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Edited Transcript of SHB.L earnings conference call or presentation 26-Nov-19 9:30am GMT

Full Year 2019 Shaftesbury PLC Earnings Presentation

London Dec 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Shaftesbury PLC earnings conference call or presentation Tuesday, November 26, 2019 at 9:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Brian Bickell

Shaftesbury PLC - CEO & Executive Director

* Christopher Peter Alan Ward

Shaftesbury PLC - Finance Director & Executive Director

* Simon John Quayle

Shaftesbury PLC - Property Director & Executive Director

* Thomas James Chisnell Welton

Shaftesbury PLC - Property Director & Executive Director

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Conference Call Participants

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* Maxwell Wilson Nimmo

Kempen & Co. N.V., Research Division - Analyst

* Robert Alan Jones

Deutsche Bank AG, Research Division - Research Analyst

* Rubinder Singh Virdee

Green Street Advisors, LLC, Research Division - Analyst of Research

* Tom Musson

Liberum Capital Limited, Research Division - Research Analyst

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Presentation

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [1]

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Good morning, everybody. And welcome to the presentation of Shaftesbury annual results -- annual results for the year ended 30th of September 2019. Just to remind you, we are doing annual results here, not 6 months.

If I could just quickly introduce the team who you know very well, Chris Ward, Simon Quayle, Tom Welton, very well-known to all of you.

We do have live video as well as audio streaming today. The cameras are recording from the back. So right, they're not interested in you, the audience, today. It's all about us. The stream will continue through the Q&A session, but we will not be taking questions from people dialing in. So as we normally do, if you have any questions, please don't hesitate to e-mail me at brian.bickell@shaftesbury.co.uk, and I'll deal with your questions later this morning.

So the agenda for the day is an introduction from me. Chris will be talking about the results. I'll come back again for a review of the business operationally and a summary and outlook, followed by questions and answers.

We are going to talk through the results in detail today and the trends we're seeing across the portfolio and our activity. But also, as most companies are doing now, reminding people about the importance of ESG to running a business and the way we're perceived in the community we work in. Absolutely critical if we have some traction with those whose community we work in.

So Chris is going to go through the results, but the key features are, obviously, a very robust business, robust operational performance, reflected in our growing earnings and dividends.

Valuation of our portfolios, all the combined portfolio, down just 0.6%, currently standing at GBP 4 billion, also represents the resilience of the operational business that sits -- sits underneath the valuation.

And it's worth reminding people at this point exactly what Shaftesbury is. I'm sure you know very well, but I'm still going to remind you, our focus is exclusively on London's West End. We have an exceptional long-term forensic knowledge of this location, and that's how we've built up over 30 years a portfolio of over 15 -- 15 acres, 15.2 acres of ownership now.

Clearly, our business is all about our 1.1 million square feet of food, beverage, retail and leisure uses, which now account for 69% of our income. That's 609 shops, restaurants, bars, cafés, pubs, clubs. And we're told, as you know, that we have 1 in 5 of the licensed premises in the West End. So a really important part of the thing that differentiates the West End, this leisure economy, as well as a very strong business economy.

The other part of the business, as you know, is offices and apartments. So we have some 435,000 square feet of offices and now 610 apartments, which together, represents some 31% of our income.

The West End, as we always say, is a location like no other. It sets us apart from the U.K. nationally and probably many cities you'll see across -- well, virtually any city you'll see across Western Europe. The center of the city, we sit here in the West End, with estimates of over 200 million visits annually. And the important thing for the core part of our business, our shops and restaurants, is this creates a 7-day-a-week trading environment which puts -- really puts the West End in a league of its own.

And of course, these people that come, we have a huge local catchment in terms of its working population. It's not just a visitor economy, although you could say people coming into work are visitors. But with a working population in the bar of over 700,000 people, we, those of us who are lucky enough to work there, are the regular customers, Monday to Thursday, for our shops and restaurants and bars and everything.

But of course, come the weekend, it's very much a visitor destination. That could be Londoners coming into town, people in the home counties, other domestic visitors. But more importantly, a very large element of international visitors. So again, you just don't see these sort of features in the -- in any other provincial destination, which are principally all U.K. origin footfall only.

The West end is accessible. We have a fantastic transport network, which whatever you think about it, it moves millions of people around the city every day. The West End sits in the middle of that, and yes, Crossrail is a bit delayed, but it's not far away now and actually, it will bring huge benefits to the West End of London.

So a very broad-based economy. It's about business and about leisure. And we are really not solely reliant on what goes on in the U.K., but we're never ever completely immune from it. We would never say that. And fundamentally, we're working in an area where there is a demand/supply imbalance. You can't really make the West End any bigger. Certainly for ground floor uses, it's very limited. But because of its attractions, its global reputation, the ability to trade really well, really profitably here, demand, historically and traditionally, does exceed supply. So from a landlord's perspective, that's the place you want to be really. So all these features absolutely underpin our business.

Our strategy is really well-known to you. It's about creating ownership clusters. It's about food and beverage. We take a very holistic, long-term curation of our locations, now villages.

I'm going to come on to talking about our buildings shortly, but it is about adapting and reusing, that's our motto. And it's actually a very sustainable way of looking at real estate. Not everything in this world needs to be demolished after 30 years. We've got buildings that are around for 200 years and are still fit for purpose.

Obviously, our sustainability, stakeholders, staff, our ESG agenda has always been really important to us and what underpins this are prudent financial arrangements that support the balance sheet and support the business long term. Property companies tend to come to grief if they don't have that solid base.

But really, just a reminder, and again sorry to keep reminding you of things, but things have been going on in this portfolio for a long time and what has been changing over time is the way we use our buildings. It's never stopped, for over 30 years, we have not stopped changing our buildings, cutting them, carving them in different ways, introducing new uses, moving things around. It is a very adaptable, flexible portfolio. And then you have to contrast it to modern structures, not just shopping centers, but big buildings that are dominated by upper floor uses of offices and residential, very hard to adapt the space that sits beneath it. Whereas Shaftesbury, the oldest buildings in the portfolio have the most flexibility.

I could spend the next hour telling you about all the things we've done over the last 30 years, but just to take a very high-level approach to this. If you just look at the lower floors of our buildings, 10 years ago, I'd be standing here saying 42% of our income came from retail. That's now down to 31%. That's come about by changing space, changing uses, moving things around.

