Well, good morning, everyone. I hope you've all had a cup of coffee and found something to eat. I think most people are here, so we begin. But a big thank you from all of us, really, for making the time to be with us today. We know it's very busy for everybody in the run-up to Christmas. It's certainly been very busy on the estates. I'm quite pleased, actually, we're doing this on a Monday, 'cause if we'd have been doing this over the weekend, I think you'd have all struggled to get here 'cause it was so busy.
Unfortunately, the rain might be a bit of a damper on those that are going on the tour, but we were saying, actually, as we were setting up, that I don't think we've ever really seen the estates as busy as they have been in the last few weeks, and Black Friday weekend has obviously turbocharged that, so it's been incredibly busy. So, as I say, we're delighted to welcome you this morning. This is our inaugural investor event. We've got a very talented team. Joining me today for the presentation are our executive committee, Situl, Chris, Michelle, and Andrew, who I'm sure you, you know well. We've also got a number of colleagues with us in the audience today. And I think I'd first like to say a big thank you to everybody at Shaftesbury Capital for their dedication this year.
Been a lot of hard work. It's been a significant period of change for everybody as we've brought the two companies together, and I think you can see that, they've delivered excellent operational performance, and we're creating a really interesting and exciting environment in which we're working in together. I'd just like to introduce some of the senior team briefly. I hope you get the chance to meet them today. I'm not going to ask them to embarrass themselves by standing up, but in amongst everybody here is our Chairman, Jonathan Nicholls. Maybe he should stand up, actually. He's the chairman. There you go. Morning, Jonathan. We've got our senior asset and leasing team here, Kristen Es and Jenna. I think I saw Jenna and Julia Wilkinson.
For those of you who've been around the estate recently, you've seen the wonderful Christmas decorations and all the marketing activities that we do, and Catherine Riccomini is here, who's responsible for that. Incredibly talented marketing team at Shaftesbury Capital. Alison, who's our general counsel, is here, and then from our finance team, Sarah Corbett. She's really been responsible for putting on today. I hope you will appreciate the amount of work that goes into this, and with her team, they've done a really amazing job, so thank you very much. We've also got finance heads, Heather Petrie, Steph Dade, and Graham Keer , who is our treasurer, who I think many of you know. And somewhere should be our sustainability leads, Matt Smith and Tom Attree .
So hopefully, between them on the operations side, you'll be able to ask any questions that you like. We've also got our company secretaries, Desna and Ruth Pavey. While I'm doing the thank yous, I'd like to thank the Royal Opera House also for allowing us to use this magnificent venue. We do have a rather special relationship with the Opera House. It started many years ago when we bought a few properties on the estate back in 2006, and we do keep very close relations with them, so it's wonderful to be in this hall. It's actually called the Peter Hamlyn Hall now. It's been through many iterations over the years. The Opera House has obviously changed, and this hall has changed with it.
It was originally built in the 1850s, designed by a chap called Edward Middleton Barry. He, he designed a lot of these sort of steel and glass structures in the day. At one point, it was actually part of the market itself. So where that mirror is, that was a mirrored space, effectively, all the way through to the piazza. And it was actually known, when part of the market, as Floral Hall, and flowers were sold here in the mornings, and then in the afternoons and the evenings, it was used really as a venue. So if you like, it's an early example of creatively managed mixed-use real estate, so we thought it was quite a fitting venue for the presentation today. Just turning now to this morning's agenda. The presentation will be about an hour long.
I'm going to provide an overview and strategy and then outline priorities and some of the medium-term targets. Situl will discuss financial performance drivers, and then Michelle and Andrew will provide some insights into the portfolio. Chris will then talk through our sustainability, people, and technology strategy, and then I'll make a few closing remarks. We've then left around 30-45 minutes for questions, depending on how enthusiastic you all are. Hopefully, that will be long enough. And then, there is lunch available from somewhere around 12:15 P.M. And then for those of you that are joining the tours this afternoon, we're planning on leaving about 1:15 P.M., and I'll make a bit of announcement at the point, but you can get the mics and the various headphones and things over in the corner there.
The trading update issued earlier today demonstrates, I think, excellent momentum. It continues across the business with some very positive operating metrics. We are really delighted with the pace and performance over the last eight months with rising rents, leasing transactions well ahead of ERVs, and cost savings above our initial ambitions. Footfall across the West End is strong, particularly in our portfolio, and we've had an excellent start to the Christmas trading period. There are high occupancy levels across the portfolio, and customer sales are tracking approximately 12% ahead year-on-year. We're seeing now the delivery of broader benefits of the merger, including the use of data insights, cross-locational marketing, and leasing activity, providing incremental revenue. We have commenced asset rotation and completed the sale of a number of properties.
These were well ahead of valuation, and several other sales are agreed. Despite the geopolitical and macroeconomic environment, the West End continues to demonstrate its enduring appeal and resilience, and our portfolio is well-positioned to outperform. We've got a strong pipeline of demand across all uses, and that provides us with confidence in the rental growth prospects for our unique portfolio of properties. With cost and operational synergies, increased scale, and greater equity market liquidity, we have a firm foundation for value creation for our shareholders. Shaftesbury Capital owns an impossible-to-replicate portfolio, located in some of the most iconic destinations across London's West End. Our portfolio is focused on three super prime locations: Covent Garden, Carnaby, including Soho, and Chinatown.
The 4.9 billion sq ft, 4.9 billion GBP portfolio comprises 2.9 million sq ft of lettable space across 670 predominantly freehold buildings, with around 2,000 individual units. Portfolio is well-balanced, with 34% retail, 34% hospitality, and the upper floors offering high-quality office and residential use with just over 700 apartments. It offers a diverse occupier mix and income stream with a range of unit sizes and rental tenures, and it appeals to a broad range of occupiers. The portfolio is located in vibrant, high profile, high footfall destinations close to the West End's major transport hubs, including the Elizabeth line at both Tottenham Court Road and Bond Street stations, where passenger traffic has increased significantly.
West End is a world-class destination for dining, shopping, leisure, and entertainment, and is a leading global financial and commercial center, a major hub for the creative industries. It's long been, it's long demonstrated, its enduring appeal at the heart of one of the world's greatest cities. It's also home to exceptional performing arts facilities with an unrivaled variety of cultural attractions, with approximately 43 theaters, over 10,000 hotel keys, and it attracts approximately 200 million domestic and international visitors every year. As the largest employment center in the U.K., this provides a regular daily customer base for its retail, hospitality, and leisure business, businesses. It's this exceptional number of domestic and international visitors and range of activities that creates a seven-day-a-week trading environment, which underpins its appeal.
In turn, this provides sustained customer demand in a market of constrained supply of commercial space, with long-term vacancy of approximately just 3%. This supports rental growth and returns. Excuse me. West End market has delivered attractive, predictable growth over the last 30 years, with annualized rental growth of approximately 4%. Growth was particularly strong in the last decade at 5.7%, and on a pro forma basis, our portfolio outperformed, with certain parts doing particularly well. For example, Covent Garden delivered an 8% ERV growth over that period as the district was repositioned. You'll note from the second chart on this slide that West End retail yields have been remarkably consistent, averaging approximately 4% over many interest rate cycles, and that, in turn demonstrates the long-term resilience of the West End property market.
