British Land (LSE:BLND) — Investor Presentation

0:01 Good morning, ladies and gentlemen, and welcome to the BRITISH LAND COMPANY PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so, and these will be available via your investor meet company dashboard.

0:32 Before we begin, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from BRITISH LAND COMPANY PLC. Pavesh, good morning, sir. Hi. Good morning. Thank you, everyone, for joining us. Very pleased to be here. I thought we, we presented our half year results on Monday this week, and I thought perhaps it'd be helpful just to provide a bit of color, on some of the key messages that we talked about. And then very happy to take some some questions, from you guys afterwards. So we reported results for the six months of the end of September the thirtieth, and a couple of key headlines I'd want to draw. Firstly, really pleased with the operational performance that we've seen in the business in the first half of of this year.

1:24 We've leased really well across the business. We leased 1,600,000 square feet of space, and we did that at 12% ahead of, value or market rents, so what we call ERV. We control our costs very well, and so good sort of top line growth in terms of leasing and rental growth and good cost control meant where our underlying profit was up 3.4%, in the period. Now as you know, the macroeconomic and geopolitical backdrop remains uncertain. Interest rates have increased since we last reported. So as a result of that, we saw an outward yield shift of 23 basis points, albeit that did slow down in the period, meaning we had a 2.5% fall in the value of our portfolio.

2:10 Importantly, though, we saw really good rental growth, and rental growth has accelerated. ERV has been up more than 3% across all of our three markets or three submarkets, which I'll talk about in a second. And this has helped cushion the impact of the portfolio value decline. In the near term movements in market interest rates, both up and down, will continue to reflect property values, but rental growth is likely to be the dominant driver of medium term performance in our business. And we feel and have guided that we're expecting our rental growth to be at the top of end of our guidance for each of our submarkets. So last year, we had set rental guidance of two to 4% for campuses, three to 5% for our retail parks, and four to 5% for London urban logistics.

3:00 And six months in, we feel we'll be guiding or are guiding towards the top end of those ranges. We look at something called net equivalent yield. So what's the income we get today on our portfolio? What is the income we'd get as leases regear, and what's sort of weighted average of that? And that's a 6.1% net equivalent yield. That compares to a five year swap rate of just over 4.1%. And we look at five year swap rate because that's the the duration of which we typically borrow. So when you look at that spread, we think that's an attractive sort of headroom between what our portfolio is generating versus what market sort of borrowing rates are. So that as well as our development upside across our portfolio, which I'll talk about in a second, we think provides for really attractive future returns in our business.

3:55 So let me touch a little bit now on, each of the component parts of our business. One of the things we talked about to, to the market this week was in the right submarkets, we're seeing bifurcation. We're seeing that accelerating, whether it's across our campuses, our retail parks, or in in London urban logistics. The best parts of London are thriving. So if I take Broadgate, for example, which is one of our campuses, maybe we'll take a step back. We've got, our campus our our London office portfolio is is very much focused on on London. We've got a campus in Paddington in West, London. We've got a campus in Regent's Place, which is just outside of King's Cross in the sort of in the Knowledge 0.25.

4:44 We've got Broadgate in the city, which just sits above Liverpool Street. And then a new campus we're developing a mixed use scheme is Canada Water, which is on the Waller Heights Peninsula. So if I talk, for Broadgate as an example of what we're seeing, it's in the Northeast Corner of the city of London, but the performance is very different than we're seeing in the rest of the city. Rents are up nearly 4% in the last six months. Our vacancy is 3%. That compares to 11 and a half percent for the city as a whole. And we're seeing really good rental growth. So 3.7% market rent growth against some 1% for the rest of the city. We see a similar performance, a picture in our retail parks. So our retail parks are full. We have 99% occupancy.

5:31 We've carried that since last year. We were full. And that compares to a vacancy rate of close to 14% when you look at UK retail and aggregates. And the parks are performing really well. There are net store openings on parks, meaning there's more things opening than closing as opposed to shopping centers in the high street where you're seeing net closures. And I'll talk more about retail parks in in in a second. And then the third element of our business is London Urban Logistics. So this is Inner London development led last mile logistics that we are building. And, again, we we we think it's a really attractive part of the market where vacancy levels are really low at point 4%. That compares to sub 7% for UK big box.

