TR Property Investment Trust plc (TRY) Earnings Call Transcript

Good morning, and welcome to the TR Property Investment Trust plc Investor Update. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review your questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to Marcus Phayre-Mudge, Fund Manager.

Good morning, Alex, and thank you very much. Good morning, ladies and gentlemen. Thank you for your time this morning, conscious that it is Monday, so you're all very busy. So the format very much as we usually do, so a canter through some of the backdrop of the trust, what we're trying to achieve, how we've done a bit about performance year-to-date and then very much get into how we've been doing more recently and what we think is going to happen in the next 6 months. And obviously, we've got a very large event coming up in less than 2 weeks now and the fall of the budget. So apologies for those of you who heard me mention coots slides before, but just bear with me because obviously, we've got a mixture of existing investors, potential investors and people who are having an introduction to the trust here today. So in terms of what do we do at Tender Capital, the trust is the mother ship. But we actually run about GBP 2.2 billion in total. The majority is still pan-Europe, but increasingly a number of global mandates and in some cases, some U.S. only as well. We just won last week. We just won a $300 million mandate, which we're pleased about. Okay. In terms of the team, a reminder, we're a big team, team of 12 and that includes plus rather a team of 12 in London plus an analyst we can tap into in the U.S., Brendiltz. But as you will notice, to remind those of you who are new to this presentation. A lot of the team have worked with me and with each other for a very long time. [indiscernible], who's the Deputy Fund Manager be with me for 17 years. George Gay, who looks after our physical real estate, 20 years, generally our finest years, et cetera, et cetera. So a long-standing team and Paul Barry, U.K. and [indiscernible] for 7. In terms of just pulling together some basic facts about the trust, we can own physical property up to 15%. We're currently at 5.5%. That is almost at all-time low. And it reflects 2 things: one, the transition out of a large asset, which we finished all the asset management on, which is the corona in base water. But more importantly, rather than recycling that capital into -- back into the physical commercial assets in the U.K., we felt there was better value in the equity market over the last 6 months, and that is 12 months that has come to pass. And with gearing, whilst our legal maximum is 25%, we generally won't go over 20%. We're currently at 17% or actually that this is live. We're in Bear in mind that in Q2 2008 -- sorry, Q3 2008, we were a quarter before Lehmans went down, we were 20% cash. So essentially 20% cash, most bearish, 20% geared most bullish. Therefore, we are clearly extremely bullish, and that's what we'll talk to you about today, results for the previous financial year to the end of March on the left-hand side and then for the first months of the new financial year on the right-hand side. So -- and we will be publishing our half year results to the end of September, which is essentially you knock off 1% of all these numbers. That will be -- gives you where we were at the half year, and the results will be out back end of next week. Okay. Our performance, you've seen this slide before, I'll go past it. It's basically just our relative performance versus the benchmark, which we're clearly proud of. But the past is no problem or guarantee to us to the future. Income, crucially important. TR obviously originally stands for Touche Remnant going way back in the day when it was -- we were a part of the Henderson stable. We then moved to Tensure capital, and we told everybody that it then so for Temps River. And of course, we're now part of Columbia Fred needle, albeit Tens River is till an entity in which we are principles in and it is essentially a joint venture between us in Colombia. So we now say that TR stands for total return, and that's absolutely genuine because income a mix of both income and capital growth is what we're trying to achieve here. As you can see, the dividend has grown every year since 1996 by 1 year, and that was 9, 10 and you'll also share will notice that we have been drawing on reserves for the last couple of years. Reserves now equal about of our full year 1 year's payout. And we may need to draw on them a little bit more, but it helps essentially smooth the dividend payment. So in the good years, we put some of reserves away in store, and then we need them when we need them, et cetera. But more of that a bit later. I think real estate at the moment, very much seen as -- which is what it is, which is at the value end of the equity trade. We are -- the world is having its head turned by growth and particularly by the MAG 7, et cetera. But a real reminder that there are so many parts of our world that are enjoying structural growth, residential. I think everybody knows how undersupplied we are hearing in Europe. Data centers, crucial growing part of our environment. Industrial, e-commerce, logistics, absolutely booming, a lot of, I would say booming rates have slow but still very positive. And then health care, be it primary health care or elderly health care or social care, social housing, all of which is proving to be a growth part of the market for obvious reasons. And then I think this is quite a useful slide because it sort of breaks down global real estate equities into that constituent subsectors. And I think many -- the area that we are most concerned about is the office market. Across -- with some exceptions, which we'll talk about a bit later on. But when you look at equities, real estate equities globally, offices are, as you can see here, 5% of market share. In Europe, on a Europe-only basis, slightly more, probably closer to 7%. But really, it's still compared to the headlines it gets because ages like to ambulance chase. It's almost -- it's -- you can avoid these markets if you so wish. Okay. So just a couple of background slides here, just to remind you about how -- on the left-hand side, this is unlevered income returns for unlevered income real estate in the U.K., so income and capital return. You've seen this many times before. And what it's really showing is how the capital account swings from positive to negative. And those 2 very deep drawdowns of the early '90s and then the GFC, first 1 being caused by the over development of the late 80s. The GFC was all about not only the very dramatic change in the cost of debt but crucially, the lack of availability of debt. And then more recently, we've had a dramatic change in the cost of debt, but plenty of availability. Now we find ourselves in an environment where that cost of debt is falling. The availability is high. We're seeing competition amongst lenders, we're seeing margins coming down, as you can see from these said spreads on this slide and the Eurobond the yield to maturities. So that's all very encouraging. Going back on slide then to see how this is reflected in the equity market is crucially important. So what I'm showing you here is some of our key metrics that we're using. And for us, the NAV itself is less important because NAVs are backward looking. They are also a valuers interpretation