Shaftesbury Capital PLC

Everybody's here early, thank you very much. Are we ready to go? Phone line's open. Okay, yeah, we've got the thumbs up. So if we're ready, we'll start. I know you've all got a very busy day and a very busy week. So very much appreciate you coming to our third session of annual results this morning. So we're really very pleased with the results for this year. Another excellent year of progress and performance. I think we're delivering growth as we said we would do. The agenda for this morning Fairly straightforward. I'll give you a bit of an overview of the results. Sittl will then go through the financial review. I'll then update on what's going on in the portfolio and we'll finish with a summary and outlook and some Q&A. So as I said, another very successful year, delivering strong performance, an increase in rents, values, income and dividends, while strengthening our financial position and creating significant optionality for the group. Obviously, macroeconomic issues and geopolitical risks have been well documented. However, I'm pleased to say that conditions across the West End are very active. we continue to see positive trends in footfall and sales across our prime portfolio and the team is successfully delivering leasing well ahead of ERV with excellent levels of activity limited vacancy and a strong pipeline during the year we were pleased to have formed a long-term partnership on Covent Garden with the Norwegian Sovereign Wealth Fund, which highlights the fundamental value and attractiveness of our portfolio. We continue to expand over £100 million invested through acquisitions and capital expenditure, and a number of properties are currently under review. And with enhanced liquidity, we're well positioned to take advantage of market opportunities. As one of the largest property owners in London's West End, we play an important role in shaping the area's long-term future. Visitors continue to be drawn to the West End's exceptional cultural, retail and entertainment offering, reinforcing its position as a leading destination for experience-led travel. The portfolio is benefiting from record international arrivals to London airports, hotel occupancy remains strong, whilst the Elizabeth line continues to broaden catchment for visitors and workers alike. Charterbury Capital's irreplaceable portfolio of properties located at the heart of the West End provides high occupancy, low capital requirements and reliable growing long-term cash flows. Turning to results, valuation increased 6.6% like for like to £5.4 billion. This was led by a 6% increase in ERV and a small two basis point inward yield movement. Total accounting return and total property return are 9.1% and 10.1% which is in line with our medium term targets. We continue to deliver rental growth which increased by 6% and every effort continues to be made to enhance customer service whilst delivering meaningful cost savings. Underlying earnings are up 12% and the Board has proposed a final dividend of 2.1 pence per share which brings the total dividend to 4 pence per share which is an increase of 14% for the year. We have a very strong balance sheet and access to significant liquidity with low leverage. I think the performance overall demonstrates the exceptional qualities of the portfolio delivering growth in cash rents, dividends, ERV and valuation. So I'll now hand over to Citl for the financial review.

