Schroder Real Estate Investment Trust Limited ($SREI)

Good afternoon, and welcome to the Schroder Real Estate Investment Trust Limited Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Nick Montgomery, Fund Manager. Good afternoon, sir.

Good afternoon, Lily. Thank you for the introduction, and good morning, everybody -- or good afternoon, rather, everybody, and welcome to an overview of Schroder Real Estate Investment Trust. So for those of you that have been on before, I'm Nick Montgomery. I'm Fund Manager alongside Bradley Biggins, who is with me today as well. This will probably be a slightly shorter initial presentation than over recent times because obviously, we're following a quarterly NAV update. But there's obviously a lot going on both in terms of obviously, geopolitics, but the impact on markets, but also in our case, obviously, activity in relation to possible M&A activity. And hence, I expect we will have some questions about that more broadly. So I guess we will aim to do and give you an overview to the extent that we can in relation to that and in particular, set it in the context of our broader strategy. If we just start, I guess, by recapping on what we are for those perhaps who don't know us quite so well. So we are a real estate investment trust -- we own a good quality portfolio with a value as at December of around GBP 480 million. We have an attractive income yield, which allows us in turn to pay an attractive level of dividends. Our most recent dividend yield into today's share price reflects a dividend yield of around 7.3%, so an attractive level of dividend. And importantly, we have delivered growth in that dividend. And as we go through the presentation, you will hopefully see where we will continue to deliver further income growth and then in turn, earnings and down the line, further dividend growth. The yield profile of the portfolio is very attractive, both in relation to the initial yield that the portfolio delivers, but also what we call the reversionary yield, which is the valuers' view or independent valuers' view of market rents as a percentage of our portfolio value, which today represents a yield of around 8.3%. And to put that, I guess, more into hard numbers, that's the potential to deliver additional rent from the portfolio of around GBP 9 million, which compares to the annualized dividend yield that we're paying of around GBP 17.5 million. So although you never get all of that because obviously, there's churn in the portfolio, that's higher than peers, and we hope will allow us, as I say, to continue driving the earnings growth. And that's why you and obviously, we own the company it delivers that attractive yield. We have a very robust balance sheet, and I'll come on to give a perspective on the market. But of course, in an environment where the expectation is that inflation will inevitably remain stickier and therefore, we might see interest rates higher than we had expected maybe a month or 2 ago, we have a very robust balance sheet with one of the lowest cost, longest duration fixed rates across the whole of the real estate sector. So we have an average interest cost today of about 3.4%, that's all in, which has an average maturity of around 7.7 years. Now more importantly, of that around 3/4 is actually fixed at 2.5% for just over another 10 years. Now given obviously market volatility, not least over the course of the last few weeks, our share price reflects a discount to the December NAV of around 20%, which, again, we think offers an attractive entry point given what you'll hear from us in terms of further earnings growth potential. And we are continuing to address our overarching strategy, progressing that thematic approach on improving the underlying sustainability performance of our assets, which is all about driving that higher rent for the green premium and delivering a more resilient portfolio over the longer term. And just to recap, again, for those who don't know us quite so well, over the course of the last 5 years, we've been very clear in terms of where we want to be allocated with around 2/3 of our portfolio now allocated to the multi industrial sector or the retail warehouse sector, which, again, not just our view, but consensus is that, that ought to be the part of the market that delivers the most attractive risk-adjusted returns. Now obviously, just pausing for a moment and going to some of the questions I can see on the right-hand side of my screen. Since we last presented on this forum, we have made an announcement that you -- if you haven't seen it, it features on our website in relation to a consortium bid proposal for Picton on behalf of SREIT in a consortium with LondonMetric Property, which, again, I imagine most of you will know well, obviously, a large real estate investment trust happens to be a shareholder in SREIT. So obviously, we are very restricted in terms of what we can say. All we can say is what was in the leak announcement, which in simple terms was a consortium offer for Picton with LondonMetric Property. The fact that in early March, we made a joint nonbinding proposal to acquire the company. But that proposal was an all share, so paper bid, so no cash, an acquisition funded by the issuance of separate SREIT and LondonMetric shares, and in simple terms, we were highlighting that, that would allow Picton shareholders to realize an accelerated return. And obviously, they're able to roll into what we genuinely believe are market-leading REITs. Obviously, we are different to LondonMetric. We are much smaller. We