Good morning, everybody, and welcome to our first half results presentation. My name is Ian Brown, part of the Investor Relations team here at Tritax. I'm very pleased to be joined here today by the Chairman of Tritax Big Box, Aubrey Adams, Colin Godfrey, our Chief Executive Officer, and Frankie Whitehead, our Finance Director. Before I hand over to Aubrey for some opening remarks, I will quickly run you through some housekeeping points. The team will run you through the results presentation, and thereafter, there will be an opportunity for analysts and investors to ask questions. There are 2 ways to ask questions. You can input them into the web chat by pressing the Q&A button, or if you would prefer to ask your question in person, please use the Raise Your Hand button. I will announce your name and then unmute your line.
Please do, though, remember to unmute your own device. Finally, in November, we will be hosting a seminar for investors which will provide further details on our development program. More details of that seminar will be published on our website in the coming weeks. This session is being recorded and a replay will be made available on the Tritax Big Box website. With that, I will hand over to Aubrey.
Ian, thank you, and a very big welcome from me to everyone. Good morning to you all. Welcome not just from me, but also from the Board of Big Box. As my first set of results as Chairman, I'm particularly pleased that we've produced a fantastic set of figures. In fact, I think they're probably a record. I obviously can't take any credit for that, but credit is due to Colin and his team. Could I just acknowledge also the role of Richard Jewson, who was the Chairman from whom I took over. Richard was Chairman when Big Box first was launched, and he had the vision and foresight to see the potential for Big Boxes. That has flown through into the strategy, a very clear strategy to invest in the very best assets in the class.
I think history has shown that that has always produced the most consistent results over time. These results not only produce a fantastic return, an excellent return for shareholders, but also form the base for future expansion of the business. It puts us in a particularly good position to take advantage of what is clearly a very strong market. You will hear more about this from Colin. At that point, can I hand over to Colin?
Thank you, Aubrey, and good morning everyone? It's a real pleasure to be presenting the interim results to you this morning for Tritax Big Box, and to provide you with an update on the further great progress that we've made so far this year. As usual, I'll start with a brief introduction and then come back later to provide a strategic update, after which Frankie will run through the financial results and outlook. Ian will then coordinate the Q&A. You'll hear from Frankie in a moment that once again, we've delivered a really strong set of results for the half year. It's the strongest first half performance we've delivered to date, and we remain really positive about the outlook for our business.
This performance is the direct consequence of our strategy, and it's based upon our decisions to focus on a high-quality portfolio of investment assets in the logistics space and to control land and create investments in-house through development. We will be reaping the benefits of these decisions for many years to come. The confidence that we got in our future performance is also supported by our track record. You can see here on the graph that we have grown both contracted rents and NAV over the last five years, and this is underpinned an improving earnings per share position, which in turn supports our attractive dividend. It's fair to say that over the last seven and a half years, we've never been more excited about the future than we are today. Why?
Because we're incredibly well-positioned to take advantage of the market opportunity, having laid strong foundations for success, which is already showing through in our performance. This is based on the very favorable ongoing fundamentals of our market, which I'll touch on later. Combined with the benefits of a high-performing, resilient, and strategically positioned portfolio, sector leading in-house expertise, and of course, the U.K.'s largest logistics land portfolio. These combined allow us to drive performance by executing a clear strategy, which is underpinned by our focus on enhancing ESG and maintaining financial discipline. As you've heard me say before, all of this means that we're really well-positioned to capture the great opportunity ahead of us to deliver growing returns over the short, medium, and longer terms.
We return to the theme of delivering our strategy in a few minutes, first, I'll hand over to Frankie to run through the financial results. Frankie.
Thank you, Colin, and good morning everyone? I'm pleased to be presenting a continuation of the strong performance recorded in 2020 as we report on our 2021 interim results. Our market conditions have become even more favorable over the past six months, and as Colin has said, this has led to us recording our strongest half one performance since IPO. It's a period where growth in net rental income has helped to deliver a 23.6% increase in our adjusted earnings per share, up to 4.03p, and we have increased the dividend for the first half. Further attractive levels of capital growth across our portfolio has seen the NAV increase by 10.6% to 194.2p. As a result, we have delivered a double-digit total accounting return across the first half of the year.
This next slide highlights the growth in our income stream, which is a driving factor behind growth in the overall earnings. The group net rental income increased by 10.9%, largely driven by recent development completions. We've added a total of GBP 8.5 million to our contracted annual rent roll, which increases to GBP 189 million as at the period end. Our operating costs have remained stable on a relative basis, represented by a net cost ratio which remains unchanged at 14.1%. The adjusted earnings per share has increased to 4.03p, which includes GBP 8.9 million of development management fees received in the period. In line with our policy, the dividends for the first half total 50% of last year's full year dividend. This equates to 3.2p per share, which is a 2.4% increase. Based on adjusted earnings, the dividend payout ratio equates to 79%.
