Harworth Group plc (UK6A.SG) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to Harworth's Full Year Results for 2021. It's really great to see so many people here in the room with us, and we're delighted to be here. Welcome also to those of you who have joined via our webcast. I'm particularly pleased to be standing -- she's sitting, next to Kitty Patmore, our Chief Financial Officer; who's recently returned to the business following her maternity leave. And Kitty, I'm not sure at this stage what's the easiest. And we're also joined in the audience by Nigel Turner, to whom I'm grateful for stepping in as Interim Chief Financial Officer while Kitty was out of the business. This slide shows our agenda for today. I'll begin with an overview of our performance during the year and comments on our markets and progress against strategy. I'll then hand over to Kitty, who will take you through the financials, and then I'll take us through the operational review before finishing with our outlook. We'll then close the session with some Q&A. [Operator Instructions] So 2021 marked my first full year as Chief Executive of Harworth. It was a year of strong momentum and the business really started to go through the gears as we stepped into our ambitious strategy to reach GBP 1 billion of net assets over 5 to 7 years. Our strong operational performance, combined with tailwinds in our end markets, particularly industrial and logistics, delivered an EPRA NDV of GBP 637.5 million, and a record total return of 24.6%. People in finance are both essential to delivering our strategy successfully and as well as making some key hires to resource delivery, we also promoted a number of the team. And in early 2022, we completed the restructure of our funding, increasing our RCF to GBP 200 million. So these strong foundations that we put in place in 2021 mean that we're well positioned to pursue our growth strategy and importantly, our purpose to transform London property into sustainable places where people want to live and work. Slide 4 provides an overview of some of our highlights of the year in a bit more detail. So Harworth has a 28 million square foot industrial and logistics pipeline, 1.5 million square feet were added to this during the year through the acquisition of a site in Rothwell, Northamptonshire. We also progressed planning at a number of sites and began to scale up our direct development activities. During the year, we completed GBP 108 million of sales across our portfolios. And in addition to this, at the end of the year, we conditionally exchanged on the sales of our Ansty and Kellingley sites, both at significant premiums to book value. It was also a highly active year across our residential pipeline. During the year, we accelerated residential land sales, disposing of over 1,400 plots and also secured planning for over 1,000 homes at our Ironbridge development. We acquired land at Stavely and have around 31,000 plots in our pipeline at the end of the year, of which about 1/3 have a planning consent. Our investment portfolio also continued to post robust operational metrics, with very high rent collection, very low vacancy and a busy period for letting activity. Our financial position remained robust with an LTV of just 3.4% at year-end. And as you will have seen last week, we have now agreed a new 5-year GBP 200 million debt facility with Natwest, Santander and HSBC. The Harworth Way continues to be a key priority for us. We have identified 8 focus impact areas that will define our approach as a business and which we will measure our progress against. These include net zero carbon targets for the first time. And finally, to resource our growth strategy, we've made a number of key appointments across the business. These have brought significant expertise and greatly strengthened our leadership team as we embark on the strategy. I've touched on this already, but it's worth pausing to reflect on the very strong performance shown by Harworth's core markets of industrial, logistics and residential. And Slide 5 highlights the key trends in the industrial and logistics sector and the charts on this slide show what a record year it has been for the market. Take-up in 2021 surpassed the previous record set in 2020, driven by a combination of factors, including the growth of online retailing, onshoring in response to both Brexit and global supply chain disruption, and increased occupier confidence to expand and invest. This combined demand saw fall to a record low in the fourth quarter of 2021, with vacancy rates falling to below 3% across the market. Investors remain positive about industrial and logistics throughout 2021, and this is reflected in the investment volumes across both corporate and asset level deals, which you can see from the chart on the bottom right. The residential market is also in robust health. Supply of new housing still remains well below government target levels of 300,000 units per year. And at the same time, demand has continued to grow across all sectors of the market, driven in the main by long-term structural trends. Supply issues have served to tighten the availability of materials further. But to date, price inflation has offset most of the main cost increases. And you can see from the chart on the bottom left that our regional markets are forecast to have above-average growth in the next 5 years. It's also worth noting with regard to our planned build-to-rent portfolio, the continued growth of the private rental sector with keen interest from investors in portfolios of single-family product that can be delivered at scale. And as you can see from the bottom right chart, this market is expected to grow in the coming years. So this slide is one that many of you will have seen before and it summarizes our strategy to reach an EPRA NDV of GBP 1 billion by 2027 and deliver our purpose of creating sustainable places where people want to live and work. Our key enablers are highlighted in green, and you can see below them, the 4 key drivers of our strategy for growth. I'll spend a few minutes on the next slide providing more detail on the progress that we're making against the strategy. So firstly, our strategy stated our ambition to ramp up direct development from 200,000 square feet per annum as seen over the past 6 years to 800,000 square feet per annum. And we made a strong start on this because during the year, we developed and let 51,000 square foot at Logistics North, and we started on site with 420,000 square feet across Bardon Hill in Leicestershire and the Advanced Manufacturing Park in Rotherham. The second key driver of our strategy is to deliver a step change in residential plot sales from just over 860 per annum historically to 2,000 plots per annum. And in 2021, we sold over 1,400 plots to a range of housebuilders in all 3 regions. We're also well advance in preparing for the launch of our initial single-family build-to-rent portfolio later in the year and appointed James Crow as Head of Mixed Tenure at the end of last year to oversee its delivery. Thirdly, we need to replenish our pipeline as we accelerate through it, and we aim to maintain a 12- to 15-year land supply throughout the period of our strategic plan. During 2021, we've remained within this range as we made a number of new acquisitions to replenish our portfolio, including sites in Rothwell, Northamptonshire and Stavely in Derbyshire. And finally, our investment portfolio continues to play an important role in the way that we fund our business. At year-end, 11% of that space was modern Grade A, and we intend to transition this entire portfolio to modern Grade A over the length of our strategic plan. Now I'm really pleased with the progress that we've made in the first year of our strategic plan and the way that our team has stepped up to deliver. This positions us well to continue to progress delivery of our strategy as we go through 2022. And with that, I would like to hand over to Kitty, who will take you through the financials.

