LondonMetric Property Plc (LMP) Earnings Call Transcript & Summary

Great. Good morning, ladies and gentlemen, and thank you for coming for the LondonMetric half year results for the period ending the 30th of September. I suspect most of you are pretty familiar with the format. I'll give you a brief overview of the highlights for the last 6 months. I'll hand over to Martin to give you an update on the financials in more detail, the numbers that I wouldn't have covered. I'll come back to give you an update on our thoughts in the market and also how our portfolio is performing. And then our insights or our own views on the outlook, again, both for ourselves and the wider real estate market before then opening up to Q&A in the floor and then also to those of you who are listening online. So an overview. For those of you, I think the -- I don't know, but interest rates do remain the yardstick by which all assets in the sector are valued. But the pleasing thing is that I think we are reaching, hopefully, an inflection point on inflation and, in turn, for interest rates as well. Swap rates have fallen. I don't know what they are, but I think they're about -- Jason sends a nice note around every morning telling me what they are, but I think we're about 423 this morning or something like that. So we're down about 120 basis points on where we were back in August. And I think that's quite important. I'll come on to talk about that in more detail later. For those of you who follow the sector over the last week or so, it's pretty apparent that the capital markets are continuing to recalibrate at different speeds. You have those that are enjoying a structural tailwind, predominantly beds and sheds, and you've got those that are facing some pretty strong headwinds. And therefore, market liquidity will polarize around those different thematics. So our portfolio at the end of September was valued at just under GBP 3.2 billion, and we continue to shape by the structural trends in consumer behavior. And as I think our numbers highlight, we're seeing some strong returns. Our income metrics, which I'll go into more detail in a moment, are all on a positive trajectory. Like-for-like is up 2.9%. Our rent reviews and our regears on a 5-year basis are up 21% against previous passing, which is a wonderful achievement. And looking further ahead over the next 2 to 3 years, but probably 2, 2.5 actually to be more accurate, we see embedded reversion of another 20% that we will capture. And again, both Martin and I will touch on that in a bit more detail going forward. As you would expect, we maintain a disciplined approach to capital allocation. We've successfully executed on the takeover of the CTPT portfolio and have already started the sell-down of some of the noncore assets. So to date, we're -- we sold GBP 25 million of those assets. We've probably got about that -- a little bit more than that to go again. So I think we sold 9% of the portfolio. We've probably got another 11% or so to go. And that's been -- again, I won't take too much now because there's a slide on it, but effectively, High Street retail and offices has been the thematic of those sell-downs and all small lot sizes, which again is an important point to make. Over the 6 months, we've disposed in total across the enlarged portfolio, GBP 157 million worth of assets. And that, together with the stabilization of the portfolio values, has allowed us to print an LTV today, down from 32 -- I think, 32.4% 6 months ago to 29.5% today, and that's bang in line with what I would have -- our aspirations would have been back in the summer. And equally important is the fact that our debt is largely 100% fixed or hedged. And that is, for me, incredibly important. So briefly on the financial highlights. Again, I don't need to spend too long on these because they're self-explanatory. Earnings are up, per share is up, and we've announced this morning another quarterly dividend of 2.4p, which is a 4.3% increase on where we were this time last year. And we're well on track to -- this is our ninth year of dividend progression. We're well on track to complete that ninth, and I think we're well set for 10 as well without making too many forecasts. I will mention that 109% dividend cover. It's amazing how many companies forget to mention cover these days. But anyway, 109% dividend cover that gives us that margin of safety that is so important to me. And then there's an interesting slide then on the bottom right around the equivalent yield movements that we -- that the portfolio has taken in the -- since probably the peak valuation, which I think we had in March '22. So you can see there's some pretty big equivalent yield movements. So we've navigated most of those pretty well, not all of them. The biggest, obviously, impact is when you start with the low yield and you have a big increase in the outward shift, it has a multiplying impact on the percentage reduction in valuations. But we've got to open up our eyes up to -- we live in a different world today. The period of free money is well and truly over. And for us, it's all about the income and the income growth, and that's what frames our thoughts around where we allocate the capital. So on that note, I'll pass it over to Martin. Otherwise, he will -- actually, I have nothing to say. Take us through.

