British Land Company PLC · LSE:BLND
British Land — H1 2019 Earnings Presentation
99 slides from British Land's earnings presentation, Nov 14, 2018
Slide 1: Half Year Results Presentation
Half Year Results Presentation Six months ended 30 September 2018 www.britishland.com @BritishLandPLC #BLHY2019 $BLND
Slide 2: Progressing our Strategy
Progressing our Strategy Chris Grigg, Chief Executive 2
Slide 3: Further good operational and strategic progress
Further good operational and strategic progress • Leasing well across the business – 421,000 sq ft Offices leasing – Office developments letting up ahead of schedule and on better terms than expected – Retail demand firm with 457,000 sq ft leasing • Good operational performance – Occupancy high at 9
Slide 4: Finance Review
Finance Review Simon Carter, CFO 4
Slide 5: Focus on capital discipline since the referendum
Focus on capital discipline since the referendum Selling Well £2.4bn income producing sales at 4.2% Investing In Our Properties At c.6% yield via developments and share buyback Building Balance Sheet Strength Leverage down 5.4% Cost of debt down 40bps 5
Slide 6: Headlines
Headlines Period to H1 2018 H1 2019 Change % Underlying earnings per share (p) 19.2 17.2 (10.4%) Underlying Profit (£m) 198 169 (14.6%) Dividend per share (p) 15.04 15.50 3.0% As at H2 2018 H1 2019 Change % Valuation performance +0.9% (1.9%) EPRA net asset value per share (p) 967 939 (2.9%) Loan to
Slide 7: Net rental income
Net rental income £m (20) (10) (6) 7 (1) 297 Offices 5.8% 267 Retail 0.2% Total1 2.3% HY 2018 Prior period Net divestment Impact of CVAs Like-for-like Developments HY 2019 surrender premia and rental growth administrations exc. CVAs and administrations 1 Like for like rental growth is stated excludi
Slide 8: Financing costs
Financing costs £m 4 6 (2) (4) (66) (62) HY 2018 Financing Net divestment Developments Share buyback HY 2019 activity 8
Slide 9: Underlying earnings per share
Underlying earnings per share Pence (1.9p) (0.8p) 0.6p (0.6p) 0.7p 19.2p 17.3p 17.2p HY 2018 Prior period HY 2018 excl. Net divestment Impact of LFL rental Share HY 2019 surrender surrender and CVAs growth1 buybacks premia developments and admins Committed developments and buyback expected to add ap
Slide 10: Income statement
Income statement HY to 30 September H1 2018 H1 2019 Change % Net rental income (£m) 297 267 (10.1%) Fees & other income (£m) 8 6 (25.0%) Administrative expenses (£m) (41) (42) (2.4%) Net finance costs (£m) (66) (62) 6.1% Underlying Profit (£m) 198 169 (14.6%) Underlying earnings per share (p) 19.2 1
Slide 11: CVAs and Administrations
CVAs and Administrations Contacted rent Number of % of Annualised contracted rent reduction £’m Stores CVAs impact by Quarter (£’m) Number of stores in c.2,000 7 CVAs - reduced rents portfolio Stores exposed to CVAs - stores closing 114 6 CVA/admins Admins - stores closing Administrations 5.8 38 5 C
Slide 12: Valuation performance
Valuation performance 6 months to Valuation Movement Movement Yield ERV NEY Weighting September 2018 £m £m % movement growth % % Bps % Offices 6,130 50 0.7 +1 0.2 4.4 48 Retail 6,305 (307) (4.5) +14 (1.5) 5.4 49 Residential 128 (4) (3.1) n/a n/a n/a 1 Canada Water 293 1 0.3 n/a n/a n/a 2 Total 12,85
Slide 13: Retail Valuation Movements
Retail Valuation Movements 67% of rent lost through CVA/admin Sept ’18 is at assets seeing more than 5% Valuations (£’m) valuation decline 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 More than 0% 0% to -2.5% -2.5% to -5% -5% to -10% More than -10% Local Multi-let Regional Multi-let Superstores L
Slide 14: Retail Operational Performance
Retail Operational Performance New Lettings & Renewals Rent Reviews Occupancy Floor Floor Net Vs Net Effective Vs Area (Sq Area (Sq Effective Previous Rent (£’m) ERV ft ‘000) ft ‘000) Rent (£’m) Rent Total Retail 457 8.0 +5.0% 622 15.4 +2.2% 97.6% Regional multi-let 269 3.9 +6.6% 232 6.5 4.1% 97.3%
