Tritax Big Box REIT (LSE:BBOX) Q2 2026 Earnings Call

0:00 Good morning, and welcome to our results presentation for the first six months of twenty twenty six. I'm Colin Godfrey, CEO of Tritax Big Box. As usual, I will kick off with our key messages before Frankie, our CFO, provides an update on our financial and operational performance. I'll then outline the substantial strategic progress that we've made in the period before opening the lines for q and a. The key message that I want to deliver this morning is that we're exceptionally well positioned to take advantage of the significant opportunities inherent within our business and the broader market. We continue to deliver against our key growth milestones, and with a near doubling of secure power for our data center pipeline, we're increasing our EPS growth ambition to 65% by 2031 or sooner from 50% by 2030.

1:02 The first half of twenty twenty six has been defined by strong execution and a series of important strategic milestones across the business. Active asset management and capture of rental reversion has delivered strong income growth, and we've been doing this at pace. Supported by a successful disposal program, we've recycled capital from lower returning assets to generate superior risk adjusted returns and provide a key source of funding flexibility. Since January 2023, we've redeployed more than £1,000,000,000 into higher returning opportunities. In development, our agile platform continues to create future income opportunities at attractive yields on cost, allowing us to align development activity with market conditions and allocate capital selectively.

1:59 Just eighteen months after entering the data center sector, we have already made meaningful capital value development gains, which will be followed by significant rental income and earnings growth as schemes are delivered. Together, these achievements have delivered another period of strong financial performance with growth in net rental income, earnings, and dividends, which Frankie will cover in more detail shortly. They demonstrate the earnings power of our platform and the significant opportunity ahead as we continue to progress towards our long term earnings ambition. Yesterday afternoon, we announced the exciting news that we have secured a further 235 megawatts of power for our data center pipeline.

2:50 This is another major milestone building on successful granting of planning permission at Manor Farm in the period. This incremental power is phased for delivery in twenty thirty to twenty thirty one and nearly doubles our secured power to 507 megawatts. It is connected to two additional schemes, which have the potential to deliver exceptional risk adjusted returns with a yield on cost of between 911% and a profit on cost in excess of 50%. The proposed equity issue unlocks the next wave of the data center pipeline, securing the early stage and longer term CapEx requirements of these two schemes, complementing our ongoing capital recycling program.

3:44 These two new schemes give us the potential to nearly double our expected data center rental income from the £58,000,000 that we announced for the Manor Farm and Chelmsford projects to between 107 and £119,000,000. It is this additional opportunity which gives us the confidence to increase our adjusted EPS growth ambition to 65 by 2031 or sooner, up from 50% by 2030. Given commercial sensitivities and as was the case with Chelmsford, we are not disclosing the precise locations of these two new schemes.

4:29 However, they are both in the prime Greater London availability zone. This is further evidence that our power first approach is working, creating exciting prospects in data centers with the potential to deliver exceptional risk adjusted returns across a current total opportunity of over one gigawatt of potential power capacity. With that, I'll hand over to Frankie to cover the financial and operational review. Frankie. Thank you, Colin, and good morning, everyone. This first half reflects another strong period of disciplined execution across the business with consistent delivery across asset management, capital recycling, and progress with our development opportunities.

5:22 This has translated into strong earnings growth along with creating significant future opportunities to deliver value to shareholders. Starting with the headlines. The portfolio generated 5.1% EPRA like for like rental growth, more than double the level of the prior period. Adjusted EPS excluding all DMA income increased by 7% to 4.41p. And the dividend grew to 4p per share, a 4.4% increase. Our portfolio value was £7,700,000,000, reflecting net disposals and modest valuation movements, resulting in a 1% reduction in EPRA NTA per share to 185.9p.

6:17 Turning to the income statement, which highlights our recurring earnings and dividend growth. Net rental income increased by 16.2% to a £173,300,000, driven by the contribution from the Blackstone portfolio acquired in October 2025 and strong like for like rental growth. Operational efficiencies reduced the EPRA cost ratio excluding vacancy costs to 12.2%. This remains one of the lowest in the European real estate sector as the bottom right hand chart shows. As a result, operating profit increased by 6.1%.

7:04 We have taken the opportunity to simplify our disclosure around earnings, which we now quote fully inclusive and fully exclusive of DMA income. Adjusted EPS excluding all DMA income increased by 7% to 4.41p. Adjusted earnings per share was also 4.41p with no DMA income recognized during the period, and the dividend represented a 91% payout ratio. The right hand chart sets out the moving parts of annual contracted rent over the period. And with the ERV of the portfolio 29% ahead of contracted rent, this shows that looking forward, there is still plenty of income growth to deliver.

