diagnostics Hub is not the only initiative being delivered in Wood Green. We have the Bridge Link food offer, where we're converting partially vacant and partially temporary led space into 6 new food catering kiosks and common area seating. It's fully leased. We will achieve a 14% yield on cost when the project opens early this summer. In addition, we're converting the former WHSmith into 3 tenancies, Wingstop, Wendy's and Putt shack. We're anticipating a 10% yield on cost and projects going to tender in the coming weeks. Over in Walthamstow, our focus on unlocking value is not refined to our retail ground and lower-level areas. We continue to explore, conceptualize and appraise further mixed-use diversification and densification of our centers. They're located in some of the most vibrant and growing areas of London and the Southeast. And Walthamstow is a great example. As part of the planning consent for the wider development, we have added value through regearing and extending our headlease with a council to 250 years. We're excited to see the progress that Long Harbour are making with their contractor tied at Walthamstow, as you can see in the photo on the bottom right of this slide. The first phase is a twin tower residential development above our current loading base, which includes 495 BTR apartments. The future phases 2 and 3 provide 50,000 square feet of retail, 43 apartments and a new town square with a future Victoria Line station entrance. Our progress at Walthamstow is a testament to the dedication and focus of our wider team, including James Ryman, who is in the audience this morning. There has been a lot of discussion in various forums about turning retail into residential or mixed use. We received our planning consents in 2021. And last year was focused on enabling works, vacating some retail areas and demolition. Completion is scheduled for the towers for 2025 when we will also receive the affected retail stores back for us to re-lease and generate income from. Then it's about the future phases. They're not built into our valuations. The additional retail and the additional residential where we already on the retail, have demand from additional supermarket operators to join ASDA and Lidl. We continue to explore Walthamstow type mixed-use densification opportunities in our portfolio. We're continuing to work with our experienced residential and hotel developer, FEC. We have early-stage engagement with local authorities, and we're looking to move to pre-application consultation in 1 of our other London centers over the coming months. These potential projects include a mix of uses, including residential, hotel and offices, potentially for education and services users. Turning to our Snozone business, another recovery and growth story. Nick and the team are doing a great job recovering earnings in the U.K. Revenue increased from GBP 6.8 million in 2021 to GBP 13 million in 2022, that corresponded to an increase in EBITDA to GBP 1.4 million for '22 versus GBP 800,000 in 2021. In Madrid, the team are delivering on our business plan for the [ slope ]. We acquired it in 2021. Our income for 2022 was GBP 3.5 million, which is up 65%. We're looking forward to a full year contribution post the COVID restrictions in Madrid, which extended for longer than they did in the U.K. Madrid also features our first solar array, reducing our January '23 energy consumption by a significant 40% versus January last year. Strong forward booking -- we're seeing strong forward bookings as people return to skiing post the pandemic and we continue to explore growth opportunities for Snozone. In the interim, we're anticipating continued recovery in earnings. And I'd like now to hand over to Stuart to take us through the financials. Thanks, Stuart.

