Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
WWW.BRITISHLAND.COM
HALF YEAR ENDED 30 SEPTEMBER 2013
HALF YEAR RESULTS PRESENTATION
RESULTS OVERVIEW
Chris Grigg
Chief Executive
1
INTRODUCTION
• A strong set of results
– Improving performance from Retail
– Further step-up in Offices’ performance
• Successfully executing our plan
– Investing our placing proceeds
– Increasing our development pipeline
2
3
PERFORMANCE HIGHLIGHTS
HY to 30 September % Change
UK Valuation £11.2bn +2.8%
Capital Returns vs IPD +100bps
NAV per Share 623p +4.5%
Dividend per Share 13.5p +2.3%
6 month Total Accounting Return 6.8%
-80
20
120
220
320
Asset Management Development Yield Movement Total Valuation
MATERIAL IMPROVEMENT IN VALUATIONS
4
UK Valuation Drivers £m
H1 2012/13 H2 2012/13 H1 2013/14
£22m £90m £309m TOTAL VALUATION MOVEMENT
STRONGER LETTING ACTIVITY
• Investment lettings and renewals at 5.4% ahead of ERV
Future Annual Rent Added Increased Letting Activity
6.1
9.8
14.1
H1 2012/13 H2 2012/13 H1 2013/14
Lettings/renewals and Rent Reviews
Sq ft 000’s £m
5
410 433 609
59 110
322
H1 2012/13 H2 2013/13 H1 2013/14
Investment Lettings Development Lettings
INVESTING IN LINE WITH STRATEGY
ADDING FUTURE GROWTH TO THE PORTFOLIO
6
Rebuilding
our
development
pipeline
Successfully
investing
placing
proceeds
Accelerating
asset sales
• £1.1bn recently committed/near term development pipeline
• Focused on London offices and residential
• Significant profit potential
• Proceeds fully deployed ahead of expectations
• Largest deal Paddington Central (£470m)
• Expected to be accretive to earnings in current year
• Taking advantage of investment market strength to sell
• Sale of mature UK retail assets
• Proceeds reinvested in high quality locally dominant schemes
• Sale of Puerto Venecia reduces European exposure to 1%
1
2
3
RETAIL
7
IMPROVING RETAIL PERFORMANCE
• Strengthening capital returns (+1.5%) after 18 months of declines
• Performance driven by yield compression and asset management
• Continue to outperform IPD across all subsectors
Capital Returns (%) H1 2012/13 H2 2012/13 H1 2013/14
Retail Parks (2.3) (0.8) 1.0
Superstores 0.5 (1.1) 2.1
Shopping Centres (0.3) (1.0) 0.3
Department Stores (0.6) 3.2 6.5
Leisure 0.0 (0.2) 2.0
UK Retail (1.0) (0.6) 1.5
8
9
CONTINUED RETAIL POLARISATION
Retail Occupancy Retail ERV Growth
Indexed March 2010 = 100 %
97.4 98.0
94.7 95.3
88.3 88.9
Mar 13 Sep 13
BL All Retail IPD All Retail IPD Secondary
85
90
95
100
105
BL All Retail IPD All Retail IPD Secondary
Mar
10
Sep
10
Mar
11
Sep
11
Mar
12
Sep
12
Mar
13
Sep
13
10
Increased Lettings/Renewals
STRONG RETAIL ASSET MANAGEMENT
• Leasing activity significantly ahead
of last half year
• Lettings/renewals 3.8% ahead
of ERV
• Administration down to 0.2% of total
rent (from 0.9%)
• Occupancy up 60bps to 98.0%
• Continue to outperform on footfall 224
150 29
403 354
271
97
721
Retail Parks ShoppingCentres
Development Total Retail
H1 2012/13 H1 2013/14
Sq ft 000s
11
BREADTH AND QUALITY OF OFFER IN RETAIL
Food & Leisure
75,000sq ft
• Costa at Bradford, Elgin, Lincoln
• Giraffe at Milton Keynes
• Wagamama at Whiteley
• Ed’s Diner at Meadowhall
• Cineworld at Whiteley
Fashion
248,000sq ft
• Nike at Rotherham and Chester
• Outfit at Stockton
• Schuh at Glasgow Fort
• Fat Face at Drake Circus, Plymouth
• JD Sports at Ealing
Homewares
125,000sq ft
• Wren Kitchens at Colchester and Oxford
• CSL at Stockton
• Next Home at Colchester
• Harvey’s at Bradford, Wakefield and Oldham
TAKING ADVANTAGE OF MARKET STRENGTH
RECYCLING RETAIL ASSETS
12
• Increase in pace of asset sales
• £311m of retail assets sold to year to date; £243m sold last year
• Over £80m of deals under offer; more than £100m in the market
Retail Asset Sales (Year to Date) No of Assets Sale Price
Retail Parks 3 £70m
Foodstores 2 £15m
Shopping Centres 2 £215m
High Street 1 £11m
Total 8 £311m
INVESTING IN THE RIGHT RETAIL LOCATIONS
SOUTHGATE, BATH
430,000sq ft
Top 10 Bath as a UK
Tourist Destination
18m
Visitors pa
50% acquired for
£101m
13
INVESTING IN THE RIGHT RETAIL LOCATIONS
SOUTHGATE, BATH
Modern retail formats
Great brands
Bought significantly below
replacement cost
Growth potential
• Affordable rents
• Improving the occupier mix
• 5.7% yield when fully let
14
DEVELOPING IN THE RIGHT RETAIL LOCATIONS
WHITELEY SHOPPING
15
320,000 sq ft scheme
completed in May
7.8% yield on cost
Highly affordable
• Rents £25 - £45psf
• Service charge:
£3.50psf
Planning for 60,000 sq ft
leisure scheme
Nearly 2.5m shoppers since
opening
£90m estimated annual sales
OFFICES AND RESIDENTIAL
16
ANOTHER STRONG OFFICE PERFORMANCE
• Strong performance with capital returns of 5.4%
