British Land Company PLC · LSE:BLND
British Land — The British Land Company — Debt Investor Presentation (September 2005)
38 slides from British Land's debt investor presentation, September 2005
Slide 1: Presentation to Debt Investors, September 2005
We are investors in UK property and our focus is on actively managing, financing THEdeveloping and BRITISH LANDprime COMPANY PLC commercial Presentationproperty to to Debt Investors create theSeptember environment 2005 in which modern business can 10 Cornwall Terrace, Regent’s Park, London NW1 4QP T
Slide 2: Introduction
We are investors in UK property and our focus Section 1 is on actively managing, financing and developing prime commercial property to create theIntroduction environment in which modern business can thrive. Results ResultsPresentation Presentation Year Yearended ended31 31March March2004 2004
Slide 3: Why We Are Here
Introduction WHY WE ARE HERE Substantial user of capital markets Recent communication has tended to be transaction specific rather than general update Committed to being at the forefront of market friendly behaviour Important time in British Land’s evolution Strong credit story 1
Slide 4: What We Are
Introduction WHAT WE ARE UK quoted property company, largest by assets £13.8bn1 – Market capitalisation £4.7bn2 – Total assets under management £17bn1 Focused portfolio – 58%1 retail of which 71%1 out of town – 37%1 offices of which 95%1 Central London Highest quality assets – Prime locations
Slide 5: Key Attractions of UK Real Estate
Introduction KEY ATTRACTIONS OF UK REAL ESTATE Lease structure – Usually between a 10 and 25 year term – Regular rent reviews: typically every five years and upward only – Tenant has full liability for repairing and insuring – High degree of control with landlords – tenants have limited break opti
Slide 6: Proven Track Record
Introduction PROVEN TRACK RECORD 1 Profits Growth Total Return2 18% 2 26% 1 Average Annual Return pa Average Annual Growth pa 22% 14% 2 18% 1 1 10% 14% 1 6% 10% 2% 6% 5 YRS 3 YRS 1 YR 5 YRS 3 YRS 1 YR British Land Major Peers 3 4 1 Underlying profits excludes exceptional items and profits on asset d
Slide 7: Strategy: Bedrock
Introduction STRATEGY: BEDROCK Focus on areas of competitive advantage Bias to high quality assets, long lease profiles, favourable demand/supply characteristics complemented by efficient capital structure Distinctive ability to add value through purchases, disposals and partnerships Excelle
Slide 8: Strategy: How British Land Is Evolving
Introduction STRATEGY: HOW BRITISH LAND IS EVOLVING Pro-active asset management, customer focus and flexibility Disciplined and dispassionate asset review process Outstanding human capital, focused on performance Positioning at the forefront of market friendly behaviour 6
Slide 9: Portfolio Positioned for Growth with Security
Introduction PORTFOLIO POSITIONED FOR GROWTH WITH SECURITY 2 PMA Forecast Total Property Returns BL Proforma1 Protected against downside Next 5 Years Weighting – prime, low voids, long leases fully Retail underpinning gearing Warehouses 31% (including Superstores) Shopping Positioned for fundame
Slide 10: Strong Growth in Cash Rents
Introduction STRONG GROWTH IN CASH RENTS March 2005 Of which £m contracted £m Annualised net rents 625.6 625.6 Net reversions1 103.5 66.9 Committed developments 31.3 23.5 Increase 134.8 90.4 Total 760.4 716.0 Development prospects 151.1 8 1 Reversions include rent reviews, expiry of rent free period
Slide 11: An Efficient Capital Structure
Introduction AN EFFICIENT CAPITAL STRUCTURE Principal objectives: Group financed over the long-term with debt supported by recurring, committed income Group maintains a prudent financial position by active management of financial risks, including interest rate, liquidity and counterparty risks 1
Slide 12: Low Risk Profile
We are investors in UK property and our focus Section 2 is on actively managing, financing and developing prime commercial property to Lowenvironment create the Risk Profile in which modern business can thrive. Results ResultsPresentation Presentation Year Yearended ended31 31March March2004 2004