But as we know, higher interest rates are currently impacting the broader investment market for real estate. However, investment yields in the West End, which predominantly comprises freehold properties and smaller lot sizes, remains resilient. Our portfolio consists of adaptable mixed-use properties with low CapEx requirements. Currently, there appears to be a broad pool of domestic and international investors attracted to prime West End real estate, as we've seen through the recent sale of individual properties above book value. Now, our purpose is to create thriving destinations in the West End. Our strategy is to deliver long-term income, value, and dividend growth from our unique portfolio. We place our customer at the heart of the business to deliver best-in-class service.
We take a creative and active approach to our portfolio, investing in these remarkable destinations, refreshing the offer through a dynamic leasing strategy, and delivering high-quality public realm. We take a prudent approach to financial leverage and maintain cost and capital discipline. We believe in responsible stewardship and working in partnership with the wider community, contributing to the long-term success of the West End. Of course, all of this is not possible without our creative and talented team. Our competitive strengths support strategy. Firstly, our people. We have an experienced and talented team who share a passion for the West End. Integration is now well advanced, and I'm proud of the energy and enthusiasm shown by our team and the company which we're building. The team has a strong track record of delivering value growth over many years and has extensive knowledge of the West End property market.
We have a professional, inclusive, and entrepreneurial culture reflective of our business strategy, where creativity and innovation are encouraged. As you've heard, our portfolio is concentrated in iconic, high-footfall destination with a balance of uses and diversified income streams. The increased scale and depth we now enjoy provides opportunities for customers to expand and move around the portfolio, and we have a strong, resilient, and flexible capital structure and take a prudent approach to risk. We're customer-focused, leveraging our deep understanding of consumers together with data-led insights to inform decision-making. And with our experience and track record in the West End, we've developed very strong relationships with multiple stakeholders across a wide range of interests. And it's these competitive advantages that underpin the strength of our operating model, which is now deployed at scale over an unrivaled portfolio of prime properties in the West End.
By applying our expertise across these concentrated ownerships, will allow us to deliver better service to our customers, enhancing tenant retention and acquisition, which in time drives higher returns, value growth, and dividends. We're stewards of these three unique, vibrant West End destinations: Covent Garden, Carnaby/Soho, and Chinatown. We celebrate their individual attributes to provide a sustainable and prosperous future for the communities they serve and our wider stakeholders. It's through a dynamic leasing strategy that targets complementary, high-performing brands and differentiated experiences that we ensure our locations evolve to appeal to Londoners and visitors. We creatively manage these portfolios through intensive asset management of each unit and identify investment and repositioning opportunities. The team are utilizing our rich data, which is supported by holistic marketing strategies across the estate, which takes advantage of cross-locational marketing opportunities.
Now, Covent Garden represents about 53% of the portfolio. It's a world-class retail and dining destination, and it's this location where we see the most immediate driver of growth. We've got a tremendous opportunity to enhance adjacencies by creating better linkage through marketing Covent Garden as one district, integrating Seven Dials, Opera Quarter , The Coliseum, and the Covent Garden Piazza. Carnaby Soho, which represents 31% of the portfolio, is a vibrant district. It's an iconic shopping location and has a strong day-to-night restaurant scene. There's an opportunity to evolve and improve the district over the medium term and to enhance returns. Europe's premier Chinatown is located in the heart of the West End's entertainment district. With its long-term high occupancy, it provides resilience and a growing cash flow. Now, we've set these medium-term priorities for the company.
We aim to grow rents, earnings, and dividends and realize the long-term potential of our real estate. As we move beyond the initial stage of integration, we're seeking to accelerate cost savings and operational efficiencies while providing excellent service to our customer. We will maintain significant liquidity and manage the absolute level of finance costs to ensure efficient conversion of income to earnings through the refinancing cycle. Our priority is to maximize the potential from investment opportunities within the existing portfolio, including sustainability enhancements. Capital expenditure of approximately 1% of portfolio value per annum is expected. Five percent of total portfolio value is initially expected to be sold, and that includes the GBP 82 million of assets announced today. Shaftesbury Capital is financially strong.
We have access to over GBP 500 million of liquidity to act on market opportunities, and we are committed to reducing the impact of our operations on the environment while engaging and collaborating with a wide range of stakeholders, and this is integral to our strategy and our values. Underpinned by our strong balance sheet, we will seek to allocate capital to London's West End profitably and to deliver a progressive dividend policy. By fulfilling these priorities, we expect to deliver a total property return of between 7% and 9% and a total accounting return of between 8% and 10% over the medium term. I'll hand over to Situl, who'll provide more detail of the drivers of that financial performance and the targets that we're working to.
Thanks, Ian, and good morning, everyone. Our key areas of focus from a financial perspective are growing ERV and cash rental income, efficiently converting that to earnings, a disciplined approach to capital investment and returns, and maintaining a resilient and flexible balance sheet with access to liquidity. All of this is with a view to generating attractive property and accounting returns. Central to the focus on returns is a clear framework for capital allocation, which is grounded in having a strong balance sheet and investment discipline. The starting point is our asset allocation, which, as you know, is concentrated in some of the most sought-after and scarce land and real estate assets anywhere, with a balance across different uses, as well as the benefits of granularity, low capital requirements, and adaptability. Key areas which we think about are summarized on this slide.
Starting with accretive investment in our portfolio, generally expected to be up to 1% of gross value on average per annum. This tends to be refurbishment projects, including sustainability enhancements, rather than ground-up development. There's a rich pipeline of repositioning opportunities across the portfolio, which Michelle and Andrew will outline shortly. Secondly, selective acquisition activity. We have a long track record of aggregating ownership in our chosen markets. We're looking at a number of opportunities to acquire assets, and we'll be well-positioned to explore others over the coming years. Third, realizing value from non-strategic or mature assets, initially 5% of the portfolio, based on an assessment of risk-adjusted returns. This year, we have realized over GBP 80 million at a premium to valuation. Finally, a progressive dividend profile for shareholders, reflecting growth trends in cash and underlying earnings.
We've set out here targets for total returns over the medium term. Clearly, this will not be linear nor uniform across different parts of the portfolio, and external factors will have a significant bearing year on year. Total property returns comprise rental income plus capital growth, adjusted for acquisitions, disposals, and CapEx. Running net income of 3%, plus targeted rental growth of 5%-7% when combined with CapEx, would result in total property returns of 7%-9%. This assumes stable cap rates. Clearly, over shorter reporting periods, there is a possibility of yield movement. This then leads us on to total accounting returns, which are based on the NTA movement, plus dividends. Taking property returns together with the effect of leverage and overheads, the target range of total accounting returns is 8%-10%.
While noting that central London yields are at the lower end of the spectrum on a relative basis, earnings progression will be a driver of dividend distributions, which we regard as an important part of shareholder returns. This chart sets out the main components based on pro forma 2022 numbers, which you'll be familiar with from our previous disclosures. State the obvious, top-line growth has the potential to drive earnings progression with effective cost control in the areas highlighted here. So taking each element in turn. Contracted running income at June of GBP 188 million, compares with ERV of GBP 235 million. This presents the opportunity to grow income significantly by capturing the reversion elements, currently GBP 47 million, and secondly, by growing ERV through our actions.
As you've seen, operational performance has been strong, with leasing transactions running ahead of ERV and customer sales significantly ahead of pre-pandemic levels. That performance and our ongoing initiatives provide the springboard for income growth over the coming years. Through continued integration, we have the opportunity to enhance the EPRA cost ratio by realizing efficiencies in the running of the portfolio and the administration of the business. On the property side, there is a portion which is activity and volume driven, such as letting fees and other areas which are more discretionary, such as security and marketing. As processes and approaches are further aligned, we should begin to realize scale benefits and be regarded by third-party suppliers as a partner of choice in our markets.
