Thank you, everybody, for joining. Sorry about that slight pregnant pause, but we're all present and correct. Great to have you all on the line. Thank you for your time. Bradley and I, who manage the Schroder Real Estate Investment Trust, are going to give you an update on the quarter, the most recently reported NAV as of 31st December 2024. Hopefully, more interestingly, just give you perspective on all the great stuff that's going on across the portfolio and give you a sense of where we see markets and why we think it is an interesting time to be looking at buying shares in a company such as ours. I will begin just by giving you the headlines.
Some of you who are already shareholders will know about these key points, but for those that perhaps do not know as quite so well, Schroder Real Estate Investment Trust owns a diversified portfolio of U.K. real estate, but very much focused on high-growth sectors with a high yield. I would not describe our strategy as worst house on the best street, but we are about buying good quality assets in good locations, but where those assets have characteristics that we can improve through our active management approach, excuse me, and drive higher levels of income, and then in turn pass that income on to shareholders through an attractive level of dividend. Our most recently announced dividend for the quarter reflects a yield on yesterday's closing share price of about 6.8%.
As I say, a disciplined approach to dividends, and that reflects a dividend cover of 104% over the quarter to the end of December last year. The other reason we've been able to continue delivering on that progressive dividend, and I'll demonstrate that in a bit more information, in a bit more detail later, is because we have great visibility of our interest cost. We have, we believe, the best debt structure within the peer group. Our average interest cost at the moment is 3.5%, but really critically, almost three-quarters of that is actually fixed for 11 years at 2.5%. Share price today, for various different reasons, obviously, sentiment towards U.K. real estate remains on the cautious side in many areas, but that does mean that the current share price reflects a 14% discount to the December net asset value.
I guess just worth noting that that's an independent valuation done at the end of December by CBRE, the biggest valuation firm in the market, which we do think is an attractive entry point. Actually, very positively, we are seeing an evolving shareholder register. For us, that means having a higher proportion of investors coming to retail platforms such as yourselves, and that's very positive in terms of buying support alongside the, if you like, the traditional investor base historically of smaller wealth managers. The final point to note is a year or two ago, we announced a strategic evolution where we came out and basically re-articulated our very active approach to be clear how sustainability forms a really important part of how we are managing our assets, with the real focus on driving higher earnings growth.
As we've said before, an increasing number of tenants are prepared to pay what we would call a green premium, a rental premium for occupying more energy-efficient, sustainable space. We are also increasingly seeing investors being prepared to pay a premium for assets that have those characteristics. Just briefly in terms of the portfolio characteristics, I've noted we have a direct portfolio of U.K. real estate concentrated in what we see as being the high-growth parts of the market. We are very diversified, and Bradley will give you more color on this later in the presentation, but we have 38 assets, 317 tenants, so very nice granular income. To portfolio value at the end of December, GBP 474 million.
Once you allow for our debt, which I'll come on to in a bit more detail, that reflects a net asset value of a smidge under GBP 300 million and a net loan to value of just under 37%. Significant focus alongside financial performance, as I say, on improving the sustainability characteristics. We participate in the leading real estate sustainability benchmark called GRESB, Global Real Estate Sustainability Benchmark, and we're seeing continued improvements in our scores there, and more importantly, continued high levels of activity actually at portfolio level in terms of implementing initiatives that are driving that green premium. The strategy itself, I wouldn't say sector agnostic, but we have a lot of flexibility within the strategy to asset allocate to where we see the higher growth coming through.
I think that is a competitive advantage when you compare us to other companies who are more constrained because they are single sector, single sector focus. What we've been doing over the last few years is increasing our allocation to multi-let industrial estates, which represent just over half of our portfolio value now. The remaining 50% of the portfolio, as I say, is concentrated in good locations, but focused very much on offices in the best locations where we can drive value, convenience retail, and related ancillary uses. I'll give you more examples of that shortly. Alongside, obviously, share price return, net asset value total return, we're also able to assess the performance at an underlying asset level.
We recently, some of you will recall, won the award for the best 10-year return at portfolio level to the end of 2023, compared with all underlying portfolios for U.K. and Europe within the MSCI index, which is the biggest sample of institutional real estate. You can see here the most recent data we have to the end of December, over one year, a total return from the portfolio of over 8%, so 300 basis points ahead of the benchmark, and the spread actually over the longer term, even wider than that. We are very proud of our performance.