of market data. There's nothing -- it's not like equities where the wide equity market with their pricing every minute of every hour of every day. So you've got to be careful with those, take those with a pinch of salt. But what you can't what is factual, of course, is your earnings yield and your cash income that you're receiving, your average cost of debt and your average LTV. What you will see here relative to private property companies, public property companies are very, very conservative about their levels of leverage. And then when you look on the right-hand side, where we're trading compared to history, on a discount to asset value. It's not a question whether you believe the asset value or not. It's just the fact that when you look at it on a relative to previous cycles, you'll see that we're looking -- this is reflecting the lack of popularity of the sector. So what we're seeing is a real market opportunity. And then the last leg of the stool, we've talked about this before. This is we are seeing increasing levels of consolidation. So these are small property companies merging. We've been very, very active in this space. And then sometimes, unfortunately, private equity come steaming in. And in the case of PHP Assura, we were able to see off KKR and to merge PHP and ensuring to proper decent GBP 4.5 billion market cap property company. But sometimes, all the listed market just doesn't want the assets in the case of warehouse REIT that was acquired by Blackstone. We were happy to wave good bye to that. We didn't like the assets. We didn't like the management. And happy to expand on any of that if you -- anybody wants to in particular. And then we -- Unite acquiring Empiric. We were -- we would not pro that transaction. We sold a lot of shares when that was announced. And the share price has declined on the back of that plus its results. Okay, diversification, fairly obvious. And then the history of performance of real estate equities, clearly, 2022 are as bless and then you have these sort of various full storms of recovery, but we really feel that this time, we are moving up to -- the market is understanding the opportunity, which is businesses that have low leverage, have access to debt, cost of debt falling where you own the right real estate, there is rental growth. There is a shortage of supply, and there are some really interesting market opportunities. Okay. And then to remind ourselves that this is just an illustration of how real estate performed versus wider equities following the peak in interest rate cycle in the previous 4 cycles, all happen for different reasons, et cetera. But just as you would suspect, real estate does well when the cost of money is coming down. Same way in 2022, we did say badly because the cost of money rose so dramatically. Right. Getting into a bit more about what we've been busy getting up to. There are 3 slides here covering Q1, 2 and 3. So we'll just touch on a few things on the left-hand side of the arrow is go green and heading up is we acquired more of it. If the arrow is going down, then we sold more of it. And where it's going both ways is because within that period, we had a rotation in and out and back in potentially. You'll notice data centers. We took profits in Merlin and then we subsequently bought back into it at a lower price. Higher beta names at the bottom. This was when -- we were taking risk off the table. There are 2 ways for us to take risk off the table. One is just to reduce leverage overall and move into reduced gearing, potentially all the way into cash. The other is to sell businesses that we think are going to have a higher propensity to react poorly to wider global issues. And that's -- and you will notice that in there, quite a lot of names like Catena and Saga. These are Swedish property companies that tend to be more highly leveraged. And then you will notice M&A activism, urban logistics REIT, warehouses having been less than complementary about warehouse wet and it will stop me from realizing that this business was likely to be taken private and therefore, staying wrong with us buying the shares as a short-term tactical trade to pick up basis points of performance. And then in Q2, you -- things to call out here, again, adding to industrials on weakness management change, social housing REIT, which was known as TriplePoint and Hammerson both saw management change that we were acquiring ahead of that. U.K. majors, we're switching other lands into British and then you'll see at the bottom that sale of Unite that we -- that I talked about and others that we are happy to mention and then come out to some of those Swedish diversified names as those higher beta plays. European shopping centers have been a massively strong performer for us. It's been a great run, and we just took a little bit of profit out of both Europe commercial and Caviar. And then in Q3, here, we're buying back into data centers through both Merlin and Tritax Big Box. Tritax Big Box has a very large scheme are close to slow, sort of almost adjacent to SEGRO's assets, and that's with the Secretary of State for the environment for determination at the moment. So we hope they get that, that would be great. And then we bought more of Switzerland, which is generally a safe have, but interest rates are essentially going back to there. And then you'll see in the M&A activism part, where we sold out of PRS REIT once the bid has been announced. We acquired shares in big yellow both before -- well, we have been acquiring, buying back into self-storage and then we found that we were benefited from acquiring some more shares because this company looks like it's in play. And Blackstone has been granted an extension to their put up or shut up into December. So going past the budget date and then again, warehouse, we took our profits there. We have bought more residential exposure, and that's quite important. Tag in Germany, which has 25% of its assets in Poland. We're very optimistic about what's going on in Poland. And then IRES, where there's been a change in legislation to take the cap hopefully, to remove the cap on rental growth, which is basically timing development. As you all know, if you overregulate residential markets, that's all very beneficial for those lucky people who own a flat and where rents are then sub open market, they're below market value. But for everyone else, they're busily waiting in the queue because no developer is going to build more flats if those rents are going to be capped. It just becomes uneconomic. And the Irish government have realized that they're getting no development in Dublin. As a consequence, they need to change the rules. SEGRO, we've been taking chips off the table here. We can talk about that a bit later. There might be some questions on it. And we've been adding to WDP and CTP actually in Continental Europe. This is where we're seeing the benefits of our Asian businesses, shortening their supply chains, bringing more last mile closer to the final customer and for completion, the final sticking together of bits and pieces and lots and lots of storing parts here in Europe for final assembly. And then finally, profits in Charles by Capital owners of Covent Garden and parts of China town, et cetera. So it's a good business, but we think that the values have moved too far. Okay. Reminder, we are more continental Europe than we are in the U.K. don't worry too much