Two-thirds of admin costs are people-related, with the balance being spread across a number of different areas, including the costs of running a listed PLC, IT, insurance, and occupational costs. There has been good progress already, with cost synergies running well ahead of schedule on timing and amount, and we continue to explore additional opportunities. We set out in the table the buildup of our current gross and net finance costs on a cash basis. The majority of the drawn debt is at fixed rates, and interest rate hedging is in place to cover the exposure on the bank facilities. Under current market conditions, refinancing activity will result in the running cost of debt increasing... and in this context, we will have regard to the absolute quantum of debt, including the impact of capital rotation.
Over time, we would expect Shaftesbury Capital to have a very positive credit story, in particular, as income growth is delivered. Our capital structure approach is based on resilience, flexibility, and efficiency. Over time, we would very much see income as a primary driver of leverage levels and capacity. We will continue to consider carefully the overall quantum and cost of debt, both to manage financial risk and for efficient conversion of income to earnings. Also, as you can see on the right-hand side here, we already have a presence in a number of markets, public and private, and would expect to broaden this over time, reflecting the enduring attractiveness of our asset class and portfolio. We have a strong set of credit metrics.
Loan-to-value at 30% is well within our target range of 20%-40%, and we have access to significant liquidity, currently in the order of GBP 500 million. Structurally, our debt is currently spread between PLC level unsecured debt on the left, comprising around GBP 650 million, with the balance being spread between secured debts of GBP 585 million and unsecured debts within Covent Garden of GBP 475 million. You'll be familiar with the financing activities completed this year. 200 of the GBP 576 million pound loan facility, which was put in place at the time of the merger, was repaid with the proceeds of the new 10-year loan with Aviva. We are at an advanced stage of discussions on a new medium-term bank facility.
As we transition towards a capital structure, which is tailored for Shaftesbury Capital, there will be a number of priorities over the next two to three years, including medium-term refinancing activity, particularly in relation to the 2026 maturities, embedding sustainability metrics into our debt, where appropriate, and as we consider broadening our access to markets, progressing towards a credit rating. These milestones will provide the opportunity for the company to establish a strong, longer-term capital structure in line with our overall business plan. So to summarize, we have a number of clear priorities consistent with our medium-term returns targets.
The main elements are meaningful rental growth over the coming years, efficiencies in property and overhead costs, continued investment in our portfolio and through acquisitions, as well as some asset rotation, and maintaining a strong balance sheet and liquidity, and managing overall finance costs to ensure that top-line growth is translated to earnings. And with that, I will now hand over to Michelle.
I'll begin this morning with an overview of how we manage our exceptional portfolio. As Ian has highlighted, we're focused on generating long-term returns through income and value growth through our exceptional villages. Our levers of value creation are outlined here. We've honed our unique skills to our unique locations, ensuring we attract the best uses and concepts, while focusing on accretive investment and enhancing our buildings. We have a deep knowledge of our customers and our target consumers and recognize the inherent value of our brands. Covent Garden, Carnaby, Soho, and Chinatown, global destinations with each requiring bespoke asset strategies to realize their long-term potential. None of what we do would be possible without working closely with our stakeholders and our local community. We aim to be proactive when it comes to identifying market trends and themes.
These ever-evolving dynamics play a real part in how we think about our approach and execution. The market continues to demonstrate strong polarization of demand, both occupational and investment, to the strongest locations. Mixed use, resilient, high amenity value, West End, and low carbon is where it's at. Through our activities, we must demonstrate to our customers our capability to curate, invest, and operate with skill to ensure we're positioned to attract strong demand and market share, which ultimately underpins our growth prospects. Our portfolio is consumer-facing. The contemporary consumer is digitally native and spend is increasingly purpose-driven with high expectations. Against this, it's critical that we demonstrate our value as a landlord and as a place to visit, backed by strong consumer experiences and digital connectivity. We believe the portfolio is well positioned to deliver long-term, sustainable rental growth.
As an example, on the top right-hand chart, you can see here, we have a broad spread of rents that appeal to multiple types of occupiers, with our weighted average rents circa 50% below prime Central London. As you've heard us talk about before, store productivity is only one barometer of retail and increasingly F&B success. However, we believe it's right to focus on ensuring we target the right brands across the price spectrum and market our locations to enhance store productivity....Based on the data we collect today in our portfolio, there's a range of average densities from circa 500 GBP to over 1,100 GBP per sq ft, with many tenants generating significantly ahead of this. Average rent sales across our portfolio remain very affordable.
We see the potential to grow these sales densities over time to support rental growth, which is why we're focused on active targeting of the right uses and categories. Ultimately, we want our tenants to succeed, and for example, at Covent Garden, over the last decade, we've seen densities more than double from a wide variety of occupiers. We've been very pleased to see commercial synergies begin to emerge as our operating practices come together. The benefits of scale are undoubted. Our reach has expanded, our conversations with tenants are broader, our contribution to their ability to grow and expand their businesses has already started to translate into transactional efficiency. For example, we're pleased to announce today that Axel Arigato, a flagship Soho brand, has taken a new store in Seven Dials, right on the dial and anchoring Earlham Street. We've commenced our rollout of brand partnerships.
We see potential through events and brand collaborations to increase revenue potential from our non-leased income activities. While it's early days, we have a good range of live conversations and are seeing some enhancements here. Aside from income, this enables us to develop closer relationships with our target brands, particularly at Carnaby and Soho, and we're working with local council, councils and stakeholders in tandem. The office portfolio is doing well. We see robust demand, and we're pleased to have rolled out our assembled product across the group, which provides for more flexible office packages and brings the offer under one cohesive brands, with rents for well-fitted, high-quality space, regularly achieving in excess of GBP 100 a sq ft. We also see longer-term potential to benefit from adjacencies.
For example, with the Opera Quarter identified as a new gateway entrance into Covent Garden. Vision work has commenced there. Cost efficiencies through consolidation of property and marketing activities is beginning to deliver tangible efficiencies. Over 70% of our business is in ground floor uses, which touch the consumer. We want to make our locations the most attractive destinations in the world. Therefore, understanding and anticipating consumer demand is key to our success. We see ourselves as partners to our retail and F&B occupiers, working with them to enhance the operating metrics that matter to all of us. Footfall, spend, share of wallet, conversion, and so on, which in turn support our rental growth prospects. These pillars ensure we place our efforts in a meaningful and tangible way, ensuring a creative always-on approach.
For example, further to our digital strategy, we now have over 1 million consumers, which we have access to, including launching our channels in China, who we can engage directly with and learn from on a daily basis. These provide us insight with who our customers are today and who they could be tomorrow. You've heard us talk about improved access to data. We don't have the answers to everything we would like just yet, but we are beginning to utilize some of the rich data we do have access to, to better understand the consumer behavior and inform our decisions. This slide demonstrates our learnings from how our consumers utilize each of our villages. We see a lot of opportunity in tapping into the circa 200 million customer visits into the West End.
For example, we now know that less than 20% of Covent Garden visitors go to Seven Dials, and less than 10% of Seven Dials come to Covent Garden. As one district, there should be much greater permeability of consumers. We see an incredible opportunity to help people navigate this district more holistically, which in turn will enhance our operating metrics. In particular, we see the value of linking the Chinatown consumer into Covent Garden and Soho into Carnaby. Our leasing and marketing activities, as well as real estate interventions, whereby we maximize our nodal points, will help us deliver this in time. Having reviewed the portfolio, both Covent Garden and Carnaby, Soho, have an abundance of opportunity to create value, and you'll hear more from Andrew on this later.