7:57 Our capital allocation framework remains unchanged. We continue to recycle capital from lower returning assets into higher risk adjusted returns. At June 30, the LTV had reduced to 32.9%, and when including post period end disposals, reduces further to 32.1. Despite some softening in prime yields, EPRA NTA per share declined only 1% reflecting portfolio resilience and was offset by value created from our active asset management and development activity. We completed 259,000,000 of disposals during the half, averaging 2% above prevailing book values and £344,000,000 in the year to date.

8:51 Just to highlight how effective we have been at funding our strategy in recent years, this takes total disposals over a three and a half year period to over £1,000,000,000. As ever, CapEx invested over the period is reflective of specific circumstances in relation to our development sites. The planning delay at Manor Farm has been well communicated, and this was coupled with a delayed planning decision at a logistics site. Our logistics CapEx including development and asset refurbishment therefore has been lower than anticipated this half with a combined £79,000,000 invested. CapEx in half two is set to increase and I will update you on how we see the remainder of the year on a later slide.

9:44 Total accounting returns were impacted by the capital value performance across the portfolio of minus naught point 2% for the period. Our 2.3% earnings yield for the six months was partly offset by a combined naught point 9% reduction across our investment and logistics development portfolios as our equivalent yield moved out by 10 basis points to 5.8%. Like for like ERV growth remained healthy however at 1.9% for the six months. We are now starting to see value delivered from our DC pipeline with a naught point 5% positive contribution in respect of the Manor Farm planning delivery. Together, this produced an underlying total accounting return of 1.6% for the six months and a reported total accounting return of 1.3% after a land option impairment and the Blackstone completion statement true up effects.

10:47 Importantly, these returns do not yet reflect the full earnings and shareholder value potential embedded within the business. The benefits from the Blackstone portfolio are only just beginning to flow through, while the most significant value creation opportunities associated with our data center platform remain ahead of us, which I'll talk to in a moment. Now looking at our three growth drivers. First, asset management, which continues to deliver attractive and highly visible earnings growth. Across all these events, we have secured £8,600,000 of additional annual rental income, over 50% higher than the same period last year, delivering an average 10.5 uplift in passing rents.

11:41 The larger part of the portfolio subject to lease events in the period, this has led to our strong EPRA like for like rental growth of 5.1%. In our 2025 annual results, we signaled twenty six point nine million pounds of potential reversion capture for this year, and we're making good progress looking at the bottom left hand chart. First, we have captured £6,500,000 of rental reversion through lease events in the first half, achieving 100% of the potential that we previously indicated. Second, we have £4,500,000 of rental reversion attached to half one lease events, which are currently in progress.

12:29 To remind you, we have a policy of accruing 75% of this from the rent review date. And thirdly, the second half events are even more significant with over £15,000,000 of rental reversion available in half two. Portfolio vacancy was slightly higher overall, but this reflected net development activity. Underlying vacancy remained stable at 3.1%. Logistics development is our second growth driver. We currently have 1,200,000 square feet under construction, representing £13,000,000 of potential additional rent with 78% of this already secured via pre leasing.

13:18 We completed naught point 6,000,000 square feet of new space with potential rent of £6,900,000 at an expected yield on cost of over 10%. This very attractive yield reflects later phases of schemes where land and infrastructure costs have already been born within previous phases. Further, we secured development lettings in the period, adding almost £5,000,000 of annual rent and achieved an average yield on cost of around 7 and a half percent. And Colin will expand upon some of the positive forward looking indicators that we are seeing in a moment.

13:59 Now turning to data centers, our third growth driver. On the left is a reminder of the key features of our power first approach. An attractive component is that most of value is created before construction begins. This illustration shows that approximately 60% of expected development profit is captured through delivering power, planning, and pre letting. At Manor Farm, we had recognized approximately 20% of scheme profit at June 30, stepping up to 30% in July after clearing the judicial review period. And with a prelease expected in half two, we expect to recognize 60% of scheme profits by the financial year end.

14:50 And at Chelmsford, around 10% of scheme profit had been recognized at June 30. And with planning permission pending, we expect to recognize at least 30% by the year end. Overall, this could translate to up to £100,000,000 of data center development profit being recognized this current year.

15:14 Sustainability remains integral to our strategy and supports all three growth drivers. We continue to progress across the four pillars of our framework, including increasing rooftop solar, biodiversity, communities, and carbon reduction initiatives. We're also developing a dedicated sustainability approach for our data centers, which we believe will differentiate our projects, and we will talk more about this in future presentations.

15:51 Our balance sheet remains a competitive advantage supported by our staggered, diversified, and long term debt portfolio. We ended the period with an LTV of 32.9%, approximately £530,000,000 of available liquidity, four years average debt maturity, and an average cost of debt of 3.6%. Pulling out the middle chart on this slide, which highlights an important point. Even if interest rates remain elevated and refinancing occurs at prevailing market rates, existing portfolio rental reversion far exceeds projected medium term financing cost increases, and this is before any further rental growth is factored in.