have a different income profile. And I think we appeal to a different type of shareholder base. But as I say, we would -- we think both, in our view, are leading. Now that's the extent of what we can say in relation to the current process. What we have done though in the presentation in an attempt to give you a little bit more color on how we look at M&A is just to restate, and Bradley will talk to this, restate some of the overarching principles that we would apply -- and obviously, importantly, our Board would apply in looking at growth for the company. And obviously, the key focus for us is anything that we do would obviously need to be accretive in terms of earnings whilst also obviously preserving our conviction views about the real estate market, in particular, having that complementary portfolio where, as I say, we have taken the portfolio to where around 2/3 is allocated to multi-let industrial and retail warehousing. So more on that in due course. But we also wanted to highlight that now and to say that we will address that a little bit more further in the presentation. The other point to note at this stage there's no content in the deck for similar reasons is that some of you would have seen that Schroders following a 200-year history is being acquired by Nuveen. Now that transaction was announced a few weeks ago or a couple of months ago. The actual vote on the transaction is at the end of this month. And all being well, subject to antitrust and other regulatory approvals, the transaction will close later in the year. Now we're all very excited by that. Nuveen, for those that don't know, is part of the American organization called TIAA, a very large insurance business in the U.S., essentially neutral from looking at it from a U.K. perspective. And Nuveen is their profit-making asset management business, which is deploying both for the general account, the balance sheet of TIAA, but also investors within those underlying Nuveen funds. And so putting those 2 businesses together creates a business that has assets under management of around USD 2.5 trillion and it provides our clients across the whole Schroders business, combined with Nuveen with access to a much broader range of geographies and products. Now obviously, relevant to this, what does that mean for real estate? It is very exciting. Nuveen run a similar quantum of assets that we do in Europe, but actually it's very complementary, both in terms of country, sector strategies and investors. And interestingly, in Europe, but also particularly in the U.K., they don't run real estate investment trusts like we do. And so we believe that this will remain a strategic focus for the combined going forward. And as we've always said in these forums, although this isn't our biggest strategy, it is certainly one of the most visible with it being the shop window as a listed fund. So strategically, very important that no one is distracted by the moving transaction that we continue executing to deliver the best thing for our shareholders. But in time, I genuinely believe the transaction will offer all of our investors, including SREIT, further really interesting opportunities, both in terms of resource, reach, scale and all the things that those bring in terms of critically performance. Now just moving on to the next slide. I guess the first thing to note, and we did obviously announce our interim results in November, but we gave a further update in Q1 with some really exciting asset management activity. Obviously, the key focus for us is driving higher earnings growth -- that's obviously partly about reducing the vacancy rate, but it's also about making sure that where we have vacancy, we're delivering those improvements in terms of refurbishments, improving the sustainability performance, driving higher rents. And we're making good progress, and Bradley will provide more color on where we are in relation to the vacancy rate and where we see that moving directionally. And as I say, we are encouraged by the activity, notwithstanding, obviously, the broader sort of geopolitical and economic uncertainty. Part of the reason for that, I guess, don't say confidence as such, but because we can see what's happening on the ground is that we have an overweight exposure to those more undersupplied, we would argue, structurally supported parts of the real estate market, particularly the multi-let industrial estates that no one is really building in contrast to the bigger boxes where we have seen more supply, but also the more value-orientated end of the retail sector. So that's obviously retail warehousing, but also convenience retail. And Bradley will talk to some of the recent activity with tenants like Lidl and Tesco and others who are taking space from us in those sorts of retail assets. Our performance continues to be strong. We won for the second time, the best 10-year risk-adjusted performance for 2024 awarded by MSCI in the middle of last year. And we are seeing that relative performance continue over the more recent period. And the continued focus, as we said previously, best-in-class governance Obviously, we changed fees relatively recently, moving 50% of our fees onto a market cap basis. And the fees include, as Bradley will touch on, a natural tiering so that as the company gets bigger, the overall fee level in basis points comes down. So continued healthy activity levels. That in turn contributed to a further positive NAV total return over the most recent quarter to December, which we're setting out here. You can see there the NAV at