Slide 15: EPRA net asset value
EPRA net asset value (28p) 17p (15p) (3p) 2p (1p) 967p 939p Mar 18 Valuation Underlying Dividends Financing Share buyback Other Sep 18 performance Profit activity 15
Slide 16: Pursuing developments on a risk managed basis
Pursuing developments on a risk managed basis £m – ERV • Committed pipeline 70 – ERV of £63 million – Delivering c.4p to EPS once fully occupied 60 – 69% pre-let or under offer – Speculative exposure now 3.7% 50 – As at September, 65% costs to go covered by Clarges residential receipts 40 – 93% of c
Slide 17: Strength of debt metrics
Strength of debt metrics Proportionally Consolidated 31 Mar 2018 30 Sept 2018 Loan to value (LTV) 28.4% 26.7% Weighted Average Interest Rate 2.8% 2.9% Interest Cover 4.0x 3.7x Available Undrawn Facilities £1.2bn £1.5bn Weighted Average Drawn Debt Maturity 8.6yrs 8.5yrs Senior unsecured credit rating
Slide 18: Update on Strategy
Update on Strategy Chris Grigg, Chief Executive 18
Slide 19: Future British Land: progressing our mixed use strategy
Future British Land: progressing our mixed use strategy Mixed Use places to work, shop and live Offices Retail Build to Rent • Focused on London campuses • Smaller more focused portfolio • Complementary to our current strategy • Well connected, • Multi-let with mixed sustainable and smart use potent
Slide 20: Our unique London campuses
Our unique London campuses Campuses account for 80% of Offices portfolio 421,000 sq ft Office leasing 6.5% ahead of ERV Developments 69% let or under offer 20
Slide 21: A range of developments attracting a broader mix of occupier
A range of developments attracting a broader mix of occupier • McCann: 148,000 sq ft at 135 Bishopsgate – Leading global advertising group – Non-conventional city occupier relocating from the West End – “21st Century Warehouse” …the building’s location at the intersection of Shoreditch, Spitalfields
Slide 22: Mimecast – the largest tech letting in the City this year
Mimecast – the largest tech letting in the City this year • Mimecast: 113,000 sq ft at 1FA – 79,000 sq ft let in April 2018 – Exercised option over 34,000 sq ft • Now 42% let or under offer • Further 73,000 sq ft allocated to Storey “British Land’s progressive approach will ensure our new London off
Slide 23: TP ICAP – maintaining our appeal to financial services
TP ICAP – maintaining our appeal to financial services • TP ICAP: 123,000 sq ft at 135 Bishopsgate – Existing occupier recommitting to Broadgate – Vote of confidence in London and Broadgate • 135 Bishopsgate now 94% pre-let – Includes 42,000 sq ft let to Eataly “…opening a place in London where peop
Slide 24: Opening up Broadgate to the neighbourhood
Opening up Broadgate to the neighbourhood Eataly’s frontage is 80m long and 12m high, leveraging the public realm along Bishopsgate benefitting from high footfall 135 Bishopsgate, previous 135 Bishopsgate, PC Q3 2019 24
Slide 25: Continued roll out of Storey
Continued roll out of Storey • Integral part of our campus offer – Operational across all three campuses – 130,000 sq ft; 87% let or under offer – Premium of 42% to ERV on leased space • 186,000 sq ft further space identified – 120,000 sq ft on our campuses – 65,600 sq ft in standalone buildings – P
Slide 26: Retail – maintaining our operational focus
Retail – maintaining our operational focus • Market environment challenging – Rapid structural change – Cost pressures on retailers • Continuing demand for our space – 457,000 sq ft lettings and renewals – 5.0% ahead of ERV – Retail portfolio 98% full • Operational outperformance – Total sales down
Slide 27: Delivering a smaller, more focused Retail portfolio
Delivering a smaller, more focused Retail portfolio • £2.4bn assets sold since March 2014 – £995m superstores – £614m department stores – £559m multi-let assets – £196m leisure and solus assets • £634m sold or under offer in the last 12 months – £215m sold – £419m exchanged or under offer • Physical