If you look at our upper floors, 15 years ago, we realized we had very small offices in these domestic-sized buildings. Small, walk-up offices, you can't get in air conditioning and IT requirements can't fit into these funny old bits of space. So we've gradually shifted those poorest quality offices to residential use. So we now have 610 flats, most of which have come out of converting old, redundant office space and actually turning buildings back to how they were probably built 150, 200 years ago when people lived upstairs and worked downstairs. So it's this repurposing that goes on constantly in this business. And we've given a couple of examples there. People see Kingly Court today as a fantastic food hub. It was originally a Victorian stables block. It was offices when we bought it. We had a period when it was in retail use and it did really well, but we could see the growing trend and interest in F&B space. So it's now a brilliant restaurant hub.

Thomas Neal's warehouse, an old Victorian banana warehouse, was a retail. It was a shopping center when we bought it. We didn't convert it, somebody else did it. Now a brilliant food market, Seven Dials Market, I'd recommend everybody goes on to try.

Those of us -- those of you who have toured with us will have seen for years we've been talking about what we're doing in Chinatown, buying back old leases so we can get hold of those redundant upper floors not used by restaurants. They used to be once upon a time. The restaurants have gone and shrunk down the building. So it's releasing a lot of space upstairs, but also to create much better quality space on those lower floors with modern restaurants.

And of course, shops, we'll talk about the issues in demand for shops these days and the size people want.

We always felt we were quite on the back foot with our buildings because the ground floor spaces were very small. So we spent the last 15 years, where appropriate, knocking ground floors together. It's quite difficult. We got listed buildings, conservation area status, adding in first floor offices, adding in basements. So we've made those shops bigger. And if people don't want bigger shops now, we will make them smaller. But the important point for Shaftesbury, where that space is released, it has value, it has a huge income potential. We're not going to be any worse off doing that. It's just the ebb and flow of the way these buildings have been used for a couple of hundred years, really.

Portfolio reversionary table. You will have seen this before. It's just a reminder that all the things we do, and it's very, very granular management in this business, is designed to keep this chart growing in the same way. It's relentlessly growing the ERVs, but at the same time, absolutely critically turning the theoretical income ERVs into contracted income, and that's what we've carried on doing, and that's what the business is fundamentally all about.

So at that point, I shall hand over to Chris, who's going to go through the results in detail.

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Christopher Peter Alan Ward, Shaftesbury PLC - Finance Director & Executive Director [2]

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Morning, everybody. Thank you, Brian. This is the point where I -- every time, I can't work how to use this. So if I go backwards, please forgive me. I guess it's that one? Yes.

So these are the headlines. Underneath this business, the operation is working really well. We're growing our income. Our income was up -- well, the rental income was up nearly 5% like-for-like in the year, which fed through to a 4.5% growth in net property income. And this just drives through straight into earnings, up 4.1%. And then the dividend, we proposed a dividend of 9p for the final, which is up almost 6% on last year, bringing the total for the year to 17.7p, 5.4% up on last year.

Coming to the sort of balance sheet. The portfolio value is GBP 4 billion, and there's a sort of slight nudge down overall, 0.6%, and we'll have a look at that, but we're seeing that the wholly-owned portfolio and the Longmartin assets are behaving very differently. That reduction in value has fed through into the NAV, which is down 0.9% at GBP 9.82. But the total accounting return, which adds back the dividends we've paid in the year, is positive at 0.8%.

So we'll have a look at each of these bits as we go through. So starting with the profit and loss accounts, and this is looking at the rental income. And you can see, we've grown income from 100 -- almost GBP 113 million to just over GBP 117 million in the year. There were a few bits and pieces in there. Acquisitions added GBP 1.8 million. We had a couple of disposals, 2 noncore assets. These were in our first half, so we reported them at March. Something like 24% up on value. So we haven't got the income from those this year.

And 72 Broadwick Street, the scheme, which Brian will talk about. Last year, we had some short-term income there as we bought it, and there was income coming up to December -- September, which was GBP 2.3 million. But in September last year, we got vacant positions and there's no income on there as we've been working on it this year.

And then the like-for-like increase. So stripping out those 3 things, the like-for-like increase was 4.9%, GBP 5.4 million, and included a really useful contribution from turnover top-ups from our restaurants of GBP 1.2 million. That was up a little bit on last year, GBP 1.1 million. But it kind of goes to show the success that our F&B tenants are having.

There's more to come. I will come on when we come into the valuation. You'll see that the portfolio is highly reversionary, and we've also got a record level of schemes on site at the moment. So actually, that 4.9% of our growth like-for-like was despite having quite a lot of kit that's being worked on and not producing income in the year.

So that income growth flows straight into our earnings, as I said earlier on, and this is a bridge -- this is EPRA earnings. So this is a bridge between last year and this year. So EPRA earnings were up 5.6%, GBP 54.6 million, that's 17.8p a share. And you can see that the big thing in there is the growth in net property income. There was a tick-up in admin costs this year, which was actually all about employee costs, and most of it was to do with share-based remuneration. These are sort of nonaccounting, noncash accounting charges that we have to make. I expect that to come back a little bit next year.

Net finance costs were -- sorry, net finance income was better or net finance cost was not as big as last year, GBP 0.7 million, so that was a boost to earnings. GBP 0.3 million of that last year was a write-off of loan issue costs as we refinanced our revolving credit facilities. The rest is interest income.

And then Longmartin. The contribution from Longmartin was reduced by about GBP 0.5 million. This was all about empty space. So partly because we are working on some schemes, which Brian will talk about, and also a couple of large units on Long Acre, and we'll come on and talk about Long Acre, I promise you. But a couple of large units which came back and, of course, no income and rates to pay.

So quickly, looking at the NAV. And what you can see here is the NAV's down 9p. Earnings and dividends broadly offset each other in the year, 18p of earnings, 17p of dividends, rounded. And actually, what you see is the rest of it all comes from the valuations. Wholly-owned portfolio knocks 4p off NAV; Longmartin, 6p.

Actually, what you see there is a really disproportional impact of Longmartin because it is just 5% of our portfolio and yet it's having a big impact.

So before we talk about the valuations, just going to keep you all on tenterhooks, I thought we'd just have a look at some of the operating metrics.

So leasing activity's been very strong. Lots of deals, robust demand, but our leasing volumes are up about 6% or 7% on last year. Commercial transactions, up 3.2% against last year's ERV. And you'll see that when we come into the valuation.