We expect to invest circa 1% per annum into our portfolio, not including acquisitions, while improving the leasing prospects and sustainability credentials of our assets. A detailed review was undertaken, very bottom up, which looked at every asset in our fleet and has initially identified circa GBP 250 million of assets for sale. These assets are largely peripheral in nature or have fulfilled their asset management plan, and we're very pleased with the circa GBP 80 million or so of assets disposed to date, 12% ahead of June valuation. So building on these focus areas, we're pleased to see strong portfolio activity with good transactional momentum across all uses. So far in the second half, 76 commercial leases have been signed, running 7% ahead of June RV.
As you can see on this slide, the great new concepts we've introduced to our portfolio, from independent to flagship global stores, as well as demand for office space with particular progress in our new developments. Portfolio vacancy is low. We see a good pipeline of demand for the space we have and intend to bring to market. The feedback we get from existing and target customers is they are looking for vibrant, resilient locations with clear identities and strategies to capture the consumer. There's a good range of demand from retail and F&B, with global hospitality and global retail brands once again on the front foot, with London high on the list. While we see office demand certainly weighted towards the West End, particularly for high amenity, well-fitted, and new space. Turning to Covent Garden. Covent Garden's been transformed into a world-class destination.
It benefits from mixed-use dynamics, a sought-after retail and F&B location, as well as office growth market with a fantastic residential neighborhood. We're surrounded by high-quality, high-spend uses and are very much one of London's main cultural and art hubs. Those of you who know us well will know of our track record of turning Covent Garden from a narrow consumer spend, along with mass brands which didn't have much broad appeal, to a thriving destination with a balanced consumer and quality experiences for everyone at every price point. Here's a snapshot of how some of our streets have evolved under our stewardship and through our strategy. Floral Street and King Street had almost no retail. Today, they're thriving locations backed by some of the world's best retail and hospitality experiences with reinvigorated upper parts.
They are pedestrianized, they are greener, and they have become true destinations in their own right. At the bottom of this building we are in right now, is where luxury brands such as Rolex, Tudor, Messika, have transformed the experience of what is the Royal Opera House Arcade, producing densities ten times more than the previous uses. Our strategy for Covent Garden is simple: unite the district as one, bringing Seven Dials, Covent Garden, Opera Quarter, Coliseum, and New Row together, while recognizing the distinct character of each part. Creative and active asset management and leasing, investing accretively, holistic brand positioning, and maximizing linkages to enhance leasing opportunities and footfall. Our leasing plans are evolving, but we wanted to share some principles that are forming our strategy. We believe it's important for Covent Garden to remain a democratic destination with something for everyone.
In particular, in Covent Garden and Seven Dials, we have a strong consumer offer and a great foundation to build on. These two districts, whilst we aim to unite them, have a distinct character, as evident by some of the concepts you see here. We've always been category-focused, and we see the growth areas highlighted here for each of those districts, and it's great to already see some conversion of these initial categories into deals, all of which underpins the potential to enhance the productivity of our stores and translate into rental growth, whilst making them wonderful places for people to visit. We would like to more closely align the retail and F&B strategy, particularly in Seven Dials and the Opera Quarter, as we feel there is scope to expand the nature of the consumer who currently visits these locations.
You can see here, we've been actively reviewing opportunities to accelerate value across the estate. We're currently on site with five schemes, which are largely pre-let, and we are delighted to have signed Ergon House for its new restaurant and hotel concept, another first to London, for 26 King Street, previously occupied by Carluccio's. Looking to Seven Dials, we've identified a number of new schemes. These interventions will provide repositioning opportunities, and we expect them to deliver financial performance in line or ahead of our core returns. We've identified targeted acquisition opportunities, and we will allocate capital where we see the potential for growth. This slide sets out some initial thinking about the Seven Dials district. Seven Dials represents the opportunity to be treated as part of Covent Garden, expanding its consumer and leasing range while preserving its unique character.
The orange lines are how we are thinking about our overall zoning strategy. In particular, Neal Street, an organically pedestrianized street, an extension of main Covent Garden's James Street, and a key gateway into Seven Dials, not only from Covent Garden, but also the Elizabeth line. In itself, this is Seven Dials' High Street. Our leasing and public realm vision is underway, which considers how we can better link all of this together. Monmouth Street is a well-recognized brand in its own right, and we see the potential for greater premium retailing, as well as a prime F&B location. While on Earlham Street, we expect to strengthen the streetwear focus, and we are delighted with the signing of Axel Arigato, which anchors this fantastic street.
The green circles are where we see focal hubs and key access points, and as seen on the previous slide, schemes have been identified to tackle these opportunities. As mentioned earlier, we see the opportunity to better link in the Opera Quarter into Russell Street. Russell Street was historically the original entrance into Covent Garden. Whilst we're in early discussions with stakeholders about the potential to reinvigorate this access point, linking the potential from the numerous bars, restaurants, and theaters towards the Piazza will create value in time. Here are a few illustrative pictures which demonstrate the potential for increased al fresco dining, greening, pedestrianization, and a generally lower carbon approach to this important connecting street. In summary, Covent Garden has had a great start.
Leasing and asset management progress has been excellent, and we've identified our priorities and investment opportunities for the coming years, while we continue to work on our overall vision for the district. We have a great opportunity to holistically bring this fantastic part of London together into one estate, capable of delivering income and rental growth over the medium term, while working closely with stakeholders and communities to make this a great place for Londoners who live, work, and visit here, as well as a thriving tourist destination. I will now hand you over to Andrew, who will speak about our plans for Carnaby, Soho, and Chinatown.
... Thank you, Michelle, and good morning, everybody. Positioned at the heart of the West End, Carnaby in Soho is a true, truly fantastic location. With internationally renowned shopping and an unrivaled concentration of bars, restaurants, and leisure experiences, people come to this area to have fun. As Ian mentioned, its excellent transport connectivity has recently been bolstered by the opening of the Elizabeth line. The area attracts an estimated 28 million visitors per annum, a broad mix of Londoners, domestic, and international tourists. As a renowned hub for the creative sector, employees of these businesses add to the unique character of the area and provide a rich source of repeat customer for our shops, bars, and restaurants. When it comes to eating and drinking, Carnaby in Soho has something for everyone.
From the casual live music experiences and independent dining options in Carnaby, to the higher-end concepts found all across Soho. Thriving off a buzzing day and night hospitality scene, our businesses continue to trade well, and demand for space is strong, with units often attracting multiple offers. This year marks a decade of dining in Kingly Court, with it now housing over 21 international founder-led concepts spread throughout this unique all-year courtyard environment. Kingly Court continues to be one of our best performing F&B locations, with strong sales and low rent-to-sales ratios on all levels. During the course of this year, we have created two further restaurants and are refreshing the lineup with new concepts, including an all-day operator, as we seek to make more of our breakfast offer.
Kingly Court sits in a cluster of hospitality operators on Ganton Street and Kingly Street, all with al fresco seating and providing a complimentary mix of bars and pubs, providing customers with a rich variety. Overall, we see good opportunities to grow rents across all these locations. On the slide, we have some before and after shots. The Kingly Street picture is one of my favorites and shows the transformation from being a service road for Carnaby in Regent Street to what it is today. Our restaurants are an important ingredient of the vibrancy within our areas, something which is becoming increasingly popular with our office occupiers. Making up 32% of portfolio ERV, offices are an important element of the Carnaby in Soho holdings. Over the past number of years, we've been engaged in a major office-led refurbishment program, delivering over 80,000 sq ft of space.