That is testament both to having the right asset allocation, but equally, it is the fact that Bradley and I have a team of over 100 people within the U.K. business at Schroders who are specialist investors, asset managers, but also subject matter specialists in sustainability and all the other supporting functions you would expect from a business like Schroders, which help us really drive the performance at portfolio level and, as I say, make the right decisions in relation to asset allocation, but also financing that has helped drive the net asset value total return. Just to give you a flavor of the portfolio, if you like, what is under the bonnet. We are showing you six assets here, which represent pretty much half the portfolio value, not quite, but almost.
As I mentioned, half the portfolio now sits within multi-let industrial estates. We think it is a great sector still to be in.
Structural tailwinds clearly supporting continued occupational demand, obviously from logistics as retailers change their supply chains, but also last mile delivery. With multi-let estates, all the other myriad of occupiers that you have serving the local economy. We've been very clear in terms of buying these assets in densely populated urban areas. The two assets you can see here, very big estates just off the A5 in Milton Keynes. Likewise, probably one of the biggest contiguous industrial ownerships just on the outskirts of Leeds, just off the inner ring road. Some really positive activity here, one most recently that Bradley will touch on at Milton Keynes, where we have developed a small infill development, which is something that we're doing as we're gradually improving these estates through refurbishments and capturing that rental growth. Within the office sector, these are our two biggest office exposures.
These are our two assets where we have co-ownership holdings amongst other Schroder managed funds, simply because the assets were too big for us to buy on our own. The middle top one, really interesting location, Bloomsbury sits, as some of you will know, just north of Tottenham Court Road, clearly benefiting from the Elizabeth Line, but also lots of mixed uses around UCL and then going up towards the medical corridor and all the cluster of knowledge-based tenants up at King's Cross. Very interesting location in terms of spread of occupier profile. We have a building here let off a very low rent compared with comparable new build property where we hope long term there is the potential to explore significant reconfiguration, possibly even secure planning consent for a bigger scheme, which we might look then to sell on. Our second biggest office exposure is City Tower Manchester.
This is a big lump right in the middle of Manchester next to Piccadilly Gardens. Spread of uses, so hotel, office tower, educational use, and then retail and leisure at lower levels with fantastic footfall, which you'd expect in that sort of location. Huge amount of asset management going on, which Bradley, again, will touch on later on in terms of leasing up refurbished space. Finally, what we call value and convenience retail. Essentially that means from a retail park perspective, limited fashion, very much focused on food retail such as Lidl, Aldi, the discounters like Home Bargains, and again, associated uses. By buying these retail parks, typically at sustainable rents of somewhere sort of low teens, we can deliver a lot of asset management. Recent examples at Bedford include putting a Starbucks pod on the car park, generating about GBP 150,000 of new rents.
Increasingly, we're also looking at putting EV charging points on our sites. Both, in fact, at Bedford and at Headingley, we've done deals with a subsidiary of Octopus Energy where the rents are very attractive for virtually no capital expenditure. Value retail, which is where, as I say, we see continued growth opportunities. Debt, I think this is a real differentiator. As I noted earlier on, this is the, if you like, from the left-hand side, that dark blue bar, the GBP 130 million, that's approximately 75% of our dual debt, all-in cost of 2.5% fixed. That's 2.5% fixed for 11 years, which gives us that fantastic bedrock of debt where we know we very well know refinancing risk, which allows us to focus on that top line earnings growth.
Alongside that, we have a tactical revolving credit facility with RBS, which runs until 2027, part of which is capped at 4.25%. In the money, we have an element of unhedged, which is that 21 million, you can see there in green. We are steadily undertaking a small number of small sales where those proceeds will partly go towards further capital expenditure projects, but also we hope pay down that floating exposure and in doing so as well, bring that loan to value from where it is at the minute, 36.5%, down to within our long-term strategic range of 25%-35%. We think part of that will happen naturally with values going up, but we have that range, again, expressed as a long-term range because we think that is the optimal loan to value looking through the cycle.
It's worth noting, although we're above our range of 35, that's very much internal guidance. We have tons of cover against our actual banking covenants, both from a loan to value, but also an interest cover perspective. We hope in time you'll see that drift down slightly. I guess as a related point to that, and one of the reasons why we did see the LTV tick down naturally is because we are seeing a recovery in U.K. property values. In fact, the net asset value per share increase over the quarter to December at 2.5% or 4% in NAV total return with the dividends was actually our strongest quarterly performance from June 2022, when we saw obviously the value correction, partly because of a general increase in rates, obviously accelerated by the disastrous mini budget.