Average letting times haven't changed. Lease incentives are stable. In fact -- actually, in our -- and we're not seeing a big growth in lease incentives. And on our balance sheet, we've got about 1.5 months' worth of unamortized lease incentives, 1.5 months' worth of annual income on our balance sheet, which is kind of no different to last year or the year before or -- so you can see how that -- that doesn't really have a big drag.

But it's great. We're securing income, we're securing cash flow and we're proving new rental tones. And of course, they're really useful in our negotiations along the streets, but also it's great evidence for our valuers.

The resi. So that was GBP 7 million of resi transactions, up marginally on prior rents. But you must remember, during our leases, we get indexation each year. So we're already capturing growth each year in those. So we're quite pleased with that fact. The occupation demand is really, really strong. And at the end of the year, we had 3 flats vacant, and they were all under offer, out of 610, and that kind of gives you an idea of that sort of strength of demand for our quirky little units.

And that all feeds in -- all that leasing activity feeds into our vacancy, which was down 0.9% over the year. It's split into sort of underlying and larger schemes. The larger schemes have -- has come off quite a lot because -- well, we let Thomas Neal's and as Brian said, if you haven't been to Seven Dials Market, you really should go, it's amazing. Yes, not good for my cholesterol, but brilliant.

And the underlying vacancy just nudged up a touch, but not very much. And there's very little in there. About half of it was under offer.

So with that sort of context established, let's look at the valuation. So overall, you can see the sort of the difference in how the 2 portfolios are performing, with the wholly-owned portfolio, 0.2% down like-for-like over the year. Longmartin, 8.5% down, and actually what's driven that is all about retail. It's all about Long Acre, actually, and we'll talk about that in a moment.

And actually, you can see that across the wholly-owned portfolio, 3.2% ERV growth, with growth in every village. Longmartin, 3.5% down. Again, it was all about the retail. The non-retail there was pretty flat, actually.

So firstly, turning to the wholly-owned portfolio. We'll have a look at the reversion. So this is breaking down the chart that Brian showed earlier on, it's breaking down the 2019 bar, if you like, between current income and/or passing rent and ERV. And we saw growth in both of those. The passing rent's up 2.4% despite levels of schemes that we had on, which weren't contributing to passing rents at the moment, but they will come through.

ERV, as I say, every village increased.

The reversion, 28% is just over -- it was nearly GBP 33 million. And based on today's proven ERVs rather than tomorrow, there's no rental -- future rental growth built into that. And actually, those ERVs are net of all the lease incentives that we give as well.

So the sort of the breakdown of that, as you can see from the chart, if you wander from left to right is -- so the contracted income, that stuff where we've let it, it is now rent-free, so that flows into income very, very quickly, into cash flow very quickly. We had GBP 5.5 million of EPRA vacancy. And again, as we're letting that, to say half of that was under offer, almost half of it at the end of the year so that then drops down into contracted and then into current income.

We have a record level of schemes at the moment. So GBP 15.5 million, split between GBP 9.4 million, the sort of -- the run-of-the-mill schemes are doing and GBP 6.1 million which is Broadwick Street. Brian will talk about schemes at the moment. It's quite interesting. We -- I mean, we're incredibly busy. We're putting in -- I think if you look back over the last 5 years or so, something like 2 planning applications a week, on average, which is an astonishing level. We're probably Westminster's biggest customer in the planning department. I don't know. I say that without any evidence at all, but there's a lot of planning applications. And it's not all big stuff. It's not like what you'd imagine, but some of it is -- might be just moving doors or staircases or -- but there's a lot of activity, and that's feeding into the schemes we've got on the go.

And the schemes, as we sort of said in the prelims, is that quite a big chunk of the schemes we had on the go last year is sort of maturing in the first half of this year, something like GBP 5 million of income. And we do sort of caution that. I mean, if they all mature or they come online, let's say, in -- towards the end of March, then in our March numbers, we're going to have a peak in our vacancy. But then as we let them, they'll start to produce really nice income. And we'll see the full year impact in 2021.

But of course, we've got other schemes coming online. I mean, we looked at a scheme yesterday, and pretty much every week, there's something else we're looking at. So there's a -- there will be a churn through there.

And then we have our under-rented element. This is just if you can get it, all entities go and re-let it. The rental levels are higher or the rental tones are higher than the rents we're charging at the moment. So -- which is all nice.

So this is all that -- this reversion potential should be accretive to earnings and cash flow going forward.

And then looking at the performance overall of the wholly-owned portfolio. As I say, rental growth in every village. We have seen a little bit of yield expansion. And in fact, mainly on Carnaby Street, where we have our biggest shops. I think of all of our shops over, say, 3,500 square feet, about half of them are in Carnaby. And actually, Carnaby's got the biggest rents as well, the biggest Zone As across our portfolio.

So interestingly, we've got no vacancy. Demand is good. We're seeing rental growth along the street. In fact, actually, we're doing deals above the ERVs that were recorded in the valuation. But the value isn't -- not going to criticize our values. We don't argue with them. They said the sentiment for bigger retail at the moment isn't great. So they've added 20 basis points along Carnaby Street. And that's -- that has an impact.

We've also seen a small softening in the resi value. Not in every village, actually but when we average it out, it's about 2.3%. And that's quite interesting, given the strength of the occupier market. This is all about sentiment and it's all about uncertainty. People are just sitting on their hands at the moment, and we'll talk about availability and supply and demand in a couple of slides. But with people sitting on their hands, there aren't that many deals to benchmark against.

So overall, the increase in yield on Carnaby and then the softening of resi, offset by the ERV growth we've had across the portfolio, left us with a devaluation of GBP 15 million, which is about 4p a share on NAV.

Supply and demand. So this is quite interesting. The market is really quiet. It's really, really quiet. It just feels like everybody is just sitting on their hands at the moment and there's enough uncertainty around private owners. The types of buildings we look for are generally not owned by institutions, they're generally owned by families. And yes, and why sell? Why would you sell some of these assets if you don't need to?

So we seem to find that -- well, I mean, it's sort of a throwaway line, but death, divorce and debt, or something that happens that where somebody needs to cash in their asset, they will cash it in. But there's no distress at the moment, well certainly not on the debt side anyway. So people are hunkered down, and there's very little available at the moment, which is great because it makes our 15.2 acres even more scarce, which is a great position to be in.

