British Land Company PLC · LSE:BLND
British Land — The British Land Company — FY2001 Earnings Presentation
47 slides from British Land's earnings presentation, May 30, 2001
Slide 1: Results Presentation Year ended 31 March 2001
1 The British Land Company PLC Results Presentation Year ended 31 March 2001 À 30 May 2001
Slide 2: Agenda
2 The British Land Company PLC Agenda • Introduction • Financial Review • Property Review • Outlook À
Slide 3: Introduction
3 The British Land Company PLC Introduction John Ritblat Chairman À
Slide 4: Group Highlights
4 The British Land Company PLC Group Highlights • Consistent strategy delivers strong performance – NAV up 15.6% to 802p – pre-tax profits before exceptional charge up 8.1% to £169.1m • Active portfolio management – Acquisitions £132.9m – Development expenditure £112.4m – Disposals £439.5m • Weighte
Slide 5: Portfolio Highlights
5 The British Land Company PLC Portfolio Highlights • Broadgate coming through strongly – Valuation up 22.4% to £2.9bn, driven by strong rental growth • Meadowhall on acquisition plan – Passing rents up 33.3%1 £45m to £60.0m; value maintained • Supermarket strategy progressed – £550 - £600m securiti
Slide 6: Financial Review
6 The British Land Company PLC Financial Review John Weston Smith Finance Director À
Slide 7: Financial Highlights
7 The British Land Company PLC Financial Highlights TOTAL RETURN - Pre-exceptional1 19.3% (2000 - 11.9%) 31 March Increase 31 March 2001 2000 Diluted NAV per Share 774p 13.7% 681p – Basic 802p 15.6% 694p Net Rental Income £449.3m 7.4% £418.5m Profits before Tax and Exceptional1 £169.1m 8.1% £156.4m
Slide 8: Growth in NAV
8 The British Land Company PLC Growth in NAV £ Million Pence per Share2 At 31 March 2000 3,593.5 694 Valuation surplus 545.1 105 Profits before exceptional1 after tax 149.9 29 Exceptional1 charge after tax (74.6) (14) Dividends (59.6) (12) Other 0.1 - At 31 March 2001 4,154.4 802 À 1 Unsecured bonds
Slide 9: Dividends
9 The British Land Company PLC Dividends Compound Average Dividend Growth 1 Last 5 years 6.1% 12 11.5p 10.9p Dividends (pence per share) 11 10.3p 9.8p 10 9.0p 9 8 7 1997 1998 1999 2000 2001 Year ended 31 March À 1 Compound average growth rate (p.a.)
Slide 10: Total Return
10 The British Land Company PLC Total Return Compound Average Total Return 1 2 Last 5 years 15.6% 23.6% 25 19.3% 20 16.4% % Total Return 15 11.9% 9.9% 10 5 0 1997 1998 1999 2000 2001 Year ended 31 March Growth in NAV Dividend À 1 Dividends plus growth in pre-exceptional NAV 2 Compound average growth
Slide 11: Financing
11 The British Land Company PLC Financing • Innovative financing policy has reduced cost of debt 1 1997 1998 1999 2000 2001 Proforma Net debt £2.1bn £2.3bn £2.7bn £3.8bn £3.7bn £3.9bn Average interest rate 8.46% 8.49% 7.30% 7.05% 6.91% 6.8% Average debt 20.5yrs 19.9yrs 23.0yrs 18.4yrs 17.8yrs 18yrs
Slide 12: Changes in Income
12 The British Land Company PLC Changes in Income Increase 2001 2000 Net Rental Income1 £23.0m £370.5m £347.5m Current Year Purchases £3.5m Meadowhall (including rent reviews) £22.2m Current Year Sales £(7.9)m Prior Year Sales £(2.8)m End of Rent free periods £1.7m Rent Reviews £6.5m £(0.2)m Other £
Slide 13: Prime Covenant Quality
13 The British Land Company PLC Prime Covenant Quality • Annualised net rents of £493m Diversified Tenant Base Other Manufacturing • Dun & Bradstreet Stress Score Hotels & 2% 10% for portfolio Restaurants – 72% rated either negligible or 6% low risk Government Retail – Only 0.7% rated high risk 2% 3
Slide 14: Liability Management
14 The British Land Company PLC Liability Management • An Efficient and Risk Averse Capital Structure Proforma1 31 March 31 March 2001 2000 Net Debt: £3.9bn £3.7bn 3.8bn Average interest rate 6.8% 6.9% 7.1% Fixed rate 93% 83% 85% FRS 13 adjustment2 £232m £232m £179m Mortgage ratio 48% 46% 49% (debt
Slide 15: Asset Gearing
15 The British Land Company PLC Asset Gearing Diversified Debt Structure • To Enhance the Returns on Equity 10.0 9.0 8.0 Share of JV Assets 7.0 6.0 £ billion 5.0 Share of JV Debt 1 (16.5%) 4.0 Other (2.2%) 3.0 Convertible Bonds (10.4%) Group Assets3 Bank Debt (18.0%) 2.0 Unsecured Bonds2 (6.7%) 1.0
Slide 16: Joint Venture Gearing