We saw an increase in EPRA earnings, which again, as I said earlier, reflects that 104% dividend cover. We have also noted here the small sale that we did with a further small sale actually completed since quarter end with more in progress. I guess one point to note, it's a technical point, but it is probably worth noting is because our loan, I mentioned the Canada Life loan, is a fixed rate loan, we do not reflect the fair value of that as we would were it a swap or a derivative. If you do fair value that loan at 2.5% for 11 years, the value of that today is about GBP 18 million. In a sense, that is GBP 18 million of value, which is not coming through the NAV in a way that it would do were it a derivative.
Now, dividends, this is certainly why we own the shares, and I imagine it's a key reason why some of you own the shares. You can see here the progression in the quarterly dividend as we have been implementing the strategy, particularly as we came out obviously of the pandemic. I guess the key point here is as we implement the strategy where we believe it is sustainable to do so, we will recommend to the board that they continue increasing the dividend. That was reflected in the 2% uplift over the quarter to be paid around now, but also reflecting the 7%+ increase over the most recent financial year. You can see they're ticking up.
One of the things hopefully you'll take from Bradley's presentation is if we are able to crystallize the reversionary potential in the portfolio, the fact that our market rents and through leasing up vacant space will increase the rents we're receiving, then we have confidence, hopefully you'll have confidence that we continue driving that earnings growth. Now, final section for me before I hand over to Bradley, just a bit of color around where we see the actual U.K. real estate market more broadly. What we're showing here are data points from the MSCI index. This is the index I mentioned earlier. This is the biggest sample of a representation of how the wider U.K. real estate market is performing. This is principally commercial assets. Obviously there's industrial, retail, all of the above.
What you can see here, most notably, you can obviously from the left-hand side see the very sharp correction we saw in values in the GFC period with property values at that point in nominal terms falling 44%. What you can also see if you scroll forward is that period of 2022 to 2023, where after that mini budget we saw values fall approaching 25%. Not on the scale of a GFC period, but actually from a historical perspective, pretty significant correction. Now, our view, and these are our forecasts, so the only certainty is that they are wrong, but our view is that we are at an interesting inflection point for the markets.
Although interest rates have not fallen by as much as some commentators were expecting and probably are unlikely to move this week, the consensus is that looking forward over the next two to three years, interest rates will be supportive of real assets because although inflation is likely to remain stickier, we are expecting and certainly market consensus is that we will gradually begin to see interest rates drift downwards. The sector, in contrast with the period immediately before the GFC, for example, already offers a premium over the risk-free rate. If you take the 10-year gilt today, whatever it is, 4.7%, average real estate yields are give or take 5%-5.5%, in our case, somewhat higher. You do already have that spread over the risk-free rate.
I think what is interesting and what differentiates this cycle from previous cycles is the fact we are still seeing healthy levels of rental growth and actually saw healthy levels of growth through the most recent correction. Going forward, you can see here on the right-hand side, a combination of that initial income return of around 5.5%, rental growth broadly tracking inflation, and some lift coming from a steady fall in interest rates means that we think the underlying property market will deliver returns of somewhere between 8%-9%, taking the four to five-year view, which is broadly speaking above the average and also why we are beginning to see more interest in the sector at the moment, in particular private equity interest, a lot of U.S. money, for example, who sees the U.K. market as an interesting opportunity.
I guess just to provide a bit more color behind some of those points, moving from the top left, you can see here that the moving capital value is down. We have had that 25% reduction in values post June 2022 in nominal terms. Interestingly, you can see there the industrial sector, the light blue line was first to correct because the yields were lowest, but actually you will now begin to see that tick up as sentiment improves, as I said earlier on, because we see continued rental growth in that sector and a lot of institutions remain underallocated. We are seeing continued demand for the types of industrial assets that we own. The rental point, this is really stark.
This is showing you over the 32 months from the June 2022 correction, how rents are behaving in nominal terms and comparing that to how those nominal rents behaved in previous downturns. What is really striking is how over the most recent cycle, rents are up about 18% on average compared with that GFC period coming out of the 2007 period of rents falling 5%. That is a really big delta in the way that the rents are behaving. Why is that? Firstly, I guess most simply, and this is sort of real estate 101, it is a good hedge. Now, often real estate is described as a good hedge from a total return perspective. It is much less so in relation to the capital side, but it is definitely the case on the income side.