about our geographical positioning. It's all very much a question of bottom up. Here on the left-hand side, we split our world into these '26 buckets. And I've talked about these in the past. It's where companies sit where then we can into the same group, and not all the sit comfortably in each 1 because some quite all them are diversified names. But where we think that the same sort of macro drivers around deglobalization, et cetera, all logistics, industrial names going to the same pot. But where we see it's very local. So you'll see the separation between London retail, which is all about tourism versus U.K. national, which is about the U.K. more regionally versus Europe, where the European shopping centers, which are very different because we have lower levels of online purchasing and also supermarkets anchored by hypermarkets -- sorry, shopping centers anchored by hypermarkets, not anchored by department stores. And then on the right-hand side, this is our relative positioning. So you need to be in a subsector that we think has got growth prospects. But more importantly, how is that reflected in the price of the underlying company. So in some cases, we are very positive about the underlying market, but it's just the fact that it's all reflected in share prices. Okay. And then largest positions versus the benchmark, both overweight and underweight, that's just some statements of fact. And then the final 1 that we talked about many times in the past, we talked to discuss this at the AGM, shrink or merge. Standing still no longer an option. This is all about the fact that so many of these names, particularly in the U.K. are owned by wealth managers that themselves have consolidated, and they have no interest in businesses with market caps of 2, 3 , 4 , even GBP 500 million, and they absolutely want them to merge into 1 billion-plus players. In some cases, we're going to see these end up ending up being privatized with the likes of PRS REIT. And then both life science REIT and Aberdeen European logistics income have both announced wind-ups over spread over time, but it's -- which is, I think, is always a disappointing route to go, but it reflects the fact that in certainly in the case of life science REIT, a very disparate group of assets, very sort of uncoordinated purchasing profile that is not too much money was raised too quickly. They got into development, standing investments all sorts of things, which haven't proved to be very successful. And then looking at our physical portfolio. A reminder, Bayswater as a big asset that we sold sort of GBP 33 million. And then when we look at what else we own, as you can see, it's unashamedly in that logistics and industrial space. In the case of Wandsworth, this is fantastic scheme. So they are just -- that's one's worth town railway station, top right-hand corner, River tens above the picture. And here, we are rolling refurbishment Phase 1, we've let 2 units to a high end female athleisure wear business, rents over GBP 50 per foot. We're now doing Phase 2, which is 3 units. We've let 1 again, rents over GBP 55 per foot. And we've got 2 more that are on the market and when we will then roll out the rest. In the meantime, the vast majority of the scheme is left. It's just less on short-term leases while we roll through to the refurbishment. You may be amazed by the level of those rents. You didn't get it -- you didn't mishear it when I said GBP 55 per foot. But remember, these are relatively small units, 3,000 square feet. And actually -- but they are -- there's so little what we call ultra urban industrial space that if you want to be disclosed. And here, we are very unusual to have an industrial estate that's so connected with a mainline railway station, literary next door and then plenty of amenity. We've got a go in the juice. We've got restaurants, we've got cafes because just south of this picture is the tons is a well wealthy ones worth and neighborhood -- residential neighborhood. And then responsible investing. This is really -- just to remind you, we do absolutely everything we can on our buildings, everything screen leases. We're putting solar panels where we can. And in the case of ones worth Food Bank, we rotate them through if we have a vacant unit, they are welcome to use it, which they are at the moment. And then sort of to pull it all together before we get into some Q&A, and I'm going to actually be on the button for my 25 minutes of sort of full speaking. Just to pull everything together, we have this positive interest rate trajectory for us. The short end of the curve is clearly coming down. There are more cuts coming. The long end, obviously, is particularly in the U.K. is much more subject to our government's behavior, but we are seeing stability and dropping rates across Europe. Equity prices remain heavily discounted. The analogy I've been using is that in your portfolio, your a little bit that you hold in real estate, equities is very much the designated driver at the party. We the steady Eddie delivering you as we have in the first 7 months of our financial year, 13%, but it's the tech pros at the bar who buying everyone drinks and probably getting into a situation of excess and at some point, everyone's going to go, please can we go home. Where is the designated driver, let's have a bit more of that because [indiscernible] has been in the low or whatever. More potential M&A. I think this is really another key driver. If listed real estate globally is only about of all institutional-grade real estate. So we're very much price takers, not price makers. And that figure is on 1 percentage point lower in Europe. And i.e., the U.S. REIT market is bigger than the European regulation relative to their market. And if we continue to undervalue our listed companies, then private equity will come along and take it private. And that's more full us in many respects, but it's been an opportunity for TR Props to make money by picking those companies that we think might get taken out. Opportunistic capital raises on the increase. This is encouraging healthy sign. This is listed companies taking advantage of changes in structural shifting away from defined benefit pension schemes, for example, that aren't owning real estate or you get the border to coast amalgamation that's producing more real estate onto the market in the U.K. And then the volatility see that we're seeing based on tariffs or geopolitical risk or what's going on. And in terms of the sell-off we've had last week in the U.S., just a sort of inkling of what the future might hold. And then as I said, real estate equity is offering that stability and reserve billions, which to us is crucial. And then on the appendix, just a couple of slides about which you're going to see on the pack where we bought and sold Urban logistics REIT. This is on the left-hand side. We started to think that there was -- there might be an opportunity here. And we realized that it was probably management we're going to dig their heels in. So we sold out Wonderla and then came back into it on realized that there was genuine desire from other companies to come and take this business either private or amalgamate with it and LondonMetric acquired that business. And then not a similar situation with warehouse REIT. Okay, right. I think that is the end of the formal part of the presentation. I do hope we've got some questions. So back to you. Thank you.