Slide 28: Key criteria for long term Retail assets
Key criteria for long term Retail assets Criteria Key attributes • Urban locations with excellent local market position and connectivity Size and • Strong demographics of catchment location • Right-sized to underpin supply-demand tension • Strong visual identity; high quality environment Environment
Slide 29: Build to Rent – building a presence in this growth market
Build to Rent – building a presence in this growth market • Attractive market Canada Water – Clear structural growth dynamics – Fragmented with small professional offering – Highly complementary to our business – Part of our mixed use vision • Focused on achieving scale – Exclusive discussions with
Slide 30: Significant residential opportunities in our existing portfolio
Significant residential opportunities in our existing portfolio 4,000 – 5,000 units opportunities across our portfolio 30
Slide 31: Our vision for Canada Water
Our vision for Canada Water A partnership between British Land and London Borough of Southwark creating a new urban centre 31
Slide 32: Further good progress at Canada Water
Further good progress at Canada Water • Master development agreement signed – New 500-year headlease, simplifying current structure – Aligns our interest with Southwark Council; ownership split 80:20 • Planning submitted – Outline planning for the overall masterplan including 3,000 homes – Detailed
Slide 33: First detailed plots
First detailed plots K1 – residential Plot A1 – residential & workspace A2 – workspace & leisure 3 33
Slide 34: Future British Land: London focused mixed use business
Future British Land: London focused mixed use business March 2010 Current Indicative business split 5+ years 10% 33% 66% 48% 49% 30-35% 5% 50-55% • London focused: over 70% of group • Smaller, more focused Retail • Meaningful Residential exposure Retail Campus-focused Storey Residential • Right bala
Slide 35: Conclusion and outlook
Conclusion and outlook • Uncertain environment – Expect this to continue – Our business is strong financially, with limited speculative exposure • Clear and consistent strategy – Good progress on Retail sales – Continuing to benefit from the unconventional London cycle and our developments – Promisi
Slide 36: Appendices
Appendices 36
Slide 37: Our Strategy
Our Strategy British Land is a leading UK commercial property company focused on high quality retail and London offices Customer Orientation Right Places We use our insight into customers’ needs and We design engaging, sustainable places identify major long term trends to create which bring people t
Slide 38: We apply our Placemaking Framework across the business
We apply our Placemaking Framework across the business We We We We Connect Design Enhance Enliven Communication Form Occupier mix Customer service Digital connectivity, Efficient and effective Occupiers and On-site hospitality branding and marketing buildings and space campus community & customer se
Slide 39: Retail & Offices managed environments
81% of our Retail & Office assets are within our managed environments 58% London Weighting Retail & Offices Leisure £6.1bn £6.3bn 80% of Office assets 82% of Retail assets are at our campuses are multi-let Further £0.3bn at Canada Water and £0.1bn of standalone Residential assets Figures shown on a
Slide 40: Retail Multi-let Portfolio
Retail Multi-let Portfolio Our two core products each fulfil specific shopper missions Regional Local Attracting visitors from a wide catchment for a planned trip Fitting into the daily life of local communities Missions include Retail offer covers Significant Missions include Local Retail offer cov
Slide 41: Multi-let Retail assets