What we're seeing here is how rents are a hedge against the higher inflation levels that we've seen. I think what's also important, and this is sort of more of a causal link, is that the impact that inflation has had, but obviously other factors, particularly in the pandemic in terms of supply shortages, in terms of the impact of construction costs. Labour shortages in the U.K. as well, I guess, is a factor here. More broadly across Europe and the awful things we're seeing in Ukraine and the Middle East, actually assuming those conflicts are resolved, we are likely to see significant boom in construction elsewhere in Europe, which will add to this construction pressure. What does that mean?
It means actually rents are likely to remain, I guess, attractive in terms of growth because of that supply shortage, because construction costs are likely to continue increasing, perhaps at a slower rate, but likely increasing. That will reduce supply. I guess it's important to note that's a reduced supply from an already constrained supply side. What we're showing here is data points focused because it's the most acute part of the market in some respects for the core office markets across the U.K. For example, here, we're showing you the total vacancy rate of Grade A, so the best quality space in orange, and then the total vacancy rate of all building types of offices in the blue bars. Just to illustrate one given time, if you move to the right-hand side to Edinburgh, Edinburgh's Grade A vacancy rate is sub 2%.
That's essentially no vacant space. Likewise, the overall vacancy rate that you can see there of 8% or just below 8% is significantly below the long run average. Again, it's a simple point to say we are expecting the occupational markets to remain resilient. We are expecting increasing competition for the best quality space, whether as a shortage, which will, we believe, lead to continued growth in rents, supporting returns, even though, as I said earlier, we're not expecting rates to fall dramatically in terms of interest rates, but we don't need to. The return, we can deliver an attractive return simply from the income return plus the impact we get from further rental growth. With that, I will pass over to Bradley before I come back and wrap up shortly.
Thanks very much, Nick. Good afternoon, everyone. It's good to talk to you for our latest quarterly update. It's a really nice sunny day here in London, and there's certainly some green shoots in the real estate market, as Nick was just explaining. Now, looking at slide 12, we set out our strategy. Our strategy for creating total returns in this improved U.K. real estate environment, we've got a really clear strategy as to how we can deliver enhanced total returns for our shareholders. We believe that by making meaningful improvements to the sustainability performance of our assets, we can increase the rents materially, and we can do it in a profitable way. We believe we can profitably generate the green premium. We've been operating this strategy for a while now.
It formally came into force on the 1st of April 2024, having got shareholder approval in December 2023, but we were implementing this strategy before then. What that means is we now have a growing number of examples where we have achieved higher rents from improving the sustainability performance of our assets. We've actually got five examples in this presentation that I'll touch on as we go through. The first of those five examples is Stanley Green Trading Estate, which we've summarized briefly on the right-hand side of the current slide. Here we developed 11 EPC A+ units. They're also BREEAM Excellent, and they were net zero, operation net zero in design. Those 11 units are on an existing estate.
What we've seen as we lease up those units is the rents that we've achieved are materially higher than the rents of the old brown units on the existing estate. In fact, they're 39% higher for similar units, so similar size. Now, not all of that's going to be green premium because the units are newer, but we believe a material element of that 39% higher rent is green premium. Not only do you get higher rent for these higher spec and sustainable units, but our independent valuer is applying a keener yield, so a lower yield. You get more value for every unit of rent. The new units that are let are being valued at a 5.2% yield, whereas the old units that are let are being valued at a 6.25% yield.
The green premium encompasses a higher rent and a keener yield, which together creates a higher valuation. This is really strong proof of the concept of the strategy, we believe. We have only been able to implement this strategy because we have a really strong team of real estate-specific sustainability experts. Each of our sustainability team are a subject matter expert in their field. We can work with them to spec these units in the best possible way from an environmental perspective, but also work with our asset managers and ensure that they are exactly the sorts of space that the tenants we want to attract are looking for. We think that this depth of expertise really differentiates us from many of our peers in the investment trust market. Now, moving on to slide 13, our two further examples.
Across the next four examples I'm going to talk about, we're looking to increase rent from the December passing level by GBP 1.9 million, which is material in the context of an annual rent roll of GBP 28.5 million at the end of December. Now, on the left-hand side, we've got one of our retail warehouse assets. This is Churchill Way West in Salisbury. We recently took back two units for redevelopment. In the top left-hand picture, you can see it's the two units on the left-hand side. There were a Smyths Toys and a HomeSense. We've took them back, so they're now vacant, and we're in planning. The reason for that is because we've agreed a lease with Lidl to bring them to the scheme. We're bringing in a really strong tenant covenant.
