Ladies and gentlemen, welcome to the Derwent London Q3 2024 business update. My name is Sagar, and I will be the operator for your call this morning. If you would like to ask a question during the question-and-answer session on today's call, you can do so by pressing the star key followed by one on your telephone keypad. I will now hand the conference over to Paul Williams, Chief Executive. Over to you, sir. Thank you very much. Good morning and welcome to the Derwent London Q3 business update. I hope you're all well. Starting with our activity in Q3, I'm delighted to say that our strong leasing momentum has continued, with GBP 4.5 million of new leases signed since the start of H2, 10% ahead of ERV, on an average term of 6.4 years. Building on the success of Soho Place and following the opening of Uniqlo at 1 Oxford Street, the two remaining units have now been leased to retailers Kiko and Aldo. Our asset management team has relocated longstanding tenant ENVY Post Production to Stephen Street from Holden House, ahead of its regeneration, where it has taken 20,000 sq ft on a 15-year lease with a break at year 10. This takes our leasing activity since the start of the year to GBP 13.3 million, on average 9% above ERV, and to over GBP 40 million since the start of 2023. Encouragingly, we are now also seeing a number of positive rent reviews, including an 18% uplift at Savile Row. Our vacancy rate has reduced further to 3% at Q3, 20 basis points lower than at H1, and 100 basis points lower than since the start of the year, and with GBP 5.7 million of rent under offer, we are confident this momentum will continue. Included within the under offer, our White Chapel Building, we have signed a conditional agreement for lease on 80,000 sq ft of the Pavilion and lower floors, subject to planning, which is expected shortly. On completion, this would increase building occupancy to 90% and reduce the portfolio's vacancy rate by a further 50 basis points. Occupational markets across central London are strong for the right space in the right location. While market take-up in the first three quarters of the year is below the 10-year average, space under offer is nearly 20% above, which is a positive forward-looking indicator. At the same time, prime vacancy is constrained, and 45% of the committed pipeline across London is already pre-let. And we're delivering really great buildings to this low-supply market. At 25 Baker Street, we're already 84% pre-let, ahead of PC in H1 2025, with strong occupier interest in the remaining 32,000 sq ft of offices. And at Network which we expect to be multi-let, we're encouraged by occupier demand for just over a year until completion. We're also making good progress with our next phase of West End projects, which together total 500,000 sq ft, but are expected to start from mid-2025 onwards. At 50 Baker Street, we were delighted to receive a resolution to grant planning consent over the summer to double the floor area, with an interesting leading carbon story. This has now moved into the detailed design stage. Interest across the investment market is rising. We are seeing more assets being brought to the market, and we have a good balance sheet capacity. In Scotland, delivery of our solar park is progressing, with site infrastructure work well underway, and we expect to complete the project in mid-2026. Turning now to the financials. With net debt only marginally higher in Q3 at £1.4 billion, our LTV remains modest at 28.9%, and interest cover high at four times. During Q3, we drew down a new £100 million unsecured debt facility with NatWest, and have subsequently repaid our £83 million secured facility in Q4. Now we continue to recycle capital, and in October, exchanged contracts for the sale of our recently vacated 25 Baker Street for GBP 26 million, a small 3% discount to the June book value. In summary, the leasing momentum, which gave us the confidence to upgrade our 2024 ERV guidance to 3%-6% with our interim results in August, has continued. Occupier demand is focused on the best buildings in well-connected central location. Over 80% of our portfolios are within a 10-minute walk of the Elizabeth Line, and our extensive regeneration pipeline is well located. Our balance sheet is strong, giving us optionality as the number of investment opportunities come to market increases. We are very well positioned. Thank you. I will now hand back to the operator for any questions. Thank you very much. If you wish to ask a question, please press star followed by one on your telephone keypad. If you change your mind and wish to remove your question, please press star followed by two. When preparing to ask your question, please ensure that your phone is unmuted locally. To confirm, that's star followed by one to ask a question. Our first question comes from Alex Holston from Van Lanschot Kempen. Please go ahead. Yes, hi. Good morning. Thank you for the quick update. Just one question from my side on network development. Sorry to interrupt. Alex, your line is breaking. Sorry about that. Can you hear me? T his is Mike. We can now. All right. Sorry about that. Yeah, let me start my question over. So thank you for the short update. There's one question from my side, which is on your network development. I understand it's still 0% pre-let, but could you comment a bit on the tenant interest you're seeing there? I think we're pretty