Thanks, Ian. Good morning, everyone. As you've heard, financial performance was positive in 2025 with growth in rental income, earnings, dividends, valuations and net tangible assets. In addition, we have strengthened our balance sheet and enhanced the group's financial flexibility. So starting with the income statement, the main points are that over the year there was growth in rental income of 6%, earnings were 12% higher and we've increased the dividend by 14%. We focus here on group share numbers, that is including Covent Garden at 75% post the transaction with Norbis Bank. As it's completed partway through the year, we've included in the appendix on slide 43 a summary of how this affects year-on-year comparisons. Adjusting for this, gross rents were up 5.9% like-for-like to £195.6 million, reflecting a successful year of leasing and asset management. In aggregate, lettings and renewals were 10% ahead of ERV and 14% up on previous passing rents. Management fees from Covent Garden for Q2 to Q4 represent the other income of £3 million. Administration costs of £41 million reflect an increased share option charge which was up by nearly £5 million compared with last year. Excluding this, costs were effectively 8% lower. Notwithstanding upward pressures, we are targeting further reductions in the absolute level of cash costs over the next two years. During the year, the cash receipt from the Comet Garden transaction lowered net debt significantly. As a result, finance costs have been reduced by almost 30% to £41.4 million. This year we will refinance or repay £400 million of maturing debt. However, based on current levels of borrowing, we are targeting finance costs to be broadly flat overall. All of these movements taken together resulted in a 12% increase in underlying earnings to £81.9 million, equivalent to 4.5 pence per share. The proposed final dividend of 2.1 pence per share takes the dividend for the year to 4p, up 14% year-on-year. Our leasing activity contributed to an increase in ERV of 6.2% over the year to £270 million. As illustrated in the chart, there is the opportunity to grow passing rents significantly given the 26% uplift as we move through from annualised gross income on the left to current market rents on the right. There is embedded reversion in our portfolio and good visibility on the income growth potential in each of our locations. This includes almost £16 million of income which is contracted or relates to rent-free periods, the majority of which will convert to running income over the next 12 months. Turning now to the balance sheet, the market value of properties under management was up 6.6% to £5.4 billion. Net debt has been taken down from £1.4 to £0.8 billion on a group share basis, with loan-to-value of 17%. NTA was up 7% over the year to 215 pence per share, driven primarily by the valuation movement. The main driver for the uplift in property valuations was rental growth with ERV up across all sectors and in all of our estates with retail and Carnaby Soho being the strongest performers. Yields moved in marginally by two basis points to 4.43% overall and the commercial portfolio is valued at an equivalent yield of 4.6%. Our assets continue to demonstrate attractiveness and affordability to our customers with average ERV for the portfolio under £100 per square foot and customer sales significantly ahead of 2019 levels outstripping ERVs. The balance sheet is in a strong position with low leverage and access to significant liquidity. With loan to value under 20% and the EBITDA multiple under seven times, there is flexibility to deploy capital towards growing our business through investment in existing assets and new opportunities. In October 2025, we entered into a new five-year loan facility of £300 million for Covent Garden. The maturity of the group's other banking facilities totalling £450 million of undrawn firepower has been extended to 2029 and 2030. We've also taken the opportunity to reduce the margins on these facilities to better reflect current market conditions and the strengthened position of the group. Part of the proceeds from the Comet Garden Partnership were used to reduce gross debt and we are positioned for repayment of the £275 million of exchangeable bonds which mature at the end of March 26. As well as the new financing, extensions and repricing we have protected finance costs from interest rate movements by capping £300 million of Sonia exposure at 3% for this year. we will continue to review financing opportunities taking advantage of the attractive credit profile of the group So to summarise, financial performance has been strong and we have enhanced flexibility. Total accounting and property returns of 9% and 10% have been achieved in 2025, driven by growth in ERV and cash rents, which together with cost management have resulted in good progression in our key financial metrics. We will continue to focus on our priority areas, earnings and dividend growth, deploying capital accretively and balance sheet strength and flexibility and with that I will hand back to Ian