This summer saw the delivery of three of these schemes, with GBP 8 million of income now being let or under offer. For the best space, rents of GBP 100 per sq ft are now firmly established in this location. The area's reputation as an office location has grown and is now attracting occupiers from nearby prime locations, such as Mayfair and St. James's. In terms of our development pipeline, there are still a number of refurbishments ongoing, including two to four Kingly Street, an image of which can be seen on the slide, and our former offices on Ganton Street, both of which will be delivered during the course of next year. The team are also currently working on the next wave of development opportunities.
For our smaller period buildings, the rollout of fully furnished options through our assembled product is now very much part of our model of offering flexible leasing packages. Positive leasing momentum continues across Carnaby and Soho, with 70 new brands being introduced, and in total, we have signed 69 commercial leases or renewals, 9% above December ERVs. As you can see, Carnaby Street has a strong backbone of existing brands, and the team are currently working on a strategy to build on this position and evolve the retail offer, paying particular attention to brand selection and categories that provide higher productivity. As part of this exercise, we are looking at fresh ideas for Carnaby Street, an area steeped in fashion history, and we will take inspiration from the ever-evolving retail scene of its surrounding Soho streets.
New brand partnerships and pop-ups will provide test-and-learn opportunities for hero brands. And as you've heard, engagement with our consumers via social media is a priority, and we will explore ways to increase the number of followers across all major channels.... taken an opportunity to introduce Chinese channels following our successes in Chinatown and Covent Garden. As part of our strategy, we will aim to attract customer- consumers from other nearby high footfall streets, like Regent Street, where currently only one in a hundred consumers visit both locations in the same trip. There is also a significant opportunity to strengthen the ties between Carnaby and Soho, particularly Berwick Street, where we now have a critical mass of ownership of over 50% of active frontages.
Broadwick Street is an important thoroughfare between Carnaby and Soho, with the Elizabeth line bringing an increasing number of consumers to an area that has benefited from third-party investment, most recently with the opening of the Broadwick Street Hotel, which, by the way, has an excellent rooftop bar. As you can see from the map, there are a number of important entrances onto Carnaby, and this particular area of focus, and this is a particular area of focus for the team, where we are currently working on ideas to enhance the public realm, and in certain instances, we're already in early discussions with stakeholders. Consumer movement around our areas is of increasing importance, and upon leaving Soho, you immediately enter Chinatown. This district is Europe's premier Chinatown, home to over 100 restaurants offering over 20 different cuisines from China and the rest of East Asia.
London's Chinatown, with its pedestrianized streets, is truly unique. With 26 theaters within a five-minute walk, and Leicester Square cinemas, casinos and hotels on its doorstep, Chinatown is the center of all things entertainment. These complimentary attractions, together with excellent transport connections, result in this being a thriving day and night trading location with exceptional levels of footfall. Over the long term, Chinatown has been characterized by its growing, resilient income stream, with low vacancy and high rates of tenant renewal. Over the last year, we've seen increasing levels of footfall and an average uplift in customer sales of 17%. This strong growth has coincided with the introduction of al fresco dining, which in most cases, has led to a significant increase in ground floor trading capacity.
The opportunity to eat outside has made Chinatown a go-to summer dining destination, and this year, 40% of sales growth occurred in July, August, and September. With Chinese tourists largely absent during this busy period, we've seen increasing numbers of Londoners and domestic tourists discover the area. Latest data on tourist arrivals indicates Chinese visitors returning in numbers, creating further growth potential, especially amongst our mainland Chinese operators. During the year, we've been pleased with leasing progress, with 60 new leases being signed 10% ahead of December's ERV, and 33 rent reviews documented 6% ahead of previous passing rents. Our F&B strategy continues to target the best of East Asian and mainland Chinese cuisine, and we've been particularly pleased with recent additions like The Eight and Pocha, both of which are trading well.
Chinatown's elevated reputation as a dining destination is creating opportunities for conversations with best-in-class international entrants, and we look forward to updating you on these over the coming year. On the retail side, we've achieved leasing success with East Asian dessert concepts, popular with our younger audience. This has now evolved into stores for specialty retail, such as Pop Mart, where we are seeing strong interest from this same demographic. With both Western and Chinese social media channels already having a strong foodie following, we are seeing increasing levels of consumer engagement on recent openings, with Instagram engagement over the last six months up 23%, with 2.3 million interactions, taking it consistently above sector norms.
These engagements are increasingly important as we aim to broaden this reach, especially across our Chinese channels, where content will increasingly refer to more than one of our locations, putting Chinatown into the mix of a great day in Covent Garden and Soho, enhancing the customer journey across our portfolio. Chinatown's position in the heart of London's entertainment district means that its entrances are particularly important. As you can see from the plan, there are important gateways to Soho, Wardour Street, and Macclesfield Street. The Newport Place entrance sits close to Leicester Square Tube and is an important gateway to Covent Garden. There are opportunities to improve tenant lineup at all of these entrances, together with refurbishment activity to improve the look of key corner buildings.
I've already touched on the importance of al fresco dining within Chinatown, where we are currently working with stakeholders to improve its look and feel. We're also working closely with the local community on the installation of a new Chinese pagoda, an image of which you can see. This is especially important so that we can incorporate it into Newport Place, so that it completes this public square. Through some light refurbishment activity, we see opportunity to introduce alternative uses to underutilized upper floors, uses like residential, where we currently have 160 units in Chinatown. Carnaby, Soho, Chinatown, world-famous, vibrant, and leading destinations for retail and hospitality. They are trading well, and given our plans, I am excited by the prospects for further growth. With that, I will now hand you back over to Michelle. Thank you.
Thanks, Andrew. In summary, we're excited about the opportunity for growth across our portfolio. We feel we're uniquely positioned with a strong team and our West End expertise to deliver rental and income growth. Ultimately, great places are about creating fantastic physical and emotional connections between our occupiers and the consumer, and to ensure our locations are positioned for competitive advantage. And that's why we're focused on targeting the best customers for our spaces and making them some of the best in the world. I hope you can see the immediate growth plan at Covent Garden, and as you've heard from Andrew just now, the exciting potential at Carnaby, Soho, and Chinatown. All of this requires a strong operating platform, and we will now turn our focus to ensuring that we optimize this both through our activities on the ground, as well as our in-source and outsourcing model.
We're confident in the growth prospects of our portfolio, and we all look forward to showing you the opportunities that we feel can deliver for our stakeholders as we tour around together later. Before that, though, I will hand you over to Chris to talk about our sustainability and technology strategy. Thank you.
It's a bit tight, isn't it?
Yeah.
Well, thank you, Michelle. Good morning, everybody. So you've heard a lot about our portfolio strategy and growth aspirations. I'm gonna talk about some things that kind of underpin this, critical to it. Firstly, our sustainability strategy, which is key to minimizing the environment, environmental impact of our operations, is founded in future-proofing our wonderful heritage buildings and creating sustainable and healthy places where people like being. Secondly, how we support both our local communities and, importantly, our talented people, who are the ones who are implementing the strategy. And thirdly, technology, which is an important enabler. Just, just to pause on technology for a moment. Over the past almost nine months, we've focused on harmonizing and optimizing our IT infrastructure, and now we're turning our attention to how it can be enhanced to deliver more.
