LondonMetric Property Plc (LMP.L) Earnings Call Transcript & Summary

Well, I think interest rates is the yardstick by which all investments should be assessed. We have -- we've been in a difficult market certainly over the last 6 months. Swap rates, the 5-year swap is a key indicator for us, which is linked heavily to the 10-year gilt. And that has moved around quite a lot. But it's operating at the moment at a level that makes liquidity tougher on bigger lot sizes. We're very, very fortunate that our average lot size is GBP 11 million. And the assets that we've been looking to come out of average is actually GBP 6 million. So we've still found liquidity for what we're trying to exit, which has been good. I think that we -- when bond rates come in and the 5-year swap drops below 350 basis points, then I think we start to see a significant pickup in liquidity for some of the bigger lot sizes. I think if we look at the wider real estate market then is what's performing and what isn't, we absolutely -- our thematic is basically around being in sectors that are going to be a beneficiary of evolving consumer behavior. The 2 key things we think about is time is a valuable commodity and experience over essentials. And so our investment in logistics is around the fact that retailers need efficient logistics infrastructure in order to deliver to a consumer who is increasingly demanding on delivery. We talk about instant gratification quite a lot. So that is about -- we don't want to wait 3 or 4 days for the parcel to arrive. There are things that we order now that we would expect to receive by the end of the day. And similarly, our investment in convenience retail is around convenience. And as its name suggests, that is -- it's about maybe shopping for your weekly groceries and doing that in 30 minutes. And therefore, we want to be in convenience retail rather than experiential retail. And that's why our retail investments are around -- focused around grocers like Aldi, Lidl, Waitrose, Marks & Spencer, Home Bargains. It's -- time is an important commodity. And then our investments in budget hotels and theme parks is essentially predicated on an increasing divergence of spending from essentials to experiences. And therefore, whether or not I want -- I don't need to do the shopping center. I'm not going in -- I remember on a Saturday, I'd go in with my friends to the town center and would wander up and down the shopping centers. People now want to spend time with their friends in a restaurant or a pub or at a concert or a sports match or a weekend break or whatever it might be. And so we lean into that. And so for us, it's about working out the macro trends and then which parts of the real estate market will play to those and making sure that we're out of the sectors that we think are most exposed to those evolving consumer habits.

Finally, as you look ahead to 2026, what are your aspirations for LondonMetric over the next year?

So for us, I mean -- and I think I said it in my statement that we want to run our winners and sell our losers. We've done a lot of M&A activity over the last 2 years. We've inherited some wonderful assets that are delivering for us, but it's also included some assets that don't quite meet our requirements. And we've been busy trimming the portfolio to come out of some smaller assets, some asset classes that we don't want to be invested in or indeed some geographies that don't meet our requirements. So we want to keep trimming the portfolio, and we want to then reinvest that money into our existing assets or into new opportunities in our favorite sectors. So for us, I think it's going to be a bit more of what we did in the first half. Our earnings are looking great for the second half as well. So we're on track to meet consensus. And it's making sure that the opportunities in our favorite areas present themselves and we can uncover them with our excellent team of people. So I believe that if we can only control the controllables, we would obviously like a more favorable macro environment. And if that happens, then that's great and the wind will blow even harder at our back. But in the meantime, we've got a lot of internal opportunities that we need to execute on.

Andrew, great set of results. Thanks for your time today.

You're very welcome. Thank you.