Excluding any additional development management fees received in the period, this ratio increases to 87%. Moving on to slide 10, which shows that our income performance has been matched with continued strong levels of capital growth. The strength of our market, along with our development and asset management activity, have been drivers to performance, and Colin will outline aspects of this later in the presentation.
The total portfolio value has increased to GBP 4.9 billion, driven by a valuation surplus generated of over GBP 300 million, which equates to capital growth of 7.3% across the first half. This has helped deliver growth of 10.6% in NAV and a reported closing EPRA NTA of 194.2p. Our rent collection continues to be strong. We have now collected 100% of all rent due for 2020 and 99.5% of rent due for the first half of 2021. The LTV has remained steady at 30%.
This performance culminates in a strong total accounting return of 12.5% reported across the six-month period. This next slide sets out the detail behind our attractive level of earnings growth, driven by a GBP 8.6 million increase in net rental income. Starting on the left-hand side, which is the half one 2020 earnings position. As you can see, a significant part of the income growth is generated via recent development completions. Elsewhere, our investment activity and last year's disposal activity broadly offset one another. As presented in the third to last column, this generates an adjusted EPS before growth in other operating income of 3.69p, which is an increase of 13.2% over the period. The 87% dividend payout ratio referred to on a previous slide is calculated against this 3.69p adjusted earnings figure, excluding the additional development management fees.
It's this payout ratio which we will pay regard to when determining our future dividend level. The increase in development management fees by GBP 5.9 million or 0 3.4p sees a 23.6% increase in adjusted EPS up to 4.03. To put some additional color on the DMA income itself, this next slide sets this out. Firstly, this income is real cash profit, and it is an additional benefit following the Tritax Symmetry acquisition. In the majority of cases, a fee or profit share is received in exchange for us providing development management services to third parties. It's therefore reflective of the experience and expertise within our development team, and there is no TBBR capital required as part of this. It is more variable in nature, however, and therefore more challenging when it comes to forward guidance.
Whilst we are guiding to between GBP 3 million to GBP 5 million per annum over the medium term, there will be periods when we are outside of this range. We see the GBP 3 million to GBP 5 million as the recurring level, and therefore, in terms of how we think about the relationship between this form of income and our dividend, we will only factor DMA income into our payout ratio at levels within this range, so as to remove any potential volatility. Since the Symmetry acquisition, GBP 22 million of additional income has been delivered under these contracts, so it provides an attractive return to our shareholders. Returning back to our net asset value performance. This slide sets out the detail behind our strong NAV growth.
The continuing strength of the investment market has caused yields to tighten by approximately 14 basis points across our portfolio, which alongside the rental growth captured, has led to the investment portfolio adding 14.4p To performance. Our development assets have added a further 3.6p. We are expecting to add to the value delivered from the development component of the portfolio during the second half. When noting the impact of the operating profit and dividends paid, this takes us to the closing EPRA NTA of GBP 194.2p. Thinking more about the future and looking to the significant opportunity that rests within our ownership of the U.K.'s largest logistics-focused land bank. This rental income bridge sets out the potential we have to grow today's passing rent from GBP 175 million, as shown on the left-hand side, by approximately two and a half times up to an estimated GBP 447 million.
This shows a live picture, therefore, there will be a few small presentation differences when compared to slides 35 and 36, which are dated as at the balance sheet date. Moving from left to right, we currently have pre-let developments under construction which are set to add GBP 14 million to passing rent, as well as the opportunity to capture a further GBP 12 million through the portfolio's rental reversion. In terms of providing further visibility on the current or soon-to-be current developments, the orange section in the middle of the page shows GBP 8 million of potential rent, which is currently under offer, which we hope to conclude in the coming weeks. In addition, a further GBP 11 million of potential rent can be generated from our speculative program, which is either under construction or where we are aiming for construction commencement prior to the year-end.
Taking all of this into account, this gets us to the orange bar totaling GBP 220 million. Within our current development pipeline, plus the reversion, we have the opportunity to grow passing rent by GBP 45 million or 26%. In respect of that current development pipeline, the timelines to reach practical completion span approximately the next 18 months. Finally, the purple bars show the potential from our near and future development pipeline. More than GBP 200 million of additional rent is capable of being generated from this, which is well-positioned, considering nearly GBP 50 million is allocated against schemes where we currently have planning consent. The development portfolio is building in terms of its momentum, and the opportunity presented here gives us confidence about delivering growth over the long term.
There is upside on top of all of this in the form of future rental growth, which is not recognized within these numbers. Moving on to the final slide from me this morning. We are looking to capitalize on an extremely strong market backdrop, and our land bank provides us with a competitive advantage to help us do this. In terms of capital expenditure, I reiterate previous guidance of targeting GBP 200 million-GBP 250 million of CapEx per annum into development. We expect to be right at the top of this range in 2021. We have balance sheet capacity to commit to near-term development opportunities, and we seek to recycle capital through investment disposals when it's right to do so and when we're able to redeploy those proceeds in a timely manner.