• Capital returns driven by both standing investments, 3.4% and
developments, 11.1%
• Outperformed IPD across sector and subsectors
17
Capital Returns (%) H1 2012/13 H2 2012/13 H1 2013/14
West End 3.6 6.2 6.9
City 1.5 1.4 3.8
BL Offices 2.3 3.4 5.4
Residential 4.8 3.1 3.6
BL Offices and Residential 2.4 3.3 5.4
West End City
64%
36%
43%
57%
41%
59%
BENEFITING FROM INCREASED WEST END EXPOSURE
18
£2.7bn £4.5bn
SEP 2013
(Reported)
SEP 2013
Including NDV of
committed developments
£5.5bn
MARCH 2010
36%
STRONG OFFICE ASSET MANAGEMENT
• Step up in letting activity across
investment and developments
• 439,000 sq ft of lettings/extensions
– 9.5% ahead of ERV
– Further 142,000 sq ft under offer
• Occupancy at 94.7% reflecting
completion and acquisitions
– City occupancy – 97.0%
– West End occupancy – 92.8%
19
Letting Activity by Sector
Insurance
TMT 37%
12%
8%
7%
3% 2%
Insurance
31%
TMT Insurance Corporate
Other Financial Legal
Oil & Gas
20
10-30 BROCK STREET
£20.1m ERV; 88% pre-let
Profit on cost of over 60%
10 PORTMAN SQUARE
£9.7m ERV; 51% pre-let
Profit on cost of over 50%
CLARGES
11% valuation uplift
Start on site Dec 2013
DELIVERING PERFORMANCE THROUGH DEVELOPMENTS
• Completed 637,000 sq ft of London developments
• 262,000 sq ft development pre-lets agreed/under offer
OB
TA
INE
D P
LA
NN
ING
CO
MP
LE
TE
D
CO
MP
LE
TE
D
21
CREATING OUTSTANDING SPACES – REGENT’S PLACE
10-30 Brock Street
Completion
another significant
milestone
10 Brock Street
100% let 3 months
after completion
Secures additional
£18m of rent for
16 years
Manchester
City FC
22
DELIVERING RENTAL GROWTH – REGENT’S PLACE
70
65
60
55
50
45
10/20 Triton St 20 Triton St 10/30 Brock Street
Debenhams
£
PSF
2009/10 2010/11 2011/12 2012/13 2013/14
42.50psf
70psf
Manchester
City FC
DELIVERING STRONG RETURNS FROM
2010 OFFICE DEVELOPMENT PROGRAMME
• Profit on cost over 40%; IRRs of c30%
23
65 133 167
216 297
400 192
188 192
175
126
90
Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13
Profit Taken Profit to Come
£257m
£321m £359m
£391m £423m
£490m £m
24
PADDINGTON CENTRAL
Acquired for
£470m
Fully let yield of
6.2%
Significant
opportunity to create
value from asset
management and
development
Third of vacant office
space already let at
terms ahead of ERV
on acquisition
SHOREDITCH ESTATE – EAST LONDON
25
Shoreditch Estate
Broadgate
E
S W
N
REPLENISHING OUR DEVELOPMENT PIPELINE
• 2.1m sq ft next phase London and retail development
(recently committed and near-term)
• £1.1bn total development cost
• Estimated profit to come of around £275m
26
Clarges
Estate
The
Hempel
Aldgate
Phase 1
Yalding
House
4 Kingdom
Street
Shoreditch
Estate
5 Kingdom
Street
2014
458,000 sq ft 2015
562,000 sq ft Start on site 2013
1,044,000 sq ft
NEAR-TERM PIPELINE RECENTLY COMMITTED
FINANCIAL REVIEW
Lucinda Bell
Finance Director
27
28
HIGHLIGHTS
HY to 30 September H1 2013 H1 2014 Change
Underlying Profit before Tax (£m) 137 146 +6.6%
Underlying Earnings per Share (p) 15.2 14.5 (4.6%)
Dividend per Share (p) 13.2 13.5 +2.3%
Net Asset Value per Share (p) 596 623 +4.5%
Valuation Performance 0.2% 2.8%
Total Accounting Return 2.4% 6.8%
29
£m
NET RENTAL INCOME MOVEMENT
272 275
(15)
13 3 3
(1)
H1 2013 PY Acquisitions/Disposals
PlacingInvestment
Developments Like for Like Other H1 2014
Like for like
Retail 1.5%
Offices 0.4%
Total 1.2%
30
£m
104
98
6
2
(3)
1
H1 2013 Ropemaker Sale Equity PlacingProceeds
Equity ProceedsInvestment
Other H1 2014
FINANCING COSTS
31
INCOME STATEMENT
HY to 30 September H1 2012/13 H1 2013/14 Change
Net Rental Income (£m) 272 275 1.1%
Fees & Other Income (£m) 8 7
Administrative Expenses (£m) (39) (38)
Net Finance Costs (£m) (104) (98)
Underlying PBT (£m) 137 146 +6.6%
Underlying EPS (p) 15.2p 14.5p (4.6)%
DEPLOYING OUR PLACING PROCEEDS
• £790m acquisition spend including £100m of development opportunities
• NIY of 5.7% on £690m of income producing investments
• £230m of prospective development spend
• Earnings neutral in H1; 0.5p accretive in FY14
32
Acquisition Spend
Prospective
Development Spend
£m £m
Paddington Central 470 180
Ealing Broadway Shopping Centre 143 -
Surrey Quays JV buy-out 48 24
Other Acquisitions 126 26
Investments 787 230
33
NAV (p)
GROWTH IN EPRA NET ASSET VALUE
596p
14p
623p
10p 10p
10p
(13p) (4p)
Mar 13 Developments Offices Retail UnderlyingProfit
Dividends Other Sep 13
34
STRONG VALUATION PERFORMANCE
HY to 30 September 2013
Valuation
£m
Uplift
%
ERV
Growth
%
NEY
%
IPD Capital Return
Outperformance
(bps)
Weighting
%
UK Retail 6,636 1.5 0.6 5.8 +50 59%
UK Offices & Residential 4,561 4.9 41%
- Of which Offices 4,401 5.0 1.7 5.5 +160 39%
UK Total 11,197 2.8 0.9 5.7 +100 100%
- of which Standing Investments 10,247 2.1 0.9 5.7