On the supply -- on the demand side, there's still strong demand, but people do say, there's very little happening. So when something does come available, there's strong demand and competition. But yes, people see what we see, the best assets in the best locations.

I must remind you, I always do, our valuers say to us, they don't put any premium on our portfolio for the trophy sort of aspect of it. The ability to get 15.2 acres in 3 months, which has taken 33 years to build up in our case, there's no premium put on that, and they remind us in the valuation. So we always feel it's right to remind you, our own shareholders.

So Longmartin. Very interesting. So Longmartin, you can break it down into 2 aspects. The retail or the non-retail. The non-retail is some offices, some restaurants and 75 flats. And that's pretty flat. Actually, the whole thing is pretty flat.

But the retail, we've got some very big shops on Long Acre, which we created 10 years ago or so? I can't remember, but yes. And when you look at Long Acre, it's a very high streety street and the shops are -- the retailers along there are very high streety shopping centers for our retailers. You know, when we built this, this was -- that was the demand was there for big units. So we created big units there. Interesting, and Brian will talk about it, we're looking at how we can cut them down and take back first floors and basements and do other things there.

But it's -- yes, rents grew quite a lot along there. And the type of occupier that typically is on Long Acre is the type of occupier who is trying to shed units everywhere at the moment because they got problems everywhere else. So the demand is pretty thin at the moment for big units and you can see it; there's vacancy on the street. You can just walk down just across the street, you can see vacancy. And there's also shadow vacancy. So leases being quietly marketed, not ours, but they're been quietly marketed. Of course, that just increases the supplier space. So -- which isn't great. It's fragmented ownership along the street as well, which is not great. And that's really why, I suppose, our wholly-owned portfolio is performing differently because when we have the clusters and we're in control and we curate, that kind of sets it apart, and people come to us and they know that we're going to be consistent in the way we curate our space.

On Long Acre, we'd love to be able to do that, but we can't because we've only got a bit of it. So it's interesting. The rents have come off in the -- they've come off 14% over the year. And the values have added 35 basis points to the yield on those units.

So the Long Acre makes up about 2/3 of the retail in Longmartin. The rest of it actually was pretty flat over the year, which is why when you put the 2 together, you get 25 basis points increase in the yield on retail. But that's driven a GBP 19 million -- our share, GBP 19 million devaluation in the year, which is about 6p a share on NAV or off NAV.

And just to finalize, this slide hasn't really changed since the half year other than the weighted average length of debt is half a year less, but yes, we keep a diversified low risk. We'd like to keep this low risk, our debt portfolio. And so we have some bonds. We have some RCFs. And we have some sort of long-term insurance debt with the spread of maturities, no one year has a large maturity in it.

At the year-end, we were about 24% LTV. We have about GBP 82 million of commitments. That's all the schemes that are on the go at the moment and 90-104 Berwick Street, which Brian will talk about in a short while. So pro forma for those would be that 25.5% LTV and GBP 197 million of available resources.

And that's really important to us because when people do finally sell their buildings, and you have to be very patient. You need to be there and you need to be ready. You need to be ready to go and we always make sure we've got resources available. And of course, with the -- as with the -- a marginal cost of our debt of about 1.6%, this should be really accretive to earnings as we buy more kit.

So with that, I'll pass back to Brian.

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [3]

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Thank you, Chris. So let's see what's going on operationally in the business in a little bit more detail.

Quite clearly, we've got good demand for all of our uses and in all of our locations. Our focus has always been about creating buzzy, lively locations that bring footfall, prosperity for our tenants, the ability to trade well. And actually, it's just as important for attracting office occupiers as well, but particularly the creative community around the West End, want to be in buzzy, lively areas, and we know how great that is because obviously, it's the middle of Carnaby Street. But also the residential tenants that we're looking for, younger people in London for a couple of years, want to be where it's all happening.

So our occupiers certainly reporting average yearly sales growth, which is good on average, with over 600 shops and restaurants and bars and cafés, they're not all going to be doing brilliantly well. Things come and go very quickly these days. But the important thing -- that -- for everybody that goes, there's somebody else that wants to come in and take the space. Tastes change, businesses have to be very fleet of foot these days to keep ahead of trends.

We are very conscious that, obviously, whilst turnover is growing for businesses, their cost pressures are growing as well. This is not a cheap place to trade from. It never has been. But the volumes people can do here are incredible. But probably the biggest worry people have at the moment are staff shortages, there are just not enough people around to work in shops and restaurants in the way that we've been used to in the past. So that is an issue that's going to be with us for some time.

Absolutely strict focus on mid-market across all of our uses. That's where the bulk of demand and footfall is in our parts of the West End. And as we keep saying, it is about this long-term curation, as Chris said, the most important thing that people are attracted by our ability to control, to control the environment around somebody setting up a shop or a restaurant, having a standard that we will not deviate from in terms of the people we think are appropriate for our locations. It's all about having the right sort of space and particularly an approach to leasing that matches what the customer wants. If shops want shorter leases, that's absolutely fine. If they are trading well, they'll want to stay and we'll want them to stay. And quite frankly, if people are not trading well, we'd rather they moved on. There's always somebody else wanting to take the space.

Because of all of this, we've been pretty much unaffected by the issues you read around national chains of restaurants and retail. We've always avoided having those sort of people in our villages. But the reality is that insolvencies, and so we always do get a few, it's never perfect. It's been less than 2% of our ERV over the year and where we've got the -- that space back, we've looked at how it's used, we've repurposed some of it, which is what we would normally do anyway, but it let really well once we put it back on the market. So no structural issues for us in the wholly-owned portfolio whatsoever. And as Chris said, Longmartin, we will deal with these larger shops.

Moving on to the uses. F&B is doing as well as ever in the West End, more people, footfall is growing in the West End generally. People may be less attractive to Regent Street and Bond Street, but they certainly like the character of what we do around SoHo and they are interesting parts of Covent Garden. It's not across-the-board, but we're in a very strong position because of what we offer, this focus on mid-market.

Space remains constrained. Our occupancy is very high, but it -- people are surprised to hear that people are still paying substantial premiums for leases. They wouldn't be doing this in any other location outside of the West End. So for instance, as you know, we lost Jamie's Italian from the joint venture earlier this year, just about the time of our half year results. That space was relet in a couple of weeks actually to Dishoom who trade next door, to double their size. But they paid a figure of -- well, halfway between 5 figures and 7 figures in terms of a premium just to take the space. It's given us an opportunity to restructure the leases. We now get a turnover [element]. We've actually come out of this better than we were before.