From an earnings perspective, I provided some color on how we expect to grow our income through our current development pipeline. While not forgetting the organic income growth, we're able to capture with a large part of the portfolio being subject to review over the next few years. Finally, we will target a dividend payout ratio of at least 90% of adjusted earnings. In line with our policy, any potential increase to this year's annual dividend will be determined as part of the Q4 declaration. That concludes the financial review, where the execution of our strategy has led to another excellent set of financial results, and I shall now hand you back to Colin.
Well, thank you, Frankie. Frankie's described our really strong performance in the first half of 2021 and our positive outlook. I'll also now spend a few minutes just looking at what's behind all of that and why our consistent strong performance is set to continue into the long term. Essentially, as you've heard me say before, it's all about the strength of our market and how our strategy and our expertise are aligned to make the most of that to drive income growth. I'll start with some of the strong market drivers and then update you on continued value delivery, both through active asset management and from our development activities. Let's look at the key themes we're seeing from our occupiers and how that drives our business. Firstly, E-commerce continues to accelerate.
It's predicted that the U.K. will need a further 60 million sq ft of logistics space by 2025. If take-up continues at recent rates, then the level is likely to be much higher than that. Secondly, with disruption expected to be a more regular feature of trading activity, businesses are planning to improve supply chain resilience and reliability, increasing their space requirements. Finally, there's a growing awareness and focus on enhancing ESG performance, not just in terms of environmental factors, but also the working environment and employee welfare, as demonstrated by our research survey with Savills. I'll talk to this a little more a bit later, but Big Box is very well-placed to make a very significant contribution in this area.
For us, all of this translates to growing a long-term need for high-quality logistics space capable of helping our customers respond to these dynamics. These occupier drivers are part of the ongoing market backdrop which support the strong trading that we continue to experience. Here on slide 18, I'll walk you through some of the dynamics that are evident in our market right now. At the beginning of the year, unsatisfied demand was equivalent to around four years of take-up. Despite constrained supply, H1 2021 witnessed the strongest first-half take-up performance to date. Supply has significantly lagged demand, and this has left the vacancy rate at its lowest level ever, at only 2%. There are only three buildings available to let that are over 500,000 sq ft.
One of which we understand actually is being offered for an occupation, but only one of which is new and completes next spring. The supply and demand imbalance continues to drive rental growth, agency forecasts have strengthened for the next few years. Improving rental growth is encouraging investment demand as commercial property allocations pivot away from traditional sectors into logistics. This has produced the highest level of first-half investment activity recorded ever, driving further yield compression, which is good news for our investment assets as well as our development land. Importantly, the structural changes that we're seeing are still in their infancy in our view. This gives us the confidence in the significant scale and duration of the opportunity, which is really a positive feature of our future.
It's worth reminding you that we have designed our strategy to align with the long-term drivers that we're seeing in the market. Again, you're familiar by now with this chart, but I'll just highlight a few key points. In essence, there are three key components to our strategy. You can see at the top of the triangle that we've deliberately built a portfolio of high-quality assets attracting great customers. I believe it's the best in Europe. We've also built the capabilities to add value to these assets through direct and active management. We apply our skills, insights, and innovation gained from being the U.K.'s largest investor in logistics to develop our land portfolio at an attractive yield on cost. I really want to emphasize the point at the bottom here.
This strategy is underpinned by a very disciplined approach to capital allocation, with sustainability being embedded across the portfolio. That leads me neatly onto the next slide, which gives an updated snapshot on our strong sustainability position and the progress that we continue to make. We've handpicked and built a modern and sustainable portfolio. 92% of our floor space has an EPC rating of A to C. Also, 49% of total floor space is certified to BREEAM very good or excellent, well above the industry average. This is a critical factor because our portfolio means that we don't face significant future CapEx requirements to enhance the environmental performance and meet government targets.
We generated 890 MW of solar PV power for our tenants in the first half of 2021, avoiding over 200 tons of carbon emissions. We're leading by example the aim of developing only net zero carbon buildings. DPD at Bicester, which completed very recently, is our first example. Every year, we poll our occupiers on what's important to them. We've seen a notable increase in ESG as a key factor in their decision-making, with nearly 70% saying it was very important to them. That's up from around 50% 4 years ago. We're seeing this activity being reflected in our ESG ratings, which continue to improve, including the recent increase in our Sustainalytics and FTSE4Good ratings. ESG remains at the very heart of our thinking, it's embedded into our actions.
To return to the first of the three key elements of our strategy, our high-quality assets. This slide updates on the strategic composition of the portfolio at the half year, which is very little changed from December. The investment portfolio represents around 90% of GAV and the development portfolio approximately 10%, and this balance has been a conscious decision. The investment portfolio consists of foundation assets at around 72% of GAV. These provide our low-risk income with modern buildings, strong locations, and long-term high-quality customers. Added to which we have value add assets at approximately 19% of GAV, which provide good capital and rental growth potential through active management. For example, lease regears or property improvements. It's worth saying that in seven and a half years, none of our buildings have suffered a vacancy at lease expiry, and we currently enjoy zero vacancy.