6:18 There just isn't any really high quality or last mile logistics space in London. And we're taking our skill sets and developing and planning and being able to create space in offices and deploy that into logistics space in London. Again, I'll talk about that more in a second. But since we've launched our our strategy in 2021 under Simon Carter, our CEO, you know, we have transformed our portfolio. Nearly 90% of our business now is focused on those submarkets that are performing really well, whether it's campuses, retail parks, and and London urban logistics. So let me touch on each of these component parts of our our business. What we are really seeing on the ground is quality isn't really, really in demand, and you could see this in terms of take up of new buildings.

7:11 So this page is showing you what is the level of take up and what kind of rents that we're getting. Take up for new buildings is 71% of all of the space that's being taken up in the marketplace, so very high proportion. And when you when you look at sort of the segmentation of the market, we're really seeing a three three tier market. So Cushman and Wakefield, one of, one of our advisers, has started to talk about super prime, prime, and secondary. And super prime is the top 10% of prime buildings. And what do we mean by prime? Those are buildings that have proximity to major transport hubs. They have access to good cafes and bars. There's good amenity, really good sustainability credentials, of the building, and then the overall quality of of the building.

8:00 Increasingly an important criteria that occupiers look for when choosing where they want to to, take their space. And you can see on the right hand side that rents and premiums for these buildings have grown significantly and are expected to continue to grow at a much faster rate than prime. And that was evident what I showed you on the previous page in terms of performance at Broadgate. So for the best quality space, the demand is there. Occupiers are willing to pay the rent, and and and take the space.

8:36 As I said, we've had really good operational momentum across all three of our campuses. So if I touch on what we've delivered over the half, we had deals on over 368,000 square feet. That's at seven and a half percent ahead of market rents. And we've seen a real uptick in demand in the period. We have another 281,000 square feet under offer. That's 9.7% ahead of market rents. And then in terms of negotiations, a good lead indicator we look at is how many square feet of space are we negotiating with potential occupiers versus the amount of space that we have. And we've got nearly 1,800,000 square feet of negotiations underway on 1,000,000 square feet of space. We also have a flexible offer, which we call STORY, which represents about 5% of our business.

9:27 And there, we've had 71,000 square feet of leasing in the period and we have occupancy at about 87%. So STORY is a really sort of a well evolved high quality flex offer that we provide. We've been running it for about six years, and we continue to see strong levels of interest in that part of the business. And we look at opportunities for it to to expand across our portfolio. And so these this delivery in the first half demonstrates, you know, continued demand for best in class workspace. And for us, it's our campus proposition that really think we think stands out. Occupiers place huge importance on getting the best space. They want accessible location. They want high quality amenity and environment, particularly in a world post COVID where everybody is reevaluating what space they want.

10:17 They want less space, but they want better space. They're not very price sensitive, but it's important that all of the the the proposition that we offer on the campuses is is there when they're selecting because they're making a decision for the next ten, potentially fifteen years. They need to get it right, and they need to ensure it meets the needs of what their their their employees are asking for. And the campus model plays to that, as evidenced in in the strong leasing numbers. We also have high occupancy across our campuses. Right? At Broadgate, we've successfully relet or under offer on nearly 300,000 square feet of space, and occupancy is now at 97%. At Paddington, we're full. We have a 100% occupancy. One of our most exciting developments there is 3 Sheldon Square. It will be an all electric building.

11:06 We've already pre let 65% of that to Virgin Media o two. And we have another 27,000 square feet under offer, which will take us to 86% pre let before the building completes, and the building's about four months away from completion. So another good lead indicator say, you know, for the best space, people are willing to take it, even before before before the space completes. And then at Regent's Place, which is in the heart of the knowledge quarter in London, we are looking to reposition that campus as London's premier science campus. So occupancy there is 88%. That's a function of us deliberately taking back space so that we can reposition it for innovation and life sciences. And the reason we wanna do that, we think that's a key growth part of The UK economy where we'll be able to attract occupiers who willing to pay a higher rent and higher, growth in rent.

12:01 So if I touch on the innovation and life sciences a little bit more in detail, and Regions Place really is key part of our push towards innovation and science based, repositioning. And worth maybe reminding you of a couple of points. Firstly, life science is not just about labs. As important as labs are, these companies also need headquarter space. Life science is is just one of the key innovation areas that we are targeting. We're looking at data science, technology, looking at physical sciences, clean energy, AI, fintech. So there's a large universe of companies with huge growth potential, that want really high quality space, and there's not enough of it available today.