- of which Development 950 8.9
£0.6bn
£1.7bn
£1.0bn
£0.7bn £0.4bn
£1.7bn
£0.9bn
DEBT FINANCING – DIVERSE FUNDING PROFILE
• £610m of new financing
arranged in H1
• £3.1bn raised since 2011
(£2.6bn BL share)
• £1.3bn of facilities in place for
more than two years
• 75% fixed over 5 years
35
Diverse Debt Profile (30 September 2013)1
Drawn Unsecured Debt-undrawn
Debentures & Loan Notes
US Private Placements
Convertible Bonds Securitisations
Other JV & funds debt
1 Pro forma for the drawdown of the £200m 2014 USPPs and repayment of £200m of Drawn Facilities
36
STRENGTH OF BALANCE SHEET METRICS
Proportionally Consolidated 31 Mar 2013 30 Sep 2013
Loan to Value (LTV) 40.2% 42.3%
Average Interest Rate 4.6% 4.2%
Interest Cover 2.3x 2.5x
Average Maturity of Drawn Debt (years) 9.9 8.9*
Group 31 Mar 2013 30 Sep 2013
Loan to Value (LTV) 24.2% 28.5%
Average Interest Rate 4.4% 3.7%
Interest Cover 2.8x 3.3x
* Pro forma for drawing down £200m from 2014 USPPs
DEVELOPMENT PROGRAMME
DRIVING FUTURE PERFORMANCE
• 2010 committed office programme already 68% pre-let,
well ahead of plan
• Recently committed programme; profit on cost 25%
• Total pipeline of 3m sq ft
Sq ft ‘000 Current Dev. Cost £m
2010 Committed Development Programme 2,666 1,335
Recently Committed Programme 1,044 626
Near-term Pipeline 1,020 478
Total recently Committed/Near-term 2,064 1,104
Medium-term Prospects c1,000
37
DEVELOPMENT PROGRAMME – CONTRIBUTING TO
FUTURE PERFORMANCE
• Current development commitment
of £1.3bn
• Residential commitment at £500m
level, as previously set
• New developments to come on
stream as 2010 programme
completes
• Capacity to further replenish pipeline
as 2010 developments complete
38
Development Commitment
0
200
400
600
800
1000
1200
1400
Mar 13 Sep 13 Mar 14 Sep 14 Mar 15
Near-term Prospects
Recently Committed Developments
2010 Committed Developments
£m
39
A PLATFORM FOR FUTURE INCOME GROWTH
Annualised Gross Rents Cash Flow Basis
£m
Accounting Basis
£m
Current Passing Rent 5495
5731 Expiry of Rent-free Periods 571
Fixed, Minimum Uplifts 13
2010 Non-Completed Developments Pre-let 28 24
Recently Committed Developments Pre-let 4 4
Total Contracted 651 601
Developments – 2010 Committed Developments to let2 29 23
Developments – Recently Committed/Near-term to let2 46 39
Investments – RPI, Letting of Vacancies etc. 2,3,4 30 28
Potential Rent in 5 Years 756 691
Increase 38% 21%
Table shows UK total, excluding assets held in Europe. 1 Rent includes £27m of completed 2010 Programme Developments on a cash flow basis, £23m on an accounting basis 2 Valuers estimate of non-contracted rents 3 Illustrative impact based on RPI of 2.5% pa 4 Includes RPI, open market rent reviews, re-letting of expiries and the letting of non-development vacant space 5 Gross rents plus, where rent reviews are outstanding, any increase to ERV (as determined by the Group’s external valuers), less any ground rents
payable under head leases
CONCLUSION
CHRIS GRIGG
Chief Executive
40
OUTLOOK
41
• Market outlook overall positive
– London to remain strong
– Improving outlook for high quality retail
• Expect to continue to benefit from our actions
– Increased exposure to London and the South East (now 61% of portfolio)
– Investment in up and coming London locations
– Replenished development pipeline
– Increased focus on locally dominant retail assets
42
OUR PRIORITIES
Delivering
returns from
developments
Driving
growth from
standing
investments
Continued
asset
recycling
• Completing and letting up our 2010 programme
• Starting on site on recently committed developments
• Taking Paddington and Shoreditch through planning
• Selectively adding to the development pipeline
• Focusing on leasing and asset management
• Bedding down new assets such as Ealing Broadway and
Southgate, Bath
• Continued sale of more mature retail assets
• Disciplined acquisitions
1
2
3
SUMMARY
43
• British Land is a strongly performing business
– Delivering value from asset management, development and portfolio reshaping
• Executing smartly, according to plan
– Raised funds and successfully deployed them
– Continue buying and selling well
– Replenishing our development pipeline
• Encouraged by the outlook for our markets
APPENDICES
44
ANOTHER SUCCESSFUL PERIOD OPERATIONALLY
45
BL UK Property Returns vs IPD1
bps
50
160
100
60
90
60
-
20
40
60
80
100
120
140
160
180
Retail Offices Total
Capital Returns Total Returns
1 For 6 months ended 30 September 2013
RECONCILIATION OF UNDERLYING PROFIT BEFORE TAX
46
HY to 30 September (£m) 2012/13 2013/14
IFRS profit before tax 109 422
Net valuation movement (includes disposals) 13 (287)
Deferred and current taxation of joint ventures & funds (3) (6)