This really speaks to our buildings being in demand and the consequent reliability of the income that we've benefited from. Allied to the investment portfolio, of course, is the U.K.'s largest land portfolio for logistics, which took over years to assemble and nurture. From this, we can create investments in-house, controlling timing, quality of build, tenant caliber, and attractiveness of returns. There's been no better time to control such a logistics-focused land portfolio given the strength of current market dynamics. We believe that this will only improve into the future. It's worth remembering that our land is held primarily through option agreements, which is capital efficient and flexible. This means that the potential for our development portfolio is far greater than the current capital allocations suggest.
As Frankie said, this has the potential to more than double the size of the business, as we can see here, by the potential income growth breakdown on the right-hand pie graph. The key takeaway here is that the quality of our investment portfolio underpins returns, delivering long-term dependable and growing income. This combines very neatly with our development land portfolio, which provides the potential to further enhance returns in a controlled way. The next three slides provide an update on how our active asset and investment management is driving value from within the portfolio, and that's the second element of the three-part strategy. Here on slide 22, this captures the way that we're embedding rental growth with active management into our business, complementing one another. The key to this is the strength of our customer relationships and our understanding of their businesses.
We're a customer-led business in our thinking. For us, this activity breaks down into four key components. Rent reviews, which compound our income, building improvements, including extensions and sustainability initiatives, lease regears and reletting, and of course, selectively buying and selling investments. You can see in the pie charts that we've created an attractive blend of upward-only review types, with a third of our portfolio subject to open market rent reviews and half inflation-linked. Whilst most rent reviews are five yearly, 12% of our rents are reviewed annually, which is attractive. The light shaded section on the lower graph shows how contracted uplifts will grow our inflation-linked hybrid and fixed rent reviews at a minimum of 1.4% per annum over the next two years.
The darker shaded area shows the additional growth potential from open market and inflation-linked rent reviews at levels higher than the contracted minimums. This reflects the potential for over 3% per annum over the course of the next two years. On this next slide, you can see what we've done in the first half of 2021. 37% of our portfolio is subject to rent review this year. That's 21 properties, of which 12 have been reviewed during the first half, along with two from the previous year. We're making really good progress so far, having delivered GBP 3.8 million increase in contracted rent in the first half through a blend of inflation-linked and open market rent reviews. This equates to 2.2% like-for-like growth annualized. Like-for-like ERV growth has also been attractive at 3.8% over the 12 months to June 30, with the portfolio now 6.5% reversionary.
We expect further progress as we conclude the remaining reviews this year. As you can see on the right here, there's a further 27% of the portfolio due for review in 2022. There's really significant potential to capture an attractive level of rental growth over the course of the next couple of years. This is another great example of how we use our investment management skills to actively create value. We have a really strong track record of acquiring attractive assets off-market, using our experience, relationships, and reputation. During the period, we acquired off-market an 872,000 sq ft logistics facility at Avonmouth, near Bristol, for GBP 90 million. The purchase reflected an attractive net initial yield of 5.1% for nearly 13 years' done expired term and rent reviews with CPIs as a minimum.
Let to Accolade Wines, the number one wine company by value of U.K. sales, the facility is the largest wine production, warehouse distribution, and innovation center in Europe. At the half year, the investment was valued at more than 50 basis points lower than the purchase yield. This opportunity was the result of the strength of our relationships in the market and also our ability to move swiftly, and we see a number of opportunities to deploy our asset management and ESG capabilities to further enhance the value of the building. That's given you an insight into our investment activity in the first half. I'll spend the next few minutes updating the great progress that we're making in the third key element of our strategy, the development portfolio. This map provides a reminder of the scale and strategic positioning of our land portfolio.
As I've said, it's the largest logistics-focused land portfolio in the U.K. It incorporates 25 sites across all of the key logistics locations in the U.K. As I mentioned earlier, it's capable of delivering 40 million square feet. That's more than double the size of our current investment portfolio. Earlier, Frankie gave you a feel for the magnitude of the opportunity in demonstrating the potential rental growth from our land portfolio. This portfolio is therefore a key competitive advantage, allowing us to create assets in a capital-efficient way and capture unprecedented levels of demand at a 6%-8% yield on cost, significantly above the current prevailing market prime yields of sub 4%. I'm pleased to report that we're making very good progress, consistent with our guidance, as shown here on slide 26. We're building momentum in our development portfolio, as you can see here on the right.