And then right next door, we had a Mexican restaurant, Cantina Laredo, which didn't really work particularly well over time. That lease has changed hands for a 6-figure sum, we've now got a really cool wine bar restaurant there.

So all these things happen, but for us, is -- we have a way out, really.

And of course, the customer demographic we have here for our F&B, it's about the people who work here. But think about all the tourists that come. Hotels will not feed you these days. They'll give you breakfast, they want you out of the door. People want to come and try new food types. It draws people into our areas and it draws people into West End. So really important.

Of course, we're capturing some of these excess super demand in terms of turnover-related income out of our restaurants. That's -- this year represents about GBP 1.2 million of our income, but it gives us great insight into how people are trading. So that's F&B and some of our new openings here, some names you'll recognize, possibly not. All different, nothing formulaic, really interesting offers. And I'd have to say if you like Sri Lankan food, I'd go to Kolamba on Kingly Street.

Moving on to retail. Again, it's a similar principle here. We're doing -- leasing activity is good, occupancy is resilient. Our rents are competitive, we'll look at the rental chart in a minute -- moment. But this wide range of shop sizes -- and when we talk about larger shops, our shops are really not that big, they're only relatively big, 3,500 square feet is not big for a shop. We're talking on Long Acre about shops that we've got 9,000 square feet. Ours are generally much smaller than that even when we call the large ones.

Looking for those interesting brands all the time. But really, this flexible approach, what sort of space do people need, we can upsize, we can downsize. But it's wrong to think that nobody wants larger shops. We are letting larger shops. We're seeing people renew leases early in shops because they want to refit, they want more security of tenure. And they're still interested, some of them in larger spaces, just not quite the market it was before. So it's horses for courses, really. But as I said before, we can repurpose space as necessary, and we can move in either direction.

So here we are now, relative rental tones for retail. You see we remain very much on the right-hand side of the chart there, the affordable side. Some of the more expensive streets are, as we've said, coming under pressure. But we still think this is a great platform for long-term growth for some of these rents there. They're under-rented. We know some of the streets around Covent Garden, for instance, North Covent Garden where we are, they've got great rental potential with the coming Lacrosse round in a couple of years, things like Seven Dials Market appearing here. These will be transformational over the next couple of years. So people are going to be attracted to the affordability of our space.

And interesting selection of new retail openings. One thing you might be a little bit surprised to see is Timberland on the list there. Interestingly enough, Timberland are coming off of Regent Street. They're coming to Carnaby. That used to be on Carnaby, they went to Regent Street. They've taken the old boots unit, which we've reduced in size by 1/3. So we put -- we added first floor to the shop, Entice Boots moved down the street 10 years ago or more. Timberland don't want the first floor. That's going back to office use. So Timberland are trading out of 2/3 of the space they had on Regent Street but probably, more importantly, their comparative rent is 2/3 of what they would be paying on Regent Street. So they're basically at [2/3 of 2/3], but you've still got 45 million people walking past your door every day. So that's a very compelling argument for an awful lot of retailers. The profile is there. The space is more suitable for them.

Offices. Market's trading but the market is very good for us. This demand for smaller, self-contained space is good. As I say, over the years, we've repurposed our smallest offices. Believe me, if a lot of that space was available today, it would not be usable, it would not be let. Flats, not a problem at all. But it's -- self-contained space is still popular, it's not all about co-working space. But I think, as we've said in the past, we're conscious that's an option for people. So we're looking at the specification of our smaller offices. We make sure they've got good broadband, plug-and-play from day 1. Our trials of actually doing some fully fitted space have been really useful. Not that all the space has to be fitted out, we're finding in some buildings it's almost like selling a show house or having a show house on a housing estate. You need -- because our space is a little bit old sometimes, people need to see how it could be fitted out, and then the rest of the building goes. So again, some interesting experience there. But as I say, we -- the product we offer in offices is still very popular.

Then moving on to residential. As we said, very much in demand in terms of renting 3 apartments to let at the end of September is not unusual. We're running with vacancy of less than 10 units. So it's a good, steady source of income. Whilst there doesn't seem to be much reversion in this -- in the residential, remember that we're -- on these 3 year ISTs, we're getting a 4% annual increase before we come to the third year where the rents are sort of reset. So there is growth underneath the bonnet there. But most importantly, huge demand. But again, like the offices, you've got to keep the specification up to scratch.

We've been talking a lot about schemes and Chris has given you a sense of the size of what we're working on at the moment. So over 0.25 million square feet under refurbishment over the years and this constant process of cutting and carving in our buildings into different ways, I suppose you could sum it up as all of the Rs: It's refurbish, reconfigure and repurpose, and that's what we do within all of our buildings. Remembering that once we've cut and carved the ground floor space, we're not fitting out either. So there's no great exposure to obsolescence in these buildings. The cost of doing these things are not that huge if you know what you're doing.

So we are looking at some of our larger shops, not all of them because there's still demand for them. I'd say boots is -- The Boots and Timberland is a great example. We've done something similar with Ben Sherman on the other side of Carnaby Street where they've now occupied probably 1/3 of the space they had before but the back space has gone to a restaurant, which backs up to Kingly Court. Basement is now going to be a live entertainment venue. There used to be a club there 40 years ago for The Roaring '20s. Well, actually, when we put that space up for -- onto the market, we had 20 serious offers of interest on it. So again, it's something that's coming back to the West End, live entertainment is gone, everybody wants to see it back again. So it's just, say, what you do with the space.

We do point out there that we've got a number of our medium-sized schemes that we're about to complete probably in the first 3 months of 2020. So it's -- there will be a letting process. By the end of the year, that space will have been taken care of. But you might see a slight spike in the vacancy level at the 31st of March next year because some of those things -- we've always found that we actually have to finish stuff before it -- you really get the interest going again. We're not selling bog standard shells in a shopping center or something like that. You need to see it and tenants need to understand the exciting things you can do with the space.

Our larger scheme is 72 Broadwick Street. We're on site now. It's an 80,000 square foot scheme and so GBP 32 million of contracts. And so probably one of the largest schemes we've done for some time. But things are well underway. We start getting the space back in phases towards the early autumn next year. So again, some of that could be sitting in vacancy at the 30th of September, but it will be taken care of. The demand is there, it's just the timing of when these things complete. But it's going to be a fantastic addition to Carnaby and already some interest in the space we're constructing. So all very positive.