the bottom of 61.7p per share. That reflects the 20% discount based on today's share price of around 50p. You can see we continue to invest capital expenditure in our assets, and that will be a further theme as we run up to the final year-end results to March, which we'll be presenting in June. But again, both at property level, but also NAV level, continued healthy performance against our peers because of that underlying activity. Obviously, as I noted at the introduction, the reason you -- we own the shares is largely driven by income, particularly if we're in an environment where rates are going to remain higher for longer, which we've been saying for a little while, even obviously before the most recent turbulence in the Middle East. And therefore, that really strong focus on driving the asset management activity, the underlying asset performance, really disciplined cost control, close management of all fees, including our own, has allowed us to continue driving that growth in EPRA earnings, which you can see there, ticked up slightly over the quarter by 2%. As I noted in the introduction, but I think this is even more important today, when we're looking at the outlook for earnings and dividends, obviously, we're looking at top line growth in terms of rental growth. We're looking at the ability to save costs and drive efficiencies, which obviously would come through scale. But also most importantly, we have the reassurance of knowing that we have very cheap debt for a long period of time. Some of our peers that you'll know, some of them are producing higher earnings. Some of them are, in fact, distributing more than their recurring earnings. But in some cases, those companies know that they have a bit of a cliff edge coming in terms of debt costs because they need to refinance in '26 or '27. And of course, rates today remain substantially above where they were when some of those facilities were put in place 5 to 7 years ago, and we don't have that issue here. You can see on the left-hand side here, the vast majority of our debt, GBP 130 million with Canada Life. That's a piece that is fixed at 2.5% for an average maturity of around 10 years. The balance of our debt is more of a tactical facility we have with RBS, part of which is hedged, part of which is floating. But again, that's a relatively small part. And when you aggregate that, we have that average debt cost of around 3.4%. Performance, I've noted, it remains strong relative to our peers. Obviously, in capital value terms, we have seen the market slow you can see here, if you just look at the bottom right-hand side there, over the long term, we have continued to deliver very healthy levels of relative outperformance. That's obviously down to the sector allocation that I've been mentioning, particularly the outperformance of the multi-industrial sector, but it's also by having that higher income return through the cycle, which -- and obviously, the asset management that allows us to drive the rental growth as well. Now just from a market perspective, obviously, things are moving around on a daily, hourly basis. And what we've seen, as you can expect, is, therefore, a sharp change in the trajectory of interest rates. But again, the outlook remains uncertain even today, obviously, the markets have had a slightly better day. Our view is that this has, if you like, concentrated the views that we shared before the most recent in the Middle East, which is that the inflationary pressures that were beginning to abate in our view and Schroders view were still going to remain elevated versus consensus. Prior to the recent, obviously, impact on energy prices, that was down to a host of factors, demographics, decarbonization, supply chains, supply chain disruption and obviously, the energy price increases will add to that. What that means is that we're not expecting any reduction in rates this year. Those interest rate reductions will be pushed out, and that's what you're seeing in terms of market expectations here. I guess from a real estate point of view, if we do see, let's all hope a relatively swift end to facilities and that remains uncertain, we think central banks will look through, obviously, the inflationary impact. But as I say, rates remain slightly higher than previously. But we will also see the knock-on impact of second order effects in terms of going back to raw materials, which sits obviously alongside what we've already seen in terms of increasing demand of scarce resources, skilled labor shortages, which mean that the supply-constrained pipeline in new developments across Europe, but particularly focused on the U.K. will become even more acute. And so when we're looking forward into the cycle, just to move to the next slide, we expect the returns going forward to be driven by rental growth rather than any sort of benefit coming from yield compression in response to what others perhaps would have expected in terms of falling yields. And so in that context, our strategy of owning a high-yielding portfolio allocated to those sectors where we are seeing those higher rates of rental growth, obviously, particularly in that multi-let industrial sector means that we do see the potential for a recovery looking forward, driven by that restricted supply, but portfolios like ours benefiting more than the average because of our allocation and because of that high yield. So as I say, lots of uncertainty, but we think we are relatively well positioned. So with that, I will pause and over to Bradley to speak a little bit more about strategy.