Examples include potentially automating tasks to drive better productivity, how we can further leverage this huge amount of commercial, social media, and sustainability data that we have. Then, of course, there's this rapid, exhilarating evolution of Gen AI, which is inevitably will provide opportunities. Like many companies, we don't have the answers today, but it is an area we're focusing on. What are the opportunities to create a competitive advantage? How we can be more effective in our marketing. Perhaps intelligent building management systems, which are controlling the energy usage. We're cognizant that regulation just hasn't kept pace with the pace of change of Gen AI, and there are a number of limitations, copyright, bias, well-trodden and well-read path. My view is these will be solved in time.
Meanwhile, it's a topic we have discussed with the board and remains high on the agenda, including the related risk management and governance procedures that we need. What some people refer to as responsible AI. Anyway, turning to our sustainability strategy. We're experts in preserving and improving heritage buildings, typically through low-carbon retrofit rather than demolition and rebuild. Generally, this is a much more inherently sustainable approach than rebuilding. It extends the useful economic lives of our buildings at modest cost, while preserving the heritage of our locations, which, as you know, is a major part of their charm and appeal. In simple terms, we start with fundamentally good quality buildings, so you don't have to do very much to them. In our retrofits, we reduce ongoing carbon emissions by making them more efficient, and in doing so, we only introduce minimal amounts of new carbon...
We retain, repair, reuse whatever we can in the buildings, and where we source new materials, we source them responsibly. This means that the carbon footprint of our works, not to mention the air pollution, is considerably less than if you were to do ground-up building. We find that almost counterintuitively, simple, low-cost interventions, such as more efficient equipment and maybe LED lighting, upgraded building management systems, adding insulation, glazing solutions, can generate significant improvements in energy performance. Currently, our portfolio is 78% rated E to C as EPC ratings. That's up 10 percentage points over the year following completion of a number of larger schemes, some of which Andrew spoke about earlier. We target at least a B on our major refurbishments.
We estimate that the cost of doing these works and the energy performance works is about 0.1% of portfolio value a year. So that's about GBP 5 million, or 10% of the annual CapEx, and it's included within that annual CapEx. So it's not a lot of money. We're also carrying out at the moment. We're underway carrying out some detailed carbon reduction audits called CRREM. These are in their very early stage at the moment, these reviews, but actually they're validating our estimate of costs. As we look ahead, tech and innovation will play its part, whether it be new ways to generate renewables, store energy, or better glazing solutions, we have some ideas on those, or even just leveraging our data better. We're collecting more and more data. Of course, energy... Improved energy performance is a win-win.
Customers are increasingly looking for sustainable space, which matches their own environmental aspirations. But lower energy means lower cost, which means there's a bit more left for rent. So putting all that together, today, we're pleased to confirm our commitment to be net zero by 2030 across the business and across our own operations, which are Scope one and two, forgive me being technical there, by 2025. To achieve this, our target is to reduce embodied carbon by 50% and operational carbon by 60% compared with our baseline, with a pathway aligned to 1.5-degree science-based targets trajectory. Next year, we're going to be updating, revalidating, and enhancing our pathway, while also considering the longer-term target. The full detail of this pathway will be on our website in the coming days. So what does it look like?
So this chart shows the baseline, 77,000 tons of CO2, running down to 2030, a projected 36,000 tons. It's a, that's a significant reduction, 53%. And you can see by 2022, we'd already made really great progress on this. Being net zero is going to rely on some residual offsetting. Next year, we're gonna consider our approach to offsetting. You will have read lots of things where offsetting can mean many things to many people. You might pay a farmer not to cut down some trees, which he was never gonna cut down anyway. That's not really where we're gonna go. We're always gonna prioritize getting our buildings right rather than rely on offsetting. How are we gonna achieve it?
Well, partly through the things I've just talked about, not very putting much carbon into buildings and making them more energy efficient. Also, where practical, through decarbonizing the energy supply into the buildings, basically replacing gas with electricity. Leveraging the outputs of the CREM analysis we're doing, and critically, in influencing our customer behaviors. Our customer behaviors and the customers are producing almost half of the operational carbon in our portfolio. So using our position to influence them, rather, maybe through green leases, but also just by engaging with them, is gonna be really important, as we're engaging through our supply chain. So turning to our villages, we're concentrating on making them sustainable and healthy, which makes them just nicer places to be, where people enjoy being, which plays right through to the heart of our purpose.
Where possible, we prioritize pedestrians through public realm, improving air quality and the visitor experience. We also seek to reduce traffic pollution levels by encouraging consolidation of waste collection, for example, and the use of electric vehicles, which is another area where we can influence our customers. It'd be fantastic if they had all their deliveries with electric vehicles. Also, as you walk around, and for those of you coming on the tour today, you will see lots of plants, green walls, et cetera, all around. They make it look really nice and part of the charm. But what you don't see, there's a whole load of biodiversity on the roofs, green roofs and beehives in some buildings. And for some of you will remember that we've created Carnaby Honey before. It's really quite nice. Slightly smoggy, but quite nice.
As Ian said, being a responsible long, long-term investor, helping address local issues, local challenges, is absolutely key to our strategy and our values. Importantly, we collaborate with local authorities, neighboring owners, residents groups, et cetera, on various matters, such as public realm improvements, lessening traffic congestion, pollution, and area management, making sure that our collective goals are addressed to safeguard the future of the West End. We also support a number of community partners, grassroots organizations, which are really interesting. I mean, that's supporting those means that our funding goes much, much further. Our reach is much better. But all of it's all about addressing social, local social issues, for example, homelessness or youth unemployment, opportunity and training. It's not all financial, by the way.
We provide subsidized space for small businesses, and we encourage all of our colleagues to get involved in community projects. Talking of our colleagues, implementing our strategy would just be impossible without this talented and experienced team. The integration has gone well, culminating in coming together into one office, which has proved to be very popular. Over the past almost nine months, our culture has found a natural place. It can be described, as Ian said, as high performance, professional, inclusive, entrepreneurial, and where creativity and innovation are promoted. It's a collaborative environment, and people are inspired to give their best and contribute to our success. Everyone counts, everyone has a voice. This flows from our values, which are summarized on the right of the slide and more detail set out in the appendix.
This all sets the foundations for Shaftesbury Capital to be a great place to work, where our people can develop and grow, where recognition is given, where achieving excellence and doing the right thing is rewarded, where diversity and inclusion are valued, and where our team feels supported. So to wrap up, we future-proof our high-quality buildings through low-carbon retrofit refurbishment while improving their energy performance. We're committed to being a net zero business by 2030. We focus on creating healthy and sustainable places where people enjoy being. Our technology strategy is on track. We're turning to enhancements to improve what we've got, and we're considering AI, and that's firmly on the board agenda. We behave as a good neighbor with our multiple stakeholders and support organizations to address local social issues.
And finally, we have a culture of values and support framework to ensure this remains a great place to work. Thank you. I'll now hand back to Ian. Oh.
Thanks, Chris. I hope you found the presentation useful, that it's given you some insight on our ambitions and the potential that we see for Shaftesbury Capital, the unique nature of our properties, and the strength of our operating capabilities. But before concluding, I'd just like to remind you of the priorities that the team are working to in order to achieve those financial targets that we mentioned. Obviously, grow rents, grow earnings, grow dividends. Above all, realize the long-term potential of these wonderful assets, drive cost savings and efficiencies whilst delivering excellent customer service. We do want to make accretive investments over time, and we are pursuing and achieving sales and actively looking to rotate that capital. We will maintain a strong balance sheet.