Multi-let Retail assets Regional Local Attracting visitors from a wide Fitting into the daily life of local communities catchment for a planned trip Southgate, Bath Mayflower, Basildon Old Market, Hereford Studlands, Newmarket Broughton, Chester1 Weston Lock, Bath Inverness1 Harlech, Newport Fort Ki
Slide 42: Our Retail portfolio is well positioned to meet consumer and retailer demands
Our Retail portfolio is well positioned to meet both consumer and retailer demands BL local centres BL regional centres Potential to reach Average rent 60% BL asset catchments to sales ratio of the population 9% Annual footfall of Occupancy 305m cost ratio Source: CACI Retail Footprint 2017, BL Insi
Slide 43: Online sales increasingly integrated with physical stores
Online sales increasingly integrated with physical stores: 87% of UK retail sales touch the store Retail sales by channel (UK, all sectors, 2017) Online Mail order Online sales not pureplay sales & TV shopping Online sales browsed in store Click & Collect browsed in store £2bn sales £19 bn £7 bn £20
Slide 44: Physical store openings significantly boost retailers’ online presence
Physical store openings significantly boost retailers’ online presence Postal area share of retailer website visits Indexed vs. start of store opening period 170 160 150 140 130 120 +52% 110 100 90 80 -20 weeks -15 -10 -5 Store Opening 5 10 15 +20 weeks Note: Based on a sample of 29 retailers openin
Slide 45: BL footfall performance vs benchmark
BL footfall performance vs benchmark +210bps Outperformance for Jan-10 = 100 6m to Sep 2018 115 110 105 BL Index 100 95 90 85 Tyco (formerly Experian) Index 80 75 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Brit
Slide 46: Major property holdings
Major property holdings At 30 September 2018 BL Share Sq ft Rent Occupancy Lease Length % 000’s £m pa1,4 Rate %2,4 yrs3,4 1 Broadgate 50 4,133 140 98.9 5.5 2 Regent's Place 100 1,740 76 99.6 7.2 3 Paddington Central 100 958 45 98.9 5.8 4 Meadowhall, Sheffield 50 1,500 89 98.9 5.9 5 Glasgow Fort 78 5
Slide 47: Broadgate Campus
Broadgate Campus 2 FA & 3 FA • 2FA & 3FA - Innovation cluster inc. 64k sq ft of Storey space • 3FA – UBS surrendered lease in Jan 2018. ‘Light touch’ refurb completed, now 100% let/under offer • Current size: 189k sq ft • Potential size: 563k sq ft 1 FA • Pre-let 113k sq ft to Mimecast, 11k sq ft to
Slide 48: Paddington Central Campus
Paddington Central Campus 48
Slide 49: Regent’s Place Campus
Regent’s Place Campus DRUMMOND STREET @ ROCK STREET EUSTON STATION TRITON STREET REGENTS — PLACE = TRITON SQUARE PLAZA a REGENTS. = PARK EUSTON SQUARE ©) ® @ ©) Se ysron ROAD one Pantano Wan since — @) 20 Triton Street @) 1 Osnaburgh Street ® 1-8 Longford Street @ UKPN Substation ® 1 Triton Square ©
Slide 50: Top occupiers & occupier split by industry
Top 20 occupiers & occupier split by industry As at 30 September 2018 % of Contracted Rent Occupier Split by Industry (%) Tesco1 4.5 Other 7% Sainsbury’s 3.9 Fashion & Beauty Debenhams2 (incl. Head Office) 3.8 Home & DIY 7% 18% Government 2.9 Next plc 2.6 Grocery & Kingfisher (incl. Head Office) 2.3
Slide 51: Capital Activity
Capital Activity Since 1 April 2018 Offices Retail Residential Canada Water Total £m £m £m £m £m Purchases1 32 110 - - 142 Sales2 (500) (139) (203) - (842) Development Spend 69 21 9 8 107 Capital Spend 8 16 - - 24 Net Investment (391) 8 (194) 8 (569) Gross Investment 609 286 212 8 1,115 On a proport
Slide 52: Capital Activity £1.1bn
Capital Activity £1.1bn Gross investment activity in H1 FY19 Net Spend1 £m £52m £648m (£47m) £45m (£502m) (£572m) (£569m) 1,600 1,200 800 400 - (400) (800) (1,200) (1,600) (2,000) 2013 2014 2015 2016 2017 20182 H1 2019 Sales Capital Investment Purchases Net Spend 1 Previous periods have been restate
Slide 53: Purchases
Purchases Since 1 April 2018 Sector Price Price Annual (100%) (BL Share) Passing Rent £m £m £m1 Completed Royal Victoria Place, Tunbridge Wells Retail 92 92 3 Hercules Unit Trust units Retail 18 18 1 Exchanged Orsman Road, Haggerston Offices 32 32 2 Total 142 142 6 1 BL share of annualised rent topp