Amortisation of intangible assets 1 -
Capital financing costs 10 17
Non-recurring items 7 -
Underlying Profit Before Tax 137 146
EPRA adjustments (3) (19)
EPRA Earnings Before Tax 134 127
£m
PERIOD ON PERIOD PROFIT GROWTH
47
137
146
(8)
13 3
7
(3) (4)
H1 2013 PYTransactions
Equity Placing Like-for-LikeIncomeGrowth
DevelopmentActivity
Cost of NewFacilities
Other H1 2014
UK GROSS RENTAL INCOME1 – SECTORAL
48
HY to 30 Sep 2013 Annualised as at 30 Sep 2013
(Accounting Basis) £m Group JVs & Funds Total Group JVs & Funds Total
Retail parks 52 21 73 102 45 147
Superstores 5 32 37 7 63 71
Shopping centres 27 30 57 50 64 114
Department stores 16 - 16 34 - 34
Leisure 14 - 14 28 - 28
UK Retail 114 83 197 221 172 394
City 3 42 45 4 82 86
West End 35 - 35 84 - 84
Provincial 3 - 3 6 - 6
All Offices 41 42 83 94 82 176
Residential2 2 - 2 3 - 3
All Offices & Residential 43 42 85 97 82 179
UK Total 157 125 282 318 254 573
Table shows UK total, excluding assets held in Europe. 1 Gross rental income will differ from annualised rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives 2 Stand-alone residential
OPERATING COSTS METRIC
49
HY to 30 September (£m) H1 2012/13 H1 2013/14
Property outgoings 7 9
Administrative expenses 37 36
Share of joint ventures and funds expenses 7 9
Less:
Performance & management fees (from joint ventures & funds) (5) (5)
Other fees and commission (3) (2)
EPRA Costs (including direct vacancy costs) (A) 43 47
Direct vacancy costs (6) (6)
EPRA Costs (excluding direct vacancy costs) (B) 37 41
Total Gross Rental Income inc. share of joint ventures and funds (C) 284 291
EPRA Cost Ratio (including direct vacancy costs) (A/C) 15.1% 16.4%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C) 13.1% 14.4%
RECONCILIATION OF EPRA NAV & NNNAV
50
As at 31 Mar 13 30 Sep 13
£m Pence £m Pence
Balance Sheet (IFRS) Net Assets 5,687 568 6,106 604
Deferred tax arising on revaluation movements 14 1 5 -
Mark to market on effective cash flow hedges and
related debt adjustments 198 20 138 14
Adjust to fully diluted on exercise of share options 58 6 37 4
Surplus on trading properties 10 1 12 1
EPRA NAV 5,967 596 6,298 623
Deferred tax arising on revaluation movements (14) (1) (5) (1)
Mark to market of debt and derivatives (431) (43) (277) (27)
EPRA NNNAV 5,522 552 6,016 595
EPRA BALANCE SHEET
(PROPORTIONAL CONSOLIDATION)
51
£m Mar 13 Group JVs & Funds Sep 13
Total properties 10,499 6,219 5,219 11,438
Net debt (4,266) (2,628) (2,292) (4,920)
Other net liabilities (266) (51) (169) (220)
EPRA Net Assets 5,967 3,540 2,758 6,298
Loan to value (LTV)1 40.2% 28.6% 42.3%
Average interest rate 4.6% 3.6% 4.2%
Interest cover 2.3x 3.3x 2.5x
Average maturity of drawn debt (years) 9.9 8.8 8.92
1 Group LTV based on Group Properties and net investment in JV & Funds, and Group net debt 2 Weighted average debt maturity includes the drawdown of £200m from the 2014 USPPs
£m
DEBT MATURITY – GROUP1
52
1 Pro forma for the drawdown of the £200m 2014 USPPs and repayment of £200m of Drawn Facilities
Year to 30 September
0
200
400
600
800
1,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
Debentures & Loan Notes Private Placements Convertible Bonds
£m
DEBT MATURITY – JOINT VENTURES AND FUNDS1
53
1 At British Land share
0
200
400
600
800
1,000
2014 2015 2016 2017 2018 2019-2023 2024-2036
JVs - Securitisations JVs - Bank Drawn Funds - Bank Drawn JVs - Bank Undrawn Funds - Bank Undrawn
Year to 30 September
GROSS AND NET DEBT RECONCILIATION
54
As at 30 September 2013 (£m) Group JVs & Funds Total
Gross debt (principal value) 2,687 2,507 5,194
IFRS Adjustments:
Issue costs and premia (7) (11) (18)
Fair value hedges 61 - 61
Other items 20 - 20
Gross Debt (IFRS basis) 2,761 2,496 5,257
Market value of derivatives 29 94 123
Cash & liquid investments (112) (210) (322)
Net debt (IFRS basis) 2,678 2,380 5,058
EPRA Adjustments:
Mark to market on effective cash flow hedges and
related debt adjustments
(50) (88) (138)
Net Debt (EPRA Basis) 2,628 2,292 4,920
55
4,266 4,920
625
136
153
99
74 19 18
Mar 13Net Debt
Acquisitions Disposals Developmentand Capex
OperatingCashflow
Dividends Convertiblebond market
value
Other Sep 13Net Debt
£m
EPRA NET DEBT – PROPORTIONALLY CONSOLIDATED
£2.1bn
Available
Facilities
£1.5bn
Available
Facilities
LTV 40.2%
42.3%
MAJOR HOLDINGS
As at 30 September 2013
(excl. developments under construction)
BL
Share %
Sq ft
000’s
Rent
£m pa1
Occupancy
Rate %2
Lease
Length yrs3
1 Broadgate, London EC2 50 3,963 177 97.0 7.6
2 Regent's Place, London NW1 100 1,589 67 97.6 9.6
3 Meadowhall Shopping Centre, Sheffield 50 1,374 82 97.4 8.4
4 Sainsbury’s Superstores 52 2,864 67 100.0 15.7
5 Tesco Superstores 50 2,687 61 100.0 14.6