12:48 Secondly, it's really important, to be in the knowledge quarter, and that's where our region's place campus is located. It's in the heart of the knowledge quarter. We're surrounded by organizations like UCL, UCLH, the Turing Institute, the Wellcome Trust, the Francis Crick Institute, all places of research, academia. And it's why the the knowledge quarter is widely recognized as a natural place in London for businesses in this sector that want to cluster. And businesses do wanna cluster together, want to share, to collaborate, to attract talent. And so we're fortunate that Regions Place is located where it is in the heart of that knowledge quarter. We're working hard to build our relationships with those institutions.

13:39 We signed a memorandum of understanding recently with UCL, and that was really for us to to sort of plug in and build on the wider ecosystem in and around Regions Place. What does that MOU mean? It means that we can leverage UCL's globally recognized brand and network. It allows our occupiers at Regions Place to access the technical services and facilities that UCL can provide. And it means we're in partnership with an organization that's very effective at sort of embedding in the nursery ground for that next generation of occupiers. As an example, for exam you you will many of you will recognize DeepMind, and that is an institution that came out of or was born in UCL.

14:26 And we're starting to see early signs of benefit. We've got space under offer to a UCL spinout already, and have really good conversations, on lab conversion space of potential occupiers.

14:45 Outside of London, we're so we're looking beyond Regions Place. There's other pockets in the Golden Triangle that we think, are really play to this this sort of demand for high quality innovation life science space. Outside of London, we recently signed, a prelet at the Priestley Centre in Guildford. So this is one of the largest life science deals in The UK this year. We pre let the space to a company called LGC, so it's a global life sciences tool company. They took 48,000 square feet of lab and office space at a premium to rents that you would pay for traditional office space in the area. That means business is over 60% pre let, and it's pre let ahead of practical completion, which will be in q one of twenty twenty four.

15:33 And then in Cambridge, we have been deploying capital. We bought the ARM headquarters about a year and a half ago. We then subsequently bought the patch of land beside that, the Peterhouse expansion. You know, we've committed to build that this year, so that'll be 96,000 square feet of space. Construction started in, just recently in q three, and we will be targeting PC in q one twenty twenty five. And it will be the only new office and lab building that will be delivered in Cambridge in 2025. And because of that, we're already having strong interest from a range of different suppliers. So we really think pivoting up, elements of our campus to innovation and life sciences bill building allows us to focus on those parts of The UK economy that we think will be growing and will play high in growing rents.

16:22 Let me now turn to retail parks. We feel the retail parks are the preferred format for many retailers. The reason we feel that way is the space is very affordable. Rents have reduced over time. Business rates are rebased. Service charges have always been low, and sales are now well above pre pandemic levels. And so we look at a metric called occupancy cost ratio, which is rent rates and service charges of proportion of sales. And that now at our parks is 9%. That's down from nearly eighteen percent twenty sixteen, and it's much lower than in shopping centers, which are around 13 to 14%. So if you think about retailers, you know, all run on very thin margins, the affordability of the format is very important to them, and retail parks provide that.

17:13 Second bit is parks are an ideal format for a broad range of occupiers. They are located on major arterial roads. They provide ample free car parking. They're simple in concept. They're large steel boxes that can be easily adapted. And because of that, we're seeing a lot of incremental demand coming from a broad range of occupiers. That could be discounters, the pound lands, the B and M's, essential retail, and then multichannel specialists. That could be the grocers. It could be some of the, UK fashion retailers next. M and S are two big occupiers that are, with us on our parks. And so affordable, really a good format for omnichannel retailers. We attract a broad range of occupiers, so the demand is coming in.

18:05 And you counter that from a supply perspective. Planning regimes are quite restricted, meaning there's very little or no new supply coming in. So the value of a parks per square foot today is lower than the value to develop a park per square foot. So it's uneconomic to build new supply. And so you've got really strong demand and limited supply really plays into, what we're seeing on the ground. And we as I said, we're 99% fall across our parks. And when you take that sort of supply demand dimension together, it's why you're seeing net openings. Since 2016, more units have opened on parks while you've seen closures on the high street, and you've seen closures in, shopping centers.