We achieved practical completion of 700,000 sq ft in the period, adding GBP 5.5 million passing rent. We have two significant transactions totaling 1 million sq ft in solicitor's hands. We commenced 600,000 sq ft of speculative construction in the first half. We also expect to commence a further 900,000 sq ft of speculative construction very shortly. In total, we have line of sight on a potential GBP 19.1 million of additional rent that we expect to deliver within the next 18 months. On top of that, we received a further 2.4 million sq ft of planning consents during the period, maintaining our 100% track record of planning success. This increasing activity underpins our expectation for greater letting activity in the second half of this year and beyond, which is excellent news. Slide 27 breaks down the phasing and scale of our development pipeline.
You can see our current development pipeline, where we're currently constructing buildings and expect to generate rental income within around 12 months. This amounts to 3.5 million sq ft and includes Amazon at Littlebrook, which, as you know, is Europe's largest and most prestigious logistics facility. It was a terrific achievement for us to have delivered practical completion on this building earlier this week. Is the near-term development pipeline, where we've received or submitted an application for planning consent. This is estimated to provide over 10 million sq ft, we expect to be able to begin construction on these sites over the course of the next three years. Further ahead is our future development pipeline, which has the potential to deliver an additional 28 million sq ft on land held under option. Land values are growing, particularly in key locations and for land with planning consent.
With a deep pool of optioned land, we control a long-term supply, which will support our future growth. The key takeaway here is the scale of the opportunity and the development potential within the business. With such a strong market, we're very confident in our ability to deploy our annual target of GBP 200 million-GBP 250 million, which equates to approximately 2 million sq ft-3 million sq ft of space per annum, as Frankie mentioned earlier. We'll be delving into this area in greater detail at our capital markets day in November, as mentioned by Ian. Turning to our final slide and a brief summary of the key points from today's results and update. We've made a really strong start to 2021, and we're on track to deliver our 8th consecutive year of growth.
We have a strong balance sheet, clear strategy, and a financial discipline to deliver attractive and sustainable performance. Our market is in great shape, delivering both attractive rental growth and capital value growth. This is supported by structural change, a driver which we believe will underpin our sector for the longer term. There are material barriers to entry for U.K. logistics property. Our unique position and expertise means that we're well-placed to take advantage through our high-quality investment portfolio and the U.K.'s largest development land portfolio. As a consequence, we are confident in delivering long-term income and value growth for our stakeholders. That concludes this morning's presentation. Thank you for listening. I'll now hand over to Ian. He will open up the session to your questions.
Thanks, Colin. As I mentioned at the beginning of the call, if you've got a question, there's two ways to answer it. You can press the Q&A box and type your question there, or you can press the Raise Your Hand button, and we will unmute your line, and you can ask your question that way. We've had a couple of questions come through as the presentation's been going on. I'll just rattle through a couple of those that have come through first. The first one is, I see you've delivered 2.2% rental growth in the first half. How should we think about that moving forwards?
Okay, thanks, Ian. I think I'll take that one, Frankie. Look, I think it's important to remember that much of our rent reviews are five yearly and backward-looking to lower historic inflation and lower rents. Obviously, rental growth has been on the up. We've generally delivered a sort of 2% to 3% annual rental growth for the business. We think that's an appropriate level given the lower risk, higher quality nature of our assets and income. Of course, as you just heard me say, ERV growth in the 12 months to the 30th of June was 3.8% in our portfolio, with rental growth accelerating in the market more generally, which speaks to a growing opportunity for us to capture. Of course, rent reviews are just one component of delivering total returns for our shareholders. There are other components to income growth across our business as well.
These building blocks really altogether produce attractive total returns. Obviously, we think about that in the context of including our development portfolio as well, which has the huge potential to grow our income. As we showed on one of the slides, I think it was slide 21. It's really about a more rounded composition and contribution to total return that rent reviews are part of as part of our overall, the way we think about income growth.
Great. Okay. We've got a question from Paul May on the line. Paul, I'm gonna open up your line, and hopefully allow you to talk. Paul, if you unmute yourself, we should be able to hear you.
Hi, guys. Can you hear me okay?
Yeah, we can.
Morning, Paul?
Cool. Great stuff. Morning, morning. Just a few questions just around the development opportunity. I suppose the first one, I think you highlighted some GBP 246 million of potential new rent coming from the total development opportunity. Just estimating that to be around GBP 3 billion-GBP 4 billion of CapEx, given the 6%-8% year on cost, and obviously, you still need to buy the land through the option. Just wondering your thoughts on financing of that moving forward. Next one, just around the timeframe. I appreciate we've had an acceleration of the developments probably since you acquired , and the total pipeline or total opportunity has increased. I just wondered around the timeframe. I think I recall it was around 8-10 years when you acquired DBS, if I recall correctly. Seems to be sort of extending.
Is that just simply a case of the pipeline has got bigger? Or is it just being cautious? Then just finally, on the development side of things and development team, I think, again, I recall when you acquired DBS, the incentive for management kind of tied them in for, I think it was something like six to eight years, but I'm wrong on that. I can't remember exactly. Just wondered how the development situation looks, whether you've sort of got that expertise now brought in-house or whether there's an expectation to continue or extend the sort of the Tritax Symmetry situation. Thank you very much.