6 Paddington Central 100 609 22 92.9 10.7
7 Teeside Shopping Park, Stockton-on-Tees 100 451 14 100.0 7.5
8 Drake Circus Shopping Centre, Plymouth 100 570 15 98.7 6.7
9 Debenhams, Oxford Street 100 363 10 100.0 25.5
10 Portman Square, W14 100 132 5 51.0 12.5
1 Annualised contracted rent including 100% of Joint Ventures & Funds 2 Includes accommodation under offer or subject to asset management 3 Weighted average to first break 4 Development reached practical completion in May 2013
56
TOP 20 CUSTOMERS & CUSTOMER SPLIT BY INDUSTRY
57
As at 30 September 2013 % of Total Rent
Tesco plc 7.3
Sainsbury Group 5.9
Debenhams 5.7
UBS AG 3.2
Home Retail Group 2.7
Kingfisher (B&Q) 2.6
HM Government 2.5
Arcadia Group 2.1
Next plc 2.1
Virgin Active 2.1
Spirit Group 1.6
Alliance Boots 1.5
Herbert Smith 1.4
DSG International 1.3
Marks & Spencer Plc 1.2
Royal Bank of Scotland plc 1.2
Hutchison Whampoa 1.2
Asda Group 1.1
New Look 1.0
House of Fraser 1.0
Customer Split by Industry (%)
15%
18%
19% 7%
8%
14%
11%
2% 6%
Supermarkets Fashion & Beauty
General Retail DIY
Food / Leisure Banks and Financial Services
Professional & Corporate Government
Other Businesses
UK PORTFOLIO WEIGHTING
58
As at 30 September 2013 (%) 2012 2013 (Current) 2013 (Pro forma)¹
Retail parks 24.5 22.9 20.8
Superstores 12.6 11.7 10.9
Shopping centres 17.6 17.3 15.7
Department stores 4.6 4.6 4.1
Leisure 3.0 2.8 2.6
UK Retail 62.3 59.3 54.1
City 17.1 16.5 17.3
West End 18.4 22.0 25.3
Provincial 0.8 0.8 0.7
All Offices 36.3 39.3 43.3
Residential2 1.4 1.4 2.6
All Offices & Residential 37.7 40.7 45.9
UK Total 100.0 100.0 100.0
Table shows UK total, excluding assets held in Europe. 1 Pro forma for committed developments at estimated end value (as determined by the Group’s external valuers) and disposals completed/exchanged post half end 2 Stand-alone residential
UK PORTFOLIO VALUATION BY SECTOR
59
Group JVs & Funds Total Change %2
As at 30 September 2013 £m £m1 £m H1
Retail parks 1,755 814 2,569 1.1
Superstores 118 1,188 1,306 2.0
Shopping centres 756 1,181 1,937 0.3
Department stores 512 1 513 6.5
Leisure 308 3 311 2.0
UK Retail 3,449 3,187 6,636 1.5
City 57 1,786 1,843 3.6
West End 2,468 - 2,468 6.0
Provincial 85 5 90 4.0
All Offices 2,610 1,791 4,401 5.0
Residential3 160 - 160 2.6
All Offices & Residential 2,770 1,791 4,561 4.9
UK Total 6,219 4,978 11,197 2.8
UK Standing Investments 5,682 4,565 10,247 2.1
UK Developments 537 413 950 8.9
Table shows UK total, excluding assets held in Europe. Total portfolio valuation including Europe of £11.4bn at period end, +2.7% valuation movement. 1 Group’s share of properties in joint ventures and funds
2 Valuation movement during the period (after taking account of capital expenditure) of properties held at the balance sheet date,
including developments (classified by end use), purchases and sales 3 Stand-alone residential
UK PORTFOLIO NET YIELDS1
60
As at 30 September 2013
(excl. developments)
EPRA Net Initial
Yield %
EPRA Topped-
Up Net Initial
Yield %2
Overall Topped-
Up Net Initial
Yield%3
Net
Reversionary
Yield %
Net
Equivalent
Yield %
Retail parks 5.5 5.7 5.8 5.8 5.9
Superstores 5.1 5.1 5.1 5.1 5.1
Shopping centres 5.4 5.7 5.7 5.8 5.8
Department stores 5.4 5.4 7.8 4.5 6.0
Leisure 7.6 7.6 8.8 6.0 8.4
UK Retail 5.5 5.6 5.9 5.6 5.8
City 5.3 6.1 6.1 6.0 5.6
West End 3.0 4.8 4.9 5.6 5.4
Provincial 7.1 7.1 7.1 5.7 6.3
All Offices 4.0 5.3 5.4 5.8 5.5
UK Total 5.0 5.5 5.8 5.7 5.7
Table shows UK total, excluding assets held in Europe. 1 Including notional purchaser's costs 2 Including rent contracted from expiry of rent-free periods and fixed uplifts not in lieu of growth 3 Including fixed/minimum uplifts (excluded from EPRA definition)
UK LEASE LENGTH AND OCCUPANCY
61
As at 30 September 2013 Average Lease Length (yrs) Occupancy Rate (%)
To Expiry To Break Occupancy Occupancy
(underlying)1
Retail parks 9.5 8.6 95.7 97.4
Superstores 15.0 15.0 100.0 100.0
Shopping centres 9.6 8.8 95.6 97.0
Department stores 27.4 24.1 99.5 99.5
Leisure 21.2 21.2 99.8 100.0
UK Retail 12.6 11.8 96.9 98.0
City 9.6 7.7 96.5 97.0
West End 11.6 9.6 89.8 92.8
Provincial 8.8 8.4 100.0 100.0
All Offices 10.6 8.7 92.8 94.7
UK Total 11.9 10.7 95.4 96.8
Table shows UK total, excluding assets held in Europe. 1 Including accommodation under offer or subject to asset management
UK ANNUALISED RENT & ESITMATED VALUE (ERV)
62
As at 30 September 2013
(excl. Developments)
Annualised Rents (Valuation Basis) £m1 ERV £m Average Rent (£psf)2
Group JVs & Funds Total Total Contracted ERV
Retail parks 103 46 149 159 23.2 23.8
Superstores 7 63 70 70 21.8 21.7
Shopping centres 50 66 116 123 25.3 26.2
Department stores 30 - 30 25 13.4 11.0