They're on a 25-year lease with a break at year 20 at a really great rent. The rent Lidl will be paying is GBP 440,000 per annum. On a per sq ft basis, that's 67% higher than what HomeSense and Smyths Toys were paying. How are we able to agree such an increase in rent? We're spending GBP 1.5 million to bring those units up to a much higher sustainability specification. We're targeting an EPC A. In addition, Lidl are going to put PV on the roof, and we're also going to have EV chargers in the car park. We're going to have fully electric HVAC systems so we can benefit from the greening of the grid as well as those PVs. A really good example there of using our expertise in sustainability to bring Lidl to the site.
On the right-hand side, we're showing one of our multi-let industrial estates. As Nick says, it's a really interesting time for multi-let industrial estates with favorable supply-demand dynamics and lots of different occupiers looking for space on these schemes. At Swindon, at Stirling Court , we undertook an extensive refurbishment of two of the units, two out of three of the units. We moved the EPCs from a C and a D to a B. We've let one unit so far, one of the two refurbished units. The rent we've achieved at that unit is 32% ahead of the previous passing level. It justifies that capital expenditure we've made. In addition, the second unit is actually under offer at 41% ahead of the previous passing level. Again, we're showing how we can profitably generate that green premium, create a more resilient liquid portfolio.
Just to look at some of the returns, the income yield on cost at Salisbury was 12%, which is really attractive given what you'd have to pay for a retail warehouse with Lidl as the occupier and such a long lease with inflation-linked uplifts. I would like to talk about a couple more examples. On slide 14 now, we've got Holland Lane on the left. Holland Lane is on Stacey Bushes , which is actually the fund's largest asset. Stacy Bushes is a multi-let industrial estate in Milton Keynes. Fantastic asset. What we are focused on here is a site we call Holland Lane. We had an old unit on this site. It was only around 5,000 sq ft. It was a very low site cover. We saw an opportunity to replace that, and we have done.
We've developed a 17,000 sq ft industrial unit on the site. So we've increased that site cover so we can increase the per sq ft and the rent. And what we've done here is, again, similar to Stanley Green, we designed an operation net zero carbon unit. It's achieved EPC A+ and BREEAM Excellent. And it's currently under offer to an international EV manufacturer at a rent of GBP 14.79 per sq ft. Now, to put that into context, that's 42% higher than the ERV across the estate of GBP 10.41. So similar to Stanley Green, we're seeing this sort of 40% rental premium for the really sustainable units. And not only are you getting that rental premium, there's also the keener yield. And in addition to that, we're able to attract these really strong tenants.
For example, Stanley Green, we've got Siemens and this tenant who I can't name at the moment, but international EV manufacturer, really strong covenant. On the right-hand side, we've got an office example. This is St Ann's House in Manchester. Now, we're undertaking a really extensive refurbishment at St. Anne's, and we're looking to push on the sustainability performance similarly to how we have at the other assets I've described. We're extensively refurbishing the ground floor and the basement floor and the common areas to improve the amenity and to improve the utilities in order to attract better tenants at higher rents. To put that into context, we are currently refurbishing the fifth floor as well. We're going to do a Cat A refurbishment.
Given the improvements we've made on the ground and in the basement, we're able to quote a rent of GBP 28 per sq ft. To put that into context, it's 74% higher than the rent that was previously passing from the tenant who recently vacated. It shows if you do the right works to your assets, you can achieve these much higher rents. By the way, GBP 28 per sq ft is a fairly conservative target, and I'd hope the team can exceed that. Is this profitable? We've got a GBP 2.4 million capex budget here. We've spent GBP 400,000 already. There's GBP 2 million to go. We think the valuation uplift could be in the region of GBP 7 million. Yes, we do see this as being profitable. Moving on to slide 15, we look at sort of portfolio level analysis.
This also shows a reflection of how we are implementing the strategy. For example, we've got a very diversified portfolio. We've got 38 properties, more than 300 tenants. We think that spreads risks and improves the resilience of the portfolio. In addition, we've got a really attractive income profile. Our net initial yield is 5.6%. In fact, once the University of Law rent-free ends in October, it will be 6.1%, all else being equal. As Nick mentioned, we've got this really high reversion yield of 8.4%. To put that into context, because I can understand these yields are a bit abstract sometimes, the net initial yield reflects an annual rent of GBP 28.5 million. The reversion yield represents an annual rent of GBP 39.6 million. It is around GBP 10 million higher.