18:55 So, we are also The UK's largest owner and operator of parks. That scale allows us to do portfolio deals. Meaning, when Marks and Spencer's comes to us and wants to expand in the park, they may want to, enter a new park that they don't have a location in. They want to expand their food offering or their food hall, and therefore need more space, at an existing location. They may want to regear a lease. We can have all of those conversations together because we've got the physical reach, across The UK. So that's the second strand of our business. The third then is London last mile. And here, we really, really like the fundamentals.

19:41 Just to be clear, when we talk London logistics, we're not talking big box up the m one. We're very much focused on, London. And the reason we like it is, ecommerce is driving, the entire logistics market. But in London, there's additional tailwinds. And those tailwinds are rising expectations about speed and convenience of delivery. There's more stringent requirements from London councils on, low carbon, low pollution deliveries. Get the trucks off the road, get the carbon off the road, and and focus on more electric deliveries, and our product provides that opportunity to occupiers. And, also, operators can make substantial savings by being closer to the customer. So 60% of the cost base of a logistics provider is in transport costs.

20:33 If we're able to whereas rent is only 6% of their cost base. So if we're provide able to provide them with really compelling space much closer to where their end customer is in Central London, then, it's an efficient format from them as well. So really really strong demand. You couple that with the fact that there's vacancy rates are very, very low in Central London. They're point 4%. So that demand dramatically exceeds supply. As a result here, rents have grown much more strongly than the wider logistic market. We expect them to continue to do so, and hence why we think there's a really exciting part in the third strand of of our business. Let me now touch a little bit on development. So a key driver of value creation for BRITISH LAND historically has been developments, and it's something we continue to, look at as as we look look look forward.

21:30 So in our innovation and life sciences part pipeline, I mentioned earlier, we committed to the Peterhouse expansion in Cambridge. As I said, there's very little supply of innovations, space here, and we're having good, good conversations on pre LUTs, and that will deliver us a good return of around 1212%. At Canada Water, we're progressing well with phase one. So Canada Water, as I as I said earlier, is on the Peninsula. We've got, 53 acres of black canvas really to develop a new town center within London. Phase one includes some offices, some residential plots, and those will deliver in q four twenty twenty four. Part of the planning that we got also meant that we needed and and and required to build some affordable housing, and that will complete later this year, and we pro presold that to the London borough of Southwark.

22:24 So those are two of our committed developments that we're progressing with. As we look forward, there's optionality across our portfolio. We're looking at 2 Fensbury Avenue. So this is not something we've committed to yet, but we are progressing with enabling works, meaning buying optionality and and getting the foundations ready for when we do commit. We need a pre let here given the scale. This is a 750,000 square foot office on our Broadgate campus. We think it'd be one of the best buildings in London. We're having very good pre let conversations, and we would need that to commit to scheme. But, you know, really encouraging conversations at very good rents, and we expect that this building will deliver returns in line with our hurdle rates.

23:17 And then lastly, in urban logistics, we acquired sites over the last eighteen months. We've gotten planning. So we got planning, at Mandela Way, the image on the left here, but also the box in Paddington, which is space under one of our buildings at the Paddington campus, was originally space for storage of facilities for Crossrail. We then we're looking at it as an affordable workspace, but actually from a logistic perspective, it's a great location because of of of where it's located and and the transport links into West London. And we got planning on that earlier this year. The council actually loved the space and said this is exactly the type of thing that we want in Inner London. It allows us to get trucks off the road. It allows for low push pollution delivery.

24:07 So we got planning on that, this year. Both of these will be amongst the best, most sustainable last mile logistics facilities in London. And actually, a new generation of product that doesn't exist today of multistory warehouses. These will deliver really good returns as well in the mid teens. So really excited to sort of progress and develop on these. Haven't yet committed to them, but we anticipate doing so in the second half of this year. Overall, we think development profits. So what's the capital appreciation in the business from developing our entire pipeline, which we'll do over the course of many years, we think is up to £1,400,000,000. So a key lever for us to create value going forward. So that paints a bit a picture on the three parts of our markets.

24:56 As I said, we we feel and and can demonstrate through our delivery in the first six months and and prior years, we are operating the best park parts of each of those markets where there's really strong demand for that product, and that has translated into our financial performance. So the first six months of this year, we delivered a 142,000,000 of underlying profit. That's 3.4% growth. That was driven by 2% like for like net rental growth, and we kept a very tight grip on our costs. Earnings per share were up 3.4% to 15.2p, and we'll pay an interim dividend of 12.16p. That's up 4.8%. Net tangible assets were down 3.9%. That's a function of the 2.5% decrease in the value of the portfolio I talked about earlier, as yields moved out, but that was mitigated by strong rental growth.