As Chris has highlighted, we are firmly focused on delivering our environmental and community objectives, and we want to be a good partner for our people, for our customers, and for other stakeholders in the West End. We feel that Shaftesbury Capital has had an excellent start delivering strong operational performance with growth in cash rents and ERV. Footfall across the West End is high, particularly in our estates, and we've had a strong start to the Christmas trading period. There are high occupancy levels and customer sales. They're generally tracking 16% ahead of pre-pandemic levels. Excellent leasing levels, lots of activity with a strong leasing pipeline, and this does provide us with real confidence for the rental growth prospects of our portfolio. Shaftesbury Capital is financially strong.
We have a flexible capital structure, significant liquidity, and over time, we will benefit from enhanced access to capital. So we're confident in the long-term prospects of the West End, and we're focused on generating sustained growth in income and dividends whilst managing debt and cost appropriately. With our ambitious and talented team, Shaftesbury Capital is positioned to drive long-term rental income and capital growth and meet our important sustainability objectives as the leading Central London REIT. So that was a little longer than we'd hoped for, but we've got about 30 minutes. We can extend that a little bit if you're not that hungry for Q&A. There's microphones around, so if anybody would like to ask a question, if you'd raise your hand. There's some early ones down here.
If you wouldn't mind stating who you are and where you're from, that would be really helpful. Thank you very much.
Thanks, Ian. It's, Rob Jones from BNP Paribas. I've got three. One is a particularly long question, apologies in advance for that. Let's do them in... Do you want them one at a time or all three?
Go for it.
Okay, so the first one I think is probably for Michelle. The slide 30, I thought was really interesting on cross-visitation.
... why is it that you've only got a small percentage of Chinatown and Seven Dials customers visiting Covent Garden? Is there an element of the brand types that are in the various different villages or customers not understanding the breadth of brands that you now have at Covent Garden? And I guess linked to that, you have higher percentages in terms of the cross-visitation across some other villages in the estate. What can you learn from other areas you're seeing, and how to bring that kind of knowledge to driving people to Covent Garden? That was the first question.
Shall I?
Yeah. No, you go for it.
Great question. Thank you very much. It's, this has been really interesting for us because I think when we did this study, perhaps we were expecting there to be a bit more cross-permeability in somewhere like Covent Garden. And as we sort of keep testing that data, it's, it's sort of been consistent in what it's shown us. And I think, you know, you're absolutely right. I, one of the things I would say is, a lot of these villages have never really been marketed holistically before. So, for example, in Covent Garden, we now have this opportunity to market this as one place. And for lots of very good reasons, they've been marketed separately, as you'd expect, 'cause they were, they were held by two different companies.
But now we have this opportunity to put it all under one banner and really help the consumer understand how you can navigate this district a lot better than they currently do. So part of that is in the marketing. The other part. The other side of it is actually what you do with the real estate itself and what you do with the initiatives you do on the ground. So a cohesive leasing strategy where it's it's complementary but respectful of the characteristics, but also how we think about those nodal points. So one of the things I talked about was was adjacencies, maximizing those adjacencies and thinking about those nodal points. And you'll note, you'll note that on some of the slides I showed you where we had the maps, we're actually tackling some of those nodal points as a matter of priority.
These are not things that happen overnight, but they are things that will enhance that permeability over time. It's quite interesting. You look at the track record here at Covent Garden, you know, we had a scheme here called Floral Court, which was not only a good investment decision to make, but also part of that was underpinned by creating greater permeability, and without a shadow of a doubt, that has worked. It's been both accretive for us, but it's also helped us achieve some of those objectives that you've just outlined.
Great, thanks. Chris, slide 62. I appreciate you wanna get from 66,000 tons of CO2 down to 36 by 2030. I'm wondering how much it would cost today to offset those 36,000 tons of CO2 using, as you put it, high-quality credits. If I go online and look at carbon credit purchases, and I don't know whether these credits are high or low quality, roughly 36,000 tons costs about GBP 200,000 a year. That also got me thinking, if you were to offset your 66,000 tons being delivered today, it would cost you less than 1 basis point of portfolio value. And I wonder whether a, a, an element of the strategy could be to actually start offsetting fully today, still target the 36,000 in terms of that gross tonnage of CO2 emissions.
So you're not changing your ambition in terms of sustainability, but you can make that incremental contribution as a potential portfolio value, which is de minimis, assuming that, of course, it only costs that kind of amount, i.e., a basis point of portfolio value for higher quality credits.
Yeah. Thank you. Thanks, Rob. I think it would cost more than that, by the way, today. But I guess it depends on what type of offset you've got. I mean, there's sort of all sorts of greenwashing things that are going on, so we're trying to get to the bottom of that and understand that. You know, you can sort of pay to have bits of a rainforest protected, but they just cut down another bit just down the road, so... or metaphorically down the road. So we're looking at that. Yes, we could do that. Actually, I think I'd rather just channel the money into making the very best of every scheme that we do.
Okay, thanks. And the last one from my side. Ian, you talk about obviously disposals being undertaken at 12% average premium to book value, which is great to see. What about the assets that you've been trying to sell but haven't yet? Where are you seeing bids versus last reported book values? And why do you think for some disposals, you're not achieving the levels that you're willing to sell at, potential disposals, that is?
Well, they, they are achieving the levels. You know, we've just reported five buildings, 12% above the, the June valuation, and that's a wide range of, property with, and different types. There's freehold, leasehold, there's various, different ownership structures, and all of those properties, received good quality interest. So that's very representative, in my view, of what's going on in the West End. I think you're probably referring to Fitzrovia, aren't you, in the press, press commentary about that? Fitzrovia is valued as individual buildings, and what we've found through the process that we've been going through with the agents is that, you know, we're getting good bids for individual properties. So we are not in a hurry to sell.
But we've, as previously indicated, you know, we don't see north of Oxford Street as an area where we want to allocate capital. So our job is to get best possible pricing we can on these assets that have taken time to assemble, and we feel the best way of doing that is pursuing individual property sales. Indeed, Andrew's got a number of those under offer as we speak. So, you know, as far as we're concerned, we're seeing good demand in the West End.
Thank you very much.
No more questions, Rob? Mike, we've got one at the back and then one at the front.
Hi there. Just a really quick one. Dan Thornton from Davy. How do you preserve the sort of countercultural sort of elements of Soho? You know, when you've got things like Covent Garden and Chinatown are more sort of overseas tourist-based, it's a bit more sort of mainstream.
... It's an evolution, isn't it? So what we try to do is focus on the elements of each of these areas which people love, and we keep those as part of the future. I think the whole of the West End really is attractive, not just to Londoners and tourists. There's a lot of people that live here as well and work here. We wanna make sure that we provide a range of activities that meet their aspirations. But, you know, you can't stand still, you've got to move ahead. But it's doing that in a measured way that we hope benefits everybody. And I think, you know, we're sitting in a building that was part of the market building 150 years ago, or part of the market 150 years ago. Things have changed.
In 2006, we started buying on the Piazza. It was a very different place, but it's still one of the most loved places in London. You know, we will continue to do that by working carefully with everybody that loves these parts of the capital. Mike, you've got a question down the front.
Morning. I'm Mike Prew from Jefferies. A couple of questions, please. Looking further out from the debt side, you've given us a lot, a lot of sort of good shape as to how the business is gonna look in the medium term, but can I ask, you've got hedges burning off in 2023 and 2024. Just looking at exploring, you know, the increased dimensions to the debt structure and perhaps the bond market with lots of small liquid assets, I would imagine, would be very bond-friendly. And one more question is, you know, in the past, I don't think the Longmartin joint venture has been particularly successful.