If we're able to capture some of that reversion of GBP 10 million, we can potentially move that dividend on quite materially as well, because the annualized dividend at the moment is just over GBP 17 million. Clearly, GBP 10 million is very material in the context of an annual dividend of GBP 17 million. In addition, with regards to the strategy, we do employ a research-led approach to sector selection. We've got a fantastic research team. As Nick says, and as I've reiterated, we like multi-let industrial estates. Half the portfolio is in multi-let industrial estates, and we're very much overweight industrial. In addition, we like retail warehouses. It really plays on the theme of changing consumer preferences. We are overweight retail warehouses as well. In fact, taking our industrial and retail warehouse allocations together, that's 63% of the fund.
Now, moving on to slide 16, a brief look at our tenants. These top 15 tenants represent almost a third of our passing rent. If you can get comfortable with these tenants, and we are very comfortable ourselves, then you can get really, you can get some good comfort around the quality of our rent and the quality of our income. A few points to draw out. There are only two tenants that represent more than 3% of the passing rent. It speaks to that diversification and granularity again and the resiliency of the portfolio. When you look down this list, you'll see really good, strong household names. As I said, we think this is a good, strong tenant lineup.
Moving on to slide 17, we can see here the sort of bridge to get us from that annual rent of GBP 28.5 million to that reversion rent of GBP 39.4 million that I described earlier. What this looks at is the cash passing rent. The annual rent is the cash passing as of 31st of December. Since then, we have already had fixed uplifts. These are usually the end of rent-free periods. We have already had GBP 800,000 of additional rent come online since the end of last year. Before the end of 2026, we have another GBP 4.7 million of fixed uplifts coming through. That is mainly the end of rent-free periods. There are some fixed uplifts in our existing leases as well. Now, half of that GBP 4.7 million relates to one tenant who I mentioned earlier.
That's the University of Law who occupy our asset in Bloomsbury that Nick spoke to. A really interesting area. Half of the GBP 4.7 million is coming in in October this year. At Stanley Green I mentioned, we developed those 11 new units. Nine of them are currently, well, eight of them are currently let. Two more are under offer. In fact, one of those is let as well. There is only one more unit to let. Of that GBP 400,000, GBP 190,000 is let. We're working hard to get the other sort of GBP 200,000 of rent into Stanley Green as quickly as possible. There are some units in our portfolio where the passing rent is below the market level of rent. The market level of rent there is determined by our independent valuer.
As rent reviews come around, as lease renewals come around, we can hopefully push those rents on to get up to the market level. Finally, we have GBP 4.2 million of vacant space. Taken with Stanley Green, it is GBP 4.6 million of vacant space. We are working hard to let that. In fact, as at the year end, so the end of 2024, of the 11.6% of void space, we have actually got 3.6% lesser under offer. This is shown on slide 18. Actually, if you look at void, our void has been above 11% for over a year, even 18 months. It is a result of these new developments and refurbishments being underway and coming online. It takes some time to let those sorts of tenants in on the terms that we want.
Actually, the 10-year range is 5%-13%, and we'd probably target around 8.5% on an ongoing basis. We always need some void in this strategy because we want to work the assets. We want to do the CapEx and refurbishments, and therefore you have some void space. What we see is a real opportunity as we bring this void down from 11.6%- 8.5%. If we can then maintain at 8.5%, you kind of get this boost, this one-off boost in income. On this slide, we set out some of the activity we have underway where we are bringing that void down. We're hoping to release a trading update in the coming weeks to sort of crystallize some of that letting activity to the market. As I said, we think the current void is actually an opportunity.
As Nick showed in the previous slides on our dividend, despite our void being above 11%, in the last 12 months, we've increased our dividend by 7.3%. We have been able to grow earnings and push that dividend on whilst we're undertaking these works. I'll pause there and hand back to Nick, and it'll be fantastic to have some questions from you. Excellent. Thanks, Bradley. Thanks, everybody, for joining again. I won't spend too long here, but I think hopefully what comes across clearly in the presentation is that we are well positioned. We have an attractive yield profile from the portfolio, which is supported by a sector-leading low cost of debt. Looking forward, although there is still clearly uncertainty, particularly around geopolitics, we do think the U.K. real estate market has moved and repriced to an attractive level and that we are at a turning point.