encouraged. It doesn't finish until the end of next year. We always foresee it to be multi-let. So encouraged by the interest. If we go back to what we did at the Brunel Building, one of our most successful projects, that was really letting up in the last 12 months. So there's good interest. The vacancy rate in Paddington is pretty low. Emily, would you like to add something to that? Yeah. No, I think the scale of the development is such. It's just over 100,000 sq ft, and the floor plates are sort of 17,000 sq ft. So that generally lends itself to a market that we'd expect to be active, as Paul says, in the sort of 12 months prior. It's not sort of 40,000 sq ft where you'd likely see earlier pre-let. So we're in active discussions with a couple of parties at the moment, and we're positive for some traction in that over the next year. All right. Great. That was it from my side. Thank you. Thank you, Alex. Thank you. The next question comes from Rob Jones from BNP Paribas. Please go ahead. Yeah, morning. Morning, Rob. My question. Morning, Paul. Pleasure. Just a very quick one, which is you talk about, obviously, investment market activity expected to pick up into 2025. And from our perspective, there's some potential for a bit of yield compression on the selective assets. But I wonder, from an acquisition opportunity perspective, how you think about the firepower that you have to undertake acquisitions. I appreciate you give a figure of your cash and available facilities, but realistically, we're not going to use all of that for acquisitions. So figure on firepower. And also, I guess, links to that, the quantum of assets that you are looking at at the moment with a relatively serious level of interest and how that compares to that firepower. Thanks. No, personally, we have an appetite to buy. We are encouraged to see more and more assets being put on the market. What we've seen so far this year has actually all been pretty well-bid. And what's been interesting from our point of view, actually, they've all been sort of risk-on assets. So obviously, we're also committed to the pipeline next year. We are a recycling model. Damian, respect to the firepower, you've just raised some money. I think they knocked on our door rather than you knocked on their door. Yeah, I think in terms of firepower, I think as of today, I'd be comfortable with about GBP 200 million additional acquisition if it came along. As Paul says, we are a recycling model that continues. And if really interesting deals come along, we've got other options as well. But I think for the time being, we feel very well placed, and I think we continue as we always have done. We're all pretty well on short positions in cash, haven't we, as well? So I think we're feeling pretty positive. I think you're right. Hopefully, we'll see some yield compression due course. And it's interesting to see a few more assets being made available. And as I said earlier, they are well-bid. So I think you make a good point, Rob. And then the final one, just to follow up on that, actually, is around ERVs. Obviously, you're seeing really strong ERV growth year to date. We're almost 10% in terms of leasing ahead of ERV, I should say. You reiterated your upgraded ERV growth guidance for the current financial year. What's caused you to, I guess, either not comment around likely being at the top end or indeed above the top end of the range, or even a further upgrade from the upgrade that we saw at the half year? I think we upgraded. We were confident back in February we should have upgraded then and back again in August. We did 2% for the first half of this year for the underlying portfolio. I am pretty confident about our ERV performance for this year. The net effectives are doing very well. I always like to not do too many projections, but I think we're feeling pretty firm about it, and let's hope that we do end up near the top end. I think what's interesting also, we're seeing rent reviews perform better than they have been for some time. We are letting well, and what I'm also encouraged by is actually we're letting right across the portfolio, right across the villages, and we're not too dependent on sort of just one small core area. If you look at the net effectives we've achieved at Whitechapel to date, this year has been good. Our letting at Stephen Street, I think, was 13% above ERV, moving an existing customer. So I think hopefully we will be near the top end. Nigel, do you want to add anything to that on your say on the valuation? No, no. I think just reiterating, it's good to see rent reviews starting to happen. So that's really encouraging, not only for this year, but probably more for next year. I know. The top end will continue to outperform, as you can see from all our lettings. Yeah. That's why we're building so much. Thank you very much. Appreciate it. Thanks, Rob. Thank you. Thank you. The next question comes from Callum from Qualitex. Please go ahead. Morning, Callum. I hope you're well. Yeah. Good morning. Thank you for taking my question. Just one. We've seen a lot of volatility in the bond market the last couple of weeks, rates back up to 4.5, a little bit higher. And you talked about a fairly strong acquisition pipeline potentially that you're looking at. Has this kind of recent move in the bond market changed your view on capital allocation or the investment returns you're underwriting? I think