Well, thank you, Paul. If I may, I'll take those in reverse order, and perhaps take the last two, and then Frankie can answer the first one. As to development team, you're absolutely right. It was an 8-year contractual arrangement at the start of the relationship in February 2019. That remains the case in terms of timeframe. Of course, you did see us come back and announce to the market a change in the incentive program for the management team. I think this is really important in the context of a market where individuals and teams with strong expertise in the logistics space were in high demand. We were having quite a lot of knocks on the door with some of our key members of that team. They're all really happy. It's a highly focused team.
I think that's been demonstrated in the progress we're making now. There's no change to the timeline expected there. The incentive plan that we have in place does incentivize that team, both to the eight-year anniversary, but also beyond that, Paul. There is the expectation that will continue, assuming all things continue in a positive manner. As to the timeframe over which we're looking at the sites, you're absolutely right. It was an 8 to 10 year timeframe on the sites. It hasn't really changed much. We're still looking at it on the basis of a sort of 10-year program.
We have added some sites since we acquired Symmetry Platform, they've been sites that we believe that we can accelerate through the process, partly because local authorities come to us and encouraged us to bring the planning application forward or because that site has already been allocated for employment uses in the local planning process. They wouldn't necessarily, because they're new sites, go onto the back end of the time horizon. We're still looking to a 10-year projected time horizon. Of course, as time goes by, if we do continue to add sites, that may well project the time horizon out a little bit further. That's great news in the context of a longer term backdrop of the market looking positive. As for the CapEx financing, I'll hand you over to Frankie.
Yeah. Thanks, Colin, and hi, Paul. I think if we look at the CapEx target of GBP 200 million-GBP 250 million per annum into development, I think we're extremely confident of self-financing that through a combination of the balance sheet leverage and the recycling of capital. I think we demonstrated our ability to dispose well last year. We made nearly GBP 150 million worth of disposals ahead of book value. I think you will see us doing more of that. Disposing of investment assets in the 4% and 5% and recycling that capital into the 60s% and the 70s% is very good business for us. You will see us doing more of that. Clearly, we have further tools at our disposal over the longer term. We've had strong support from shareholders to date.
We have no plans to raise equity at the moment. I think if a scenario was to present itself where, effectively we were able to accelerate that development pipeline beyond those parameters, and we could demonstrate enhancing, and accelerating returns to our shareholders, that may be a situation where we would look to present that to our shareholders. We aren't in that current position at the moment.
Just to, sorry, if possible to follow up. Are you still audible? Sorry, just checking you can still hear me.
Yeah, I hadn't muted you yet, Paul, sorry.
I'll just monopolize it. Just to follow up on that, just tying all of the things together, because you've got yourselves into a extremely advantageous position, with the land plots you have and the opportunity you have and the potential development sort of scale. The market is very strong. I appreciate you say your expectation is that this strong structural market continues for some time. It's just trying to see, is there an opportunity to increase that development CapEx on an annual basis, given the strong market, given the land plots you have, given the potential you have within the business? Maybe you'll say, actually, we can't because of planning, so that's fine. It's just to try tie up CapEx spend per annum, timeline, development opportunity, revenue opportunity.
As you say, in terms of equity issuance, it's our thing to issue equity if that is expanding the pipeline and delivering things on a faster timescale. Just wondering what the sort of thoughts are there and what the positioning is? Thank you.
Frankie, would you like to take that?
Yeah. I think for the near term, Paul, that 2 sq ft to 3 million sq ft per annum, that GBP 2 million to GBP 250 million worth of CapEx, is positioned based on the current and the near-term development pipeline, i.e., the maturity of the sites, where they are within the planning regime and the associated times within that. As I said, I think we're very confident of self-financing that. Over the near to medium term, is there an ability to increase that level? Yes. Will we have appetite for that? Yes. I think in the context of a larger portfolio overall, and clearly within the context of our investment policy limits, up to 5% of stack, as a proportion of GAV.
We look to do that provided, back to the share, provided it's in shareholders' interest and provided we can demonstrate an ability to accelerate and enhance overall return. Starting off at that level. Yes, an ability to ramp that up over the medium term.
Paul, just if I can add to that. We currently have over 9 million sq ft of planning consented sites across the U.K. It's important to note that those sites typically have either already had CapEx in infrastructure to open them up or don't require a significant amount of infrastructure. It's one of the joys of our portfolio, actually. Apart from Hinckley, we don't really own very, very large, highly strategically sensitive sites, which are either contentious from a planning point of view or are going to require a very, very significant amount of money, in terms of infrastructure costs.
This is a really important feature, and it's something that when Phil Redding joined us, he commented on specifically. He was really, really encouraged by this and said, this is a real feature of your business that you're not presenting strongly enough to the market. I think we're in great shape in terms of the balance between planning consents and the ability to react to the current market strength and get on site and vertically build these buildings in the current and near term.