We think actually our portfolio is positioned in a way that we can benefit, particularly with the overweight position to multi-let industrial and in particular the active management opportunities that are coming from that. The final point to note is I think we are now seeing real evidence that our strategic pivot and the investment we have made as a business into that sustainability resource is really now bearing fruit in terms of proper illustrations of how we are driving that green premium and how that is such an increasingly important part of what occupiers and investors are expecting from the commercial real estate sector. Again, thank you to those people who have bought shares.
We will be looking to increase communication through channels like this, but also we're expecting to make a trading update just with progress on some of the activity Bradley's touched on over the course of the next week or two in anticipation then, obviously, of our year-end results to 31st March, which we will be releasing to the market at some point in June. With that, Jake, I will pass back to you.
Perfect. Nick, Bradley, that's great. Thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the right-hand corner of your screen.
Just while the team take a few moments to review those questions that were submitted already, I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can all be accessed via your investor dashboard. Guys, as you can see there, we have received a number of questions throughout your presentation this afternoon. Thank you to all of those on the call for taking the time to submit their questions. At this point, if I may just hand back to you to read out those questions and give your responses where it's appropriate to do so. If I pick up from you at the end, that would be great. Thank you.
Fantastic. Thanks, Jake. Good questions, which we'll address. The first question talks to the leverage point.
With a low cost of debt, is there room for you to increase leverage for acquisitions, or is a conservative debt profile a key priority? I think we're leaning more towards the latter. I think the guidance that we have agreed with the board at 25%-35%, I think, is a very good discipline. When we increased above 35%, it was done consciously because we were using the RCF to fund some of the income and value-enhancing activity that Bradley's touched on, notably the Stanley Green development. Having done that, although, as I said, we are seeing values tick up, we are taking positive action now through those smaller sales. As you'll have seen, hopefully, some of those are quite meaningful premiums to use that cash to repay that more expensive part of the unhedged debt and obviously hold some back for capex.
As to the question of acquisitions, I think if we had more firepower, we would now be buying. I think we do see this as an interesting point to be buying assets, particularly where, as we do, you've got the capability to drive the asset management strategies. Unfortunately, at the moment, we don't have that firepower. Bradley and I have been spending time looking at the portfolio with the board, exploring whether there are some perhaps bigger assets that we can sell where we have done the active management at those lower yields and then recycle that into high yields. I think I would hope that during the course of the next 12- 18 months, we will have executed some of those lower yielding sales that does give us more firepower to go back into the markets.
The next question, what actions are you taking to maintain the dividend coverage and ensure long-term sustainability of dividends? I think this is partly about the active management. Bradley, I do not know if you want to just talk to some of the other things we are doing to optimize earnings.
Yeah, absolutely. Probably just because you just described the leverage, one of the things that actually is very helpful is because such a large element of our debt is either fixed or hedged, we know the interest cost looking forward. When we are looking to increase the dividend, it helps with that forecasting because for a long period of time, we know almost exactly what we are going to be paying in interest cost.
In terms of the top-line rental growth, it's absolutely about that active asset management, always looking to do what occupiers want so that we can push rents on. As I said, we've got a clear strategy focused on sustainability to do that. We've got an increasing number of examples where we have done that and the rents are moving on. Very controlled on our cost side. Our ongoing costs are 1.2% of net asset value for the half year to September, which we think is a very competitive level. Yeah, just it really is about that active management, pushing rents on, reducing voids, sending assets where we've completed business plans, and potentially recycling into high-yielding assets where we can sort of increase the rent with that yield arbitrage.
Yep. Absolutely. Thank you. The next question, so what specific strategies do you anticipate will continue driving growth in net asset value, particularly in the face of changing market conditions?
Yeah, great question. I guess, as we've touched on, our strategic evolution that we announced two years ago was partly because we could see that there was an increasing emphasis from both occupiers and investors on buildings offering high sustainability performance. I think that is working. I also think by being diversified and having the flexibility to tack and change between sectors, I think that is also an advantage and allows us to respond to those changing market conditions. We're always looking at where the ball's going, if you like, rather than the rearview mirror. I think as we look forward, Bradley and I feel that perhaps parts of the living sector could be interesting. We like operating assets.