Moving on to Longmartin. Chris has talked about some of the issues in the retail. But what's also going on in the background is the repurposing of Sir Martin's Courtyard. Now this scheme was conceived in 2005. So it was about '05, '06. So getting on for 15 years ago. The model of the courtyard was actually Kingly Court when it was in its retail phase. But of course, life has moved on in Kingly Court, that's all now F&B. So we're doing something similar here to repurpose the poorer-value retail space we created. It was the right thing to do at the time. But the opportunity now is -- well, if the opportunity is there, it's there. We're putting 3 new restaurants. Just finished in November. Already quite a lot of interest in the space. Let's say, the things that are going around it, the loss of Jamie's, which had become a bit dull and Cantina moving those things out is we're going to have a really exciting dining up here.

Our Sussex House development, the office is let within a couple of months. Again, on the basis that we fitted out one floor, and then the rest flew off the shelves. And we now have got a prominent ground floor unit, which is attracting a lot of interest and always the effective gander offer now. So that will be dealt with.

And finally, we're smartening up the courtyards with fantastic new entrances. It's raising the visibility.

And looking at Long Acre, yes, we will downsize some of those shops over the next couple of years, and we're already starting to do that. We've got plans well underway.

Chris talked about the very limited availability of things to buy in our areas, it's probably quieter than we've ever known it. Sometimes, it seems sort of strange that people are hunkering down and not selling. But actually -- and there are buyers out there, but people who have owned buildings for generations around us are very reluctant to sell. They have no financial pressure on them. It really is that financial pressure that does bring things to -- forces people to sell, really. But otherwise, in uncertain times, you tend to hunker down, really. And if you trade out of these locations, it's very hard to get back in again.

So purchases there, GBP 47 million in the year. I'd say it's not a bad result in light of the market and then now somewhat delayed purchase of 90-104 Berwick Street. Further delays, I'm afraid. We now have a -- the vendor is expecting to hand over by the end of April next year. And there is a lot of progress on site now. And so Interserve have got their act together and seem to be doing what they're supposed to be doing. But we've agreed -- negotiated with the vendor a reduction of the purchase price to GBP 36 million from GBP 38.5 million. So we have lost out because of these delays. Because the thing of what we're buying, 2/3 of the income is already pre-let into the hotel occupier upstairs and the co-op are coming back into the supermarket space. So we keep our fingers crossed for second quarter of next year.

Sold a couple of properties in the first half, particularly -- they were special purchases, but they achieved some 24% above valuation. Just so -- it goes to show there is a huge appetite for the space. The reality is we can't see this changing for the foreseeable future. Our business is not predicated on buying more. It's always nice to have but we have to be realistic, and we've been very patient over 33 years. We know exactly what we want to buy. We're not going to buy for the sake of it. That's not our style, as you know. So we'd rather sit and wait for the right things to come along. And I can tell you over 33 years, they always come along eventually.

So it's just time to say a few words about ESG matters. We are -- fundamentally, we're about the reuse of existing building stock, our buildings are very old, they're heritage buildings. But with the right sort of approach, you can extend their useful lives, both in terms of their economic viability and their sustainability. We're excellent at that. For over 5 years now, since minimum energy standards were -- first came into being, we've had a rolling program across the portfolio of making sure whenever we get space back, we improve its environmental performance. So over 80% of the portfolio now is above minimum standards. And most of it is well above minimum standards, which is a grade -- [grade is 4G] on the scale. The bit that's left to do is occupied space, where actually we really can't get in and do anything, but we will be dealing with that over the next couple of years to make sure by the deadlines of being unable to let staff in 2023, everything will be sorted. And I say, we're looking ahead, we're doing more than we need to because these standards are not going to be relaxed, they're going to get more stringent.

We do a lot of stuff around the West End. We talked about Bee's Knees and Wild West End. Probably the most important thing we're going to do now is get more involved with our tenants and talking to them about the way they use our space. And actually -- particularly when you've got lots of smaller businesses, they don't have the resource to understand how they can be working in a more sustainable manner. So that's our mission for the next -- starting from now for the next couple of years is to help those small businesses be more -- be more sustainability conscious. And we've got this great Blue Turtle initiative, which will start in Carnaby, about getting restaurants to be more -- well, just the way they'll run their business really, but it's about sustainable produce, particularly fish, things like that, the environmental, what do you do with food waste? All those sort of things. We can help out. So it's absolutely critical that we -- that's our mission really.

And in terms of the community world, SoHo, it's a very small community. We've always -- we've been around there. We're trusted, so I think, long-term owner. We do work very closely with Westminster City Council and Camden Council. They have their policy objectives. That's a political choice that we don't get involved in that. But like all local authorities, they're strapped for resources. And we, like many other owners across the West End, step in and do things, which frankly would not get done were it not for the private sector.

And finally, our staff, really important for us. We're probably the only company that comes to the Stock Exchange where 75% of their entire workforce turns out for the results presentation, but they're all here today. And they're probably the most valuable asset we have. So we have a 3-year strategic people plan now. We're creating different structures in the office, investing in people. So that's absolutely future-proofing the business.

So quickly moving on to the summary and outlook. We've had a period of extreme uncertainty around Brexit and politics. We hope it goes away, but that's not certain. Nobody quite knows what's around the corner. There may be yet more uncertainty to come, but the structural changes, particularly in retail, are not going to go away. That's changing. That's a fast-moving scene. But we're really well-placed to adapt what we do to that.

Within the West End, well, it's still a fantastic location, really strong growth prospects. Some of you may have seen recently, the [USN] Company, which is the largest business improvement district in the West End, produced a report showing that in the next 3 years alone, they've identified some 2 -- over GBP 2 billion worth of investment in the West End. That's building new offices. It's building -- it's investing in the public realm. It's creating new hotels. You're even seeing retailers, people like Adidas, making huge investment in global flagship stores. All these things are going to bring footfall to the West End. They bring interest. So the things that other people do benefit Shaftesbury as much as the things we provide in our villages. So it is an ecosystem that some people don't quite understand, but it's not just Shaftesbury saying that this is a great, prosperous location, other people are committing huge sums of money long-term because they can see the benefits of being here.

So we focus on our mission, which is to make great places even better, that's our strapline these days. But it's all fundamentally below the bonnet. It's about creating interesting, exciting experiences and places people want to come to, making sure our tenants are making more money, that's how we're going to prosper long term.