Great stuff. Congratulations, guys. Yeah, great stuff. Thanks very much.
Thank you for your question.
Thanks, Paul. Just turning to the web chat. We've got a question from Tom Musson who asks about construction cost inflation in the market, and are we experiencing any, and do you expect this feeds into rental inflation?
Well, thank you, Tom. Yes, we are seeing a combination of both the delays in obtaining materials and also cost price inflation. There's also a bit of cost inflation in labor in certain instances. I think it's a simple supply-demand imbalance situation really, which is creating this. Largely Brexit driven, a little bit COVID driven. There are other factors which have conspired against the market. I think there's a Tata Steel factory which has sort of closed for upgrading. There's a fire in another major facility, et cetera. It's almost a perfect storm.
Including the Suez situation, which has sort of come as a confluence to create a squeeze on the market. We believe that there's probably something like a 12-month to 18-month squeeze. That typically is what most of the commentators in the market are suggesting. Overall, we're mitigating most of this impact, and our current projects benefit from fixed price contracts with suppliers, so we're protected there. We are also, remember, a large-scale developer and we can therefore achieve pricing advantage and priority on the delivery of key materials. I think the smaller operators are struggling a lot more to have the product delivered on time. So far, this is having very little impact on our current development pipeline. We're talking about four-week time delays that we're seeing on a few of our buildings. Again, not all of them.
We believe that through a combination of buying well, managing costs, against the acceleration of rental growth in the market, of course, which is offsetting some of these cost increases. We're really confident we can continue to deliver developments within our stated 6%-8% target yield range, which of course is the most important metric, and we continue to keep that under review.
Great. Next question comes from Poonam at Numis. Please could you provide the split of the 7.3% portfolio value uplift between like-for-like capital growth and developments?
Hold on for me. I'll give it in ratios, Poonam, if that's okay. Just slightly easier. 40% driven through rental growth and asset management. 40% broadly through strength of the market and yield compression, and then the remaining 20% coming from development gains.
Great. The next question from Andrew Williams is, do you have a breakdown as to what measure of inflation, RPI, CPI, mix is used for the inflation part of the portfolio, please?
I have that here.
Yeah. Thanks, Frankie.
As Colin talked to, around 50% of the portfolio is inflation linked. That carves up between 30% of that being RPI and 20% being CPI.
Great. A question's come in from Julian Livingston-Booth of CM . Can you elaborate on your appetite to acquire additional land sites? The first question, then on the second, on tenant demand, are you seeing an increase in breadth of tenants looking at your space, or is it simply a case of existing tenants wanting more space?
Well, thank you, Julian. Firstly, additional land. We have really deep-rooted relationships in the market with landowners, and you need local market intelligence. We have our eye on other sites. We're very particular about the sites that we look to acquire. They've got to be the right sites and the right locations. It's really interesting looking at the drivers and seeing that decentralization, if you like, from the sort of original concentration on the Golden Triangle. Of course, we call that the regional distribution network. That's, if you like, pushed out occupier demand into locations where they can attract and retain appropriate levels of staff at the right pricing points. Of course, also power is coming into play. It's important to think about these things in the context of where you're looking to acquire your sites.
We do quite a lot of intelligence gathering in that regard. The balance between all of those factors and of course, being able to acquire the sites, typically through options, which are, of course, very capital efficient, but at an attractive pricing point. We control the process and hopefully therefore we've got line of sight on delivering value, through the planning process, getting planning consent, and also through occupier interest before we move ahead and expend significant sums of money on infrastructure and of course on buildings for tenants. You will see us acquiring more land, but very, very selectively. The next point on tenant demand is, I think it's a broadening and a deepening. We are seeing new tenants coming onto the horizon.
There are some big names globally which I won't mention specifically, but you probably may have said who some of them are, who are new into the U.K. market. There are also, of course, relative fledgling e-commerce companies that are growing quite fast, that are taking larger space. Not many of those have really reached the point where they can occupy a very, very large logistics building. We typically tend to let our buildings to strong balance sheet companies that have been around for quite some time. I think over the course of the next few years, that could start to change.
It is a broad complexion, but I think it's really interesting to note that, as well as the pure play e-commerce driven demand, we're also seeing a lot of demand from companies and retailers, by way of example, who are transitioning their businesses from a more traditional platform, as retail high street sales decline and E-commerce sales grow, they're wanting more efficient buildings to be able to optimize their supply chain networks. Of course, with automation, with data centers, et cetera, being vested within these buildings. Of course, also to cope with the increased levels of disruption that we're seeing evident in the market in recent times. Hopefully, that's of help, Julian.
Great. The next question comes from Tom Musson. I'm going to open up your line, Thomas, and hopefully you'll be able to talk.
Hello, can you hear me?
We can. Good morning?