Leisure 25 - 25 20 13.4 10.8
UK Retail 215 175 390 397 21.4 21.3
City 4 77 81 91 47.4 45.7
West End 69 - 69 124 48.5 50.8
Provincial 6 - 6 5 27.1 21.9
All Offices 79 77 156 220 46.8 47.2
Residential3 3 - 3 3 - -
All Offices & Residential 82 77 159 223 - -
UK Total 297 252 549 620 25.7 26.0
Table shows UK total, excluding assets held in Europe. 1 Gross rents plus, where rent reviews are outstanding, any increases to ERV (as determined by the Group’s external valuers), less any ground rents payable under
head leases, excludes contracted rent subject to rent free and future uplift 2 Office average rent £psf is based on office space only 3 Stand-alone residential
UK RENT SUBJECT TO OPEN MARKET RENT REVIEW
63
12 months to 30 September (£m) 2014 2015 2016 2017 2018 2014-16 2014-18
Retail parks 18 17 22 16 21 57 94
Superstores 8 23 13 4 4 44 52
Shopping centres 14 17 14 14 12 45 71
Department stores - - 5 - 1 5 6
Leisure - - - - - - -
UK Retail 40 57 54 34 38 151 223
Offices: - - - - - - -
City 29 6 5 12 3 40 55
West End 5 17 7 21 22 29 72
Provincial - 1 5 - - 6 6
All Offices 34 24 17 33 25 75 133
UK Total 74 81 71 67 63 226 356
Potential Uplift at Current ERV 2 3 1 - - 6 6
Table shows UK total, excluding assets held in Europe.
UK RENT SUBJECT TO LEASE BREAK OR EXPIRY
64
As at 30 September (£m) 2014 2015 2016 2017 2018 2014-16 2014-18
Retail parks 4 7 7 9 13 18 40
Superstores - - - - - - -
Shopping centres 10 7 12 11 6 29 46
Department stores - - - - - - -
Leisure - - - - - - -
UK Retail 14 14 19 20 19 47 86
City 1 1 19 - 8 21 29
West End 2 4 1 14 9 7 30
Provincial - - - - - - -
All Offices 3 5 20 14 17 28 59
UK Total 17 19 39 34 36 75 145
% of Contracted Rent 2.8% 2.9% 6.1% 5.4% 5.6% 11.8% 22.7%
Potential Uplift at Current ERV 2 1 - (1) (1) 3 1
Table shows UK total, excluding assets held in Europe.
ERV RESETTING TO MARKET
65
Annualised at 30 September (£m pa) 2014 2015 2016 2017 2018 2014-16 2014-18
ERV Expiring – existing portfolio1 20 19 39 33 34 78 145
Speculative developments – City 10 1 - - - 11 11
Speculative developments – West End 9 - 6 - - 15 15
Speculative developments – Retail 3 1 - - - 4 4
Total Rent Resetting to Market 42 21 45 33 34 108 175
ERV of current vacancies2,3 28 28
Vacant & Income Expiring 136 203
1 Rent is based on ERV, reflecting current valuation 2 Including space under offer of £7m and space in asset management of £1m 3 Including £10m of vacant space at recently completed developments
Total ERV Resetting to Market (Next 3 Years)
TOTAL ERV RESETTING TO MARKET (NEXT 3 YEARS)
66
¹ ERV of unlet portion of committed developments as a proportion of portfolio ERV including ERV of committed developments
13%
29% 5%
0%
5%
10%
15%
20%
25%
30%
British Land IPD (exc. development)
Portfolio Vacancies & Expiries Developments (Speculative)¹
UK CONTRACTED RENTAL INCREASES (CASH FLOW BASIS)
Annualised at 30 September (£m pa) 2014 2015 2016 2017 2018 2014-16 2014-18
Expiry of rent free periods –
standing portfolio 38 9 9 1 - 56 57
Expiry of rent free periods –
development pre-lets - 3 21 5 3 24 32
Fixed uplifts (EPRA basis) 1 1 - - 1 2 3
Fixed & minimum uplifts in
lieu of rental growth 1 1 3 3 2 5 10
Total 40 14 33 9 6 84 102
67
RECENTLY COMMITTED DEVELOPMENT PROGRAMME
68
12 months to 30 September (£m) Sector BL Share Sq ft PC
Calendar
Current
Value
Cost to
Complete
ERV Pre-let Resi End
Value
% '000 Year £m £m1,4 £m2 £m £m
The Clarges Estate3 Mixed Use 100 193 2017 170 179 5.6 - 388
Hereford Retail 100 310 2014 35 40 5.5 2.8 -
The Hempel Residential 100 40 2015 34 26 - - 81
Craven Hill Gardens Residential 100 25 2014 33 8 - - 50
Aldgate Place, Phase 1 Residential 50 221 2016 8 52 - - 655
Broadgate Circle Offices 50 45 2014 7 8 1.2 - -
Milton Keynes, Kingston Centre Retail 50 21 2014 4 1 0.3 0.3 -
Broughton Park, Chester Retail 44 54 2014 2 5 0.5 0.4 -
Meadowhall Surrounding Land Retail 50 22 2015 1 3 0.4 0.4 -
Whiteley Leisure, Fareham Retail 50 58 2015 1 6 0.5 0.2 -
Fort Kinnaird, Edinburgh Retail 22 55 2015 - 3 0.3 0.1 -
Total Recently Committed: 1,044 295 331 14.3 4.2 584
Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 From 1 October 2013 to practical completion (PC) 2 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives) 3 Includes 103,000 sq ft of residential 4 Cost to complete excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 5 End value excludes hotel site, receipts of £5 million (BL share) estimated
2010 DEVELOPMENT PROGRAMME
69
12 months to 30 September (£m) Sector BL Share Sq ft PC
Calendar
Current
Value
Cost to
Complete
ERV Pre-let Resi End
Value3
% '000 Year £m £m1,6 £m2 £m £m
10 - 30 Brock St, Regents Place4 Mixed Use 100 505 Completed 360 6 20.1 17.1 115