Thank you, Lynda, and good morning, everyone. It's great to see you all again. And I would like to extend my thanks to Nigel Turner for stepping into my role during my maternity leave. Now I would like to take you through the financials for 2021. Starting with our balance sheet. Our EPRA NDV increased to GBP 637.5 million at 31st December 2021, equating to 197.6p per share. This represented a 23.5% increase on our EPRA NDV per share of 160p at the end of 2020. The growth was driven predominantly by an increase in portfolio valuation as seen in the property portfolio and mark-to-market adjustment lines at this table. I will provide more details on these movements in a moment. These gains were partially offset by an increase in tax liabilities due to unrealized gains on investment properties. Gross borrowings were GBP 37.8 million lower than at the end of 2020 as a result of higher service land and property sales throughout the year. And combined with the dividend, our growth in EPRA NDV led to an increase in total return during the year to 24.6% compared to a total return of 3% in 2020. Turning now to the income statement. Sales of service land and property, in addition to income from rent, royalties and fees resulted in group revenue of GBP 109.9 million, an increase from GBP 70 million in 2020. The increase derived from accelerated service land and property sales in line with our growth strategy from the rephasing of service land sales in the COVID-19 pandemic and one-off promote fees. I'm pleased to report that as of today, 36% of our 2022 budgeted sales have completed or are agreed, indicating a robust sales profile for the year ahead. Revaluation gains are an important component of our performance seen in both the income statement and the balance sheet. In the income statement, we can see the increases in fair value of assets held for sale and investment properties. Investment properties consist predominantly of our investment portfolio, our strategic land and natural resources portfolio, but it doesn't include any increases in the fair value of our development properties. Admin expenses increased by GBP 4.7 million to GBP 19.2 million during the period. This was mainly due to higher salary expenses, reflecting both progress in existing roles and new roles added to deliver the growth strategy as well as increased insurance costs following our 2021 renewal and expenses incurred as part of the strategy review of the business. The one-off element of these costs was GBP 600,000. Despite this increase, admin expenses expressed as a percentage of revenue decreased from 21% in 2020 to 17% in 2021. All these factors together resulted in a significant increase in operating profit from GBP 27.8 million in 2020 to GBP 121.9 million in 2021. Finally, the Board is making recommendation to pay a final dividend of 0.845p per share, bringing our total dividend for the year to 1.2p and reflecting growth of 10% and which is in line with our progressive dividend policy. Looking now at our valuation gains in some more detail on Slide 12. Revaluation gains across our total portfolio were GBP 160.5 million, resulting in a total portfolio valuation of GBP 765.7 million as at 31st of December 2021. One of the major drivers of this growth was demand in the industrial and logistics market. In major developments, gains of GBP 86 million were driven by the sales of service land, including the conditional sale of our Kellingley development and robust housebuilder demand for residential sites. In strategic land, a GBP 35.5 million gain was driven by increased market appetite, in particular, for industrial and logistics sites as well as the planning permissions secured at our Wingates and Ironbridge sites. Good letting progress and increased occupier and investor demand led to valuation gains of GBP 36.3 million across the investment portfolio. Our natural resources and agricultural properties saw a small reduction in value in the waste and recycling portfolio due to shorter lease lengths, although paired alongside continued profitable sales. Slide 13 shows the breakdown of our GBP 766 million portfolio as at 31st of December 2021. Here, industrial and logistics land and properties are shown in shades of green, and they represent around 2/3 of our portfolio by value. However, note that the strategic land category is valued at approximately 3/4 of the value of our major development sites despite accounting for almost 4x as much space. This demonstrates the value that we create as we take sites through the planning and the place-making process. Our residential portfolio is shown here in shades of blue. And here, the value of the major development sites is over 3.5x greater than the strategic land sites despite accounting for less than half the number of plots. The investment portfolio included in the green of industrial and logistics now totals GBP 277 million. This portfolio continues to be an important component of our financing strategy. And together with the natural resources portfolio provides a recurring income source to service our debt facilities, supplemented by sales proceeds from an established track record that we have built up since relisting in 2015. Turning now to our net debt bridge on Slide 14. Closing net debt decreased from GBP 71.2 million at 31st of December 2020 to GBP 25.7 million at the end of 2021. This is mainly the result of sales proceeds from land and property disposals, the receipt of deferred consideration payments and profit exceeding value gains. Together, these more than offset the spend on developments and acquisitions. This leaves us with debt and cash headroom of GBP 128 million at the end of 2020 and has recently increased with the completion of the new larger banking facility. Harworth's financing strategy remains to be prudently geared. To deliver our strategic plan, we have adopted a target net loan to portfolio value at year-end of below 20%, with a maximum of 25%. As a principle, we will seek to maintain our cash flows broadly in balance by funding the majority of infrastructure expenditure through disposal proceeds, whilst allowing for growth in the portfolio. At 31st December 2021, our net loan to portfolio value at year-end was 3.4%, and we had drawn facilities of GBP 38.5 million. As Lynda has set out, one of the pillars of our new growth strategy is to increase the industrial and logistics direct development on our sites to around 800,000 square foot each year. To support this strategy, we intend to continue to enter into site-specific development and infrastructure loans alongside the main banking facilities. And during the year, we agreed 3 site-specific development loans relating to Bardon Hill, the Advanced Manufacturing Park and Gateway 36. Following year-end, given the current market backdrop, we agreed a new senior debt package comprising a 5-year GBP 200 million revolving credit facility, together with GBP 40 million uncommitted accordion facility. This replaces our previous RCF which had increased to GBP 150 million during 2021 and has an extended expiry date of February 2024. The new facility is aligned to our strategy and provides significant liquidity and flexibility. The chart on the right-hand side of this slide shows how our available debt facilities have grown over time and how maturity has increased over the same period. You can also see the increased use of site-specific funding in line with our financing strategy. In summary, we maintain a robust financial position with the flexibility and firepower to deliver on our growth strategy whilst maintaining our target net loan to portfolio value at year-end. And with that, I would like to hand you back to Lynda to take you through our operational performance.