Slide 54: Sales
Sales Since 1 April 2018 Sector Price Price Annual (100%) (BL Share) Passing Rent £m £m £m3 Completed Richmond Homebase1 Retail 45 45 1 Cheltenham Gallagher Retail Park Retail 73 29 1 Southampton David Lloyd Retail 15 15 1 5 Broadgate Offices 1,000 500 18 B&Q Glasgow Retail 28 28 2 Hamilton David Ll
Slide 55: Clarges Residential Unit Sales
Clarges Residential Unit Sales Number of units £m Completed in FY18 2 25 Completed in FY19 19 203 Total Completed 21 228 Exchanged (of which 1 exchanged and completed post period end) 3 106 Total Sold 24 334 Units remaining 10 123 Total 34 457 55
Slide 56: H2 FY19 income statement guidance
H2 FY19 income statement guidance • Gross Rents • Financing – Annualised accounting gross rent of £555m – Weighted average interest rate 2.9% as at 30 September 2018 on gross debt of £3.8bn – This reflects the £14.2m reduction to contracted – Undrawn facilities of £1.5bn as at 30 September, rents as
Slide 57: Illustrative future income profile breakdown (cash basis)
Illustrative future income profile breakdown (cash basis) For the year to 31 March 2019 2020 2021 2022 2023 Total Accounting Basis At 30 September 2018 £m £m £m £m £m £m Current Passing Rent 569 4 557 Contracted uplifts 12 16 2 3 1 34 Letting of Committed Developments1 – let or under offer 3 18 22 -
Slide 58: Gross rental income
Gross rental income1 Accounting Basis £m 6 months to 30 September 2018 Annualised as at 30 September 20184 Group JVs & Funds Total Group JVs & Funds Total West End 70 - 70 136 - 136 City 4 36 40 6 63 69 Offices 74 36 110 142 63 205 Regional 30 45 75 57 89 146 Local 47 13 60 93 26 119 Multi-let 77 58
Slide 59: Underlying Profit Bridge
Underlying Profit Bridge £m (20) (6) (5) 4 (3) (6) 7 198 169 HY 2018 Prior period Net divestment Developments Impact of CVAs Like-for-like Financing Other HY 2019 surrender (including share and rental growth activity premia buyback) administrations exc. CVAs and administrations 59
Slide 60: Administrative expenses
Administrative expenses HY to 30 September H1 2018 H1 2019 £m £m Personnel costs 26 28 Share scheme costs 2 (1) Other administrative expenses 16 18 Total 44 45 Capitalised costs (3) (3) Total administrative expenses 41 42 On a proportionally consolidated basis including the Group's share of Joint ve
Slide 61: Operating costs metric
Operating costs metric HY to 30 September H1 2018 H1 2019 £m £m Property operating expenses 19 24 Administrative expenses 41 42 Net fees and other income (8) (6) Ground rent costs and operating expenses de facto included in rents (1) (4) EPRA Costs (including direct vacancy costs) 51 56 Gross rental
Slide 62: Reconciliation of Underlying Profit
Reconciliation of Underlying Profit HY to 30 September H1 2018 H1 2019 £m £m IFRS profit before tax 238 (42) Net valuation (profit)/loss (167) 265 Profit on disposal of investment and trading properties (20) (65) Capital financing costs 153 17 Non-controlling interests (6) (6) Underlying Profit and
Slide 63: Number of shares
Number of shares As at 31 Mar 2018 30 Sept 2018 (m) (m) IFRS Basic Weighted average1 1,013 981 IFRS Diluted Weighted average2 1,016 981 Underlying/EPRA diluted Weighted average3 1,016 984 Year/Period end4 989 982 1 For use in IFRS basic earnings per share. 2 For use in IFRS diluted earnings per shar
Slide 64: EPRA balance sheet
EPRA balance sheet 31 March 18 Group JVs & Funds 30 September 18 Total properties (£m) 13,716 9,314 3,542 12,856 Adjusted net debt (£m) (3,973) (2,410) (1,118) (3,528) Other net liabilities (£m) (183) (83) (22) (105) EPRA Net Assets (£m) 9,560 6,821 2,402 9,223 Loan to value (LTV)1 28.4% 26.7% Weigh
Slide 65: Reconciliation of EPRA NAV & NNNAV
Reconciliation of EPRA NAV & NNNAV 31 March 18 30 September 18 £m Pence £m pence IFRS Net Assets 9,506 967 9,261 949 Deferred tax arising on revaluation movements 5 5 Mark to market on derivatives and related debt adjustments 137 105 Adjust to fully diluted on exercise of share options 32 27 Surplus