So we're very positive on the outlook, despite the same uncertainties that in short term are not going to go away. But this strategy of focusing on long-term growth, will, we believe, continue to deliver for our shareholders and our stakeholders.

So thank you very much for your time. Perhaps we can go into the Q&A session now. So we've got some roving mics here. If you could just introduce yourself before you ask your question, that would help. And then I'll pass the questions over to the team as appropriate. So...

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Questions and Answers

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [1]

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Sorry, the light is so bright, I can't see anybody in the audience.

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Tom Musson, Liberum Capital Limited, Research Division - Research Analyst [2]

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It's Tom Musson at Liberum. Three questions, if you don't mind. Firstly, I think you touched on it earlier regarding turnover top-up rents. Are you able to say sort of what percentage of new leases you're striking on turnover top-up base or that have turnover top-up base elements? And how much of all the leases you have are turnover-related in the portfolio?

Second, can you give us an idea of where you expect vacancy may peak in March as new schemes come onstream?

And lastly, Seven Dials Market seems to be performing well. I just want to check there's been no cannibalization of footfall or sales of nearby surrounding areas, like in Neal's Yard, for example, since that's opened?

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [3]

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Chris, do you just want to talk about the actual number of leases on -- we have where our market rents for the turnover top-up?

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Christopher Peter Alan Ward, Shaftesbury PLC - Finance Director & Executive Director [4]

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Yes. So we -- so the deals we do with restaurants now are you pay a market rent and a turnover top-up. So you pay the higher of the market rental percentage of turnover, which depends on what we can negotiate. But let's say, around 10% per turnover. I was just trying to find the exact number here, but it's something like just over 50% now of new style leases. We've got some way to go still. But you know, restaurant leases are quite long, so we can't bring these into existing leases. So every year, we chip away and we get a few more and more modern leases. And actually, it's not just the turnover element. It's -- there's no security of tenure. So we get control at the end of the lease now, whereas the old leases used to have security of tenure for tenants. And actually, they're shorter as well. So our old-style leases would be 25 years. Now, typically 15 years. So there's still some way to go.

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [5]

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I think we first brought in turnover on restaurants about 6 years ago. And we're just seeing now that we now come to the period where we're getting 5 year rent reviews. And it means that we're sort of capturing that turnover in our contracted rents as well. We'll still retain that turnover element, but we're capturing it on the reviews.

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Christopher Peter Alan Ward, Shaftesbury PLC - Finance Director & Executive Director [6]

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Oh, 54%-- no, sorry. Glasses would help. Where are we? Historic leases, yes, 49%. So yes, it's about half and half at the moment.

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [7]

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But the turnover, we don't generally do turnover in retail, but if that's what the deal is with the tenant, we can convert anything. You have to be flexible about things these days.

Tom, Seven Dials Market?

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Thomas James Chisnell Welton, Shaftesbury PLC - Property Director & Executive Director [8]

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Seven Dials Market. Yes, that's a fairly easy one to answer because we do have visibility now of the turnover numbers for a significant proportion of our restaurant tenants. And at the moment, there has been no impact at all. I think it's worth just saying that in Seven Dials, for the amount of [8 3] it was actually very under-catered for on that side. So we could see that there was an opportunity to bring more in, and it hasn't had any negative impact.

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [9]

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There was a second question.

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Tom Musson, Liberum Capital Limited, Research Division - Research Analyst [10]

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Sorry, yes. I just wondered if you could give us an idea of where you expect the vacancy may peak at the half year as those schemes complete?

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Christopher Peter Alan Ward, Shaftesbury PLC - Finance Director & Executive Director [11]

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So we have about GBP 5 million of -- well, about GBP 5 million of ERV in the schemes will complete in the first half, a lot of that in the second quarter. So if that all completed on the 28th of March, let's say -- yes, about GBP 5 million. So it's about 3.5%, I suppose. But there will be a churn of new schemes coming in and lettings and then everything else. But yes, you could see that little spike, possibly.

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Rubinder Singh Virdee, Green Street Advisors, LLC, Research Division - Analyst of Research [12]

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It's Rob Virdee from Green Street Advisors. A couple of questions. Number one, asset management potential and ERV growth. So in the absence of future acquisitions, how much juice is left in asset management for your portfolio? I look at the ERV growth, I see it's sequentially slowing. Do I just need to get used to lower ERV growth for the foreseeable future? That's question one.

Second question is on OCRs for the wholly-owned portfolio in F&B and retail. You make the point that at Longmartin occupational costs are quite high. Can you talk about your wholly-owned portfolio and how are those OCRs moving sequentially?

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [13]

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Sure. Yes. Well, first of all, on the asset management front. I mean, this is a bit like painting the Forth Road Bridge, as people used to say. You keep doing it, and then you get to the end and you think, "Oh, I'm going to start all over again." Or other things crop up. And we are genuinely unpicking things we did 10 years ago. There's value to be extracted from these things. Our property is dynamic and demand is dynamic. So we have to keep doing these things, but they're value-creating, it's just adapting our buildings. So we never run out of space. And we've never -- it's not predicated on buying more. Yes, buying more unlocks opportunities but the reality is, it's much -- it's been much harder to buy for a long time. But we keep going back to the portfolio. We keep challenging ourselves how we're using this space. What do people want? What are people going to want next year? And it's preparing for that. So it doesn't run out. Now the long-term growth has been around sort of between 4% and 5% per annum. All I would say, over a 10-year period, over the 30s, it's never been consistent. There have been some really brilliant patches and quieter patches. But -- so we may have be in a slightly quieter patch now, but sort of 3% per annum -- yes, 3% ERV growth over the year is not a bad result in this current environment. I can tell you, 10 years ago, it was 0 and the office rents were going down. So it's been worse. This is a resilient business. It'll see through those slightly more challenging times.

OCRs. Tom, do you want to talk about those? It's very much around restaurants. It's quite interesting.

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Thomas James Chisnell Welton, Shaftesbury PLC - Property Director & Executive Director [14]

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I mean, it's a very difficult question to answer because we don't have visibility of the tenant's numbers. But I mean, I suppose just as a starting point, going back to the graph in the presentation, which just shows the comparative costs of our locations relative to some of the other streets. And I suppose the extremes of Monmouth Street, Earlham Street compared to Long Acre, that tells you quite a lot about the difference or the benefits of being in our locations where we can still deliver the footfall. But in terms of actual numbers, we don't -- we can work out the rates and the rental costs, but beyond that, it's really difficult.