5 Broadgate Offices 50 710 2015 195 87 19.2 19.2
-
The Leadenhall Building Offices 50 605 2014 195 43 18.6 8.6
-
10 Portman Square Offices 100 132 Completed 165 5 9.7 4.9
-
Marble Arch House5 Mixed Use 100 86 2013 64 9 3.9 - 18
39 Victoria Street Offices 100 93 2013 63 6 4.9 - -
199 Bishopsgate Offices 50 144 Completed 55 1 3.5 1.8
-
Whiteley Shopping, Fareham Retail 50 321 Completed 42 1 2.6 2.4
-
Bedford Street Residential 100 24 2014 26 3 - - 27
Glasgow Fort (Leisure) Retail 44 46 Completed 7 2 0.5 0.5 -
Total 2010 Programme: 2,666 1,172 163 83.0 54.5 160
Total Committed: 3,710 1,467 494 97.3 58.7 744
Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 From 1 October 2013 to practical completion (PC) 2 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives) 3 Residential development of which £120 million completed or exchanged 4 Includes 126,000 sq ft of residential, of which £93 million has now sold and completed during the half 5 Includes 10,000 sq ft of residential 6 Cost to complete excludes notional interest as interest is capitalised individually on each development at our capitalisation rate
NEAR-TERM AND PROSPECTIVE DEVELOPMENTS
70
As at 30 September 2013 (£m) BL Share Sq ft Total Cost Status
% '000 £m1
Near-term Pipeline
The Shoreditch Estate Offices 100 322 165 Pre-submission
5 Kingdom Street Offices 100 2402 154 Consented
4 Kingdom Street Offices 100 145 93 Consented
Surrey Quays (Extension) Retail 100 98 24 Consented
Yalding House Offices 100 29 22 Pre-submission
Glasgow Fort (Retail) Retail 44 112 17 Planning submitted
Deepdale, Preston Retail 22 74 3 Consented
Total Near-term 1,020 478
Medium-term Pipeline
100 Liverpool Street Offices 50 496 Pre-submission
Power Court, Luton Retail 100 158 Pre-submission
Aldgate Place, Phase 2 Residential 50 145 Consented
Wardrobe Court Residential 100 74 Pre-submission
Fort Kinnaird, Edinburgh Retail 22 30 Planning submitted
Lancaster Retail 100 n/a Pre-submission
Eden Walk Shopping Centre, Kingston Retail 50 n/a Pre-submission
Harmsworth Quays Residential 100 n/a Pre-submission
Total Medium-term 903
1 Total cost including site value. Excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 2 210,000 sq ft of which is consented
ESTIMATED FUTURE DEVELOPMENT SPEND AND
CAPITALISED INTEREST
71
PC Prelet ERV Cost to complete £m (excluding notional interest) – 6 mths
As at 30 September 2013 Calendar Year £m Mar 14 Sep 14 Mar 15 Sep 15 Mar 16 Sep 16
5 Broadgate 2015 19.2 34 25 28
The Leadenhall Building 2014 8.6 19 11 13
Marble Arch House 2013 - 7 2
39 Victoria Street 2013 - 4 1 1
Bedford Street 2014 - 3 -
Total 2010 Programme: 27.8 67 39 42 - - -
The Clarges Estate 2017 - 3 22 33 35 29 23
Hereford 2014 2.8 17 20 3 -
The Hempel 2015 n/a 4 6 7 5 2 1
Craven Hill Gardens 2014 n/a 7 1 -
Aldgate Place, Phase 1 2016 n/a 8 5 8 9 3 6
Broadgate Circle 2014 - 4 3 1
Milton Keynes, Kingston Centre 2014 0.3 1 -
Broughton Park, Chester 2014 0.4 1 4
Meadowhall Surrounding Land 2015 0.4 - - 2 -
Whiteley Leisure, Fareham 2015 0.2 - 1 3 2
Fort Kinnaird, Edinburgh 2015 0.1 2 1
Total Recently Committed: 4.2 47 63 57 51 34 30
Total Committed: 32.0 114 102 99 51 34 30
Total Near-term 24 25 33 64 77 79
Indicative Interest Capitalised on above at attributable rates1 10 10 9 8 10 11
1 Financing costs are capitalised on qualifying expenditure for committed and near term developments; the rate is at 3% for
Leadenhall and 4% for all other developments
ESTIMATED FUTURE DEVELOPMENT RENTAL INCOME
(ACCOUNTING BASIS)
72
PC Gross Rental Income (Accounting Basis)1 £m – 12 mths As at 30 September 2013 Calendar Year Sep 14 Sep 15 Sep 16 Sep 17 Sep 18
Committed Developments
5 Broadgate Q1 2015 Contracted - 9 18 18 18
The Leadenhall Building Q2 2014 Contracted 2 7 7 7 7
Non-contracted - 4 8 8 8
Broadgate Circle Q4 2014 Non-contracted - - 1 1 1
Marble Arch House Q4 2013 Non-contracted - 3 3 3 3
39 Victoria Street Q4 2013 Non-contracted - 3 4 4 4
Clarges Estate Q2 2017 Non-contracted - - - 3 5
Total Offices Contracted 2 16 25 25 25
Non-contracted - 10 16 19 21
Hereford Q2 2014 Contracted 1 2 2 2 2
Non-contracted - 2 2 2 2
Other Retail Developments Contracted - 1 1 1 1
Non-contracted - - 1 1 1
Total Retail Contracted 1 3 3 3 3
Non-contracted - 2 3 3 3
Total Committed Contracted 3 19 28 28 28
Non-contracted - 12 19 22 24
Recently Completed Developments (letting of vacant space)
199 Bishopsgate Q3 2012 Non-contracted 1 1 1 1 1
10 Portman Square Q2 2013 Non-contracted 1 4 4 4 4
10 - 30 Brock Street Q3 2013 Non-contracted - 2 3 3 3
Total Recently Completed1 Non-contracted 2 7 8 8 8
1 Pre-lets plus valuers estimates of non-contracted rent