Thanks very much Siddle. I can tell you a little bit about the portfolio, a little bit of colour for you. We own an impossible to replicate portfolio. It's located in some of the most iconic destinations across London's West End. Covent Garden, Carnaby Soho and Chinatown. The £5.4 billion portfolio under management comprises 2.8 million square feet of lettable space across 640 predominantly freehold buildings with approximately 1,900 individual lettable units. The portfolio is broadly one third retail, one third F&B with the balance in the upper floors which offer office and residential accommodation. Portfolio offers a diverse occupational mix and variety of income streams with a range of unit sizes and rental tones. Occupational demand continues to prioritise the best locations. Availability now on many of our streets is at a near record lows and this supports competitive pricing. Leasing success has been achieved across the portfolio with continued ERV growth. This slide shows some of the new brands introduced which are attracted by the seven days a week footfall in trading environment. 434 leasing transactions completed in the year representing nearly 40 million pounds of contracted rent. They were achieved an average of about 10% ahead of December 24 ERV and 14% ahead of previous passing rents. Vacancy is very low at 2.6%. The team's active and creative approach which is informed by a deep knowledge of the West End positions Shaftesbury Capital to deliver further rental growth. Seeing very strong conditions in leasing in retail. Leasing demand is very positive and trading conditions are good. In recent months we welcomed a number of new brands to Carnaby Street as we enhance the customer mix there. Charlotte Tilbury opened a new flagship store and they'll shortly be joined by Sephora and also by Addicted over the coming months. Covent Garden continues to attract new high quality brands including Nespresso and Byredo which were introduced during the course of the year. All of this has contributed to a 10.4% retail valuation growth across the portfolio. We're home to approximately 400 food and beverage outlets. Operators are attracted to the vibrant, pedestrian-friendly, well-managed estates. And there have been a number of signings across Covent Garden, including Burrow in Floral Court, Harry's Restaurant and Bar on the Piazza, and Bevette in Neil's Yard. There continues to be strong demand for Soho, for the Soho portfolio, with the introduction of several new concepts, including Padella, and the shaston arms in chinatown we've introduced more variety to the area increasing the pan-asian offering at a range of price points so across the portfolio 37 new lettings and renewals signed 15.7 percent ahead of december 2024 erv Our vibrant locations and the quality of accommodation continue to attract leasing demand for office space. The Carnaby and Covent Garden portfolios offer high amenity value and excellent environmental credentials. and we continue to see customers relocating from other parts of central London as employers recognise the importance of location and amenity value in attracting and retaining talent. The residential portfolio continues to perform well. During the year, 285 transactions were completed with rents achieved around about 4% ahead of previous passing rents. we have the ability to add value through capital initiatives to our 640 properties Our pipeline of asset management and refurbishment activities represents 4.2% of ERV and it's expected to be delivered over the coming 12 to 18 months. The scale of our holdings also help us to shape not just the buildings but the spaces around them and we're working with local stakeholders to enhance the public realm across our destinations making them greener and more enjoyable for everybody. Covent Garden's Henrietta Street public realm is currently being transformed and we're also undertaking early engagement on improvements to Carnaby Street to enhance the visitor experience whilst preserving the area's unique character. We continue to rotate capital, improving the quality of our exceptional portfolio, and in this year we disposed of £12 million of assets and invested £80 million in targeted acquisitions. As I said earlier, we have a number of properties under review. It's little mention that we introduced sovereign capital to Covent Garden this year. by partnering with NBIM leverages our operational expertise and property portfolio providing investment and expansion opportunities. So our growth prospects are underpinned by strong fundamentals The West End market has delivered attractive, predictable growth over the long term with an annualised rental growth rate of approximately 4% per annum. Our portfolio has outperformed that with nearly 7% ERV growth delivered since 2010 and this is supported by consistently high occupancy and the scarcity value of the West End where limited new supply continues to drive demand. The strength of the portfolio is its adaptable mixed-use nature which allows us to evolve space in line with changing demand and importantly to do so with relatively low capex requirements. We benefit from aggregated ownership enabling us to enhance the public realm and shape our places supported by data-led customer and marketing approach. and finally we actively manage the portfolio through capital rotation focusing investment on our chosen assets and improving performance through refurbishment initiatives so overall these factors drive consistent long-term rental growth and valuation progression just like to take a moment to thank everybody involved including our customers partners and our very experienced team in delivering this strong performance in 2025. Some of our senior leadership colleagues are with us today and I hope you'll have the opportunity to meet with them afterwards if you didn't see them during coffee. So in summary, we've had a successful year and we've made a very good start to 2026. There are obviously a number of challenges in the economy, but the West End continues to perform with high footfall, customer sales growth and low vacancy. There are excellent levels of activity and a strong leasing pipeline. We're confident in our outlook and targets for rental growth of 5% to 7%. A total property return of 7-9% and a total accounting return of 8-10%. Through active management of our prime West End portfolio, the strength of our operating platform, we're focused on sustained long-term growth in rental income, value, earnings and dividends. And backed by our strong balance sheet, we're well positioned to grow. and take advantage of market opportunities. So that concludes the presentation. We're going to move now to Q&A. For those of you that are on the phones, if you could let the operator know that you'd like to ask a question, we'll come to you. But if somebody would like to start the ball rolling in the room, that would be great.

Max. Good morning, it's Max Nemo at Deutsche Numis. Thank you for the presentation. Just a couple of questions if I can. One on Carnaby and the ERV growth is exceptionally strong there. Do you expect that that is likely to continue as it sort of catches up with some of the other villages within your portfolio, you know, kind of extracting that? low-hanging fruit should we expect that to be the strongest growth in the near term and then secondly just around firepower with where you're at 17% LTV today obviously fully acknowledge you're trying to manage the interest cost for the for the business but how you see that and and the relationship with Norges and what that does for their ambition to grow as well thanks thanks thanks yeah we're really pleased with the progress we've made on on Carnaby Street

I think what gives us confidence that it will continue to perform really well is the brands that we've brought into the estate are trading at significantly higher sales densities than some of the previous incumbents. And that gives us confidence that it will support rental growth over the medium to long term. And we are seeing, you know, reasonably positive improvements in zone A rents, which, as you know, is how the market actually looks at it. but they're still well below other locations within our portfolio and well behind the general tone in the West End so yes I do think you'll see significant growth but we're delivering growth across the portfolio you know Covent Garden's doing very well as is Chinatown but yeah we've got high hopes for Carnaby Street definitely

On your point about firepower leverage growth, I think we're in a very strong position and that's a deliberate strategy so that we are well protected on the downside and as you say we're managing interest costs but it means that we can put money to work when we see interesting opportunities and one of our priorities is deploying that capital accretively so there's plenty of room within our leverage ratios and our liquidity to do that and as you also observed the formation of the partnership is a further source of capital for growth in Covent Garden so we see opportunities across all of our estates Thank you

Morning, it's James Carswell from Pilhans. Maybe just following on from Max's question, you've got the firepower. What are you seeing in terms of acquisition opportunities? I mean, I appreciate the small buildings are pretty liquid in your kind of markets, but are you seeing any liquidity for larger lot sizes? Do you think that will bring you some opportunities?