Slide 66: Gross and net debt reconciliation
Gross and net debt reconciliation As at 30 September 2018 Group JVs & Funds Less non- Total £m £m controlling £m interests £m Gross Debt (principal) (2,597) (1,277) 111 (3,763) IFRS adjustments: Issue costs and premia 14 1 (1) 14 Fair value hedge adjustments (151) - - (151) Other items 13 3 - 16 IFR
Slide 67: Loan to value (LTV)
Loan to value (LTV) As at 31 March 2018 Valuation Acquisitions Capital Disposals Share Other As at £m movement spend buyback 30 September 2018 £m Total properties 13,716 (246) 110 106 (826) - (4) 12,856 Other 172 - - - - - 1 173 investments LTV assets 13,888 (246) 110 106 (826) - (3) 13,029 Adjusted
Slide 68: Debt metrics
Debt metrics Proportionally Consolidated 31 Mar 2018 30 Sept 2018 Loan to value (LTV) 28.4% 26.7% Weighted average interest rate 2.8% 2.9% Interest cover 4.0x 3.7x Weighted average maturity of drawn debt 8.6yrs 8.5yrs Group 31 Mar 2018 30 Sept 2018 Loan to value (LTV) 22.1% 20.1% Available undrawn f
Slide 69: Debt maturity (£m)
Debt maturity (£m) JVs – Securitisations (Secured) £m Sterling Bond (Unsecured) Funds – Bank drawn (Secured) Convertible Bond (Unsecured) 1,200 Debenture & loan notes (Secured) Bank RCF Drawn (Unsecured) US Private Placements (Unsecured) 1,000 Bank RCF Undrawn (Unsecured) 800 600 400 200 0 2019 2020
Slide 70: Debt financing – diverse profile
Debt financing – diverse profile • £1.3bn of financing activity, £3.8bn Drawn Debt1 (30 September 2018) including £1.1bn of new facilities – Amended and extended our largest syndicated RCF at £735m Bank RCFs Drawn (Unsecured) £0.4bn £0.3bn – Issued new £231m USPP US Private Placements (Unsecured) –
Slide 71: Valuation growth drivers – Offices
Valuation growth drivers – Offices 6 months to September 2018 Valuation Movement £m Movement Yield movement ERV Growth £m %1 bps2 %2 H1 H1 H1 West End 4,097 14 0.3 - 0.2 City 2,033 36 1.4 +1 0.1 Offices 6,130 50 0.7 +1 0.2 Campuses represent 80% of the Offices portfolio 1 Valuation movement during t
Slide 72: Valuation growth drivers – Retail
Valuation growth drivers – Retail 6 months to September 2018 Valuation Movement Movement Yield movement ERV Growth £m £m %1 bps2 %2 H1 H1 H1 Regional 2,950 (122) (4.0) +9 (0.8) Local 2,217 (163) (6.8) +20 (2.5) Multi-let 5,167 (285) (5.2) +14 (1.6) Other 1,138 (22) (1.7) +13 (1.4) Retail 6,305 (307)
Slide 73: Retail Portfolio Valuation – previous classification
Retail Portfolio Valuation – previous classification At 30 September 2018 Group JVs & Funds Total H1 Change1 £m £m £m % £m Shopping parks 1,827 1,105 2,932 (5.5) (175) Shopping centres 1,116 1,132 2,248 (3.7) (87) Superstores 96 262 358 (0.7) (3) Department stores 147 - 147 (24.9) (49) High Street 1
Slide 74: Portfolio valuation by sector
Portfolio valuation by sector At 30 September 2018 Group JVs & Funds Total H1 Change1 £m £m £m % £m West End 4,097 - 4,097 0.3 14 City 118 1,915 2,033 1.4 36 Offices 4,215 1,915 6,130 0.7 50 Regional 1,087 1,863 2,950 (4.0) (122) Local 1,826 391 2,217 (6.8) (163) Multi-let 2,913 2,254 5,167 (5.2) (2
Slide 75: Portfolio weighting
Portfolio weighting At 30 September 2018 2017 2018 2018 2018 % (current) (current) (pro-forma1) % £m % West End 30.6 31.9 4,097 32.0 City 17.6 15.8 2,033 17.5 Offices 48.2 47.7 6,130 49.5 Regional 22.1 22.9 2,950 22.3 Local 16.3 17.2 2,217 16.5 Multi-let 38.4 40.1 5,167 38.8 Department Stores and Le
Slide 76: Lease length and occupancy
Lease length and occupancy At 30 September 2018 Average Lease Length (yrs) Occupancy Rate (%)1 To Expiry To Break EPRA Occupancy Occupancy2,4 West End 8.2 6.7 97.0 97.8 City 6.3 5.5 98.4 98.9 Offices 7.5 6.3 97.4 98.2 Regional 7.3 6.1 96.5 97.3 Local 7.0 5.8 96.7 97.0 Multi-let 7.2 6.0 96.6 97.1 Dep
Slide 77: Portfolio net yields