Thank you, Lawrence, and good morning, everybody. Pleased to stand here and report a good set of results, demonstrating the continuing operational recovery of the business. Firstly, a reminder that 2022 is a busy transactional year for the company. In May, we completed a deal to buy out the debt on Hemel Hempstead at a 51% discount to its face value. This resulted in a GBP 12.5 million uplift to our NAV, equivalent to 7.4% and secured the future of the asset within the group. Also in May, we completed an amendment to our Ilford loan facility linked to the new leases for the Medical Center in TK Maxx. The amendment provides us with a covenant package of waivers and relaxations facilitating the investment more than GBP 10 million of CapEx, as Lawrence talked about. Also in May, a busy month. We agreed with the lender to launch a process to dispose of our Luton asset. This is expected to complete imminently. The changes we agreed to the statutory entities resulted in deconsolidation and an increase to our NAV of GBP 6.8 million. In July, we completed on the sale of Walthamstow residential opportunity, receiving GBP 21.6 million from Long Harbour, as Lawrence mentioned, are now on site, having commenced the development of the almost 500 flats above the center. And in August, we completed on the disposal of our Blackburn center at a premium to its December '21 valuation. Turning to the results for the year. Net rental income improved by 16.9% to GBP 23.5 million. This is primarily as a result of improved occupancy and rent collection, the latter enabling the net release approximately GBP 1.4 million of bad debt provisions. The improvement in NRI has driven a similar quantum of increase in adjusted profit to GBP 10.3 million for the year. Both NRI and adjusted profit for 2021 have been restated to reflect an accounting change in the treatment of COVID rent concessions, as you've seen from some others in the sector. This has reduced the 2021 number by GBP 1.6 million and increased 2022 by GBP 0.3 million versus what it would have been. The IFRS profit of GBP 12.1 million reflects the net impact of the adjusted profit, the uplift from the Hemel and Luton transactions partially offset by 3.6% revaluation loss over the year, driven by movement in market yields in H2. EPRA NTA as a result has increased to 103p per share. Despite the revaluation loss, net debt and net LTV have both significantly improved. These are primarily due to the Blackburn and Walthamstow proceeds with net LTV having reduced to 41% and 49%, 12 months ago and 72%, 18 months ago. This leads us with a debt portfolio with an expected average maturity of 4.5 years, an attractive interest rate that substantively fixed for the term of the loans. This has all supported us in reinstating the dividend. We're pleased to recommend a final dividend 2.75p per share, resulting in a total dividend for the year of 5.25p. Drilling down into adjusted profit. NRI, as noted, has benefited from the improvements in occupancy and rent collection. Rent collection has returned to essentially pre-pandemic levels with collections for 2022 approaching 98%. Interest payable is reduced by GBP 1.5 million. This primarily reflects the impact of the mild debt restructuring in November '21 and also the subsequent paydowns during 2022. But the full year benefit of the latter totaled GBP 60 million across the whole year, will reduce interest in 2023 by about GBP 1.8 million. Snozone, as Lawrence mentioned, recorded an EBITDA of GBP 1.4 million, reflecting a more normalized trading year and the strong start to this year provides confidence on improving on this further in 2023. External management fees have increased due to recognizing Luton fees as external following the deconsolidation. This offsets partially the loss of contribution as a managed asset. Management fees include about GBP 2 million in relation to Luton and Redditch that are expected to see some completion of the planned sales, which are expected to happen in the coming weeks. Fixed central overheads are in line with 2022 with efficiency savings offsetting inflation. We're targeting a net saving of 10% in 2023, partly driven by the lower number of assets under management. Valuations are relatively stabilized since June 2021. Like-for-like movement over '22 was a decline of 3.6% and outperformance of most real estate sectors. Change was due to the market-driven expansion of risk-free rates in the second half of the year with valued rent and ERV levels, both increasing over that period. This next slide provides a reminder of the impact -- the transactional activity has had in our key net loan-to-value ratio over the last 18 months. And despite the valuation decline in 2022 and net LTV is held at 41%, 800 basis points lower than December last year, primarily due to the Blackburn and Walthamstow receipts. The actions undertaken have left us with a long-term secured debt position. Expected average maturity of 4.5 years and average interest rate cost of 3.58%, that is 98% fixed. On the [ mall ] , we paid down GBP 60 million of debt during the year, and it paid down the entirety of the more expensive GBP 35 million tranche that was taken out to support the November '21 restructuring. On Ilford, we signed a loan amendment that I mentioned earlier. This provides improved covenant terms that run through to the end of '24. And importantly, also a conditional option available at the end of this year to extend the term by a further 18 months to September '25, which means we don't have any expected loan maturities until '25. And finally, on Hemel Hempstead, we drew a new GBP 4 million loan facility with a subsidiary of our strategic residential partner, FEC. This supported the purchase of the previous loan at a circa 50% discount to its face value. The improved operational performance stabilized valuation position and the actions taken significantly reduced debt over the last 18 months, enabled us to resume dividend payments during the year. And we're pleased to propose a final dividend of 2.75p per share resulting in a total of 5.25p for the whole year, in line with the interims and to mitigate the impact on cash and leverage, we'll again be offering a scrip option. Finally, this slide sets out a road map for further earnings recovery for our existing portfolio. We start on the left with our adjusted profit for 2022. In the left half of the table, we broadly have the impact of the transaction activity undertaken in the last 12 months. Blackburn falls out, having been disposed of, conversely, Hemel comes back in having been essentially reacquired. There is also, as referenced earlier, one-off benefit in bad debt in 2022 but again offset by the interest benefit mentioned. COVID recovery represents assumptions that occupancy increases back towards pre-COVID levels of around 97%. This reflects an assumption of further improvement but also the full year benefit of occupancy having increased over the last 12 months. The COVID recovery also assumes an improvement in carpark revenue, remembering the start of 2022 was still impacted by government restrictions due to COVID. Income from CapEx reflects the revenue that we generated from the major ongoing projects that Lawrence detailed as well as some units in Walthamstow coming back online once the residential development has completed. And finally, we expect the net of further Snozone recovery and central cost reductions, less than likely loss in management fees to realize a small benefit to adjusted profit over the medium term. 2023 will be partially a year of transition for CapEx projects are in progress and do take some income offline. But in total, and assuming no meaningful shift in the economic climate, we believe we have a clear road map for adjusted profit to improve by more than 20% in the medium term. With that, I'd like to hand back to Lawrence.