Yes. Thanks, Marcus. It's Peter Brown here from the team. We have quite a few single stock questions. I'll try and merge a couple together if possible. LondonMetric recently disclosed a large position in SREI, which is [indiscernible] real estate. I believe you are also a large shareholder. What is your latest on this position? And another question on that is shrink or merge any views on SREI and the stake LondonMetric has bought?

Yes, great question. I think -- our view remains that we want to keep these assets in the public domain. And whether -- SREI on its own is too small. So whether it becomes part of LondonMetric or whether it became part of another listed company, I'm potentially relatively agnostic about. We will sort of see how things turn out. There are -- LondonMetric is a very big business now and sort of swallowing SREI if that was to come to pass, would have an impact on the metric, but potentially not that great an impact. However, I think it is encouraging to see LondonMetric step up and make their intentions known and give themselves give the market that visibility. So yes, that is our view. Having said that, if we were to cast our minds back a few months. If you'd ask me the question before, LondonMetric declared their interest, I would have said I would like to see mergers of some of these smaller diversified names really coming together. And of course, everyone is going to say, "Oh, my portfolio is different from somebody else's. But they're different to an extent, but the fact of the matter is you can really pull economies of scale by merging a couple of GBP 500 million of gross assets a couple of GBP 300 million of market cap, GBP 250 million market cap business. You get some tremendous economies of scale through that. And whilst we didn't own custodian or Aberdeen property income, I did feel for custodian because I felt that they were -- they are a good business, and they would have benefited from taking on those API assets, but it wasn't to be. And then, of course, the API assets were snapped up by Goldman Sachs backed vehicle Golden Tree. So that's just -- that was sort of a shame. And I think that not quite sure what why API shareholders, I think it sounds like there are only a couple who were motivated for the -- for that rapid sale rather than the merger with custodians. So I like the idea of some of the smaller names being put together. We're big holders of Picton, we'd like to see Picton bigger as well.