Great. Thanks very much, Nick, and good afternoon, everyone. Thank you for taking the time to join. We've got some good portfolio activity to talk about. But first, as Nick alluded to, it would be good just to discuss the Board's and the manager's approach to corporate acquisitions or M&A as it's often called. And just to give you some general comments on our approach. And I guess the first thing to say is there is a high bar for us to participate in M&A. And the key focus, as Nick said, for both the Board and the manager is what is best for shareholders in a given situation. And the Board are independent of the manager. They're there to represent shareholders. And in my opinion, I think they do an excellent job of that. Now for the right acquisition opportunity from a corporate perspective, the manager, Schroders, so us, we would be willing to invest in SREIT to support the right corporate acquisition opportunity. And that corporate acquisition opportunity must satisfy a number of general requirements. So first and foremost, it has to be earnings and dividend accretive for SREIT shareholders. Now how can you achieve that? Well, often, there are clear cost synergies or there could be asset management opportunities that our teams can unlock. There could be asset recycling opportunities, so perhaps selling lower-yielding assets where we don't see a rental growth path and then buying higher-yielding assets where we think we can grow the rent as well. And also, there's the opportunity in some situations to add leverage up to our 35% sort of top end range guidance on net LTV, if we can do that in an accretive way, i.e. The benefit of the acquisitions funded by the leverage more than outweighs the cost of that additional leverage. Now of course, any corporate acquisition must also align with our sector preferences. And Nick outlined earlier the fact that we are 65% industrial and retail warehouse with that industrial allocation being largely multi-industrial estates. And he's also outlined the favorable supply-demand dynamics we see there as to why we like those sectors. Now of course, you're not going to typically get a perfectly matching sort of sector split, but we would like alignment. Of course, the assets we acquire have to be applicable to our strategy. So we look to improve the sustainability performance of our assets to generate higher income and capital growth. And as Nick has also alluded to, we did win the 10-year performance award from MSCI for the second year running. And it's important to us that we are able to continue that relative outperformance. And of course, one way of doing that is to have an attractive entry price. So from our perspective, we don't want to overpay in a corporate acquisition scenario. So they're the principles that we will be judging any potential opportunities by. I hope that's helpful. And just to reiterate, it's absolutely key that any corporate acquisition is in the best interest of SREIT shareholders. With that element of strategy addressed, we'll move on to our real estate portfolio strategy. And as I mentioned, sustainability is a core tenet of our strategy. But to be absolutely clear, that's only because we think it will help us deliver enhanced long-term total returns, and we consider that alongside the usual real estate fundamentals, such as thinking about structural changes on sector outlooks and occupier trends. And as I said, Nick has outlined some of those factors we've been considering recently, so I won't repeat those. But to give you an example of our strategy in action, and this is one you may have heard from us before, but it really is a fantastic proof of concept, and that's Stanley Green Trading Estate, which we acquired in December 2020. It had an existing trading estate there. We have a 3-acre development site. We spent almost GBP 10 million developing 80,000 square feet of new accommodation on that 3-acre development site. That came in the form of 11 new units. We've made a conscious decision to spend more money on those units to develop them to be EPC A+ or BREEAM Excellent, which is a very good sustainability standard, particularly in industrial. Now what we've found with those units, which are now fully let is that we've been able to achieve much higher rents in those units compared to the older units on the estate, even though they're in literally exactly the same location. So there's been a 39% premium for similar sized units. And that is not all green premium, but we think a good element of that is green premium. Of course, tenants will be willing to pay more for a newer unit. but we do believe a good element of that 39% rental premium is green premium. Now not only do you get higher rent, but you get more value per unit of rent that you're receiving, and that's because the independent valuer and the market in general, so other investors would apply a keener yield to these more sustainable and efficient units than an older unsustainable unit. Now we're not stopping there at Stanley Green. We are undertaking a rolling refurbishment of the older estate. So we're bringing EPCs up to a B or higher because what you find on estates is when you achieve a higher rents in a certain part of the estate, those higher rents will over the rest of the estate. So as we've been refurbishing these assets, we have been achieving much higher rents on the existing estate. So for example, we achieved a 54% uplift in rent from Screwfix as a result of a refurbishment