NUMBER OF SHARES
73
Number of shares (m) Mar 13 Sep 13
Basic
Weighted Average 895 993
Period End 986 999
Diluted
Weighted Average 901 997
Period End 1,001 1,011
West End Development Completions
SHORTAGE OF QUALITY SPACE
74
0
1
2
3
4
5
6
7
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Total (m) Available U/C 10 yr average Grade A take-up
M sq ft
Source: Deloitte Real Estate
City Development Completions
SHORTAGE OF QUALITY SPACE
75
0.0
0.5
1.0
1.5
2.0
2.5
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Total (m) Available U/C 10 yr average Grade A take-up
Source: Deloitte Real Estate
M sq ft
Rental Growth Driven by Imbalance between Supply and Demand
OFFICE MARKET RENTAL OUTLOOK
76
Source: CBRE (historic) and Average Agents' Consensus (including PMA)
Actual Forecast
£ psf
-
20
40
60
80
100
120
140
1990 1991 1993 1994 1996 1997 1999 2000 2002 2003 2005 2006 2008 2009 2011 2012 2014 2015 2017
West End City
REGENT’S PLACE
77
78
Key:
200 residential units
sold on long leases;
retail at ground floor
88,000 sq ft retail
(16 units) around
Sheldon Square
Development sites
(355,000 sq ft) +
Crossrail box below
(80,000 sq ft)
Multi-let offices
268,000 sq ft
Multi-let offices
143,000 sq ft
206 room 4-star hotel
(111,000 sq ft)
BL ownership
New Hammersmith &
City line station and
access to Crossrail
Non BL ownership
FIVE
KINGDOM
STREET
FOUR KINGDOM
STREET
ONE
KINGDOM
STREET
ONE
SHELDON
SQUARE
Non BL
ownership
PADDINGTON CENTRAL
79
BROADGATE
OUR TEAM TODAY
80
DAVID LOCKYER
Head of West End Office
Asset Management
NICOLA THOMAS
Head of Property
Performance
DARREN RICHARDS
Head of Investment RICHARD WISE
Head of UK Retail
Asset Management
BRYAN LEWIS
Head of Superstores
CHARLES BUTTERS
Acquisitions
Director
MATTHEW PINSENT
Head of City Office
Asset Management
OFFICES
RETAIL
FINANCE
OUR TEAM TODAY
81
MARC FURLONGER
Head of Forecasting ROB HUDSON
Group Financial
Controller
SARAH BARZYCKI
Head of Finance SIMON CARTER
Head of Treasury
& Capital Markets
STRATEGY
JEAN-MARC VANDEVIVERE
Head of Strategy
& Residential
DISCLAIMER
The information contained in this presentation has been extracted largely from the Half Year Results Announcement for the year ended
30 September 2013.
This presentation may contain certain “forward-looking” statements. By their nature, forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed
or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of British Land speak only as of the date they
are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they
were prepared. British Land does not undertake to update forward-looking statements to reflect any changes in British Land’s expectations with
regard thereto or any changes in events, conditions or circumstances on which any such statement is based.
This presentation is made only to investment professionals as defined in Article 19 of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 ('the FP Order'). The content of this presentation has not been approved by a person authorised under the Financial
Services and Markets Act 2000 (“FSMA”). Accordingly, this presentation may only be communicated in the UK with the benefit of an exemption set
out in the FP Order. An investment professional includes:
(i) a person who is authorised or exempt under FSMA; and
(ii) a person who invests, or can reasonably be expected to invest, on a professional basis for the purposes of a business carried on by him; and
(iii) a government, local authority (whether in the United Kingdom or elsewhere) or an international organisation; and
(iv) any director, officer, executive or employee of any such person when acting in that capacity.
This presentation is published solely for information purposes. This presentation does not constitute an offer to sell or the solicitation of an offer to
subscribe for or buy any security, nor a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the
securities referred to in this presentation in any jurisdiction in contravention of applicable law. No representation or warranty, either express or
implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein.
The distribution of this presentation in jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the
laws of any jurisdiction other than the UK should inform themselves about, and observe, any applicable requirements. This presentation has been
prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would
have been disclosed if this presentation had been prepared in accordance with the laws of jurisdictions outside the UK.
All opinions expressed in this presentation are subject to change without notice and may differ from opinions expressed elsewhere.
82