Thanks, Kitty. In the next few slides, I'll provide further detail about the portfolio and our activities in 2021. Slide 18 provides an overview of our industrial and logistics portfolio. Over 3/4 of our sites in this portfolio are owned freehold or in joint ventures. And at the end of the year, over 1/4 of our 28 million square feet have planning consent, including 1.3 million square feet at our Wingates site in Greater Manchester. Close to 1/4 of our industrial and logistics land bank is in the planning system awaiting determination. This includes 2.8 million square feet related to planning applications submitted towards the end of the year for developments at our rail connector site at Gascoigne Wood in Yorkshire and our Skelton Grange site beside the M1 and close to Leeds City Center. In a very busy year, we also commenced construction on our Bardon Hill site in Leicestershire, which is due to complete during the second half of 2022. We continue to make select land parcel sales including an GBP 11.6 million sale to Firethorn at Gateway 36. And we also continue to build on our pipeline, acquiring the freehold to Golden Triangle site in Rothwell, Northamptonshire. This site is capable of delivering 1.5 million square feet of industrial and logistics space. Slide 19 provides more detail on 2 significant sales announced towards the end of the year at Kellingley in Yorkshire and Ansty in the Midlands. Both sales were completed at significant premiums to book value and both are conditional and certain sales conditions being met. Our Kellingley site is an inherited former colliery site. And in recent years, we've undertaken land remediation and obtained an outline planning consent for 1.4 million square feet. This disposal will allow us to accelerate value realization from the site and reinvest the proceeds into the delivery of our strategy. Our Ansty site is relatively new to our portfolio, and we've been undertaking land assembly work since 2019. The site is not yet allocated in the local plan for development and needs to be fully worked through the planning process. This sale is conditioned on the granting of a hybrid planning permission and we're working collaboratively with the purchaser to progress planning. This disposal allows us to realize value and the benefits that the site can bring to the local economy much more quickly. And again, the proceeds will be reinvested to deliver our strategy. So we turn to our residential land portfolio, which has the potential to deliver around 31,000 plots. Over 1/3 of these plots are consented and over half of our land is either owned freehold or in joint ventures. And again, this has been a very active period in terms of building our pipeline and planning activity. We completed the acquisition of 133-acre site in Stavely, Derbyshire, capable of delivering 600 homes. And during the year, we also secured planning for over 1,500 homes, 1,000 of which are at our Ironbridge development in Shropshire and the remainder across a number of the smaller sites in our regions. Placemaking across our major development sites continued with the launch of Phase 2 of our 2,000 home South East Coalville development in Leicestershire, which includes plans for additional homes, a local center, including convenience retail and a primary school. We also submitted a planning application for the development of Olive Lane at Waverley, which will provide amenity and further services to the families and employees on site. And finally, we completed around 1,400 plot sales an acceleration against our plans with additional sales in particular at Coalville and Waverley. With the valuation of GBP 277 million, our investment portfolio is a critical element of the way that we fund our business and a key limb of our strategy going forward. It delivers an annualized rent roll of GBP 18 million and continues to post very robust financial and operational metrics. And you can see from the top right of the slide that our occupier base is diverse and focused on growing industrial and logistics sectors. Our operational metrics in the bottom right remains strong with a long weighted average on expired lease term of 11.5 years, a low vacancy rate of 2.7% and very high rent collection of 99% for 2021. This was also a particularly active period for the leasing