16 The British Land Company PLC Joint Venture Gearing • Joint Venture leverage maximises returns Effect of gearing on uplift in value Ungeared 1x + Joint Venture geared 1 2.5x + British Land geared 4.8x À 1Based on investment joint ventures only (development and partnership assets are substantially
Slide 17: Tax
17 The British Land Company PLC Tax Year Corporation British Land’s Tax charge Tax Rate Tax Rate 1997 33% 16.7% £15.2m 1998 31% 15.4% £19.6m 1999 31% 4.7% £2.6m 2000 30% 17.6% £27.6m 2001 30% 11.9% £10.2m À … Tax efficiency in minimising leakage
Slide 18: Strong Rental Growth Potential
18 The British Land Company PLC Strong Rental Growth Potential 31 March 2001 31 March 2000 £m £m • Annualised net rents 492.9 462.5 • Reversionary income 112.7 90.0 Total rents from existing leases 605.6 552.5 • ERV from developments1 131.8 86.0 737.4 638.5 À 1 At the marginal cost of debt the estim
Slide 19: Property Review
19 The British Land Company PLC Property Review Robert Bowden Property Investment Director À
Slide 20: Property Portfolio
20 The British Land Company PLC Property Portfolio The Portfolio at a Glance £3.4 bn City offices – with the core holding at Broadgate amounting to £2.9 bn £0.5 bn West End offices £1.8 bn Shopping Centres – with Meadowhall amounting to £1.28 bn £1.6 bn Supermarkets and non-food retail warehousing £
Slide 21: Portfolio Valuation
21 The British Land Company PLC Valuation Portfolio Valuation £m 3,386 City Offices 19.7 461 West End Offices 4.2 193 Other Offices 2.0 419 Shops (5.7) 554 Retail Warehouses 2.2 1,008 Supermarkets (1.1) 1,775 Shopping Centres (0.7) 1,064 Other 1.0 8,860 Total 6.7 -10 -5 0 5 10 15 20 25 À % Variance
Slide 22: Portfolio Yields
22 The British Land Company PLC Portfolio Yields • Portfolio is now reversionary by 22.9% 31 March 2001 Current Net Yield 5.9% Reversionary Net Yield 7.3% À
Slide 23: Portfolio Analysis
23 The British Land Company PLC Portfolio Analysis Retail 42% Offices 46% Meadowhall West End 15% 5% Supermarkets 11% City Offices 39% Retail Warehouses 6% Other Retail Other Developments Other Offices 10% 6% 6% 2% À
Slide 24: Group Portfolio Reconciliation
24 The British Land Company PLC Group Portfolio Reconciliation (Excluding JVs) £m £m Investment and development properties at 1 April 2000 6,777.8 Additions: Eldon House and Broadgate House 28.7 Theale, Lakeside 16.0 Lime Street 51.9 Other 36.3 132.9 Development expenditure 112.4 Disposals1: Dagenha
Slide 25: Joint Ventures Reconciliation
25 The British Land Company PLC Joint Ventures Reconciliation 2001 2000 Increase £m £m £m Total properties1 1,525.9 1,238.8 287.1 • 3 new joint ventures established with WestLB, London & Henley and Gazeley Properties • Main property purchases: – BL Universal acquisition of a Sainsburys Superstore at
Slide 26: Broadgate
26 Broadgate À The British Land Company PLC
Slide 27: Broadgate acres
27 The British Land Company PLC Broadgate 32 acres (not owned) À 4 million sq ft
Slide 28: Broadgate Valuation
28 The British Land Company PLC Broadgate Valuation • Valuation £2.9 billion (+22.4%) • Equivalent Yield 6.23% • ERV £57 per sq ft • Average Passing Rent £42.50 per sq ft À
Slide 29: Broadgate Activity
29 The British Land Company PLC Broadgate Activity • Rent Reviews – Settled over 100,000 sq ft Exchange House Oct 2000 at £54 psf (equivalent to headline £58) – Herbert Smith 250,000 sq ft Dec 2000 still outstanding – Forthcoming reviews on 845,000 sq ft in next 12 months (where current average rent
Slide 30: City Office Market
30 The British Land Company PLC City Office Market • Limited development now means only 3 months supply of grade A space at current take up rate • March 2001 quartile rents now at £62.50 psf • Rents forecast to rise by around 10% in the year 2001 À
Slide 31: Meadowhall
31 Meadowhall À The British Land Company PLC
Slide 32: Meadowhall Asset Management
32 The British Land Company PLC Meadowhall Asset Management • 12 new lettings (135,000 sq ft) increasing rents by £2.8m per annum • Plus 6 relocations to larger premises and a major store extension to Next • 14 retailer refurbishments (at their own expense) • 34 rent reviews settled À
Slide 33: Meadowhall Rent Levels