16:41 So overall our balance sheet strength provides us with substantial flexibility to fund our future growth opportunities. Looking now at some forward guidance. Given the lower CapEx deployed in this first half, we have updated some of the current year figures in this table to reflect this. We expect to deliver up to £400,000,000 of disposals during the full year 2026 and are well on track given year to date activity. We continue to see annual logistics development CapEx of 200 to £250,000,000 over the long term. And given the development of the broader data center opportunity in the period, we are upgrading our CapEx targets for data centers from next year, effectively doubling these to between $204,100,000,000 pounds per annum at a targeted yield on cost of nine to 11%.

17:42 To conclude, the business continues to combine strategic delivery with financial strength supported by our robust balance sheet. Together, these support our three growth drivers, asset management and capturing rental reversion, logistics development, and our data center pipeline. And it's this combination augmented by the news of new power connections being secured and new equity capital to support enhanced DC development, which positions us to achieve our upgraded adjusted earnings per share growth ambition of 65% by 2031. And now I'll hand you back to Colin for the strategic update.

18:31 Thanks, Frankie. Well, I've never before been more confident in our ability to create long term value for shareholders. We built a unique platform in the most exciting segments of UK real estate, a market leading logistics portfolio with significant embedded rental growth, an agile logistics development platform, and a hugely compelling and growing opportunity in data centers. These foundations, established over the last decade, have created a broader opportunity set than ever before, while remaining supported by high quality income producing assets and a strong balance sheet.

19:17 As a result, we are extremely well positioned to continue growing earnings and creating significant value for shareholders over the long term. Starting with a high level summary on the market. Demand, led by ecommerce occupiers, is healthy at 10,900,000 square feet, and supply remains constrained with limited speculative development starts. Vacancy remained stable at around 7%, while rental growth was 2.1% in line with our portfolio. Investment market activity suppressed in the spring due to the geopolitical events shows sign of improvement with high quality logistics assets continuing to attract investor interest, albeit that there has been some modest yield softening.

20:12 Against this backdrop, our portfolio has performed well, reflecting its quality and positioning, and we are optimally placed to capture further growth. We've developed our strategy so that the business can thrive in all market conditions. Our objective remains unchanged, to convert structural demand across logistics and data centers into superior risk adjusted returns for shareholders. We achieve this through owning and developing high quality assets and directly and actively managing them. We are client focused, sustainability led, and differentiated by our entrepreneurialism.

20:59 And the value that we're delivering is from three distinct and powerful growth drivers. First, capturing rental reversion and creating value through active asset management. Second, delivering logistics developments at attractive yields on cost through an agile and capital efficient development platform. And third, generating exceptional returns from pre let data center developments through our innovative power first approach. Together, these growth drivers provide attractive, high quality income growth, and substantial long term value creation opportunities. Our portfolio is a significant competitive advantage.

21:48 It's a deliberately curated market leading collection of modern and mission critical logistics assets in The UK's most important distribution locations, leased to world leading occupiers and generating highly resilient income. Supported by a triple net lease structure, it delivers high quality and resilient cash flows, providing a strong platform for embedded and sustainable earnings growth. Turning then to our growth drivers.

22:24 Building on the compounding nature of our rental income, our first growth driver remains one of the most compelling opportunities available to us. Market rental growth has been replenishing our portfolio rental reversion at the same rate that we have been capturing it, which is why our attractive level of reversion of over £100,000,000 has remained broadly unchanged. And importantly, this growth requires little or no capital investment. We have a long established track record of meeting or exceeding market rental values when opportunities arise.

23:01 And during the first half, we captured 100% of available ERV. As shown here on the right, we estimate that more than 70% of today's rental reversion can be captured within the next three years.

23:17 This is highly visible, high quality, and capital light earnings growth that remains within our control to deliver. Following the successful acquisition of UKCM, the nonstrategic asset sales have been above the purchase prices in aggregate, and we now have the final asset in solicitors' hands.

23:42 Enhancing our urban small box opportunity, the Blackstone acquisition significantly increased our rental reversion and is performing strongly with contracted rent up 4.4% and more to come.

23:58 A direct approach to asset management is producing compelling results, having completed 14 new lettings, adding around £2,000,000 of income and delivered average uplifts of 42% at rent review, representing a new asset event every two days since acquisition. The examples on the right highlight the opportunity to deliver compelling rental income growth.

24:26 Contracted rent has increased by 56% at Gatwick Distribution Point and 33% at Sturtley Trading Estate since acquisition. Taken together, this demonstrates that the Blackstone portfolio is performing in line with, and in some areas ahead of, our original expectations.

24:51 Our second growth driver is logistics development. With more than £360,000,000 of future rental income potential, this remains one of the largest and most attractive development portfolios in The UK market. Through our agile and capital efficient approach, we target yields on cost of six to 8% with recent activity towards the top end of that range.