And on that point, we've got a question come in. Is the trust able to be more actively encouraged in mergers and tie-ups to drive shareholder return? What can you do for that [indiscernible]?

Yes. it's a very nice question because it allows me to give a sort of wholesome answer. I've been actually for many years I should go back. I was going to kick back to the M&A slide. I've been talking to management teams and to Boards and we are -- we have been instrumental behind the scenes. So for somebody who is in the little world, people will consider me to be highly vocal. It may come as some surprise that it wasn't until we got to urban logistics REIT and the complete nonsense of the proposed internalization, which would have cost shareholders, GBP 18 million, which they didn't need to pay, and that led to us joining with Hardwood and Waverton and putting out -- putting forward resolution for the EGM for the removal of the Chairman and some senior independent directors. And then that we were able to withdraw that resolution because LondonMetric gallant over the horizon and slightly save the Board's blushes by bidding for the company. But prior to that, all my discussions with boards have been behind the scenes and there have been many. And we've made our views absolutely known to lots of management and -- sorry, and to boards. Sometimes it's very difficult, particularly on consolidation. You start with to Chairman and 2 chief execs, and then you end up with 1 Chairman, 1 chair and 1 Chief Exec, and that's not always a comfortable position for everybody. Sometimes it's a natural evolution, and there are people stepping down. I mean in the case of SREI, the manager the de facto CEO, Nick Montgomery, has been promoted to Global Head of Real Estate in Schroders. So that sort of chief exec seat is currently vacant. I know the Dept fund manager has stepped in on a temporary basis. So that's a -- it's a sort of easier situation when there is a natural spot. But I'm very happy to talk off the record about where we've actually made what we consider to be serious in roads. And that's because TR props is a fantastic vehicle. I mean, as a permanent capital vehicle, it does allow me to take quite large positions in small companies and therefore, to be a voice of at least influence, but also to be able to reflect 2 boards, the views of -- it might be my personal views, but it's generally, the views of institutional holders. And then I encourage chairs to go and speak to other shareholders. You may or may not have the time because it's maybe a relatively small part of their portfolio. But -- and that has certainly been helpful. And the Chairman of 1 business that was taken over was very nice enough to come and see me the other day to say, Marcus, you were important in helping me form some ideas about what we should be doing and talking to other shareholders. So yes, we are very, very much active. The only thing to close on is there are now fewer candidates for that activity. We have only a handful now of why I consider these subscale businesses and the rest we just want to make -- help them grow as quickly as possible.

Thanks. Moving on. What do you think of the recent developments at supermarket Income REIT, the expansion into France and U.K. convenience, grocery retail and the recent joint venture with Blue Owl, which is known for its triple-net strategy? Whatever that is.