Portfolio net yields1,2 At 30 September 2018 EPRA EPRA topped Overall Net Net Net ERV 5 net initial up net initial topped up equivalent equivalent reversionary Growth % 3 yield % yield % net initial yield % yield yield % 4 yield % movement bps West End 3.6 4.0 4.0 4.3 - 4.7 0.2 City 4.4 4.5 4.5 4.7
Slide 78: Retail Portfolio Net Yields – previous classification
Retail Portfolio Net Yields1,2 – previous classification At 30 September 2018 EPRA EPRA Overall Net Net equivalent Net ERV 5 net initial topped up topped up equivalent yield reversionary Growth % yield % net initial net initial yield % movement bps yield % 3 4 yield % yield % Shopping parks 5.1 5.2
Slide 79: Annualised rent & estimated rental value (ERV)
Annualised rent & estimated rental value (ERV) At 30 September 2018 Annualised Rents ERV Average Rent (Valuation Basis) £m1 £m (£psf) Group JVs & Funds Total Total Contracted2 ERV West End3 137 - 137 179 57.9 66.8 3 City 6 68 74 88 49.5 56.9 3 Offices 143 68 211 267 54.8 63.2 Regional 59 90 149 167
Slide 80: Rent subject to open market rent review
Rent subject to open market rent review For the year to 31 March 2019 2020 2021 2022 2023 2019–21 2019–23 At 30 September 2018 £m £m £m £m £m £m £m West End 4 15 10 9 13 29 51 City 13 4 9 - - 26 26 Offices 17 19 19 9 13 55 77 Regional 10 10 19 12 11 39 62 Local 9 11 12 6 18 32 56 Multi-let 19 21 31
Slide 81: Rent subject to lease break or expiry
Rent subject to lease break or expiry For the year to 31 March 2019 2020 2021 2022 2023 2019–21 2019–23 At 30 September 2018 £m £m £m £m £m £m £m West End 3 4 20 22 25 27 74 City 4 14 9 1 3 27 31 Offices 7 18 29 23 28 54 105 Regional 10 15 9 13 20 34 67 Local 11 12 10 12 12 33 57 Multi-let 21 27 19
Slide 82: Contracted rental increases (cash flow basis)
Contracted rental increases (cash flow basis) For the year to 31 March 2019 2020 2021 2022 2023 2019–21 2019–23 At 30 September 2018 £m £m £m £m £m £m £m Expiry of rent free periods 9 15 1 - - 25 25 Fixed uplifts (EPRA basis) - - - 2 - - 2 Fixed & minimum uplifts 1 1 1 1 1 3 5 Total 10 16 2 3 1 28 3
Slide 83: Total Property Return (as calculated by IPD)
Total Property Return (as calculated by IPD) 6 months to 30 September 2018 Offices Retail Total % British Land IPD British Land IPD British Land IPD Capital Return 0.8 1.3 (4.6) (2.2) (1.9) 1.1 – ERV Growth 0.2 0.6 (1.5) (1.1) (0.8) 0.3 – Yield Movement1 1 bps (3) bps 14 bps 5 bps 7 bps (5) bps Inco
Slide 84: De-risked development pipeline focused on campuses
De-risked development pipeline focused on campuses Eden Walk, Kingston 533,000 sq ft 135 Bishopsgate 1 Triton Square Blossom Street, 334,000 sq ft 366,000 sq ft Shoreditch Completion Q3 2019 Completion Q4 2020 2-3 Finsbury Avenue 335,000 sq ft 563,000 sq ft 1-2 Broadgate 5 Kingdom Street 533,000 sq
Slide 85: Committed developments
Committed developments At 30 September 2018 Sector BL Sq PC Current Cost to ERV Let & Share ft Calendar Value Come Under Year Offer % '000 £m £m1 £m2 £m Committed Pipeline 1 Finsbury Avenue Office 50 288 Q1 2019 122 26 8.2 3.4 135 Bishopsgate Office 50 334 Q3 2019 121 54 9.6 9.0 Plymouth (Leisure) R
Slide 86: Near term development pipeline
Near term development pipeline At 30 September 2018 Sector BL Sq Expected Current Cost to ERV Let & Planning Share ft Start on Value Come Under Status Site Offer % '000 Calendar £m £m1 £m2 £m Year Near term Pipeline Blossom Street, Shoreditch Office 100 335 Q2 2019 23 241 20.6 - Consented Gateway Bu
Slide 87: Medium term development pipeline
Medium term development pipeline At 30 September 2018 Sector BL Sq ft Planning status Share % '000 Medium term Pipeline 2-3 Finsbury Avenue Office 50 563 Consented 1-2 Broadgate Office 50 533 Submitted 5 Kingdom Street Office 100 371 Consented1 Meadowhall (Leisure) Retail 50 333 Consented Ealing – 1
Slide 88: Estimated future development spend and capitalised interest