Thank you, Stuart. I'd like to take the next few slides to step through our focus, plans and progress on ESG before moving to a summary and then across to Q&A. We're seeing the benefits from our investment in ESG across the business. We take our role in the diverse and vibrant communities we serve very seriously. We continue to make progress on our net carbon zero pathway, investing GBP 1.8 million in ESG upgrades, in addition to the significant renewal of plant and equipment, which is embedded in our CapEx projects. Our LED lighting projects are ongoing with GBP 1.8 million invested in the last year, together with increased focus and investment, this has enabled us to reduce emissions and energy consumption by 42% and 28%, respectively. Our social impact is work I'm very proud of. We've supported 187 charities. We've provided 1,324 hours in volunteering support, and we've hosted 224 community events in our shopping centers. Our focus on providing our communities better services, including our growing partnership with NHS as they look to respond to demand for both diagnostics and primary care facilities in our densely populated and highly accessible town center locations. I'm keen to share a short video from an internal NHS awards -- Innovation Awards program that the Whittington Trust made for our diagnostic center in Wood Green. This is the first in the U.K. shopping center. And I believe this video brings the facility the amazing work that the NHS are doing and the impact on the nurses, patients and our community in Haringey to life. We'll turn to the video. [Presentation]

I can say from a personal level that working with the NHS has been an amazing experience for our teams. They are driven, talented, highly capable and totally focused on delivering care and services to the community. It's interesting to note that Haringey is the only London borough that doesn't have a hospital within its council boundaries. So this facility is of critical importance to that important community. Turning to the summary. The discipline to work and initiatives that we put in place in late 2021 have provided balance sheet stability to our business, which has enabled the reinstatement of our dividend in H1 and again now for H2 last year. It's provided the scope for us to refocus on our operating business and return to our CapEx program, combined -- this, combined with the structural support from a return to stores and the benefits from a reduction in business rates is accelerating our proven community strategy, which will enable us to drive earnings and value recovery and growth. I'd like to thank you for your time this morning. Special thanks to our team, and I'd like to move now to Q&A. We'd like to start with the floor -- questions from the floor, and then we'll move to the webcast if that's okay. Miranda, we'll get a microphone for you.

From Panmure. Just 2 questions from me. On Page 11, you give the detail of how the customer proposition has changed from 2017 to 2022. Are you happy with where it is now? Do you see that evolving further? And if so, which bits do you see evolving? And then the second question was just in terms of the CapEx for the next year, that GBP 15 million expected for 2023, I think. Will that just come from cash? Or would that be any new debt facilities? [ Below cash, yes ].

And then Miranda, a very good question on the continued evolution of our customer proposition. We see further evolution and change. I can see us bringing more grocery into the centers. We already have engagement across 3 or 4 of our centers to increase our grocery representation. I mentioned Walthamstow with the additional floor space in Wood Green and Ilford. So I see grocery expanding. I believe we'll be also pharmacy similar, will strengthen our pharmacy representation. Things like the NHS, for example, primary care facility in Ilford. At the moment, we don't have pharmacy inside the shopping center. So I see that expanding relationship with NHS is providing more opportunities to increase pharmacy exposure. So there are 2 key pillars in the remerchandising of our centers. The third one is, as I just mentioned, we see -- and the video indicates, we see ourselves doing more work with the NHS. And there are active discussions in place in Wood Green to do further patient-facing facilities. We think this is a national shift from the NHS, especially in London, where, for example, the borough living in Hackney , 30% of people on cars, that's all. So our locations, you appreciate on the top of transport nodes or next to transport nodes means accessibility is unparalleled. And for the NHS who require larger floor plates, hard to achieve on the high street. So I think it's opportunity for us to continue our great work with NHS and I see the fashion exposure reducing or apparel exposure of reducing further if I'm really frank, as part of that.