25:48 LTV, a proxy for leverage, so the value or quantum of debt relative to the value the value of our assets. That increased marginally to 36.9%. That was impacted by the value decline, but it's cushioned by disposals. So we sold a noncore office and data center portfolio earlier this year at 13% ahead of book value. We also received the surrender payment from Meta, to surrender their space at 1 Triton Square. It was proactive decision for us to take the space back so we can then repurpose it as a innovation life science space. So we got a very good, payment for that seven years of rent, cash upfront, so we're really pleased to have landed that. That helped, with our LTV.

26:33 And then group net debt to EBITDA is another leverage match where we look at, and that improved. It came down to six times for the six months to the end of September. In real estate, having a strong financial position and balance sheet is really important, and I'm really pleased our balance sheet's in a very good shape. We have excellent liquidity. We at September 30, we have £1,700,000,000 of undrawn facilities in cash. And based on our current commitments and debt facilities, we don't need to refinance until mid twenty twenty six. We have good access to debt markets. We, were reaffirmed by Fitch in August again this year. Our they affirmed all of our credit ratings, including our senior unsecured at a with a stable outlook.

27:23 We're the only European REIT to be given an a unsecured rating by Fitch. We're really pleased with that. And the markets are open. We did 600,000,000 of financing activity this year. At the British line level, we extended £250,000,000 of bank revolving credit facilities. And then after September 30, the post period end, we're continued to be active, and we raised four new term loans totaling £350,000,000. So all five year loans with four different banks. So, you know, funding to 2028. And we're really pleased to have done this because it's unsecured and flexible debt. It supports our strategy. We're gonna be active in recycling and redeploying.

28:10 This debt has the same financial covenants as all our other unsecured finance, so no interest cover covenants. And at September, we've got material headroom to our covenants. We could withstand a further 45% decline in values before we come close to reaching any of those. As I said, net debt to EBITDA improved in the period, and now LTV moved marginally up. But your balance sheet's in a really strong position. And then lastly, I thought it'd useful to just talk about how we think about capital allocation. Firstly, the resilience of our balance sheet that I talked about is of utmost importance. It gives us the flexibility to invest in opportunities as as they arise, and we strengthened it in the period through the disposals that I talked about, through the surrender receipt we received at 1 Triton Square.

29:00 But we do look, and remain selective and disciplined in deploying capital into future acquisitions. So over the half, we acquired a retail park, the Thanet Retail Park. It's just over £50,000,000, purchase at an 8.1% net initial yield, which we thought was a very good income return, and, we'll continue to seek investment opportunities to provide a good return for us. As I touched on, we have a very attractive development pipeline. When all our committed developments come on stream, when they finish, they will deliver another £71,000,000 of rent over and above the rent we get today. And we committed in the period to the Peterhouse expansion that I talked about earlier. And then lastly, we remain committed to shareholder distributions, and we've grown the dividend 4.8% in the period, reflective of the strong operating performance of our business.

29:56 So to wrap up, you know, really strong occupational momentum of the last eighteen months has continued unabated, and it really is testament to the capability of our teams, but also the quality of our portfolio. We are really seeing bifurcation, and it's evident in our performance, and we're benefiting it from in all parts of our submarket, whether it's campuses, retail parks, or London urban logistics. And being in the right submarkets means, it's being translated into accelerating rental growth. So that rental growth combined with the portfolio yield I talked about earlier around 6% plus the development upside I talked about provides really attractive return profile going forward in our business.

30:41 So I'll wrap it up there. I hope that provides a good summary of sort of the headlines of our our six months performance. I'm very happy to take any questions. Perfect, Bhavesh. Thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue submit your questions just by using the Q and A tab that's situated on the top right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. Sean, Pavezh, as you can see there in the Q and A tab, we have received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. But Sean, if I may just hand back to you just to chair the Q and A session, if I could just ask you to read out those questions and give your responses where appropriate to do so, and then I'll pick up from you at the end. Thank you. Perfect. Thank you, Jake.