Yes. So the Blue Owl deal, I think is a very good one, essentially it's by, selling assets into the joint venture, particularly mature, long income assets at a very good price, that has given, management some more firepower and allowed them to go and buy, you know, slightly higher yielding assets. I think the French strategy is fine to an extent. I think it should be, you know, a., part of the portfolio, almost like a satellite to the core, but, should not become anything more than that, is my view. I can understand why they've done it. These, it is higher yielding, they can borrow much more cheaply in euros, so it is earnings accretive, but they also appreciate that there are, you know, risks come with that. They are using. You know, good quality local knowledge, they've assured me for that. For the UK convenience, I think it's a great, a, great part of the market. I think it's, it is, you know, we just have to accept that no one's going to build another. 80,000 or 90,000 ft food store, or 12,000 ft, it's not, it's not gonna be necessary. You've got to be on the survivor sites, you've got to be on the sites which can form part of the click and collect, and, click and deliver, format, as well as, providing, the full offer, so that, all makes, total sense, and I would rather they went into, convenience than possibly, you know, bought some of potentially, the, weaker operators, so we're, happy with, the strategy, and I think, you know, the new management team, are doing a very good job, and, Rob Abraham is to be applauded for what he's done. He's relatively young, but he's been in the business, for a long time, and I think he's doing a, cracking job.

Moving thick and fast. In the latest fact sheet, you mentioned that you have been adding to Tritax big box. Where do you think -- what do you think of the recent developments there diversifying away from big boxes into smaller logistic assets and have plans in the data center world that healthy development or style drift.

SP-8 Great question. I think the answer is I'm very happy for them to be engaged in more than just big boxes. I think that the ability to play the valuation cycle is useful 1 for multi-let industrial. It does add a skill set. It does add to cost. I'm less comfortable with the way they've gone about it in terms of the UK CM transaction because there was a lot of box assets, be it big or small boxes, and they have had to exit out of a lot of assets that we were not core or even satellite. And that comes with some risk. They have managed to do a lot of it, but not all of it. The Blackstone acquisition, I think, is smart from both sides, particularly for big box remains an externally managed vehicle at the moment. And it is, by far and away, the only externally managed vehicle globally that -- of that size, I can understand why REITs are when they start. They often are externally managed because they don't -- they almost unable to support themselves. And that's why management teams are doing other things as well alongside growing the REIT that make total sense for Tritax to be externally managed for a long time. But I think we must -- when we look at the new Chairman, coming in next year or year after, that must be at the top of his list of her list of things to look at. Because I think the Blackstone deal does look like a sort of carbohydrate they're sort of bulking up on assets. And that, of course, helps the fees for tri-band Aberdeen, who own 60%, nearly 80% of Tritax. The bit that we think is really, really smart is this data center development program. and we think they've got -- and this is to an extent a skill that sits outside of Tritax Big Box that sits within Tritax Management Limited. So here, I'm arguing against myself in terms of -- is that a skill that would not be inside this was an internally managed REIT. And 1 might argue that is a justification for being externally managed at this point in the development of this company. But I think if they can -- we're watching very closely, as I said, to whether we get the consent -- whether they get the consent for Mana farm, which is the slow site and that will be hugely beneficial. And then the -- we hope that because they have built such knowledge about data centers, that there should be other things coming down the pipe. We don't know about them yet, but it's something that we -- it's been 1 of the drivers for us is hoping that, that is the case. And where we see potentially a point of difference between Tritax and SEGRO.

Moving away from single stocks for the minute a listed about the trust in general. After the last AGM, about the TR Property dividend, has the board given more thought to moving towards a stable quarterly dividend. Now we did ask about this, didn't we? I think it was to do with costs associated with paying of roughly 4p per quarter rather than semiannually. Is that right, Marcus, can you remember?

Yes, that is correct. And of course, the other issue we have is our income is lumpy. It doesn't fall naturally into the 4 quarters. It's not like a supermarket income REIT or where you absolutely know because you've got this very long leases. You know exactly what your income is going to be looking out. We, of course, don't know. And in fact, we have been surprised to the upside as in companies have been increasing their dividends higher than our expectation in quite a number of instances but that doesn't mean that it's entirely predictable. And we, therefore, think that having a half year and a full year remains the right approach.

SEGRO used to be a stable position in the top 10 in Ville portfolio. What is your current view? Why are you not a larger holder anymore as have the business fundamentals change in your opinion?