Estimated future development spend and capitalised interest At 30 September 2018 PC Cost to Come £m Calendar (excluding notional interest) – 6 months breakdown Year Mar-19 Sep-19 Mar-20 Sept-20 Mar-21 Sept-21 Mar-22 Sept-22 1 Finsbury Avenue Q1 2019 24 1 1 - - - - - 135 Bishopsgate Q3 2019 33 17 2 2
Slide 89: Canada Water – Illustrative Scheme
Canada Water – Illustrative Scheme First detailed Masterplan plots K1 Detailed planning Outline submitted in Submitted May 18 L2 A1 H2 L1 Total NIA M1 H3 5.0m 0.6m H1 (sq ft) A2 D1 D2 Commercial 2.1m 0.3m (sq ft) Retail & Leisure 0.7m 0.1m (sq ft) New Homes 3,000 265 (units) Buildings highlighted ab
Slide 90: Canada Water: key milestones and timeline
Canada Water: key milestones and timeline Acquisition of 50% of Surrey MDA signed with Southwark Council Quays shopping centre Planning application submitted Remaining 50% of Surrey Quays 23 acres shopping centre acquired 23 acres Conditional agreement to acquire Printworks Surrey Quays leisure park
Slide 91: Central London development pipeline
Central London development pipeline Completed U/C Pre-let Pipeline Pre-let Q3 2018 U/C – Speculative Potential Speculative 10 year average new and under-construction take-up m sq ft 10 year average development completions 12.0 10.0 8.0 6.0 4.8m 4.0 4.3m 2.0 0.0 00 01 02 03 04 05 06 07 08 09 10 11 12
Slide 92: West End development pipeline
West End development pipeline Completed U/C Pre-let Pipeline Pre-let Q3 2018 U/C – Speculative Potential Speculative 10 year average new and under-construction take-up m sq ft 10 year average development completions 3.0 2.5 2.0 1.5 1.1m 1.0 1.0m 0.5 0.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 1
Slide 93: City development pipeline
City development pipeline Completed U/C Pre-let Pipeline Pre-let Q3 2018 U/C – Speculative Potential Speculative 10 year average new and under-construction take-up m sq ft 10 year average development completions 6.0 5.0 4.0 3.0 2.4m 2.0 2.1m 1.0 0.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Slide 94: Property Yields and interest rate yield gap
Property Yields and interest rate yield gap Retail and London Office Yields All Retail Central London Offices 10.0 8.0 6.0 NIY % 4.0 2.0 0.0 Source: IPD Property Yield vs 10 Year Gilt Yields Yield Group UK 10 Year Gift Yield 10 IPD All Property Net Initial Yield 8 6 % 4 2 - (2) 1994 1997 2000 2002 2
Slide 95: London office market rental outlook
London office market rental outlook Prime London Office Rents West End City £ psf 140 120 100 80 60 40 20 Actual Forecast 0 1990 1995 2000 2005 2010 2015 2020 Source: CBRE (historic) and Average Agents' Consensus (including PMA) for forecasts 95
Slide 96: Vacancy Central London
Vacancy Central London West End West End & City Vacancy Rates West End 10 year average City 20 City 10 year 18 average 16 14 12 10 8 6 5.5% 4 3.7% 2 0 1985 1990 1995 2000 2005 2010 2015 Q3 2018 Source: CBRE (historic) 96
Slide 97: Sustainability – Half Year highlights
Sustainability – Half Year highlights Customer Orientation Right Places Capital Efficiency Expert People Wellbeing Community Futureproofing Skills & opportunity • We published a new report, A Design • British Land came 2nd in the • The re-use of materials in our re- • The Retail & Skills Centre at F
Slide 98: Sustainability Indices
Sustainability Indices 2018 performance Other benchmarks and awards MSCI ESG Ratings FTSE4Good1 DJSI World & Europe1 2018: AAA rating 2018: 96th percentile 2018: 92nd percentile EPRA Sustainability Global Real Estate Sustainalytics Reporting Awards Sustainability Benchmark ESG Ratings1 2018: Gold fo
Slide 99: Disclaimer
Disclaimer The information contained in this presentation has been extracted largely from the Half Year Results Announcement for the period ended 30 September 2018. This presentation may contain certain “forward-looking” statements. Such statements reflect current views on, among other things, our m