31:36 So, Pravesh, we've got a few questions here. If I start with the first one, The question is with high occupancy rates and strong leasing performance, what trends are you observing in the tenant demand? And how do you plan to capitalize on these trends moving forward? So as I as I I as I mentioned, when we talk to occupiers on the ground, what are they saying to us? Firstly, most organizations, all organizations, I'm sure many of you will have done this, are asking their staff, what do you want out of the workplace? Right? Post pandemic, how do we get you back into the office? We want you back in for collaboration to work together. But what is it that you want? And the things they're demanding are the things that we provide on our campuses, whether it's, first and foremost, location. Right?

32:22 If you're gonna get your staff to get on the tube, on the train, and come into London, the the the the place of work needs to be above a really good transport note. And for us, that's Liverpool Street. It's Paddington. It's, Houston, Houston, Square across our campuses. So location is really important. But also all the other, what I like to call is the blank canvas. Right? We've got large floor plates. So occupiers don't want to spread their staff over six floors. They want them over one floor or two floors, and we provide that across our campuses. But it's all of the other sort of nonnegotiables around that, whether it's shower facilities, whether it's bike racks, whether it's good places for lunch, the public realm. So an example there is we invested in Exchange Square at Broadgate Campus.

33:09 We redeveloped the outdoor space. We put in some seating areas, some greenery, some water fountains, some good cough coffee shops, good restaurants. That's what our tenants are asking for and demanding. That's what their staff are asking for and demanding to say, if you want me back in the office, then, you know, make it easy for me to get in location. Make sure it's in an exciting part of town. Make sure there's amenity and good public realm around, so I'm interested in coming in. And we use an example called hotelification of space that seems to resonate when we talk to investors. You know, increasingly, the office is like a hotel. You want all of the amenities, the end of trip facilities, the flexibility that you would get if you were to, you know, get get some hotel space.

33:56 The other trend that is really important, I didn't really talk about it, but it's critical, is sustainability. So occupiers, when making decisions on where they want their space, sustainability is important. And the reason is if you're an accounting firm, a law firm, a brokerage, many of them have set net zero targets as as many of your businesses will will have. And the choices they have where they actually think about how to actually deliver those targets, one of the biggest choices is is their selection of office space. And so when occupiers come talk to us, they they wanna know the sustainability credentials. We have a metric in real estate called BRITISH, and all of our developments are BRITISH outstanding or excellent.

34:42 And that enables an occupier to help deliver their, sustainability targets. So that's an important criteria as well. As I talked about, each of our campuses is focused on, we think, that part of the market that is where the demand is because of location, sustainability, the experience we provide. And that's why that that's how we capitalize on that that those trends in demand evidenced in our leasing performance. Brilliant. Thank you, Bhavesh. So, actually, good good questions to follow-up on that. You're touching on how sustainability is an important feature for our for our occupiers. So so a question here, it says, how are your sustainability efforts translating into financial benefits? And what are the plans for enhancing sustainability across the portfolio?

35:30 It's core to what we do. It's not a not a nice to do. It's a commercially sensible thing to do. And why is it commercially sensible? The example I gave you earlier. Right? Let me let me give you a concrete example on one building on one occupier. So Allen and Ovary, a law firm, many of you may recognize, took space on our Broadgate development. They took it, last early last year, so in 2022. Building does not complete until 2025. And the reason they took it and they didn't move very far. Right? They had they were on Bishopsgate. They had 700,000 square feet of space. They'd sublet 300 of it. So that trend they talked about about people wanting less space, they had already sublet some of that down.

36:19 So they were using about 400,000 square feet, and they came on to our one Broadgate development and took 350,000 square feet. And the reason they took it was because they could reduce their operational carbon by 80%. That was a key lever for them to say this is a much more efficient building we're moving into. And how does it translate into financial benefits? One, we're able to pre let that building well before it was completed. Two, at really good rents. So the speed at which we're we're leasing it, and the rate that we're getting, the price that we're getting is really down to the reason they chose this was because of the sustainability element of that building. So it's good business for us. We don't do it because we like to do it, although that's important, but it is also because that's what our occupiers are demanding.

37:11 And, you heard me talk about this BRITISH LAND metric. So I guess it's it's an industry metric that measures the sustainability credentials of a building, both in terms of embodied. So what is the carbon in building something, concrete, the steel, the transportation of materials to construct, but also then in the operational elements, the running of it. And every development that we focus on has to be outstanding Because that's what our occupiers want, and that's what we that's what we that's what we deliver. Brilliant. Thank you. I've got one more question here. And you've kinda touched on it for especially for the campuses, but it says, please, can you comment on how you view your competitive position within the market?