That was quite concise. So I think for the first time in 10 years, I won't start off with, as Andrew has already said. So as Andrew has already said, it's a half year, which is continued to be dominated by economic and political volatility, but I think we've delivered a strong trading performance. We've delivered net rental income of GBP 76.9 million, an increase of 6.7% over the same period last year. This increase in net rental income is driven by additional rents from new acquisitions, particularly the CTPT acquisition and rents starting to flow from completed developments. Taken together with additional rents arising from rent reviews and regears, that amount to GBP 12 million in total, which more than outweighs the rental income lost from property disposals in the period of GBP 7 million. We reported another very strong rent collection performance in the period with 99.8% of rent due having been collected. Our administrative cost is GBP 8.6 million, which shows no increase on the same period last year. This is a result of continuing to monitor costs closely. Our EPRA cost ratio has fallen by 80 basis points since the last half year to a low of 11.5%, and our gross-to-net property cost leakage remains consistently and extremely low at less than 1%. Our finance cost of GBP 16 million, an increase of GBP 2.4 million over last year. So despite a lower average debt balance compared to the same period last year, the higher average cost of debt compared with that period has driven that increase in finance costs. Our rental growth and attention to controlling costs has driven our EPRA profit to GBP 53.1 million or 5.25p per share, which supports the increase to the dividend for the period to date to 4.8p per share. That's an increase of 4.3%. As Andrew said, provides a very strong 109% dividend cover. We've reported an IFRS profit for the period of GBP 81 million compared to a loss in the comparative period last year of GBP 243 million. So whilst the portfolio valuation was broadly flat, there's a GBP 4.9 million increase in the fair value of our derivatives alongside the strong EPRA earnings, but most significantly, it was the acquisition of the CTPT portfolio in August at a discount of GBP 23.3 million compared to the previous valuation, which is reflected as an IFRS profit. Turning balance sheet. The portfolio valuation of GBP 3.18 billion, an increase of GBP 176 million over the year-end. Obviously, primarily due to the acquisition of the CTPT portfolio, which added GBP 262 million net of that price discount on acquisitions to the balance sheet, which less the proceeds of disposal of assets in the period which had a book value of GBP 136 million. At the period end, we had GBP 28.2 million of cash on the balance sheet and GBP 974 million of debt. Net liability position in the period was GBP 53 million, the major component, as always, being rent received in advance. So in summary, our EPRA net tangible assets for the period end is GBP 2.18 billion, an increase of 11.4% over the year-end EPRA NTA of GBP 1.96 billion. On a per share basis, taking account of the new shares issued in the period, the NTA of 199.6p represents an increase of 0.7p or 0.4%. Following the 2 reported periods of valuation decline, we're pleased to see a period of relatively flat valuations and, therefore, a positive TAR of 2.8%. We have GBP 1.42 billion of debt facilities on our balance sheet at the period end. The gross drawn debt of GBP 974 million has decreased by GBP 57 million in the period. Disposal proceeds and the repayment of the first tranche of our 2016 private placement have more than outweighed the additional debt brought in under the CTP transaction. But that GBP 90 million debt facility with Canada Life had 3.5 years left to maturity at 3.36% all-in cost, an important rationale for us to do the deal. Our strategic focus in the last year has been to utilize the proceeds of disposals to reduce our LTV and to repay floating rate debt. As a result, our hedge debt at the period end is 99.5%, up from 93% at the year-end. And our loan-to-value in the period is 29.5% compared to 32.8% at the year-end. We've exercised plus 1 options on our revolving credit facilities of GBP 400 million in the period and a further GBP 275 million post period end, which helped to lengthen the maturity of our debt to 6.2 years compared to 6 years at the year-end. As we reported in May, our early refinancing of our debt this time last year was well timed and eliminated our refinancing risk through FY '24, '25 and '26 such that we have no material refinancings until FY '27. Our cost of debt at the period end is 3.3% compared to 3.4% at the end of March, and we've complied comfortably throughout the period with our debt covenants, and our interest cover ratio is now 4.6x. Steve, you missed my bit on debt. Our contracted rent roll has grown to GBP 159 million as a result of asset management activity in the period of GBP 3.6 million but most significantly as a result of that CTPT acquisition, which added GBP 17.7 million to the contracted rent roll, more than outweighing GBP 7.5 million of contracted rent roll foregone on disposals. We expect this number to grow materially to GBP 173 million as we expect an additional GBP 8 million of rent to flow from open market rent reviews and GBP 7 million from contractual uplifts, which Andrew will cover in more detail later. The significant increase in the rent delivered by capturing more growth at review supports our confidence that we will continue to grow our earnings and be able to progress our dividend from its current consensus of 9.8p for FY '24. Back to Andrew.