that we did with them on the existing estate. So overall, a really fantastic example. And just to really drive the point home, the question is, was it worthwhile spending that premium amount to get high-quality sustainable units? We think emphatically, yes. And that's drawn out by the investment performance, which you can see on the slide, where we've achieved significantly higher than the benchmark. Now moving on to the progress we've made since we reported to the market last. So we last reported our half year results on the 27th of November. Since then, we've been very busy. We've done 18 lettings. And that's at a total rent of GBP 2.1 million. And Nick spoke about the income profile of the fund. So we have a very high reversion yield of 8.3%. And the question we're often asked is, is that achievable? Well, these new lettings, so the 8 new lettings were at a level that's 0.3% higher than the December ERV. So not only do we think that reversion yield is achievable, but we're achieving it with the deals we're doing right now. In addition, the rent reviews and renewals were significantly ahead of the previous passing level, more than 20% ahead of the previous passing level. So really good result there. And that, again, speaks to us achieving that reversion. It speaks to the quality of the assets in the portfolio and the fact that we're positioned in areas where there's strong occupier demand in the market. We are continuing to progress sales, and we've made a number of sales through the financial year so far. All of them bar one have been ahead of book value, and we did decide to sell one asset below book value because we felt that actually the price would only be under more pressure as time passed. So we felt it was good to get out of that one. As Nick alluded to earlier as well, we are very much focused on cost control. So we have a very competitive ongoing charges ratio there of 1.27%. And we have aligned our fee with shareholders. So we are -- the level of our fee is now more aligned with the experience of shareholders. So half of our fee is based on market cap. And we hope that's appreciated. And of course, our fee has, therefore, declined in the current environment, and I'm sure you all get the world's smallest vial-in out there for the manager. I wanted to touch on some asset management initiatives that we've got underway. We've got 4 examples across office, industrial and retail warehouse. What's really important here is just the level of rental uplift we've been able to achieve in these processes. But also it's worth just bearing in mind that the upside in our P&L is not really there yet because the leases have been -- have only recently completed either at the end of the quarter or post quarter end, i.e., in 2026. So there is lots of upside to come in the P&L from these initiatives. So we been through them one by one. In the top left-hand corner, you can see some images of St. Ann's House, which is in Manchester. We're undertaking a GBP 3 million refurbishment there. That's almost complete. There's about GBP 1 million left to spend as of the 31st of December. We're overhauling the basement of the ground floor, the common areas and also the fifth floor office. We're introducing end-of journey facilities like showers and cycle storage. We're adding a podcast studio, yoga studio, meeting rooms, breakout areas in the basement and ground floor. So we're really activating that space. And we're adding an institutional spec reception. Now that's all great, but we need to see some rental upside, and we are currently in the market with the fifth floor, and we're targeting a rent of GBP 28 per square foot, which would be a 74% uplift on the previous passing level on that floor. So you can see that the CapEx was very much justified. Now in 4 years' time, we're targeting a total rent of GBP 1.5 million, which is almost double the current passing level. And that represents a forecast IRR of 13% per annum. So again, it speaks to the accretive nature of these projects that we're undertaking to create value and drive rental growth. In the top right-hand corner, you can see some images of Millshaw Park Industrial Estate, which is in Leeds. This is a fantastic asset. And just taking a step back, I thought it would be helpful just to provide a brief bit of background on the asset. So it's been a really strong performance since we acquired it 10 years ago in 2015. It's achieved just over 12% per annum total return compared to 9.6% for the MSCI all industrial benchmark. This asset is large. It's 28 acres, and there is 460,000 square feet of warehouse space here. It's located just south of Leeds City Center close to the M62 Motorway, and it really is on the edge of the city. Now the Leeds industrial market has a very low vacancy rate. So it's around 3%. The national average is around 5.5%. So that's really helped us drive rents in recent years. Now what I'm going to touch on here is specifically a unit we got back in June. It's 50,000 square feet. We undertook a GBP 1.9 million refurbishment of that asset to bring the EPC up to an A from a C. So we added PVs, EV charging, new roller shutter doors. We degassed the unit and put in modern electric HVAC systems, et cetera. And again, the question comes, well, was it worthwhile doing all that? Well, we have exchanged an agreement for lease with a Padel operator, and they will be paying a rent that's 86% higher than the previous passing level. It's for 15 years straight. There are