Slide 13: Balanced Asset & Liability Model
BALANCED ASSET & LIABILITY MODEL Low risk asset strategy Low risk finance profile 10
Slide 14: Low Risk Profile: Assets
Low Risk Profile ASSETS Highest quality portfolio Positioned in two sectors with critical mass and strong defensive characteristics Longest rental income profile Strong and diverse tenants Low development / voids 11
Slide 15: Highest Quality Portfolio
Low Risk Profile HIGHEST QUALITY PORTFOLIO Retail Warehouses 20% Superstores 11% Shopping Centres 18% High Street 9% Broadgate 21% Plantation Place 4% Regent’s Place 4% Developments 2% Year ended 31 March 2005, proforma for the acquisition of Pillar post year end 12
Slide 16: Positioned in Two Sectors
Low Risk Profile POSITIONED IN TWO SECTORS 58% Retail: 37% Offices: 71% Out of Town 95% Central London Retail Warehouses 20% Central London Superstores £13.8bn 33% 11% Provincial Out of Town Shopping 2% Centres Development 10% In Town Shopping Other 2% High Street 5% Centres 9% 8% … with critical ma
Slide 17: Long Leases & Low Vacancy
Low Risk Profile LONG LEASES & LOW VACANCY Average lease term to Vacancy rate first break, years % 2005 2004 2005 2004 Total Portfolio 15.9 15.8 3.5 3.1 City Offices 11.9 12.0 6.8 3.7 West End Offices 9.8 10.1 1.0 10.0 Retail Warehouses 16.0 17.0 1.5 1.0 Superstores 21.8 22.7 - - Shopping Centres 14
Slide 18: Longest Rental Income Profile
Low Risk Profile LONGEST RENTAL INCOME PROFILE Assuming No Rental Value Growth 1000 900 800 700 600 500 98% £m 400 81% 300 200 100 0 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Development programme (committed and prospective) Reversionary income (not contracted) Renewal of leases
Slide 19: Strong and Diverse Tenants
Low Risk Profile STRONG AND DIVERSE TENANTS Top 10 Retail Tenants Top 10 Office Tenants 1. J Sainsbury 1. UBS 2. Tesco 2. Lehman Brothers 3. Debenhams 3. Accenture 4. Great Universal Stores 4. EBRD 5. House of Fraser 5. Herbert Smith 6. Dixons Group 6. Royal Bank of Scotland 7. Bhs/Arcadia Group 7.
Slide 20: Controlled Development
Low Risk Profile CONTROLLED DEVELOPMENT Sq ft Cost2 % Let Income Projects Sector Completion date1 ’000 £m by rent contracted £m Completed projects Plantation Place City Office Q2 2004 542 - 99% 26.6 Plantation Place South City Office Q3 2004 161 - 1% 0.1 10 Exchange Square City Office Q2 2004 164 -
Slide 21: Finance
Low Risk Profile FINANCE Long average debt term with a spread of maturities Matching of income with debt profile High level of committed undrawn lines underpins liquidity and flexibility Controlled exposure to interest rate (and currency) fluctuations Prudent financial ratios 18
Slide 22: Long Average Debt Maturity
Low Risk Profile LONG AVERAGE DEBT MATURITY 14 YEARS 1000 900 800 700 600 £m 500 400 300 200 100 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Year ended 31 March Securitised Debt Debe
Slide 23: Matching of Income and Debt Profile
Low Risk Profile MATCHING OF INCOME AND DEBT PROFILE 25 10 20 8 15 6 Years % 10 4 5 2 0 0 2001 2002 2003 2004 2005 Year ended 31 March Weighted average debt maturity (lhs) Weighted average lease length to expiry (lhs) Weighted average interest rate (rhs) 20
Slide 24: Liquidity and Managed Interest Rate Exposure
Low Risk Profile LIQUIDITY AND MANAGED INTEREST RATE EXPOSURE 3000 100 2500 80 2000 60 £m 1500 % 40 1000 500 20 0 0 2001 2002 2003 2004 2005 Year ended 31 March % of debt at fixed or capped rates (rhs) Drawn bank facilities (lhs) Cash and available undrawn committed bank facilities (lhs) 21
Slide 25: Prudent Financial Ratios
Low Risk Profile PRUDENT FINANCIAL RATIOS Group: Interest rate profile Group – Weighted average interest rate of 6.0%1 – 90% of debt at fixed or capped rates, 87% in 5 years Total properties & investments £12,056m Maturity profile Net debt £6,041m – Weighted average debt maturity of 14.3 years1
Slide 26: Secured/Unsecured Debt
We are investors in UK property and our focus Section 3 is on actively managing, financing and developing prime commercial property to Secured/Unsecured create Debt the environment in which modern business can thrive. Results ResultsPresentation Presentation Year Yearended ended31 31March March2004