Thanks, Martin. So just sharing some thoughts on the market overview. As I touched on earlier, the investment backdrop remains dominated by macro metrics. Heightened inflation and debt costs and increasing availability of debt is impacting liquidity across the sector, with some markets -- submarkets relatively close to virtually no bid. However, as I said, I think we will see -- we're in a period of stabilization now. Hopefully, it's not another false dawn, and that should improve liquidity going forward. And swap rates below 400 could be a big -- good, big turning point. But I think debt funding and then debt availability, 2 different things. And I think there will be a relatively polarized -- polarization over the coming period about those who can get it and those who can't. And we are seeing a huge amount of debt opportunities, people needing to refinance or people needing to sell coming to the market across numerous sectors. The polarization of performances across those sectors, though -- we ask -- it is the -- like I said, those enjoying the tailwind and those facing the headwind. Beds and sheds transacting, you saw some fantastic numbers yesterday from Grainger, great -- there is rental growth. There is money flowing into those sectors. You are getting proper price transparency. Disputed sectors remain challenging. The fact is technology, as one of you wrote, is now disrupting the office sector in a similar way that it decimated the valuations of shopping malls. We are seeing, as I said, interesting funding opportunities and, obviously, corporate opportunities. But the refinancing tsunami, and we're just starting to see it, but I think it's got a way to play out, is forcing a number of assets into the market. And it's something that will create more opportunities for us. And the truth is the overall property market -- and I actually talk about the listed sector per se, but the overall U.K. property market is over-levered in an environment like where we have interest rates up at 5-plus percent. We're also seeing development supply increasingly curtailed. I think that will be very good for rental growth, particularly in the logistics sector, maybe not so much in '24, but certainly then in '25, I think you'll see a shortage of supply available in the market. The take-up is still pretty good across all subsectors of the logistics market. But you're going to -- I can see us running out of buildings this time next year because nobody's starting. Turning then to our own portfolio. This is a slide that we've now used probably for 10 years or so. As you can see there, distribution continues to dominate our allocation of capital, 72.5% across the 3 sectors. Total portfolio today, GBP 3.17 billion. Strong occupancy, as Martin has touched on, 99%. Weighted average unexpired lease terms of 11 years. And we are seeing -- it's a good, strong demand-supply dynamics. So moving to the right, looking at the numbers -- not the far right but the one in the column before that. Total property return overall, the logistics portfolio saw 8 basis points outward yield shift. You can see there the breakdown between the 3 key subsectors. And that was [ marginally ] offset by 2.4% of ERV growth to deliver a positive 3.4% total property return for the 6 months. Long income, resilient performance, 16 basis points of outward yield shift, relatively flat ERV growth and a positive 2.2% total property return, which culminates in that 3.2% TPR that you see there at the bottom. So diving into the portfolios in a little bit more detail. Our distribution investments now total just under GBP 2.3 billion with a fantastic income granularity, 99% occupancy and fantastic 3-year ERV growth. I think that will moderate over the coming period, but it's still going to be pretty healthy. And that is translating itself into the rent review settlements that you see there. On the right-hand side, urban logistics reviews settled at 35%. I think open market urban logistics reviews were settled at about 43%. Those are big numbers, big, big numbers. But overall, including our contractual uplifted rent reviews, 19% above previous passing. And I think that's -- I mean rent reviews in the warehouse market today is just a pure pleasure. I mean it's probably the highlight of my job. [ Well ], I do any, but it's still the highlight of my job. So then turning to our triple net long income. I think most of you know my admiration for the triple net model. It's why we were able to run such an efficient ship at LMP. We have GBP 3.3 billion of assets. We have 34 people, okay? That is not -- you can't do that when you've got a lot of operational assets. I think triple net is a fantastic sector. Our portfolio now just under GBP 0.75 billion in the strongest retail and trade