CPI-linked rent reviews, and we are delighted with that. It's currently in planning. The landlords are effectively complete. So as soon as that planning process is complete, we will complete the lease and then we will start to be able to accrue the rent in our financial statements. So that just speaks to the point where I was making earlier, where we've spent the money, we've progressed these initiatives, but we haven't yet seen the rental upside in our financial statements. On the left-hand side of this slide, we show Headingley Central in Leeds. This is a mixed-use 110,000 square feet retail and scheme. It's prominently located in the town center in Headingley. It's anchored by core convenience retail and leisure operators such as Premier Inn Hotels, which is at one end, got the Gym Group at the other end. Then in the middle, you've got the likes of Sainsbury's. And now I'm delighted to say we've also got Tesco's coming to the scheme, and we have McDonald's already open and operating in the scheme. And it's those 2 tenants I'd like to discuss briefly here. So we got some space back 18 months, 24 months ago from Wilkinsons, who you might know when bust. They had a single unit, which was basically 2 units joined together. When we got the space back, we divided it back into 2. So you've now got Unit 22 and Unit 24. We let one of the units to McDonald's, and they're paying a rent of GBP 75,000 per annum. It's a 25-year lease with a break at year 15, so a very long lease. And on a per square foot basis, that GBP 75,000 per annum is a 28% increase compared to what Wilkinsons were paying. And of course, McDonald's are a very strong tenant. We think that they're good for the rent for the long term. And I'm delighted to say we've also exchanged an agreement for lease with Tesco's who are paying a rent of GBP 110,000 per square foot, which is a 93% increase on the previous passing level on a per square foot basis. And that's also a 15-year lease with inflation in rent reviews. So again, this speaks to us creating value in our assets because it's very expensive to buy long leases with inflation and rent reviews from great tenants such as McDonald's and Tesco's, but we're able to create them to generate value for our shareholders. Now on the right-hand side, the final example I'll touch on today is a retail warehouse scheme in Salisbury, it's called Churchill Way West. We own 3 units in a terrace that are next to a very large Waitrose store, which we don't own, but they're on the same retail park. In the past, the 3 units we own were let to Smyths Toys, Homesense and Sports Direct. We did a regear with Sports Direct to keep them at the scheme, and we run the leases for Smyths and Homesense down to expiry because we were able to get permission to sell food from the units. So what we're able to do was instate a bidding war between Lidl and Aldi for this space. We always felt it would be great space for a discount food -- convenience food operator. It really suits their requirements well being single level, large flat car park and well located in a good town. Now what we're able to achieve with Lidl, who won the bid against Aldi was a rent of GBP 440,000 per annum on a 25-year lease with a break at year '20 with inflation-linked rent reviews again. And importantly, that rent is 67% higher than what we were getting previously on a per square foot basis. Now we did have to spend GBP 1.5 million to improve the unit and Lidl's unit, so they took Unit 1, which we enlarged and improved the sustainability performance of -- that EPC has moved to an A+. Previously, it was a D, so a really significant improvement. But I think the numbers speak for themselves in terms of how profitable this has been. So we've achieved an income return on cost of at a double-digit level. Now there is still a Unit 2, and that is -- so we've exchanged an agreement for lease with the Gym Group, again, for a 15-year term and again, with inflation-linked rent reviews. So again, this speaks to us creating that value with these great leases to great tenants to create an overall much better asset that investors will place a higher value on. Now the Gym Group AFL is subject to landlord works, which we are working on at the moment. So that when we finish those, the lease will complete and again, we'll start to collect the rents from the Gym Group. So again, bearing in mind that this rental upside is not yet flowing through the P&L. Now moving on to an illustrative sort of overview of how we might achieve our reversionary rent. And the first point to make is just take a step back and understand that our reversionary rent is GBP 9.1 million higher than our cash passing rent at the end of December. And that's clearly material in the context of a GBP 17.5 million annualized dividend. So we only need to achieve some of our reversion to hopefully have a really good impact on future dividends. Now how are we going to achieve that higher rent? Well, there we set out some illustrative steps here. So first of all, in our current leases, we have fixed uplifts. So that's usually the end of rent-free periods that tenants get at the start of the lease. So in the next 12 months, so to the end of this calendar year, we'll have GBP 3 million of fixed uplifts to come through. We also have GBP 900,000 of agreement for leases exchanged. So as I mentioned earlier, as certain requirements are met, such as achieving planning or completing landlord works, those leases will complete