In other parts of our business, we are owning and operating, for example, self-storage. We're owning and operating hotels. Therefore, we're able to draw on that specialist expertise where, for example, we've got a hotel component of one of our existing mixed-use assets. I guess what I would say, though, just to finish off is from the macro perspective, it does appear that inflation is going to be stickier. It does appear that rates may be higher than perhaps the market was expecting 6, 12 months ago. Therefore, for us, where we have a high-yielding portfolio, where we've got the asset management expertise to really capitalize on the property risk and not be reliant upon simply yields falling to demonstrate or to deliver that return, I think it puts us in a really good position.
I don't think you should expect us to do anything fundamentally different in the way that we're managing or asset allocating. What you can see over time is we can use our top-down research and that bottom-up asset management capability to pivot strategy to optimize that return. The last question, which I'll just pass to Bradley, just partly in relation to I touched on acquisitions, but are there any transactions anticipated, either acquisitions or disposals? Bradley, I guess the latter is probably something you might want to comment on briefly.
Yeah, absolutely. We are looking to sell some of our assets. We are focusing on those assets where they're smaller. We've completed business plans, and there's probably higher ESG risk in them. In terms of acquisitions, once those assets are sold, we would be looking to acquire high-yielding assets in the strategies Nick has outlined.
We still like mostly industrial estates. We still like retail warehouses, particularly in the regions where you can get that higher yield and you can undertake rolling improvements similar to the Holland Lane and the Stanley Green that we have done before. That is how we are looking at the moment. There is potential to sell some of our lower-yielding assets, potentially. We have got one or two low-yielding assets where you can recycle them into a high-yielding asset and make a sort of immediate generating immediate increase in rent, as well as giving us some asset management opportunities to go after.
Very good. We have now got one question, which is actually two more. That is great. First question, interesting. When I look at the Hargreaves Lansdown fact sheet, it says your NAV per share in December was GBP 0.645, but our RNS says GBP 0.609. Can you shed some light on what HL are showing here? Is it some other definition?
We will check that firstly, and we will come back through the platform and confirm it. I can tell you with certainty that our NAV is 64.9p. That is one thing I can say. What I would say, and this might be Bradley might have a view on this as well, it could be the point I mentioned earlier in relation to the fair value of our debt. As I mentioned, the fair value of our debt is GBP 18 million, GBP 18 million. Under accounting rules, we are not able to include that within our accounting NAV that we disclose to the market. Sometimes the platforms add it back as an NTA number. When it comes to working out the discount, the real number is 60.9.
If you are, however, like we do, if you're prepared to look at what the real value is in terms of the fair value for debt, then you can argue that it's the higher number. We always encourage people just to ignore that because it changes, obviously, with very extreme rates. We will just double-check that with Hargreaves Lansdown, and we'll confirm back the exact reason through the platform.
The final point, would you consider taking a proactive approach in the ongoing sector consolidation ?
Yeah. I guess what we are most focused on is business as usual, driving earnings, and increasing the dividend. That's fundamentally what we believe is in shareholders' best interest at the moment. We have previously, with the board, been asked to make proposals on other companies that were in a formal process. I can say that now.
That's not currently going where we were asked, as I say, to make a proposal. As I say, our priority is to focus on the business as usual, whilst also obviously looking at potential opportunities where they are in shareholders' interests. I guess that's probably the simplest way to answer that question, noting that clearly there's a lot of activity in the market at the moment, including you may have seen last week, for example, the Assura where there's a bidder paying NAV. Jake, I think we've come to the end of the questions. Thank you, as always. Back to you.
Absolutely. Nick, Bradley, that's great. Thank you very much indeed for addressing all of those questions that came in this afternoon. Of course, if there are any further questions that do come through, we'll make these available to you after the presentation. Nick, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.
Thanks, Jake. I always say sort of in jest the bottom of the market for me was middle of last year when I was asked to attend a panel called the Undatables. The real estate sector has had a difficult few years on the capital side. Interestingly, as we have hopefully demonstrated today, on the income side, it is a different picture. We do think we are at an inflection point. We are cautious about the speed of recovery for the reasons I noted, but we do think we are at an inflection point for U.K. real estate.
Therefore, we believe that the current share price rating, the discount, the yield on share price, but importantly, the future growth means that we are an interesting proposition. We'd love you to continue to engage with us through this platform. I guess I'll just finish from a trader's perspective saying thank you, everybody, for your time. We look forward to seeing you again soon.
Perfect. Nick, Bradley, that's great. Thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can really better understand your views and expectations? This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Schroder Real Estate Investment Trust, we would like to thank you for attending today's presentation. That now concludes today's session. Good afternoon.