Just one other question. Obviously, a lot of the focus on the projects is the London project Maidstone and Hemel Hempstead, is there anything sort of bubbling under wise that you can talk about?

And part of it is, as you'd appreciate, for the sort of 2 years that Stuart and I were almost exclusively focused on the balance sheet. We continue to progress the CapEx projects, but we were in a position to commit to them. So they were the projects perhaps most advanced, and therefore, they're the ones we've been able to return to very quickly and sort of press the button and accelerate away. So I'm very pleased about that. We have a master plan that's we're almost finished on Hemel Hempstead. So a very similar approach to Wood Green, a very similar approach to the exercise that we did 18 months ago on Ilford that we're now delivering by phase. We've been working with BDP and a team of internal and external people say where, I'd say the next couple of months, we'll have a master plan in place at Hemel Hempstead. And we'll then be able as part of that, to identify the phases we'd like to bring through as initial phases. We're already engaged with retailers as part of that master plan to lease some of that floor space. We had positive reaction. So we feel confident about that. And then in Maidstone, we also have a plan. That plan has been focused around the former BHS department store. We're down to the final floor. We're engaged with a retailer there. There are some other opportunities emerging in Maidstone that we're focusing, we'll get some lease renewals as well, which will create also an opportunity potentially to look at how we optimize that center further. Car parks performing exceptionally strongly down there. So the answer is yes, just at different stages, if you like, in their evolution.

[ John Kyle ] from Stifel. I just want to ask about your mixed-use value creation schemes, which are a bit further down the road. But what's the sort of attitude of the local authority planners to this? Are they amenable to it? Could there be any scope for them to sort of weaponize the Section 106 to try and extract value? Or could it even be the other way they're so keen to see this. That could be helpful.

And it really depends authority to authority, John, to be honest. We benefit in Walthamstow. We have a very proactive local authority, who we've built very strong working relationships with. And to be really frank with you, that's been key to us being able to unlock that opportunity in Walthamstow. If we go back, it was actually Council's master plan for the Town Center that contemplated the projects that we're now delivering originally. So that's an enormous benefit. If I look at our London assets for a moment where we think the opportunities are most obvious, in Ilford, we have a local authority who is very keen to deliver further residential. They have an acute shortage like most of London of housing. So we're engaged there. We had a very good relationship with the previous Council Chief Executive and Head of Regeneration and Planning. There's a new team in place. We're building relationships again. I think the council is -- they are very keen to see progress. And in Haringey, we've been through a period there probably 3 to 4 years ago, where there was an enormous amount of development directly behind us, planning consents, which are now being delivered. There's been a slightly quieter period up there. But the -- there's some new executives in place -- the new Council Chief Executive, we know well from Ilford who did a very good job, and they are very keen to see some housing delivery in that area. It's interesting in Walthamstow, they've secured the London campus for the University of Portsmouth. And I mentioned offices for educational uses. It doesn't all need to be residential, for example. So we're working with council on how we can help them provide that, whether it's on our campus or somewhere else. But I think it's net positive for the town center, John, but there are certainly opportunities. Clearly, I think we're seeing in the residential sector and PRS, and not my area of expertise. There's list of companies that specialize in that area, but a combination of the increase in interest rates, underlying base rates and construction costs probably making that development delivery challenging in the short term. We're very pleased that our friends in Long Harbour started on site a couple of months ago. But we're planning for the long term. If you look at Walthamstow, just taken 6 years to get to the point that we're in now. So our point is we just keep planning and keep unlocking, keep developing deeper relationships with the council, establishing where that demand sits and then looking to deliver against that and just being a little bit flexible as well. So in some cases, they're outline consents to start with and then move to detail. Any further questions in the room? Are there any questions on the webcast? Great. Excellent. Thank you.

Two questions from [ Luqman Hamid from 91 ]. The first, for how long will the scrip dividend option continue? And the second question is, what are the chances of buying back the managed assets via a discounted debt buyout similar to what has been done recently?

Do you want to answer the first question, Stuart?