and we'll start to be able to accrue the rents into our P&L. Now examples of those AFLs include the Padel operator at Millshaw, we discussed earlier, the Gym Group at Salisbury, we also discussed earlier and Tesco's as examples. So as those leases complete, we'll get more rent flowing. There are also some units and space in our portfolio where the market level of rent is above our current passing rent. So as rent reviews come around, as we execute renewals, we will hopefully push those rents on. And as I said earlier, our rent reviews and renewals since the interim results have been more than 20% higher than the previous passing level. And finally, we have vacant space, which is much reduced. We're down to 9.7%, which is a good level for our portfolio. Really, we target 8% to 9%, but 9.7% is very good. That's down some 200 basis points on the September level, and it is reflective of the fact that we did exchange those leases with the Gym Group, with Tesco's, with the Padel operator. So we've been working really hard to get the most from our space across the portfolio. Now with that, I'll pause, hand back to Nick, and we really encourage your questions and be delighted to answer them.

Yes. Thanks, Bradley. So this obviously is essentially an interim update because we went into obviously lots of detail after the interims. And we are obviously in the process of reviewing our year-end NAV and we'll provide a lot more color on business as usual when we present the finals in June. But I think putting to one side, I understand the focus of a lot of the questions. Hopefully, what comes across is business as usual is going well, notwithstanding broader market uncertainty, geopolitics, and we're very focused on continuing to drive those higher earnings growth and in turn, high dividend growth and maximizing the value of the portfolio as we improve the underlying assets with that sustainability-focused approach. Now I guess just moving to the questions. And I think there are obviously lots of questions in relation to the leak announcements. We are obviously subject to the market abuse regulations. And so there's a lot of detail that we've been asked that we simply can't provide at the moment. The leak announcements, obviously, we didn't choose to make. And as we noted in the announcement, it is early days. When you have things like that, you also find that things are written in the press, which we're not in control of. We don't know where it comes from. And so I also understand how there might be information out there, which as I say, people are reading and assuming is right. And as I say, all we've done is put out the leak announcement. What's great about this forum is that we get direct access to a really important part of our shareholder register. And that's why we're doing this now because we wanted to have an opportunity, obviously, to give you an update on what's happening in relation to the underlying portfolio and the existing strategy, but also to be upfront and say, look, there's been this leak announcements. But in the absence of being able to provide any further detail to reiterate some of those overarching principles that we and the Board are absolutely clear about when it comes to looking at potential future growth of the company. And again, we can't link this directly, obviously, to what we may or may not do in relation to Picton. But I would just encourage you to relook if you have an opportunity at Slide 12 in the deck, which does talk to some of those overarching principles that we're very clear about complementary portfolio, earnings growth and fundamentally something that is in shareholders' interest and speaking as a shareholder as well as the manager, we are absolutely clear about that. What I propose we do in relation to the questions relating to Picton, and again, the great thing about this forum is that we are able to go back to investors after the meeting and give responses to the extent that we can do -- so don't view this as a sort of a dodge. I think what's best is we take away the questions that relate to the leak announcements and where we can, we provide responses to at least give you an indication of how we view this sort of activity as a matter of principle. I mean that obviously dominates -- that clearly dominates the questions, but we'll endeavor to get that response back to you through the forum by the end of the week. There are 1 or 2 questions that relate to activity more broadly. There's one just querying a sale that Bradley mentioned in Liverpool. It's our first one that we've done for a long time, below book. And I think that, in a sense, answers the question, which is how much confidence can investors have in the estimated book value. As you've heard from Bradley and you've heard us report over recent years, as a general comment, we've consistently sold above book on completion of active management. I think on this occasion, I think it is a bit of an exception simply because when we looked at what we believe we could deliver for asset management, we didn't have conviction that together with market uncertainty, we were going to be able to do enough to really drive value, and we had a buyer there who was prepared to move quite quickly, which is why we did the deal as we did. Bradley, there's 1 or 2 sort of comments just in relation to vacancy, which I think you've covered. But is there any further points you just want to make in relation to the steps we're taking on the vacancy?