Good morning. Firstly, well done on a great set of results. I've got two questions around sort of the pre-let side of the market. The first one, and please do correct me if I'm wrong, but I think over the past sort of two years, three years, the only pre-lets I think I can think of are DPD, Co-op and Amazon. Is that right?
No, that's not correct. There have been a number of others, Tom. Just to give you a feel, built to suit take up was over 6 million sq ft in the first half of this year, which obviously is substantially more square footage take up than those three buildings you just mentioned. There are quite a few others. We are aware of another 6.3 million sq ft of buildings that are built to suit, which are also under offer, against the backdrop of relatively low supply levels coming through. It's quite a favorable level. The point probably that you were sort of alluding to there, it is quite interesting, is that we have seen a level of take up in speculative supply, i.e. speculative lettings.
That's really because the supply of built to suit buildings has been constrained by virtue of the barriers to entry that I mentioned earlier in the presentation. That's really good news because whilst we will continue to see new supply coming into the market, it's in a controlled way. That means that we're very confident that supply and speculative supply won't overreach the levels of demand that are currently in the market. As I mentioned earlier, there's four years worth of demand in the market right now against the backdrop of recent run rates, i.e. it would take us four years to meet market demand at the recent level of supply delivery. Of course, there's new demand coming onto the market all the time.
The situation is very, very favorable for a continuation in an upward trend in rental growth, and we believe that will continue to outstrip inflation even if inflation starts to pick up.
Okay. Maybe if I can use phase I a little bit as maybe an example. Is that one where you are very confident that you have a tenant lined up? I think PC is August, well, is this month. That obviously is unlikely to go into sort of a pre-let arrangement, but will go as a spec sort of letting, even though, the stores are 98% lined up, if I can put it that way.
Yeah, that's a good example, Tom. That building, which is, if you like, a speculative construction, but it is being funded entirely by our development partner, Bericote. We've taken no risk on the construction of that building, although we were supportive of the principles, bearing in mind that this is London's, and if not Europe's, most prestigious industrial logistics site inside the M25, next to the Thames. 450,000 sq ft. You're absolutely right. It is targeted for practical completion probably at the beginning of next month, early next month, I would say. We are currently in solicitor's hands at an advanced stage on the letting of that building. It could be a pre-let, but it might be a letting that takes place shortly after the building is completed. Currently, we're very confident and it's on track.
Okay. Just finally, I think you have answered this question already, so I apologize for sort of repeating it. Going back to your answer, I think from the previous questions around the broadening and the widening of the customer base, and I think you said that even that's the case, there's probably not that many new sort of companies that can or at scale to go into 500,000 sq ft sort of warehouse. Still on the pre-let market, are you still sort of very confident that you'll be able to get that sort of incremental demand for such large amounts of space?
Yes, we are, Tom. As I've mentioned, first half take up of this year, all-time record over 20.6 million sq ft of space. That was only constrained, as I mentioned, on the pre-letting side, because there just weren't the opportunities for pre-lets to be produced quickly enough. The market's become quite footloose. This is something I've talked to you before, whereby, the market's moving so fast, and companies are having to deal with the disruptive aspects and modernize their supply chain networks. It's not an easy thing to do when you think about staffing. How customers are driving the way that we shop. All the other challenges of coming out of old leases to consolidate into larger logistic buildings. Excuse me.
It's quite a sophisticated process, but what essentially happens is that companies wake up, realize that they need a new facility or several new facilities, and they want them now. They are not typically willing to wait very long. If you sit there and say to them, well, it's going to take sort of three years to deliver you a building, and they know that they can get one within six months, then they will go for the shorter term option, so long as it meets their requirements. This is one of the reasons why we have seen more speculative starts on site, but it's most definitely in a controlled level against the level of total take-up. I think, in our own business, the majority of our lettings have been pre-lettings in the past, and we do expect for that to continue in the future.
We've currently got over 9 million, 16.6 million square feet of live interest in our development portfolio. Whilst some of that will fall away because it's in competition with other sites, I think it talks to the depth of interest. All of that, Tom, is for pre-letting activity. Some of it, we may feed in some speculative construction against the backdrop of that pre-let demand. Of course, knowing that a tenant wants a certain size building, and if we start to construct it potentially accelerates their ability to occupy that building. If you like, taking away some of the pre-let demand and then feeding it into the spec side, it's an intelligence-led process.
Okay. Very clear. Thank you.
Brilliant. Okay. I think, in fact, we've run out of time, so I think we're going to pause there, Colin. If you want to sort of wrap up. If there are any further questions, please do get in touch with the Investor Relations team, the details of which are on the Big Box website. A transcript and a replay of this session and the presentation that we referred to will be available shortly on the Big Box website as well.
Well, look, it remains for me to thank everyone for taking the time to join us this morning, and to all the analysts that cover our stock, and of course, for the continued support of our shareholders and of our board. We hope to see you in person sometime soon. Appreciate you joining. Bye-bye.
Thanks.