activity. And in the year, we completed new lettings, totaling 267,500 square feet on terms either in line with or ahead of ERVs. We also completed a further letting of a plot with planning permission for 131,000 square foot units. Most of this activity related to transactions at Logistics North, where we let the final plots at Multiply completing the development and triggering a significant one-off promote fees. In addition to this, we also completed around 430,000 square feet of renewals and regears across the wider portfolio, representing a 28% uplift to previous rental values and we also sold GBP 8.8 million of assets in line with or ahead of our December 2020 valuations. ESG is a priority of Harworth and is embedded into the way that we work and the developments that we deliver. Harworth prides itself on being a responsible business, and we have continued to work embedding the Harworth Way through our strategy and operations during the year with particular focus on the design and carbon used in the operation of the assets that we build. Throughout the year, we've also been working with our Board ESG committee to ensure that the ESG targets the metrics that we set and measure ourselves against going forward are right for Harworth. This has culminated in us identifying 8 focus impact areas against which we will measure our sustainability progress in the coming year. And amongst these is a target to become operationally net zero carbon by 2030 and to become fully net zero carbon as a business by 2040. You will see from our annual report and accounts that we still have work to do to develop and enhance our data capture and reporting, and also our pathway to net zero. And we recognize that we now need dedicated resource to do this. And have appointed Peter Henry, who was Regional Director for Yorkshire & Central as Group Sustainability Director to drive this work forward. Peter will report to me, and we look forward to updating you on our progress at the end of the year. Our 2021 results build on our strong performance in 2020 and highlight both demand for our core sectors and the resilience of our business model. Our new strategy builds on our existing strengths, capabilities and scale and unlocks the potential within our strategic land bank delivering growth and sustainable returns to investors. We've created a clear plan to be a GBP 1 billion business by 2027. And our focus is now fully on the execution of the strategy. But I'm acutely aware that for a strategic land business, it's a marathon, not a sprint. And the flying start presented by our 2021 results will moderate as we go through the cycle. Indeed, the early months of 2022 have been extraordinary. Against the backdrop of continued strong demand for our products, we are seeing rising inflation and interest rates in the U.K. and a war in Europe, which has potentially wide-reaching implications in the near term for Western European economies, and particularly in relation to energy and some core commodity markets. Our core markets are currently performing well, but they're not immune to macroeconomic pressures. But government policy is also focused on and supports regional investments and growth. My focus is really simple, it's on ensuring that we -- as we work through our plans, that the team has the skills and resources that they need to deliver, and that we effectively manage any emerging risks to the business so that we can deliver consistently and sustainably, and grow the business over the long term. Harworth has both a track record of delivery and a deep understanding of what it takes to successfully deliver large-scale regeneration. We can, therefore, play a key role in helping local and central government to deliver on their core agendas on housing, leveling up and the green economy. We remain resilient, well-capitalized, and we're through the cycle business. And we've made a great start as we step into the delivery of our strategy, doing what Harworth does best: creating sustainable places where people want to live and work. So thank you very much for your time. And with that, I would like to open up to questions. We'll take them from those in the room first, and then we'll move on to the phone lines and online and finish as many questions as we can in the time that we have. Thank you.