25:22 Development activity in the first half was lower than prior periods, reflecting planning timetables on a small number of schemes rather than any change in occupier demand. And as we've shown on the right, we have prelets in solicitors' hands, advanced discussions across several opportunities, and strong occupier inquiry levels. Combined with our capital efficient and land option model, this leaves us well positioned to accelerate delivery as schemes move through the pipeline and operational demand crystallizes. Data centers represent a significant additional growth opportunity and are already contributing to performance.

26:07 Market demand continues to accelerate driven by hyperscale cloud, AI, and data sovereignty requirements, while power constraints continue to limit new supply. As a result, occupiers are expanding beyond traditional West London locations into new markets where power is available. These conditions play directly to the strengths of our lower risk power first strategy, creating opportunities to deliver projects of scale for leading operators. This third growth driver is a particularly exciting part of our strategy because we're at the early stages of the journey, and there is so much more to come.

26:57 Malafarm demonstrates why our power first approach to data centers is so valuable in a power constrained market. With power and planning consent secured, we now own an exceptionally scarce asset of scale in one of the world's most important data center locations. This has attracted significant occupier interest with a pre let imminent.

27:25 And as Frankie highlighted earlier, all of this supports a meaningful uplift in NTA with development profits preceding attractive rental income at a 9.3% yield on cost, creating exceptional risk adjusted returns. This is our power first approach in action.

27:50 And the really exciting news is that Manapharm is just the start as we are today announcing two further schemes which nearly double the amount of our secured power.

28:03 As we outline on the left hand side of this slide, our first two schemes have the potential to deliver approximately £58,000,000 of annual rent at an attractive nine to 11% yield on cost, with planning secured at Manor Farm and Chelmsford not far behind. They are already contributing to NTA growth with capital value gains in the period. And as mentioned, we have secured an additional 235 megawatts of power, enabling an additional two schemes in the London availability zone as shown in the middle of the slide.

28:45 This near doubling of our secured power also gives us the capability to nearly double the potential data center rental income that we can generate of between 107 and £119,000,000 per annum at compelling yields on cost, supporting an increase in our EPS ambition.

29:10 These secured schemes form part of a total current opportunity of over one gigawatt, offering the potential to deliver exceptional income and capital returns over the medium term. Bringing everything together, you'll be familiar with this bridge which illustrates the scale of the opportunity ahead, giving us the potential to nearly double our rent roll in the medium term. So starting with today's passing rent on the left, we show how our three growth drivers can deliver materially higher earnings over time.

29:49 Rental reversion provides the largest near term opportunity driven by lease events and active asset management. Logistics development adds a substantial layer of potential future income and capital value growth through prelets, completions, and the continued replenishment of the pipeline.

30:11 Data centers provide a significant additional source of both income growth and value creation, beginning with Manor Farm and Chelmsford and the contribution of the new schemes of £55,000,000, effectively providing approximately a 113,000,000 of rental income. And while this bridge shows the rental income potential within the business, we also expect to deliver significant NTA growth, which will support total accounting returns. This is particularly relevant to our data center pipeline where meaningful development gains will drive NTA growth ahead of significant rental income contributions.

31:00 So in conclusion, we have never been more confident in the opportunity ahead. Our high quality portfolio with substantial embedded rental growth, agile development platform, and exceptional data center opportunities provide multiple pathways to grow income significantly and create substantial value.

31:25 Supported by a strong balance sheet and disciplined capital allocation, we believe that we are very well positioned to deliver our enhanced earnings growth ambition. Thank you for joining us. That concludes the formal part of our presentation. I'll now hand over to Ian for your questions. Ian? Good morning, everyone, and welcome to the live Q and A part of the presentation this morning. We'll begin by taking calls from the phone lines, and then we'll move over to the webcast to take your questions from there. Just as a reminder, on the webcast, there is a chat box you can put your question into, and we'll try and get through as many as we can.

32:11 And where possible, we will try and aggregate similar questions thematically. So with that, I'll hand over to Laura, who I think is helping us on the phones and take our first question from there.

32:23 Thank you, Ian. We will now take our first question from John Wong of Kempen. Your line is open. Please go ahead.

32:40 Hi, good morning. Thank you for taking my questions. So you haven't started any developments in logistics in the first half, which I understood is partly driven by planning. At the same time, you have delivered some vacant developments. So just tying this together with your data center ambitions and the 2030 to 02/31 EPS growth targets, how should we see the split of growth between the two sectors going forward?

33:07 Yes. John, thanks for your question. So on development, look, think we're going to be second half weighted in terms of our delivery from development this financial year. We expect the CapEx to increase as we move through second half. We've got a number of deals in solicitors' hands and lots of active discussions going on. So expect a pickup there through half two. I think as we look at the sort of five to six year journey, certainly, the front half of that from an income delivery perspective is going to be development led logistics development led. We expect our first data center to come on stream from 2028 onwards. So 2028 onwards, there'll be the DC income, which will give that EPS with acceleration as we move into the 2030, 2031 period. So first half, logistics driven second half, data center driven across that time frame.