Yes. So there's a slide in the appendix that sets out the void position. So I mentioned it's down to 9.7%, which is the longest it's been for a number of years actually for SREIT, and it reflects a lot of activity that we've undertaken again over a number of years. So the reason the void was a bit higher was the Stanley Green development, which took a while to lease up because with multi-industrial estates, you tend to build them speculatively and tenants like to see them finish before they take a lease on the space. So that took a while to let up, but it's fully let now. So that's a fantastic result. We also had a number of pretty material refurbishments across our industrial estates, and we've achieved very high rental uplifts, which hopefully came across in the presentation. So there's an element of quality void. And we continue to work hard to bring the void down, but I will say that our target void rate for this strategy will be around 8% to 9%, and that's because we need the space back to undertake the refurbishment to achieve rental uplifts and to get better lease terms. In addition, one of the strengths of the portfolio is how granular and diversified it is, particularly given the high allocation to multi-industrial estate 60 tenants on a single estate. What that means is there's general churn. So it's quite rare to be at 100% occupancy on a very large multi-industrial estate just because tenants come and go. So looking at the 9.7%, we do have another 0.3% under offer and another 2.2% under refurbishment, we would hope to come to the market when it's finished and let at higher rental levels.

Thanks, Bradley. That's clear. And as I say, business as usual is a real clear focus for us. Bradley, there's one question, again, on another matter where we are thinking a lot about this and are benefiting, which is our EV charging points part of our thinking. Do you want to just talk to what we're rolling out there and how the numbers are looking?

Yes. So with EV charging points, you have different approaches. So if you have an office space, an EV charging point would be considered an amenity. So it would be like having changing rooms, your tenant would like to have EV charging points so that their employees can benefit from them, and it's kind of wrapped up as an amenity rather than a direct charge that we get. But what I would say is if you want to let an office these days, you probably would need to be offering EV chargers. But there's also a different approach with EV charging, and this applies more to, say, retail schemes. So this is where members of the public will visit a retail park or a shopping center. They might visit some shops for half an hour and then leave. And if they have an EV, electric vehicle, they will benefit from using chargers available to the public, but they will pay a charge for that electricity. And that's where you can make profit as an EV charger operator or as a landlord. So what we do is we've come to an agreement with a fund managed by Octopus Energy, where they have installed a number of EV chargers across the SREIT retail portfolio, but also the broader Schroders U.K. platform retail portfolio. And what they will do is pay us a rent to use the spaces -- and they will also incur the cost of planning, construction, the materials and labor to put EV chargers in. So we get a better asset in terms of having better amenities for the general public. We also get a rent. So we're monetizing the car park and the EV charger operator gets to sell energy to the public. So we definitely are looking at this across the portfolio. And as I said, we're very much focused on these elements of real estate.

Exactly. And by the way, both achieving our sustainability objective, but importantly, driving some very attractive levels of additional rent, which is generally not reflected within the valuation assumptions. And again, we'll provide more color on that when we announce the finals. So look, I guess I'll just finish by saying perhaps uncharacteristically, we have certainly always tried on this forum to be as transparent as possible. And certainly, the feedback we've had from past presentations has acknowledged that. I hope we have been as transparent as we would normally be in relation to business as usual. And apologies off the back of our announcement that we can't answer some of your more detailed questions in relation to that leak announcement. We will, as promised, take the questions away, however, and we will commit to come back to the platform with responses where we can do, even if it's more matters of principle rather than direct answers. And we will also obviously endeavor to keep all shareholders, retail as well as wealth managers up to date as that potential transaction progresses as and when we can do. So I think we'll leave it there. I'll hand back to Lily just to close things out. But again, thank you very much, everybody, on behalf of myself and Bradley for joining.

That's great. Thank you both for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This is going to take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.