sectors dominated by our exposure to the convenience grocery market, just under 40% in convenience grocery assets. Portfolio has always been -- I think it's been 100% let for as long as I can remember, 12 years weighted unexpired lease terms, attractive net initial yield. And despite the 16-basis-point outward yield shift that I mentioned, we still managed to deliver a positive TPR, as you can see there. Rent reviews, up 20%. So overall, it's a portfolio, and it's with customers that we know extremely well. It's got increasing granularity, both from a tenant and from a sectoral perspective, and it's something that we embrace warmly. So a quick slide here on how the integration of the CT Property Trust acquisition has gone. For those -- just to remind you, GBP 285 million portfolio. It was a NAV for adjusted NAV transaction, the adjustment, meaning that we took down the value of some of the -- what I consider their noncore assets, particularly High Street retail offices that we wouldn't feel quite so bullish about. But overall, it was highly complementary, and the sell-down of the noncore means that 86% of it now would sit comfortably within the enlarged LMP portfolio. As I touched on earlier, we have begun to sell down. We've had some great outcomes. We've had some good results. We're benefiting from the fact that the average lot sizes are quite small, and there is still good -- quite good liquidity in that space. 8 sales, GBP 25 million, like I said, I think we've probably got another GBP 27 million to go. Numbers versus underwrite, good. But like I said, we're only halfway through the process. So judge us at the end, not at half time. And then on the assets that were really attracted to, there is embedded reversion there. We are acquiring some very, very well-located -- we'll have a quite very well-located logistics assets around the southeast. This is a well-managed portfolio. This was well-composed portfolio with 1 or 2 exceptions. But again, we would expect to benefit without too much drama from the 23% reversion on that -- on those core logistics assets that now are within our ownership. So then a bit more detail on the occupier market. Like I said, I think -- whilst I think ERV growth going forward will moderate a little bit, I still think it's pretty good. And we are benefiting from structural tailwinds, which continue to support our preferred sectors. Demand is still coming. It's pretty varied. It is online, 3PL. It is coming from people needing convenience. They need to be closer to where their customers reside and ongoing onshoring. And I think that, that will drive rental growth, particularly in an environment where very few new developments that are going to be started in the current debt environment. Like I said, it's not even a cost issue. Trying -- asking [ God's bank ] at the back for a speculative development funding is going to be probably futile exercise. Our activity in the period added GBP 3.6 million of rent to our rent roll. Again, it's just a wonderful experience to be able to collect this amount of extra rent without having to do much work. I mean it really is wonderful. That's a 21% increase. When you put those 2 together, the 28% and 21% weightings or whatever, it comes out at about a 21% increase in passing rents without too many dramas. And we continue to enjoy looking forward. We continue to enjoy significant embedded reversion across our logistics assets. And if you look at that chart on the bottom right, this GBP 15 million to come, I suspect we'll upgrade that. I mean we've already upgraded it from where we were last time. That GBP 7 million of it is baked, and GBP 8 million of it will probably -- GBP 8 million will probably drift up a little bit as we get closer to those reviews and feel more comfortable with what we will actually settle those at. The fact of the matter is when we look back, we're not -- none of our reviews, we're not -- I can't remember the last time that we took a rent review to arbitration. They all get settled. The affordability is there. It's great that you could say, we should push it a bit harder then, okay? But we're going to -- we'll pick it up next time. We're just going to get rich slowly. But the fact of the matter is we tend -- when the rent -- [ when you ] guys come to see me, they tend to come in with, well, this is what we underwrite. This is what we got. It's like I said, it's a wonderful experience. And that reversion, that GBP 15 million of uplift that we'll get over the next 2.5 years, that's based on GBP 77 million of rent that comes up for renewal in that period. That's how we get to those -- that 26% piece. As you know, actively looking to improve our portfolio physically is part of our DNA. And what we try to do here is capture 3 of the key