34:02 Okay. That's clear. Thank you. And just on Chelmsford, I noticed that there's again some fees payable to the manager as well as a profit share similar to Manapharm. Just to confirm, is the targeted yield on cost of 10% to 11% net of all these fees? And following up on that, should we also expect a similar fee structure for the two new schemes?

34:25 Yes, it is net. And the board has yet to agree the fee structure for the two new schemes, but that will be confirmed at the time. Okay. That's clear. And just on the yield on target for the two new schemes, what's the swing factor between the lower end and the high end of the range? Is that driven by these fees? Or is there another factor, for example, the the type of tenant that you would be looking at? No, it's just to

35:00 give room for maneuver. I mean, obviously, there are many varying factors that can impact on the yield on cost. And it partly depends on location and the type of building that we're creating. So Mana Farm, by way of example, is 9.3% target yield on cost. That's quite precise. Most of the other schemes that we are looking to deliver are in double digits. But in Uber prime locations, you can expect that to be slightly under double digits. And in prime locations such as Chelmsford, you could expect it to be into double digits. So it just gives us a range to explain the type of difference in the locations that we are targeting.

35:46 That's clear. Thank you. Thank you. We'll now move on to our next question from Paul May of Barclays. Your line is open. Please go ahead. Hi, guys. Just three should be quick questions from me. Could we see part of the equity raise today as effectively a bit of a backfill on the Blackstone portfolio acquisition just to provide some equity for that given leverage increased through that deal and the income accretion doesn't come for quite some time from the data centers? And secondly, given and just following up on John's question, really, given the obviously difficult warehouse development situation, is it not more accretive, especially on a risk adjusted basis, to look at the large acquisition opportunities similar to that Blackstone deal? We understand there are opportunities available and more coming as private funds refinance at higher rates.

36:40 And then the final one, what justification do the valuers have or provide to you for the 4.38% net interest yield? There doesn't seem to be any transactional evidence for this. So I just wondered what their basis is and what your comfort is on that valuation. So do you mind repeating that last part of your third question? Just we didn't quite catch the number there. The 4.38% net initial yield doesn't seem to be supported by transactional evidence. And I just wonder what gives you and your valuers comfort at that level of yield, the valuation? Well, look, to start off, Paul, thanks for your questions. It's Colin. The first thing to say is that, no, we're not backfilling. We're really happy with where the LTV currently sits.

37:33 It's in line with the business plan. We've successfully executed GBP $344,000,000 of sales year to date and over GBP 1,000,000,000 of sales over the last three point five years, all in aggregate above our average valuation levels. So I think that partly talks to one of your other questions about lack of evidence. I mean we've proved our NAV time and again in selling everything across our portfolio, long income, short income, older buildings, shorter buildings, high quality covenant income, etcetera. So that's the first answer. Second one, regarding our warehouse development. I mean, look, markets ebb and flow a little bit. These are big buildings.

38:19 And we're pretty confident in the pickup in the second half and the significant level of activity we've got ongoing should be seen in that period and into 2027. Acquisitions naturally will fulfill part of our thinking, and you've seen us very active in that space in the acquisition of UKCM and of course, the Blackstone portfolio, but it's part of a broad set of opportunities that we will continue to consider with the Board in ensuring that we're making the best possible decisions for shareholders right across the business in terms of opportunity set, whether that's organic or through acquisitions. Just coming back on the disposal dimensions and improving valuations.

39:04 I appreciate they improved the valuation of those sales. But I just wondered on that 4.38%, that is very tight. There doesn't seem to be much activity at that kind of level. And certainly, I speak to people in the market, they kind of slightly scoff at that kind of number. Just wondering what gives you the confidence on your remaining portfolio. I think the net initial yield is not really metric. It's the numeric underpin to the equivalent yield and the reversionary yield and the timing of delivery of the reversionary yield that's driving market interest. I mean, it is fair to say that liquidity has slowed a little bit, and we have seen two agencies move out their prime yield by a quarter of a point. You've seen that play out in our NTA.

40:05 So we're keeping a close eye on that. But we think that across the market, we're in a pretty good shape in terms of the quality of our real estate and the liquidity of our properties, which we've proved time and again. So but obviously, that's a consequence of geopolitical risk and macroeconomic backdrop that's impacting on confidence in the marketplace. But we do still see a significant amount of investment looking to get into logistics assets. It's pretty fair to say that as you capture the reversion, in theory, your value doesn't increase materially, but your earnings obviously move in the right direction. Is that the right way to think about it? Your necessary yield will expand as you capture the reversal potential.