there's a balance here. As I say, we just said in the statement that we've got a really good pipeline of great locations in the West End. And I think we will continue to invest within the pipeline because we can see really strong ERV growth. I think if we could look to grow the business and acquire, we certainly like to. Damian, do you want to add on a comment about the bond market? I mean, volatile is definitely the word. And obviously, we've had events in the last couple of weeks that have helped to cause that. I think one of the things we're looking at now is this interesting combination of likely base rate cuts in the U.K. And it'd be interesting to see how that feeds through to the swap market and the gilt market updates through next year. I mean, some of the projections I've seen are suggesting that, for example, 10-year gilts might get down back to around about 4% or even below by next summer. So if that's the case, this is a relatively short-term spike. Let's see what happens. There is a pro-growth agenda in the U.K. There are headwinds in the economy, so it may well be that a more looser policy from the Bank of England might help to stimulate some growth. Let's wait and see. Volatile is definitely the word, though. Understood. Thank you. Thank you. Thank you. The next question comes from Jonathan Kownator from GS. Please go ahead. Good morning. Thank you for taking my questions. Just wanted to understand. You're describing a quite positive leasing market, limited supply at this stage. Are you seeing any sort of friction reaction on supply? Are you seeing some people increasing CapEx or desire to ramp up that market? Thank you. Emily, do you want to? I think we've got very good visibility on the market's pipeline up for sort of up to five years, and as we know, it's difficult to make changes to that in any haste, so we're fairly confident of a limited supply in the upcoming years. I think you're seeing a little bit more development in the city rather than the West End, where the planning policies are more relaxed, but as I say, the nature of our market means we do have very good visibility on that stock. That is a pretty strong stock, isn't it, Emily? So we're encouraged by that. So that's hard to better. If you look at the West End, I think grade A supply is about 1.2% compared to the average across the West End of about 4.7%. So if we continue this thought of the best is outperforming, and that's what people really want, then it's pretty constrained. I mean, planning is, as Emily pointed out, it takes a long time. It took two or three years to get planning in Westminster, in Baker Street, because 70% of the area is conservation or listed. So that will be a natural cap on supply. So luckily for us, we've secured our permissions for what we need to do. Yeah, for sure. I mean, obviously, we're talking about quite large scale, quite ambitious redevelopment. Any activity at the sort of shorter end cycle, maybe lighter refurb that are easier to do, but perhaps obviously much less ambitious? But is that something that you're seeing at all? I think that's a really good question. It's a very active portfolio. And I think one of the things that we want to stretch is how much rolling refurbishments we're doing, whether it's in some work in Middlesex House or we're doing in Stephen Street. And the portfolio is being upgraded regularly to provide new accommodation for rents to be bid. So I think we'll carry on doing that as we all normally do. The question is really, are other people starting to do it more as well? That's what I'm trying to get to in terms of, I mean, obviously, you're doing it, your active managers. But we've been for a time, for two years, in a period where obviously cost of funding was very elevated, is still elevated, you could say, and cost of CapEx was elevated. The key question is, as it gets slightly better, are you seeing a pickup in CapEx on this type of improvements, which would create a bit more competition in the market? Obviously, it's quite tricky to kick off a scheme very quickly. I mean, for those that are for any major schemes, unless you've got money, it takes a long time to get that going. I think there is an attitude that people want better space. And I think other competitors will be also investing within the portfolio and doing well. But I don't think you're going to suddenly see a major increase in speculative starts. And you will see some continuing rolling refurbishments and fit out. But I don't think suddenly you'll get this peak of supply. As Emily said earlier, we have very good visibility over the next five years. We're planning constrained in our core market, where I think we're 70% of our portfolio is like. It's pretty difficult to suddenly pick that up. I'm very relaxed about the supply side and very encouraged about the demand side. Thanks, Paul. Very clear. Thank you. Thank you. The next question comes from Zachary Gauge from UBS. Please go ahead. Yeah. Good morning, team. Good morning. Yeah, morning. Question from a similar team to some of the early ones, to be honest. You referenced the investment market picking up in 2025. I mean, I'm not sure if it was you, but certainly the market commentary maybe six months ago was that the market was going to pick up in the second half of this year with the first rate cut. Now, that doesn't seem to be really materializing. So I guess my question is, how