I was waiting for someone, but I'm happy else jump in. Very good set of results. Obviously, it's great to see the progress. Maybe just a couple of questions. Firstly, on the strategy, Lynda, and obviously the evolution of the new strategy outlined in September. And the one I pick up on is the build-to-rent side. So I think the plot target is quite straightforward. A lot of progress there. The direct development of the industrial logistics again, progress is quite clear, but the PRS or built-to-rent is a new departure for the business. Could you perhaps elaborate on how you see that playing out, both in terms of the timing of the initial phase or initial tranche, but also the objective you want to achieve? Will this be a direct build? Will it be a forward fund, forward purchase style agreement with an institution or what your thought process is around it?

Thanks, Colm. So when we undertook the original strategy work, we looked at actually how we could accelerate the deliveries through some of the sites, accelerate the placemaking and actually the sort of value that follows and introducing sort of a wider range of products is a logical thing to do there. From a build-to-rent perspective, when we looked at the markets that some of our sites are in, there was significant capacity to sort of take a rental product and actually uniquely as a business, Harworth can deliver this at scale. So institutional investors are very hungry for this product, and we can deliver at scale over multiple regions. We hired James Crow, who's been working very hard on this since he joined the business, and he's made really good progress with basically sort of identifying the portfolio that we want to take to market. We looked at around 600 homes in each phase in the strategy work, it's likely to be more than that. And he has been working with both the construction contractors at one end of the spectrum and investors at the other to basically develop what we want to bring to the market later in the year. So we see this as being sort of portfolio #1 of a series of portfolios as we go forward. We're looking to work with institutional investors and partners effectively to forward fund the delivery of that pipeline, and we'll pair them with a construction partner at the other end and then Harworth will oversee the development as we progressed.

Okay. And maybe just to move on to the investment portfolio then. So obviously, a bit of yield compression coming through. We all know how strong the market has been over the period. And it was interesting you given the breakdown of Grade A as an overall portfolio of 11% this year. Do you have any understanding in terms of where the yields sit for the Grade A component of the portfolio? .

So they pretty much follow the rest of the market. The Grade A element of the portfolio will probably be sub 4.5%. They're not big industrial units. These tend to be sort of smaller units or terraces and predominantly sitting at Advanced Manufacturing Park in Waverley, Logistics North, and a little bit at Rockingham. So as we develop through the strategy, we'll be able to add more volume into that.

And very finally, it'd be remiss of me not to ask an ESG question. You have an unusual slide in the appendices of 42, which is looking at the breakdown of the portfolio by [ BCE ] rating, which I haven't seen before, over half or so, C or better. Just in terms of the path of travel around that in terms of where you'd like to see yourself get to over next 3 to 5 years in terms of the energy rating, ratings of the portfolio.