40:54 Well, the cap that's correct to one degree. But of course, as we've been capturing the reversion, market rental growth has been very healthy and the reversions continue to be replenished. So we've it's been being replenished at the same rate as we've been capturing it, which is why we still have a 29%, in fact, slightly ahead at a new record level of reversion at 29.2%. So there's still a lot more to come there, Paul. And of course, the process of capturing that is helping us move up the yield curve progressively over the course of the next few years. Paul, could I just add that I think from a valuer's perspective, the top top net initial, the 4.7% that we quote is more akin to that, not the 4.4% and the equivalent is 5.8%.

41:46 So I view net initial 4.7, 5.8% at June 30. Yes. The 5.8 is far more important metric to the market. Yes. Perfect. Thanks, guys. Thank you. We'll now take our next question from Christian Hjord of Deutsche Bank. Your line is open. Please go ahead. Thank you very much and thanks for taking the questions. Just two for me. So first of all, when you sort of think about risks of delays on DCs three and four, which unfortunately in The UK is something we will have to consider. To what extent is that being factored into the time lines that you've set out? And second, obviously, good performance on the cost ratio in H1.

42:32 How should we think about that going forward? Should we have a degree of operational gearing, particularly around the data center piece as the rental income starts coming through from that at the back end of the decade? Thank you. Yes. Thanks for the question. So on the DCs, I think our experience at Manor Farm was an extreme case where we had to go to appeal after delays in local authority nondetermination. It was then subject to consideration by the inspector and then was called in by the government. We don't expect any of our subsequent schemes to take nearly that long.

43:21 Chelmsford's being dealt with by way of it's an allocated site, and it's being dealt with by way of the dedicated powers to the local authorities, so it doesn't even go to committee. And as as for the two new schemes, we see those sitting within the bookends of of, those two extreme cases that I've just outlined. So, yes, we have factored in, what we believe is appropriate timelines given that experience into timetable that we've outlined and that Frank has just mentioned with income delivery from Manor Farm, first full year '28. And then the last scheme expecting to be fully income producing in 2031. Frankie, would you like to take the cost On the cost ratio, obviously, it's something we keep a keen eye on.

44:10 We have been driving that down in recent periods. I think as we look forward to over the time frame that we're talking here with DC delivery, there's plenty of scope to drive that a lot closer to sort of the 10% mark from a net per cost ratio perspective. And we'll now take our next question from Andrew Saunders of Shaw Capital. Congrats on the very good set of interims and the equity raise. I've got two questions, if I may. First one, just how the equity raise might change your thinking on planned disposals and further debt drawdown going forward, perhaps where we might see leverage settling out over the next five years or so? And secondly, if we can just talk about the reversion opportunity, Perhaps you can just flesh out for us how much of that actually sits with the Urban Logistics portfolio? And I think you you sort of touched on that with with the Blackstone deal.

45:24 Perhaps just give us a flavor of where the sort of greater upside sits between Big Box and Urban Reversion. You. You like. So on the disposal front, look, we've been effective sellers and rotators of capital over the last sort of two to three years, as we've highlighted. That isn't going to stop. We think a continual pruning of lower performing assets, maybe assets that are sitting there with a little bit more risk in them is good discipline. So we'll continue to do that. The guidance we stated looking forward is disposals of anything up to £350,000,000 per annum. So that capital rotation piece will continue.

46:15 From a debt perspective, clearly, the equity reduces our leverage to between 2728%. We think going into this next phase where we've upgraded our DC CapEx targets, well capitalized is in the best interest of shareholders. We've always operated with a policy of a sub-thirty 5% loan to value. That isn't going to change. I think for the next period of time, seeing us in and around that 30% mark, if not slightly below that 30% mark, is where we'll operate for the foreseeable future. Thanks, Andrew. So talking to the reversion opportunity, I talked to the 29% overall. I mean we've been making great strides in urban logistics capture.

47:07 And I think we talked to the asset management side of the business, which has been incredibly powerful in delivering essentially an initiative every other day. The reversion appertaining to the small box urban piece of our portfolio stands to around 40% of the total reversionary pot. So relative to the size of our portfolio, that is where the the larger element of the opportunity lies. Of course, we do have some vacancy in the portfolio in the small books portfolio as well, which provides a further opportunity to tighten that and to therefore deliver to the net increase in income capture.

48:01 Okay. Thanks very much. That's very clear. Thank you. Thank you. We'll now move on to our next question from Suraj Goyal of Green Street. Your line is open. Please go ahead. Good morning all. Thanks for taking my question. Just a couple from me. So could you share some additional color on how the integration of the Blackstone portfolio is going? I know you provided a couple of the positive case studies in the presentation. But thinking now almost a year on, are there, you know, parts of the portfolio that we now see as more challenging, maybe maybe not necessarily the case a year ago? And then on April vacancy, which jumped to 6.5% from 5.6% at year end, I think I saw in the release, it was entirely from on the spec completions.