Slide 27: Secured/Unsecured Debt Overview
Secured/Unsecured Debt OVERVIEW Mix of securitisations, public and private debt issues Group: £m and bank borrowing in order to spread maturities, mitigate refinancing risk and reduce borrowing costs Securitisations 3,545 - Broadgate 2,071 Securitisations used to raise long-term, low cost debt -
Slide 28: Financing Approach
Secured/Unsecured Debt FINANCING APPROACH Secured debt: – Utilises tenant strength / diversity to provide rated bonds – Principally non-recourse – Supports a higher LTV than Group average Unsecured creditors benefit from: – Higher leverage in secured debt resulting in lower gearing of unencumber
Slide 29: Secured Debt: Key Features for Lenders
Secured Debt KEY FEATURES FOR LENDERS Securitisations are based on rated cashflows from specific assets Long term debentures and securitisations match liabilities with long term rental income Strong sponsor, repeat issuer Market leading transparency and disclosure 25
Slide 30: Unsecured Debt: Key Features for Lenders
Unsecured Debt KEY FEATURES FOR LENDERS Standard terms and conditions providing a ‘level playing field’ Overall Group borrowings covenant Unsecured debt to unencumbered asset cover covenant Also benefit from the surplus value and free cash flow from secured/non-recourse assets and joint vent
Slide 31: Financial Covenants Consistently Maintained
Unsecured Debt FINANCIAL COVENANTS CONSISTENTLY MAINTAINED Year ended 31 March 2001 2002 2003 2004 2005 Net Borrowings not to exceed 92% 91% 103% 102% 106% 175% of Adjusted Capital and Reserves Net Unsecured Borrowings not to exceed 45% 23% 45% 47% 42%* 70% of Unencumbered Assets * with additional s
Slide 32: Cash Flow and Interest Cover
Unsecured Debt CASH FLOW AND INTEREST COVER Group Unsecured/unencumbered £m £m Net rents 504 128 Surplus cash flows from secured/ 75 non recourse debt 504 203 Net interest (317) (79) Net rents/net Interest 1.6x 2.6x 28 Figures based on latest reported year end 31 March 2005
Slide 33: Recent Financings
Secured/Unsecured Debt RECENT FINANCINGS Secured £2,080m securitisation refinancing Broadgate in March at average rate of 5.05% for 20 yrs £1bn securitisation refinancing Hercules Unit Trust (HUT) in Sept for 7 yrs at LIBOR + 25bp Unsecured £790m unsecured revolving committed bank facility in
Slide 34: Summary
We are investors in UK property and our focus Section 4 is on actively managing, financing and developing prime commercial property to Summary create the environment in which modern business can thrive. Results ResultsPresentation Presentation Year Yearended ended31 31March March2004 2004
Slide 35: The Credit Case for British Land
Summary THE CREDIT CASE FOR BRITISH LAND Balanced high-quality portfolio 58%1 retail, 37%1 offices Long leases 16 years to first break (weighted average) Low tenant default risk Only 2.1% rated as high risk (IPD) Low vacancy 3.5% Limited development exposure 98% investment, 2% development
Slide 36: Appendix
We are investors in UK property and our focus is on actively managing, financing and developing prime commercial property to Appendix create the environment in which modern business can thrive. Results ResultsPresentation Presentation Year Yearended ended31 31March March2004 2004
Slide 37: Rental Income Profile Assumptions
RENTAL INCOME PROFILE ASSUMPTIONS • Annualised net rents of £625.6m at 31 March 2005 are shown to decrease on the first to occur of lease expiry or tenant’s break. Annualised net rents are increased for the contracted reversions of £66.9m receivable over the next 5 years • Renewal of leases on expir
Slide 38: The information contained in this presentation has been extracted largely from the Annual Report
The information contained in this presentation has been extracted largely from the Annual Report for the year ended 31 March 2005. General property market data has been extracted from Jones Lang LaSalle, PMA, Verdict and other agents’ reports (please note that their definitions may differ slightly).
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