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Simon John Quayle, Shaftesbury PLC - Property Director & Executive Director [15]

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The other thing...

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [16]

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Go ahead, Simon.

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Simon John Quayle, Shaftesbury PLC - Property Director & Executive Director [17]

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Yes, I was going to say, when you came in, you saw a video on the back -- on the screen there showing all the activities that we do throughout all of our villages. That's a critically important part of what we do to make our villages different, to draw people in. It's not just drawing anybody in, it's the right people who are going to shop in your shops and eat in your restaurants. And it's a big part of what our business is.

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [18]

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Yes. And where we have changed space, it's generally been the less valuable retail space. You haven't seen us change big shops to F&B because they -- or they're more valuable shops. We've done Kingly Court because it was tertiary retail, it worked very well. But actually, it sort of passed itself -- again, Sir Martin's Courtyard. The retail was really low value in the courtyard itself. So it's really making -- making that space more productive in terms of the turnover that can be generated from that floor space. So these things go on, but they do ebb and flow. Chris?

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Christopher Peter Alan Ward, Shaftesbury PLC - Finance Director & Executive Director [19]

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I think it's just worth sort of stepping back for a second because retail isn't dead, it's just -- bad retail is dead. And we've had a number of tenants coming to us renewing leases early, expanding what they've got, moving into other villages with other concepts. So these are people who are trading, and we don't know their OCLs, Rob if I'm honest with you. But actually, if they weren't trading well, these things wouldn't happen. So -- and actually, we -- as Brian says, we have a line of people waiting to come in just because they know they can trade really well. So I think that's kind of for us is how we kind of look at it, are they going to trade well? And we want people to be buzzy and interesting and bring their own footfall. And if they're not trading well, it's in no one's interest for them to be there. We're not just about collecting rent. Obviously, that's quite important. But it isn't just -- that isn't the sole driver of anything we do. But if the people aren't doing well, we don't want them there. So it's -- yes, people are doing okay.

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [20]

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And we have the locations that can deal with this volatility that you're seeing, particularly in retail. Now retail trends move so quickly. But they come and go, but actually in our locations, there will always be somebody that wants the space, whether they're domestic or international, because they want to be in the biggest city in Western Europe and the best retailing city on the planet.

Sorry, we're running out of time now. We need to finish in a couple of minutes. So a couple of other questions. Sorry. We can just chat later, Rob.

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Maxwell Wilson Nimmo, Kempen & Co. N.V., Research Division - Analyst [21]

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Sorry, just a quick couple for me. It's Max from Kempen. Just kind of coming back to the point on the ERV growth. If I look at Slide 17, if I compare to 10-year combined -- your CAGR, it's definitely true to say that it -- you're finding it harder to capture that growth as well. So although the top line growth is slowing a bit as well in terms of ERV, you're finding it harder on the annualized side. And is that okay still?

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [22]

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Not really because we do have more than usual in the under construction phase. It's more in under refurbishment, which will start to come through next year. It's just not available to let at the moment. So the reality of pre-letting out of the space is somewhat limited these days. But it was a lot more sitting in the under refurbishment.

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Christopher Peter Alan Ward, Shaftesbury PLC - Finance Director & Executive Director [23]

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I think that's absolutely right. And we sort of said this time last year, we sort of cautioned that we've got quite a lot of big pipeline of stuff we're working on. In fact, actually, if anything, that pipeline has grown, and it continues to grow. So that isn't adding to passing rent at the moment, but it will do. So this is the scheme, sort of that GBP 5 million coming in the first half. That will then flow down the chart into contracted income. Other schemes will go in. So it's a bit of a melting pot of stuff. But actually, yes, we had -- we're kind of at record levels of assets under management at the moment.

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Maxwell Wilson Nimmo, Kempen & Co. N.V., Research Division - Analyst [24]

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Okay. And just very quickly on Central Cross. You still got 2 assets there to lease up, is that right? One under offer? That seems...

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Thomas James Chisnell Welton, Shaftesbury PLC - Property Director & Executive Director [25]

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Sorry, we have 2 shops to let, 1 under offer, hopefully, will be signed imminently. We expect it to.

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [26]

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We can just about squeeze in one more question if there is one.

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Robert Alan Jones, Deutsche Bank AG, Research Division - Research Analyst [27]

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Yes, it's Rob Jones from -- sorry, Deutsche Bank. Just on Slide 20, the Longmartin revaluation. So obviously, you talked about the fact that the retail element, Long Acre ERVs up 14% with equivalent yields up to 35 bps. Was that movement in Zone As driven by transactional evidence on the street? Or is it all just value as assessment of what they think those -- that space would lease out, likewise with the ERVs?

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [28]

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Tom, you take the question. Part of Tom's patch.

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Thomas James Chisnell Welton, Shaftesbury PLC - Property Director & Executive Director [29]

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It's a bit of both, actually. But there were -- there was a fairly soft deal done fairly close to the valuation date on a property we don't own just across the road. So it was a private owner, owns 1 building in the street. And I think that had an impact. But as you heard from my colleagues, there's quite a lot of availability on Long Acre. So that's -- hence the adjustment there.

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Robert Alan Jones, Deutsche Bank AG, Research Division - Research Analyst [30]

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And do you think that trend is likely to continue into the first half of next year?

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Thomas James Chisnell Welton, Shaftesbury PLC - Property Director & Executive Director [31]

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It's hard to say, but I wouldn't be surprised to see a bit more pain there, to be honest, which is why we're working on solutions, yes.

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Brian Bickell, Shaftesbury PLC - CEO & Executive Director [32]

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Right. I'm conscious it's now 10:30. If there are any more questions, obviously, we'll be around after the presentation finishes. But I'd just like to thank you all for your time today, coming along.

So the business is in great shape. Prospects are good despite the rather gloomy mood that hangs over all of us. So if you want to cheer yourself up, I suggest you get yourself over to the West End, evenings, weekends. If you're sitting in Canary Wharf you may think life's a bit dull, come to the West End, you'll have -- come to the West End, you'll literally struggle to get down the streets, it's so busy. You may think that's fantastic but please, just come over and see what we're talking about.

So -- and thank you very much for your time, and it's not too early to say, have a great Christmas, everybody. Thank you.