48:52 What's the sort of laying timeline on that space in your opinion? And is there a scenario where your continued spec development potentially starts to outpace occupied demand? And then in addition to that, our sort of tenant incentives trending, Are you seeing any upward pressure here? Well, thanks very much for the questions. So the integration of the Blackstone portfolio has gone incredibly well. We're delighted with how it's dovetailed in with the core U. K. Centimeters assets we've acquired to produce a really high quality small box urban portfolio. And as I alluded to earlier, we've been making great strides in leasing some of the vacancy there.

49:43 There's been a huge amount of active management being undertaken in house. As I said, one transaction every other day and very strong income capture from those activities. We've been really pleased. I mean, look, these are in the main parks and we're controlling the parks and driving value through doing things such as refurbishments, proving new rental tones and then applying that to the parks. But it's also about making sure that our customers are happy. You know, we are a customer led business ensuring that that they're they're happy with service charge and they're getting good value for money is absolutely key. And these are these are high quality parks in in strong locations that have got depth of demand.

50:33 So and as I've mentioned just a moment ago, they also have the largest element of reversion attached to them. So we're really happy with the Blackstone portfolio. It's going very much in the same vein as The U. K. Centimeters portfolio was. Yes. So the vacancy point, quite rightly point out that increased by about 90 basis points. It's totally development driven. I think that's three buildings that PC'd sort of May, June time. So very recently, just to point out that in all of our sort of underlying appraisals and assumptions for speculative buildings, we build in a twelve month void period. So we'd certainly expect to lease the buildings within the assumptions set out there. There's good interest in all three buildings.

51:23 And yes, within a twelve month period is where we'd expect to be. I think the last question was about tenant. In terms of incentives. Yes, we're not really seeing tenants incentive change. Look, I would say broadly, the market is stable. There was 10,900,000 square feet of take up in the first half. That's down a little bit on the EUR 13,000,000 in the prior period, but net absorption is up 20% over the period. So as a consequence of new buildings coming on stream, I think the markets in the occupational market is in pretty good shape. And we're not seeing any significant impact on incentives as a result.

52:14 Okay. Very clear. Thank you. Thank you. We will now move on to our next question from Paul Mason of Berenberg. Your line is open. Please go ahead. Thanks. Good morning, team. Maybe it's a similar question to what you've been discussing on disposals. But because you're able to recycle capital into a space that's much more accretive now, does that mean you're willing to expand the range of assets you'd be comfortable to sell from and therefore accept some higher disposal yields going forward? Because the visible funding requirements are obviously a lot higher now. And then second one, can you just give a little color on the land impairments? Because I think that was just at two sites. Which sites were they? And what was driving that impairment? Yes. So look, there's nothing on our books that we wouldn't be prepared to sell at the right price, Tom.

53:10 And you're absolutely right. Selling any of our standing investments and deploying that capital into our logistics development pipeline and more particularly into data centers is hugely accretive, and that's what we've been doing over the last couple of years. But, of course, we we have we are mindful of of the two two aspects there. Firstly, you know, selling investments that have maximized value in our hands where we've completed business plans. We're also mindful of the magnitude of the sales program. Our DC development CapEx is very significant up to 2030.

53:59 Reason for our equity raise that we've just closed is that we don't feel it's possible to sensibly fund all of that from investment disposals. Although we've been disposing very, very successfully and to a significant degree, we don't want to be seen to be false sellers in the market. So it's a balancing act on those things. And of course, the market has in the very significant level of excess demand that we've received has given us strong support for that strategy in the subscriptions on the equity raise last evening. Pick up the land impairment point.

54:45 Hi, Tom. So one of the impairments is pretty modest. But if we look at the larger, we go through an ongoing process of appraising the future development schemes. This particular scheme in question, I think we're seeing some challenges around the viability of progressing that scheme. I think that shows that we run the rule over these schemes pretty frequently, and we are being very selective around where we choose to allocate capital. As a result, I mean, the particular point is around the land value. So we do not yet own the land. I mean it's about the residual land price that the scheme would come in at. The other thing to mention is a large part of the write down relates to, if you remember back in 2019, when we acquired the DB Symmetry business, we paid a price for the entirety of the sites. And then we had to allocate that price across the site. So this is not underlying cost of option professional fees. This is the corporate acquisition cost that sits on top of that particular scheme. So we've pared that back a little bit. We'll see how we go. There are some challenges there.