37:58 So there's lots of chatter on offices and what what's happening to vacancy rates, etcetera. You know, I I bring you back to the Broadgate example. Right? Vacancy rates have risen. Vacancy rates in the city are 11 and a half percent. So, but when you talk about the office market in London, it it's quite quite material. Right? It's we are a small proportion of that, and our product is the quality end of the spectrum, all the things I talked about around, the benefits that a campus provides. And so we feel that bifurcation that we're seeing is because we're in the right markets. We're seeing really good leasing, leasing above market rents. Our campuses are full. Our occupancy rates are in the high nineties or as high as a 100% of Paddington. So we feel we're providing, a product where there's very little of it.

38:51 You know, last thought I talked about 70% of all take up was new space is what occupiers are demanding. And we're actually benefiting. There's a lot of narrative around Canary War from what's happening there, And that is challenging in that space, but we're benefiting the city because occupiers like HSBC, like Clifford Chance, like Credit Suisse, they're they're moving back into the city and wanting some of the high quality space that we offer. We think we have a real sort of advantage in providing sort of the best high quality space in in campuses. And it's not just the building. Right? It's it's everything that comes around the campus, the public realm, the amenity, the the the nonnegotiables. Right? The little things like, you you know, on our Broadgate, the the building I talked about, one of the things we developed we built into the basement was a thousand bike racks because we know our occupiers and our staff and our occupiers wanna cycle it to work and all the showering facilities.

39:51 And so making it us, you know, that hotelification that I talked about earlier. In retail parks, we are the largest owner and operator of parks. That gives us our advantage. Right? We're able to do portfolio deals, and we understand our customers. You know, the M and S example I gave you, I could repeat that for B and M. You know, they just took some space with us at Teeside, and they're desperate to grow in the North Of England and cannot find space. And they're a good tenant with us in other spaces. We're able to work with them to provide them that space to help them. You know, as I said earlier, it's a simple steel box, easy to adapt to meet what they needed. We that's a place that we wanna continue to grow in.

40:37 And then in London last mile, there is no space. Right? There's very little, you know, and a few others are looking to get into that space, but vacancy rates are point 4%. It's a new market. Rents are at a level now where the economic stock were perhaps they wouldn't have a couple of years ago. And our advantage there is we know London really well. We know how to navigate planning, politics. We know how to develop. We know how to work with some of the big construction firms in London. And so all of those skills that let let us to build the Cheese Grater building or, all the buildings you see across all of our campuses, and whether it's Hundred Liverpool Street or the Broadgate development we're doing, we're able to redeploy those skills to also find, space in London to redevelop, whether it's space under our campus at Paddington, the box I talked about earlier.

41:31 We bought a car park in Finsbury Square. So the Finsbury Square car park, which will redevelop, with the Mandela Way site that I talked about. These are all really, you know, well located Central London sites that need somebody to navigate planning. And we you know, so so Mandela Way, for example, we've got a great relationship with through Canada Water. We're also able to, through through that relationship, persuade them to give us planning on, logistics in Mendel Way. And the same development team that builds the office buildings will build, these develop these logistics facilities. So I think that that strength and, you know, it's many, many decades of development in London that that is the skill within this business that we that we can set us apart.

42:19 Brilliant. Thank you, Ramesh. That's it at the moment for the questions from. So, Jake, I will hand back over to you. Perfect. Sure, Mavesh. Thank you very much indeed for addressing all of those questions that came in from investors today. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended just for you to review to then add any additional responses, of course, where appropriate to do so, and we'll publish all those responses out on the platform. But, Bavesh, perhaps before really just looking to redirect those on the call to provide you their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments just to wrap up with, that would be great. Yeah. Wilson, thank you for taking the time to listen. I just I just wrap where I started to say really good performance in the first half of the year, good operational momentum.

43:06 You know, the yield shift and and and slowed. We're seeing really good rental growth. We are in the right parts of each of our markets. Right? We are seeing bifurcation in campuses. Retail parks is the best and preferred format for retailers, and the fundamentals in London last mile logistics are super strong. So, you know, 90% of our portfolio is in those chosen submarkets. We've reshaped our portfolio, and we're really driving the operational performance of the business and look forward with confidence to deliver really strong returns for our investors. Bhavesh, that's great. And thank you once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations?

43:57 This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of BRITISH LAND COMPANY PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all. Thank you.