What's the relationship with the Mercers' and anything that can happen with the Longmartin joint venture as a nice little sort of purple triangle on your patch that you haven't really spoken about very much?
Shall I address hedging first?
Sure.
You're right, Mike. We have hedging in place, part of which is legacy hedging that we had pre this interest rate cycle, if you like. So it was very favorable rates, and we've topped that up, as we've drawn down on more variable rate debt. I think the way you would think about it, and that, by the way, that's a long-standing practice within the company, so it's not, there's nothing new about that. What you should expect from us is if we have or we see more variable rate exposure, whether actual or potential through undrawn bank lines, then we will hedge that further out into 2025 and 2026. But as you quite rightly say as well, most of our debt is currently fixed. We have some capital rotation with acquisition and sales activity.
And the option, as you saw with the financing that we did in over the summer, where we felt that the fixed rate, longer-term market was also very attractive. So I think all of that goes into the thinking, but you should very much expect us to kind of extend out that hedging profile beyond 2024.
Well, actually, whilst I've been sitting here, I've just got an invitation to the Christmas lunch for the Longmartin joint venture, so clearly, it's going better than you suggested, Mike. But I think, as you all know, the merger actually triggered an arrangement whereby the Mercers' are able to acquire our shareholding. You know, and that's something that we will talk to them about, but I haven't got any news other than that. I think there's been some very good leasing activity there this year. Some tremendous new restaurants and brands are opening up, but the numbers that we're reporting generally don't include an analysis of that because it's part of the joint venture, joint ventures list, the other one being Lillie Square .
No, no further news today, Mike, other than Christmas lunch. There's a question over here.
Hi. Mark Syn from MFS Investment Management. Just in terms of the customer data, in an ideal world, what data would you be looking for? What would you like to have? In practice, what are you actually able to get, at least at this point in time?
Yeah. You wanna answer that one?
Yeah, of course. Thank you. It's an interesting question, that. I mean, I think for us, one of the things that would be really additive is just greater access to real-time information. So it's a little bit analog in our sector, for my liking. But if you take, you know, some of the other locations in the world, particularly shopping centers, you can get quite. You get live information via tills and things like that. It's quite difficult to achieve. But what we would like to see is a faster pace, less analog version of the data we do have. So that touches your sales metrics. We'd like to see greater things around footfall, so some of the permeability I've shared with you.
But, you know, there are so many other layers of diving deeper into that. And, you know, there are other things that we would like to just see that are, I guess, better integrated into the brands. And we get a lot of... Because of our relationships and the discussions and I guess the direct engagement we have with a lot of our brands, we're able to form a view on things like basket sizes and conversion rates and things like that. But again, to be able to have that digitized in some fashion would really be fantastic. We do get some very good data with various credit card companies that we work with. You know, it's one of the things we do.
Looking at the marketing team, they, you know, they run various, I guess, initiatives with Amex and things like that, and that gives us really interesting data. So again, pulling on those threads to better understand the consumer and better understand, you know, where they go, where do they start, what are the brands that have quite strong correlation? All of that helps to feed into our leasing and investment decision-making, which ultimately, we think, underpins the growth of the business.
Yeah, and just a couple of additional comments. There's also the data from the performance of actual buildings as well, as Chris was talking to, that sustainability data is really important. You know, we've got a lot of property, so a lot of data. So we'd like, we'd like to capture that in a way that is easier to use in the business rather than just for reporting to you. But one of the things that I've been really impressed with over the last eight months is just how willing the customers are to engage with us on both operational information for their own, for the leasing and operations of the portfolio, but also with that sustainability data.
I think we're in a very unique and privileged position with people wishing to come to us and wanting to work with us to help their businesses, and that informs our decision-making as well. So we're really very excited about the potential of using this data and interpreting in a way that really improves the performance of the business. Any other questions? Yep.
Hi, guys. Everyone, yeah, it's Paul Gray at Columbia Threadneedle. A couple from me. The first one would be on the Langham portfolio, and just obviously, that's also in the market, and whether you can discuss, I think, I think pricing around GBP 800 per sq ft has, has been put out there. I know it's not a very clean read for your portfolio, but it feels like this is a new time with sort of lots of stock, West End stock available on the market, which is a real rarity. So if you can comment on the sort of level of read-across there, and also whether that's maybe fed into your decision to sell individual assets rather than an entire portfolio, that would be helpful.
Yeah, well, you forgive me if I don't sort of comment on somebody else's real estate. We didn't bid for it. It wouldn't really meet our criteria. I understand that there's possibly quite a lot of investment required. So I don't think it's really of a nature that is comparable with our own real estate. You know, our real estate is super prime real estate that's well-maintained with great occupiers. Therefore, it's about making sure that we make good decisions on leasing and placemaking to support that growth long term. I think it is fair to say that the market is probably less strong to the north side of Oxford Street, both from a consumer perspective and possibly from an investment perspective.
You know, if you've been walking around the West End and our super prime locations over the last six to seven weeks, you'll just see how busy they are, and that's sort of reiterated, if you like, or endorsed by the level of leasing activity that we've got. It doesn't feel... You know, whenever I visit other parts of London, it doesn't feel as busy as perhaps the core is. So, you know, that's been a trend now that we've been witnessing really for the last 18 months. It's just got busier and busier and busier.
The process of disposing of Charlotte Street is not influenced by anything other than what we see in terms of the people that are interested in the portfolio, and that's showing to us that we'll get better pricing by breaking it up, which is what it is. You know, it's lots of different properties in different locations. It's not. It doesn't really have the same concentration and the heart that Carnaby Street has or the Covent Garden Piazza has. So it's quite a different sort of offer, even to our own core estate. But we're, you know, we're hopeful that the interest that we've got will be converted into positive pricing.
Okay, thanks.
Did you have another question?
Yeah, just, just one, one more, which you may also say you can't really comment on. It's fair enough. But I was going to ask about 25-31 James Street, which you've been linked with in the press.
Yeah.
Maybe rather than asking, you know, for any specific update, if it's a live transaction, but does it complete the block? Is, is that the only piece of ownership, does it complete the block for you? And is there obviously therefore, like a marriage value element that's, that's factoring into the, to the pricing?
Well, look, those of you've known us for a long time know that there's been certain assets that we've always felt we could add value to. I don't think we've ever bought anything in the Covent Garden estate just because it was next to something else. I think we've bought things in the past because we think we can make money out of them. And, you know, hopefully, that will be the case on further acquisitions that we may or may not undertake. I haven't got anything further to say at the moment. But thanks for the question. Okay, we look as though we may have stunned you all into silence, and I notice that there is food. Is there food over there? I think so. But is there any further questions before we head over to the food bar?
Well, I hope you've found the presentation useful, and thank you very much for the questions. But I really do appreciate you all spending so much time with us today. We know that you're all very, very busy, but it's always nice to come into the West End, I think. It's always particularly Christmassy. Hope you get the chance to have a look around Covent Garden, Soho, Carnaby, Chinatown. We're all around over lunch, so if there's any questions, please do shout. And for those of you that are going to the tours, if you could assemble, maybe we'll start a little bit early, shall we? Start about one?
Yeah, just after one.
Yeah. We'll start assembling around 1:00 in the far corner. That would be great. But please do help yourself to the food. It's being unwrapped as we speak. And again, thank you very much for your attendance. Appreciate it.