Yeah, the team's got quite a lot of real estate that they're tracking. Obviously, whilst there's a lot of activity in the West End, buildings that are adjacent to our portfolios don't trade very often. So we are focused really on driving value out of the 640 buildings that we've got and being in a position to move quickly when real estate does come available. We bought one or two things last year. they are sort of acquisitions that add value to the individual components of the estate but clearly at some point we'd like to expand our ownerships substantially and I think these opportunities will arise

Hey, Olly Woodall from Coalytics. Thank you for the presentation and congratulations on the strong set of results across the board, particularly your office segment seemed to have very strong like for like rents. I wonder if you could give an outlook for the demand here for office and then separately for food and beverage and retail. Looking forward to what your outlook is.

Yeah, thanks very much. Well, all parts of the portfolio are performing well. I mean, offices is about 20% of what we have. Split into two categories, really, sort of purpose-built offices and then converted sort of Georgian properties. And as I said in the presentation, you know, the demand is there, not just because the buildings are good and they're well managed, but the locations are really in demand. So we're seeing strong levels of demand and I think we'll see continued rental growth in those components of the portfolio. But the bulk of what we do is retail and hospitality and retail demand has continued to be very strong. Many commentators are saying the retail leasing market is as strong as they've ever seen it. I think there was a one of the brokers put out a report recently saying demand is significantly higher than it's been for many many years so that supports the prime locations that we have and you can see that in the number of new transactions that we've done and the pipeline I think Will Oliver is somewhere in the room he's in charge of leasing so he's a very busy man at the moment so I think you'll see continued activity in that area F&B also very positive you know there's virtually nothing available and where we do get something available there's multiple operators want to take the space on so yeah very very very positive conditions across the board at the moment Okay. Thank you very much. Any questions on the telephones? Oh, we've got a nod. Do we hand over to you now? Excellent.

Okay, we do have one question on the telephone we've taken now. The question will be coming from Zachary Gage of UBS. Zachary, please go ahead. Your line is open.

yeah morning team just a quick one from me looking at the sort of the consensus numbers for earnings in 2026 I think is currently at 5p so assuming a pretty similar growth rate to the one you saw in 2025 I know you don't give formal guidance but just thinking considering the exchangeable bond refinancing at the end of March and obviously interest rates in the UK probably coming in a little bit over the year with a slight headwind on cash. Do you think that kind of growth rate is in the right ballpark for the year considering that refinancing headwind?

Let's talk about the building blocks Zach as you said we don't normally comment on consensus forecasts and there is a bit of a range so if we go through the main components that we think about rental income growth we talked about aiming to grow that cash rents in line with ERV growth and you know we have an ERV growth target of five to seven percent on the other components you'll see continued improvement over the next couple of years in the property level net to gross and there are a number of initiatives that underpin that and then on admin costs we've been quite definitive on the guidance around that in terms of bringing down the cash cost element of that and then the finance costs is as you say you've got some maturities and refinancing or repayment of that and you've got lower leverage in terms of the effects of the transaction from last year so our target with the current level of leverage is for the finance costs overall to be flat so hopefully that gives you a guide on some of the moving parts yeah that's great thanks very much thank you Zachary

Ian, I will turn the call back over to you as we have no further telephone questions. Thank you.

Thank you very much. Okay, short and sweet. If you'd like to hang around for coffee, Peel Hunt would be very happy to give you one. Thank you very much Peel Hunt for the use of the facilities. We'll be around for a little bit. As I say, most of the team are here. Asset management team, investment team, marketing team. If you'd like to spend some time with them, please feel free to do so. Otherwise, we look forward to seeing you down on the estate. The sun's out. there's plenty of nice places for you to go and eat and drink plenty of places for you to go shop so thank you very much for your attention and we hope you have a good day and if there are any questions just call any of us as the day goes on so thank you very much