themes, whether or not it's improving new amenities to some of our locations, whether or not it's improving our solar capabilities of some of our buildings, particularly in our logistics portfolio or looking at consumer behavior by looking to install new EV charging points across various locations. All of it is important to us. Not only do we make a little bit of money on the initiative per se, but we're improving the overall appeal and, in turn, the liquidity of our individual assets. And that's something that is very much baked into our DNA. And like I said, we're probably on average. I mean, there's a very wide delta on this. We're probably seeing a 10% return on marginal cost across these 3 initiatives. I mean some of them are very profitable. Some of them are not so profitable. But overall, we're improving the appeal and the quality of those assets within the portfolio. Our EPC rating, A to C at 86%. Actually, that's slightly down, partly because we've acquired the CTP assets, which were only 70%. So we've taken a dilution now. I don't think we should be judged on that snapshot. We are fantastic stewards of bad buildings. I've said it in the past, we have a desire. We have an experience. We have capital to do it. We will improve -- bad buildings are in better hands with us than they are with most other people. And therefore that -- we expect that 86% to regain its positive trajectory over the coming period. So then finally, my last slide is an outlook slide. It's actually quite a busy slide because we've got lots of moving parts. We do think the challenging macro investment environment is settling. However, U.K. consumer does remain resilient, but there are signs, to use a Formula 1 expression, that the consumer is beginning to lift and coast. I think that discretionary spend has kind of come under pressure. We probably have seen less than half of the quantitative tightening that the BOE have put into the system actually affecting people. You have to remember that not everyone has a mortgage. Some people have savings, and those who do have mortgages are on fixed rates that don't run off, but when they come, they're painful. They are going to be painful. And so we have to be alert to that. Again, to reiterate the point, I do think that falling inflation rates will create that inflection point on interest rates. And for us, it is the 5-year swap that's important. And once -- and we are beginning to see that coming down. I'd like to obviously see it lower because then we get proper liquidity. But we have to just remember the so-called market predictions, the so -- that we get from these experts, we were pricing 3 months ago. People were pricing interest rates peaking at 6%. I mean we're now probably assuming that they've peaked at 5.25%. I mean if you were studying a master's degree at university, I'd probably fail you, but the truth of the matter is dislocation in the markets, both the property markets and the stock market, for that matter, will create opportunities. We think that the trouble sectors are going to be increasingly exposed. We think debt financing and fund redemptions and fund wind-ups will bring opportunities and, most importantly, price discovery outside of just beds and sheds. I mean very difficult to price -- probably very difficult to price this office building today, very difficult. I mean there'll be aspirations. I saw that somebody's put the mailbox in Birmingham on the market, quoting a number materially below what was paid for it, but it will be interesting. It was very difficult. And we think also corporate consolidations offer attractions around synergies, efficiencies and improved liquidity as companies start to get a bit bigger. I think there's a long tail of small microcap REITs out there that are possibly not serving a fantastic purpose outside the manager. And then for LMP, our focus will be on sectors that continue to offer up the strong fundamentals. The truth of the matter is that technology and consumer behavior are just 2 powerful forces to ignore. For some, they are creating challenging headwinds. For others, they are creating a wonderful tailwind. Income and income growth will continue to deliver attractive returns and qualities. You shouldn't -- just for those of you who think about compounding like I do, it is exponential, all right? It builds momentum as it grows. Our balance sheet strength that we've demonstrated, hopefully, today gives us incredible optionality where dislocated pricing exists. And our dividend, as I -- again, I want to keep coming back to my dividend because I do think 9 years of progression covered puts us in a rarified club, and we expect that to continue. So on that note, I'm probably virtually all done. I'm so happy for us to take some questions.