I mean our aim is to be sort of ahead of sort of regulation coming in. So we continue to do 2 things. I mean, one, is obviously build more Grade A -- modern Grade A through the development program, but also we've got a number of sort of programs looking at actually how we improve the quality of what we've got, which we take the opportunity to work with tenants to do so if they want to do it in lease or if we get a lease event, actually, we can then step in and upgrade that portfolio as we go. But it's something we've been focused on for quite a long time on the investment portfolio.

It's James from Peel Hunt. Just another question on the investment portfolio. And obviously, demand from industrial assets is really high. Clearly, part of the piece in terms of improving that portfolio is the development, bringing that through. But in terms of disposals, I mean, is now a really good time to be looking at disposals given that strong demand? Or -- and how does that fit in with the timing of those developments coming through in the income kind of implications?

Yes, I'm happy. I can take that. So it's a good question, James. I think the market is very strong for industrial and logistics properties at the moment. It's a balance between maintaining the income to continue to service debt and to help to contribute towards covering our costs as well whilst that development pipeline comes through. As that comes through, that will enable us to make some sales. But if we see the opportunity to do so, and we think that it's an attractive proposition, we'll still look at sales ahead of that date, too.

And then maybe second question, just on -- again, on the direct development side, I mean, clearly, it's an ambition, you started that process in terms of increasing the direct development on your own balance sheet. And again, going back to the market, I mean demand is really strong, vacancies very low. I'm just thinking in terms of pre-lets, I mean, how many -- are you in conversations with some of those assets? And do you think pre-lets will be a -- maybe a bigger proportion of that development than maybe we thought 12, 18 months ago, just given that demand?

I mean, yes, is the answer probably to both bits of that question. Sort of Bardon, we've got huge amounts of interest in. But actually, significant interest both in the development that we're looking to start at the Advanced Manufacturing Park and Rockingham. So the market is quite hot an occupier perspective. Will it form a bigger percentage of sort of than we would have expected in previous years probably, as long as the occupier market remains resilient and it's still looking sort of very strong at the moment for some of the reasons I outlined on the slide, you've got a lot of onshoring going on. You've got a lot of businesses taking move to deal with supply chain shortages, sort of when goods are coming in from outside of the U.K. So the market feels like it's pretty robust at the moment in that space.

Chris Spearing from Liberum. A nice upbeat presentation. Just a quick question probably for Kitty. Just on the big sales that you announced in Q4. Can you give us some guidance, please, on how much of the uplift has already been taken in the December valuation and how much will come through as those sales complete?

Yes, absolutely, Chris. So both were significant sales. And when we announced them, we announced that they were quite a long way ahead of the June sort of book values as well. So as you'd imagine, the year-end valuations reflect the current market value as at the end of December. And at that stage, both sales were remaining conditional with some work to go through. So still have to go through a planning amendment for Kellingley and a full planning process for Ansty, which is expected to take a couple of years. And so the valuations at the end of the year reflect that. That means that there is likely to still be some value gains to come through as those sales complete, as we discharge those conditions that enables us to look at the valuation and to uplift those ahead of the sales prices as well. So it's probably in the order of sort of around 5% still to come through, 5% on our net NDV to come through over the next couple of years as those sales complete.

Any more questions in the room? Have you got any online?

Yes, we've got one. Okay. So we have a question from Colin Sheridan at Davy. The first -- he has 3 questions. First, in relation to the planning system, have you seen any changes to the time lines to get approvals or any other challenges stemming from councils, et cetera? And the second question is regarding acquisitions, what has the market for new strategic land being like more recently, particularly in relation to competition? And then finally, in the investment portfolio, is the change in net yield largely down to underlying market shifts? Or is there a material asset management contribution to this number?