confident are you on that happening, particularly given gilt yields being at 4.5% and you said maybe coming down to 4%? Do you think the market would be reliant on gilt yields to come back down to 4% or lower to actually reopen? Look, all I can say, I think since the summer, despite what the volatility is, we have been seeing more assets being put on the market. I think vendor pricing has been probably a bit more realistic than it was last year. So I think the gap between that is we have seen some really big transactions. Atlantic House was got sold for a good price, GBP 180 million. That's been a thing. So I think we are feeling a bit more confident about where the investment market lands and where it picks up. Obviously, there's been a fair amount of macro uncertainty with budgets and elections and all the rest of it. Nigel, do you want to add anything on the investment market? Yeah. I mean, I'm just speaking to the agents who've got stuff on. There's clearly a much bigger people going around buildings, inspections. You can get 10-15 inspections from credible money. So the appetite's there, and there's quite a bit of depth to that, whether it's private equity money, some institutional money, and private and PropCo. So I think, as I say, the momentum is building, and it's starting to show on the ground, but it's probably next year you'll see an uptick in the figures of actual turnover. Okay. Thanks. Okay. Thank you very much. Thank you. The next question comes from Neil Green from J.P. Morgan. Please go ahead. Morning, Neil. Good morning. Just one question for me, please. You mentioned you're seeing more assets come to the market, so just wondering if you're kind of seeing any themes behind why what's coming to the market is coming to the market now. Is it the rate cuts? Is it some distress? Or is it maybe some realization that some of these assets may be stranded in the future? And then could you get an idea as well as the range of what's coming to the market? Is it kind of core plus? Is it needing significant refurbishments? First of all, for me, I think we're encouraged to see a few more risk-on assets being very well bid. Stranded assets, Nigel? I mean, it's a combination of all those. If you look at what's out on the market, there's assets in all those categories. There's quite a lot in the city and quite a bit of a little bit of debt stress there, not so much in the West End. But generally speaking, there's a lot more on the market than there has been for the last six to nine months. Which is spectrum. We'll have to see how they trade. But yeah, I think we said back in February, the market we thought was beginning to stabilize. I think in August, we felt we've probably seen yield expansion as much as we'd expected, and things have settled down a bit. So I think others are probably feeling that likewise. Obviously, the last few weeks have been a bit more volatility. But I think, obviously, London is always well bid. It's a good place to put your capital, and there will be people who want you to buy. Thank you. Thank you. Thank you. We'll move on to the web questions. Yes, please. Yeah. So we've got three questions from the web. The first two are from Matt and James Peel Hunt. So Matt asks, "Are we seeing more assets that meet your pricing expectations coming to market? Any comments on the competitive environment?" I'll do that one, and we'll come to the second question. As I said earlier, things are generally being well priced. We'd like to acquire if we can. There haven't been, I wouldn't say, any real bargains yet. I don't think, Nigel, you've not seen a real? Not a real gun. We are seeing quite a bit, a bit more sort of two, three-year income stuff, which I suppose the question there is, what do they need to be done to the buildings in three years to reposition, EPC, amenity, and all of that, so there's a bit more of that on the market, which traditionally is the sort of stock we have looked at. But as I say, I wouldn't say any real distress yet. I think prices have held up reasonably well. Great. And then the second one from James Carswell, we've already had, but just to ask the question. So it's been there. "Would you expect to partially pre-let the network building before completion, or will you hold out for the best rents? I think there's a balance there, isn't there? Because we do see rental growth going. Our vacancy rate is very low across the portfolio at 3%. Our others pay retail price. We're very happy to pre-let Baker Street, 15% ahead of ERV? We're encouraged by the interest, but as I say, we're confident in the product. Hopefully, we will pre-let some of it by PC, I'd expect to be. As I say, we're in a great place. Great. And then the final question on the webcast is from Max Nimmo at Deutsche Numis. "Do you think the volatility in rates will defer investment markets to 2025?" Sort of touched on that already. But if there's a message, anything else to add? I think probably it has a bit. But as I say, go back, more product has been put on the market. But I remain pretty confident that we'll find something to buy. But also activity will pick up. Right. So thank you very much, everyone, for listening in today. If you've got any subsequent question, Robbie and the team, we'll reference around later today if you want to make a call. Have a good day and stay in touch. Thank you very much indeed. This presentation has now ended.