33 The British Land Company PLC Meadowhall Rent Levels • Total current passing rents: – £49 per sq ft; ERV £60.74 per sq ft – £60m per annum £74m per annum • Unit Shops current passing rents: – £88.86 per sq ft; ERV £106.66 per sq ft • Peak Zone A £370 per sq ft • Further rent reviews and asset mana
Slide 34: Meadowhall Current Initiatives
34 The British Land Company PLC Meadowhall Current Initiatives • Installation of a fibre optic based retail Intranet is underway, linking all retailers • Introduction of a customer loyalty card scheme • Planned extension to the Market Street Mall and Oasis • Leisure and restaurants planned for the R
Slide 35: Meadowhall Visitor Numbers
35 The British Land Company PLC Meadowhall Visitor Numbers March 2000 to March 2001 up 3.8% From: 22,686,000 To: 23,539,000 i.e. an extra 853,000 customers Website Re-launched to deliver improved service and information to shoppers the site has been averaging 34,000 hits per day since launch À
Slide 36: Meadowhall Demand
36 The British Land Company PLC Meadowhall Demand • There are requirements from retailers:- Sq ft 26 Existing tenants wish to expand totalling 190,050 163 Retailers wish to acquire units totalling 639,450 Retailer Demands 829,500 Catering and Leisure requirements totalling 152,350 Total Requirements
Slide 37: Retailer Performance
37 The British Land Company PLC Retailer Performance • Over 80% of the multiple retailers at Meadowhall are in the ‘Top Ten’ of their company outlets • Including 24% where it is their top performing outlet in the country 100 83 80 % of multiple retailers 65 60 40 24 20 0 À No. 1 Top Five Top Ten
Slide 38: Retail
38 The British Land Company PLC Retail Out of Town represents 32% of entire portfolio 76% of retail portfolio Valuation Uplift £m % Total Retail 3,756 (1)% In Town 914 (4)% Out of Town: 2,842 0% Meadowhall 1,280 0% Supermarkets 1,008 (1.1)% Retail Warehouses 554 2.2 % À
Slide 39: Supermarkets
39 The British Land Company PLC Supermarkets • 94 Supermarkets; total value of £1bn - down 1.1% • Site area c.400 acres; total floor area c. 5m sq ft • Average lease maturity 23 years; currently yielding 7.3% • Average supermarket rent now £18.20 per sq ft following positive progress on rent review
Slide 40: Retail Warehouses
40 The British Land Company PLC Retail Warehouses • Aggregate value of £554m - up 2.2% • 35 properties mainly retail parks • Total area - 3.3 million sq ft • Total land area - 330 acres • Average rent £13.51 per sq ft • Active asset management À
Slide 41: Out of Town Retailing: The Market Forecast
41 The British Land Company PLC Out of Town Retailing The Market Forecast • Now account for 30.9% of total retail sales • From: 24.5% of all retail space • From: 1.98% of retail outlets • Forecast : 1 – Increase in sales 2000/2005 up 33.9% – Increase in floor space 2000/2005 up 15.9% – Increase in s
Slide 42: Development Programme
42 The British Land Company PLC Development Programme Total programme 8 million sq ft Total cost £1.64 billion Completed during the year 200,000 sq ft (all let) 1.6 MILLION SQ FT UNDER CONSTRUCTION À 1The above includes joint ventures
Slide 43: Additions to Programme
43 The British Land Company PLC Additions to Programme Over 2.5 million sq ft added to the programme • Hamilton House, Broadgate – Design work now progressing for 140,000 sq ft • JV with Gazeley Properties – Sites at Thatcham and Redditch for 1.5m sq ft • Caroone House, Farringdon Street – Purchased
Slide 44: Development Programme Summary
44 The British Land Company PLC Development Programme Summary Total cost (including JVs) £1.64 billion Cost to BL £1.20 billion Total prospective ERV (including JVs) £175 million pa ERV to BL 1 £132 million pa À 1Includes our share of joint ventures … £305 million of total construction costs are com
Slide 45: Outlook
45 The British Land Company PLC Outlook John Ritblat Chairman À
Slide 46: Strategy
46 The British Land Company PLC Strategy An opportunistic but risk averse strategy to deliver long-term shareholder value through: • Focusing on leading quality assets in office, retail and development areas • Creating a first class modern portfolio with growth potential backed by covenant quality a
Slide 47: The British Land Company PLC
47 The British Land Company PLC The British Land Company PLC À
The British Land Company — FY2001 Earnings Presentation on 6ix