And any difficult ones, Andrew is sitting there as well.

Miranda Cockburn from Berenberg. Just on development. I'm just conscious that you're at the sort of lowest amount of development than you've been for a long time. You highlight that, obviously, development supply is obviously very limited at the moment. Are you tempted at all to step back into that market, obviously, for the numbers to make sense?

Funding. Funding?

Yes.

Funding. [ We don't build. It's ] difficult.

Yes. So you haven't got any land, or there's nothing at the moment that you would want to do.

One piece of land.

A little bit of land and in Weymouth.

One piece of -- historically, it's sat in a pretty low cost, but we've got a pre-let. So we'll secure planning, and we'll crack on with it, if we can make sure that cost price inflation is acceptable.

Max at Numis. I think I probably know the answer to this question, but I'm interested to get your view on it. Someone kind of said to me, how can LondonMetric continue to buy assets at high levels and recycle -- buy assets at high yields and recycle them at lower yields. But it sounds like that opportunity set for you is continuing to actually grow and driven by some of this distress that might come into the market. If we see and if the economists are to be believed that rates do come down quite sharply, is there a chance that actually, some of these refis you get another year extension, rates are a bit lower, and that pain doesn't actually come through and that opportunity set isn't quite as large as it could be for you?

Yes. I think, Max, I don't see refi pain in the logistics market in the same way that I would do in the office sector where it's going to be pretty serious. But I think in the logistics, it's more around redemptions. I can't sell my bad building, so I'm going to have to sell my good building. We're in negotiations on a situation on one of those, which will be the first warehouse acquisition that we've made in the year at the moment. So there's that. And I think the other opportunity set will be equity expiry. Private equity, we came in with a 5-year view. We're coming to the end of it. Do we roll or not? Well, actually, the metrics looking forward if we roll, don't look -- let's bag the IRR that we've already got. So there's a bit of that. I don't think there's going to be tsunami of warehousing opportunities. I think -- so we -- there will be more opportunities coming, but it won't be anything like if we were wanting to play in the office space or even in, actually, the retail space. I mean there are retail parks that are getting offered to me at some pretty juicy numbers as well.

Just to add, the only thing I would say is that I think the opportunities won't go tsunami. But one thing for sure, particularly on the one we're looking at the moment and we're in negotiation is we should be able to announce fairly shortly anyway as a purchase is that actually, redemptions have time scales. And the one counterparty that these funds, et cetera, seem to wish to deal with are reliable ones. I can't tell you how unreliable a number of USP managers of other people's money are in transactions at the moment. They say they're going to do something in 2 weeks. You're still sitting there 6 weeks later. And then we still got to get a U.S. approval. The one thing about LondonMetric is we are a purchaser of choice, even if we're not the best price. And that's what -- particularly one we're doing at the moment. That's why we've been chosen ahead of several other bidders as being reliable. So I think we are -- and we have another transaction ongoing where we're trading with a developer that we know well who needs some short-term finance. We will facilitate that, and we'll end up earning the asset, and the only person who's come to talk to is us, but he's not getting bank debt, so therefore, he's come to talk to us. And we'll buy the asset, provide the finance that he needs and will have some kind of profit share arrangement. So they're interesting, structured type purchases that we're looking at.

Great. And second one, if I can. You talked about it's a bit of a delight for rent reviews at this point in the logistics market. And I appreciate that rent is an overall part of business costs. So it's very low in logistics, probably sub 5%, maybe even sub 3%. But at what point do you think affordability becomes an issue?

No idea. I mean I suppose I've said this for many years. Look, when they start dragging us to arbitration because they just can't -- it's always -- it was a good indicator for us in retail warehousing when we decided to step away from the highly rented shopping park market because people didn't want to pay GBP 45, GBP 50, GBP 60, GBP 70 a foot, we thought maybe not. I think, Max, I don't know. I really don't because we've got such a diverse group of businesses as well, all operating on different margins. But we just -- I'll tell you when we go into arbitration. I mean just ask me that question next time.

Andrew Saunders from Shore Capital. You have quite an impressive reduction in the EPRA cost ratio during the first half. I wonder if you could just walk us through the moving parts behind that and whether you think it can improve any further.

Martin, you can do that? Is it down to...

We could drop Andrew's [indiscernible], that would be a help. The fact is the admin cost stayed the same, and the property cost leakage reduced. So the moving part that changes is the growth in the rent roll, in net rent. And so if we can continue to drive net rents forward and we can keep control on our cost, then that ratio will be kept there or thereabouts. At 11.5%, I'm not sure. Will we get a lot of benefit from being 10.5%? Or will we get a kicking for being 12.5%? It's in a good place, and I don't see anything driving it -- making it go higher. I think the main purpose of putting it in, Andrew, is to highlight the inefficiencies of some of the other REITs.

Callum Marley from Kolytics. You alluded to in your statement that you remain active in looking for M&A opportunities. Just looking out into the market today where some other industrial portfolios are trading 20%, 30% discount to GAV relative to where you're trading at, 7%, would these be the prime candidates that you're looking at? Or are you looking at other subsectors maybe with better tailwinds?

Do you want some names or not? Look, I think when we were [indiscernible] and we're wide eyed about opportunities, both in the direct real estate market and also where we think there's mispricing taking place in the stock market. We've demonstrated that, I think, with a number of deals over the years. Look, we want to stay. We like sectors that -- obviously, that we understand. We like sectors that are relatively low operationally. We like sectors that are going to enjoy a -- they're not going to be disrupted by technology and consumer -- changing consumer or evolving consumer behavior. So I don't see we're going to get -- all of a sudden get really interested in big discounts in the office space. But I wouldn't say that we would just only look at logistics businesses. We like the logistics market, don't get me wrong. But there are other parts. We have a GBP 744 million long income fund. And we like it, and it creates an incredible basis of -- it's a higher-yielding asset base, and it's always 100% let, and it's got reversions baked in. So yes, we like logistics, but it doesn't mean we have to only look at the logistics market. I mean CTPT wasn't just a logistics play, and some of the other ones aren't either. So we'll be pretty wide-eyed about it, but we'll stay within our circle of competence. And if we can't -- what's the quote? If you can't find enough to do in the circle of competence, do nothing, don't expand the circle.