56:00 I think it points out that we're running them all over these things on an ongoing basis and allocating capital appropriately. Okay. That's helpful. Thanks very much. I think we have time for one more question on the veins. There's a couple coming through on the webcast as well, but I'm conscious we're nearly on half the hour. But Laura, could we just take the question from Greg Simpson, please? Sure. Greg, your line is open. Please go ahead. Yes. Good morning. It's Greg from BNP. You got $344,000,000 of disposals year to date, but guiding to up to 400,000,000 for the full year, so implying not much in H2. Can you talk a bit about the health of the investment markets you're seeing in this being impacted by some of political changes in The UK and high bond yields? And then secondly, just on the Manapharm potential pre let, can you talk about the kind of tenant lease length indexation of the terms you're kind of targeting? And is there any discussion about Phase two Manapharm at this stage? Thank you.

56:57 Yes. Thanks, Greg. So on the disposals, yes, we wanted to be front footed and I think we've done very well in the first half. We're being a bit cautious in the second half there. There has been a little bit of slowdown in market activity. We'll have to see how it plays out. It's very difficult to tell until we come back in September. I think there's still a healthy level of demand in the market, but you're absolutely right. You know, the the geopolitical situation and and domestic political backdrop isn't necessarily helping market confidence. But as I said earlier, there's still a a lot of in interest in logistics development because it has very significant tailwinds, which we consider and most of the market considers will continue to deliver attractive rental growth and returns opportunities.

57:50 So I think watch that space, and we haven't disappointed in the past and we're confident of continuing to deliver a good cadence of disposals to support our strategy. As for Manapharm pre lets, the deal there has been in solicitors' hands for quite some time. It's with a major co locator with strong balance sheet. We've agreed all the principal terms, the lease length, the rent, the review terms, the the principal specification of the building, etcetera. So we're pretty close now, and we're confident of concluding that. And it's in line with our business plan objectives. Thank you.

58:41 Great. Look, I'm conscious of time. We'll go quickly to the webcast. A question from Harry at BNP. Can you confirm you have enough equity funding now to complete all the already announced projects? And should we see the $350,000,000 raise for circa two thirty five megawatts DCs as a good proxy for the remaining 500 megawatts of DC potential, I. E, you might need another GBP $750,000,000 further down the line? It's quite a scientific way of looking at it. I think, look, as we look forward, we've got the funding leaves available to execute the business plan, as I said earlier. Looking at this next phase for us being well capitalized going into that, I think, is going to allow us to deliver best value for shareholders.

59:27 Pointing to equity as a component of that, clearly, last night, today, announcing the $350,000,000 raise, we are announcing an enlarged opportunity. And looking back to the last time that we raised equity for cash in 2021, that was when we had a lot of Prilla opportunity, and we accelerated our development program. So I think every time we come to shareholders, we are either accelerating or enhancing the opportunities there. So I'd just point to that when we look forwards and our various sources of capital. Question from Elliot at Can you add some color to the vacancy of the spec developments and the average time to let the spec buildings even though you build a twelve month void period? What has been the average period to let up the vacant spec space? I don't know the answer to that.

1:00:17 It's certainly within twelve months, but I couldn't give the exact Yes. Mean, we in the past talked to stats of average leasing in negative territory, I. E, letting buildings on average before they've practically completed. We build in the sensible time frame, and that is not coming under pressure. So as Ranki says, we're certainly delivering lettings within the time frame, but I don't have the specific number to hand earlier. We can come back to you on that after the presentation closes. Next question from Bjorn Zeitzman. Can you give guidance around the cap rate you expect to use in valuing the power revenue received associated with the DC opportunities?

1:01:09 I apply a high single digit cap rate there. So guide you to the eight to 10% sort of level. Next question from Bjorn. The additional two thirty five megawatt materially increases the opportunity. Can you talk about the competitive dynamics that allowed you to secure these sites? Are similar opportunities still available? Or are they becoming increasingly scarce? Okay. Thanks, Bjorn. So I think the thing to say here is that we set up our power team and our Power First strategy five years ago with some of the leading power brains in The UK and the business, and it's all about developing relationships and understanding the opportunity set. So we we haven't gone about this in the way that most people do in in securing land and then seeking to acquire power because power is very difficult to come by. If you apply for power in around Heathrow today, you'll be waiting ten, potentially fifteen years for delivery.

1:02:18 So we have put in place some joint ventures initiatives with power generators. And it's that relationship and the work we've put in to identify power contracts, secure those and by dintu the fact we've got a JV partner that has statutory powers, it enables us to deliver the project on time and with greater certainty than we would otherwise have. So it's a direct route to power securing and delivery. And that's why we when we've announced the new 235 megawatt in two schemes allied to what we already have, giving us a total of 507 megawatts overall.

1:03:05 We've said that all of that is power secured. We have we own the land at Chelmsford. We own the land at Malefarm. The two new schemes, one of those we own the land on, the other one we don't. But key here is that we've got control of power and delivery of power within the within the time frame to 2030 that will bring these schemes on tap. And with apologies to Derwent, we've slightly overrun, but thank you very much indeed for your questions. And I think that will probably conclude the presentation. Thanks, everyone, for joining. Really appreciate your continued interest in the company and your support. Have a good day.