Okay. Thanks, Colin, for that list. Okay. So on planning, I mean, I know I've been asked this question before, and what I would say is throughout my career, the planning system has sort of been what it is. It's never been perfect. It's being consistently sort of tried to reform. I think it's been really difficult actually during COVID, but most local authorities did get their planning committees online quite early on, and they were actually progressing applications through the processes we saw ourselves from the likes of Ironbridge last year. I think it's fair to say, though, that what they do struggle for is resource. And if you look at the scale of some of the things that we're bringing forward, it's pretty chunky and some of it is in some fairly small local authority areas. So it's incumbent on us to work really hard with the local authorities to make sure that they've got the resources that they need to progress our planning applications. So it's never an easy one. We are pretty effective at getting planning for sites that we bring forward. But like I say, I'd just sort of look and say that a lot of local authorities are particularly resource constrained at this point. Obviously, what strat land being like, Colin, is the second part of your question. Probably a hotter market, particularly in industrial and logistics than we've seen for quite a long time. We saw not just sort of the normal developers that we compete against for lands in the mix, but actually also investors who have moved up the risk curve. So where they can't get built stock or consented land, they're actually sort of moving into a bit more of the strat land space. That said, you saw we managed to acquire Rothwell freehold, which is a bit of a gem. And also, we've got a pretty healthy pipeline of acquisitions that they don't nicely fit into a financial year that are sort of ticking through that we were working on last year, and we'll sort of hopefully sort of be bagging as we go through the first half of this year. Residential is a little bit different. We do compete against most of the major housebuilders increasingly sort of some backed by investors in the build-to-rent space. But I think you've just got to look at the strength of our land bank, and you've got to look at the -- at day 1, but also how Harworth assembles land. We go quite long. We take something that nobody else will often think about and piece it together very patiently sometimes over a number of years. And for us, I think that's a real sort of skill that we bring to this, and we create the opportunity to create value. Last one. Can you remember?

Yes. Was it investment portfolio and net yield?

Yes. The investment portfolio, is the change in net yield largely down to underlying market shifts? Or is there a material asset management contribution to this number?

Yes. So shall I take this one? .

You go.

So it is a really strong underlying market, Colin, and that has clearly performed very well over the course of the year. But there is a strong asset management element. So just turning back to the investment portfolio slide that Lynda delivered. We completed over 267,000 square feet of new lettings over the year and also over 428,000 square feet of renewals over the year. So what that actually means is that we churned around 20% of the total portfolio within our properties. And those that were regears were at an uplift of sort of around 28% as well. So we are increasing rents, extending lease terms and making new lettings as well. So it was really a really busy year on that front, and that's very much helped to support that tightening of the net initial yield on the portfolio.

And then we have one further question from -- with private equity acquiring recently St. Modwen and Urban&Civic, have you seen more private entrants target in your core markets? And how is competition for land increased in recent years?

I think sort of, yes, competition for land has increased in recent years. As I said, it's from -- there's institutional investors out there, there's PE out there, there's developers backed by PE out there. But sort of we're steady away at Harworth. We've got acquisition teams in the regions. A lot of them are born and bred in the regions that they're acquiring sites in and they work really hard on the ground to create the opportunities for us. And as I said in the last answer, sort of we are unlocking some really, really interesting site opportunities. It's just they don't fit nicely into the financial year and some of them will take us 2 or 3 years to assemble.

And then one final question is, does the leveling up agenda support your business strategy? And do you think it goes far enough?

That's a minefield of a question. I mean, look, leveling up is all about basically equalizing across the U.K., sort of the economic outcomes and opportunities for people. And the regions are not just in the north, they're down into the Southwest and the Midlands as well. I think what we do really contributes to that. We are investing and creating employment space, which basically creates jobs alongside that, building really good quality housing and actually now sort of diversifying the products that we bring forward at our site which creates more opportunities for people to come and live and cluster around the jobs. So from a leveling up agenda perspective, Harworth really plays into this. I think the leveling up white paper was really broad and provides a great framework for businesses like us to work within. I think the funding has been a bit slower. But obviously, the government have been focused on other things such as COVID and now sort of what's going on in the Ukraine. But we are working closely with local authority partners and also the mayoral combined authorities, so devolution. The cash tends to follow sort of the devolution to make sure that we can unlock opportunities to bring schemes forward and actually sort of enter into strategic partnerships where there is the opportunity with the public sector. What's certainly been said to me is it's no longer just about the public sector funding everything, they want to work with businesses who are prepared to invest alongside them. And I think you can see from the sort of firepower that sort of Kitty and the team have managed to put together from a funding perspective, we've definitely got capacity to invest.

That's all the questions we have from online.

Okay. Well, thank you, everybody. Thank you for your time this morning, and it's great to see real people in front of us. So thank you very much.