Eleanor Flew from Barclays here. Maybe just one on the transaction market. Who are the other buyers and sellers you're seeing? Who are you competing with when you're making offers? Who else is selling out there?

I'll do the selling, and then Valentine can do the buying bit. Look, selling is -- it's funds. There's an awful lot of funds that are looking to monetize, and that might be the retail funds. They're going to wind up. I mean the retail fund sector is -- just shouldn't exist really. We've gone from 10 retail funds 7 years ago to covering GBP 20 billion worth to 4 today at GBP 3 billion. I mean -- so there's been a lot of monetization that, I think, M&G the latest say they're going to wind theirs up. So they'll be selling. You're also seeing a number of corporates coming out, defined-benefit corporate pension funds coming out of direct real estate and putting it into bonds and assets that they consider to be more appropriate to liabilities from a liquidity and monetization perspective. So you're going to see that coming through without a doubt. And then you've got individual sellers who've got refinancings on buildings that will come through. So there's quite a wide church of vendors out there that have their own individual motivations. And then as for [indiscernible] that it tends not to be we're in default or we're going to sell, to be honest with you. There are other reasons why they need to sell. Val, on the buying side?

Yes. I mean on the buying side, it's typically characterized by PE-type purchases, U.S. particularly, names such as Copley Point, Brookfield, Mileway. South African's got Leftfield Capital, so very few institutions buying because, as Andrew said, they're selling, I mean, apart from perhaps [ Aviva ] and M&G. Another U.S. is Cabot. We've been bidding against them a little bit lately. They've been looking to buy off us. So yes, it's USP and particular managers of other people's money.

I'd take just on the transactions in the period when I look back because it is quite a wide to do GBP 157 million. I mean there have been a lot of transactions in there because I don't think in that GBP 157 million, there was a single asset over GBP 15 million.

It's a portfolio.

Yes. But if you break down the individual...

No, you're right.

Yes? So we're talking now about GBP 15 million at lot sizes. They were all cash, okay? Our smallest was probably GBP 2 million, a High Street in Nottingham or something. So there's a number of deals gone through there. And the buyers, if you look at that, there is the platform which tends to be U.S. private equity, which Valentine touches on, but there will also be owner-occupiers in there, local propcos, family offices, high net worths, it's -- yes, but nobody is writing big checks. And I think the granularity of our portfolio is helpful in that respect. Vanessa?

Vanessa Guy from JPMorgan. A question that we often get from investors given they think that the logistics market is very close to the consumer. And given the worries that are coming on the consumer side, what would be your response to these questions?

So the consumer is still strong. Let's be clear, I mean, I think it's going to have some tough times, but we have virtually full employment. You can't have like a deep recession with full employment. I mean it's impossible. And it's very difficult -- different to some of the other downturns that a few of us in the audience have been through in the past. So let's start with full employment, and let's start with -- we still -- people have -- savings ratios are still in a pretty good shape. I mean they're coming -- they'll come down. But the logistics market is tied to the consumer. I don't think it's as simple as that because there's a central consumption as well. I mean people aren't going to stop eating. And also, I'd say, when you look at our list of occupiers, the delivery channel -- and for us, it's -- a lot of it is people having to improve the efficiencies of their logistics networks. And that generally means we need better buildings. Whether or not it's a [ mega share ] of regional, the [ check market ] is still a good market. And when you compare it to the others, you are getting the other sectors. It's still a wonderful place to be. And I think the diversity of the occupiers that we have, I think we feel pretty good about it. So we've got one on the call.

[Operator Instructions]

Okay. Whilst I'm waiting for that, I've got a couple here on the -- okay, I think we've answered that question. So Sam asked, you've disposed of about 9% of the CTP portfolios. Can you comment on how much remains? I think I said roughly about 11 percentage to go, but by the way, that doesn't mean we just stop at 11%. I mean we'll take a bid on anything. Nobody on the line?

There appears to be no questions at the moment, sir.

That's disappointing. Okay. Well, thanks very much, ladies and gentlemen, for your time. Appreciate it enormously. And we'll hang around, so if anybody's got any questions that they weren't brave enough to ask in the audience, we're here. Thanks.