British Land Company PLC · LSE:BLND

British Land — Investor Presentation (October 2011)

151 slides from British Land's investor presentation, Oct 7, 2011

  1. Slide 1: Retail Event

    RETAIL EVENT 7 OCTOBER 2011 www.britishland.com

  2. Slide 2: Charlie Maudsley, Head of Retail

    Ch li Maudsley Charlie M dl Head of Retail

  3. Slide 3: One of the UK's Largest Retail Landlords

    One off the h UK’s ’ Largest Retaill Landlords dl d £9.9bn UK Retail Assets Under Management Department Stores • 23m sq ft ‐ 202 UK assets 8% • Largest g investment owner of 13% superstores • Largest owner/manager of retail whall 45% parks k Meadow 12% • Owner/manager of one of six 22% super p regio

  4. Slide 4: Key Messages

    Key Messages • A Portfolio suitable for the modern retail environment – Delivering for occupiers – Delivering for shareholders • The right approach – Quality team, asset management and driving total returns • Defensively positioned for today …. Well positioned for future growth Delivering Superior T

  5. Slide 5: Today's Agenda

    Today’s d ’ Agenda d Overview Charlie Maudsley Asset Management Approach Ben Grose Superstores Bryan Lewis Break Retail Warehouses John Maddison Sh Shopping i C Centres t Cl i B Claire Barber b Development Richard Wise Outlook Charlie Maudsley Questions & Answers Glasgow Fort Tour 5

  6. Slide 6: British Land - A High Quality Portfolio

    British h Land d ‐ A High h Quality l Portfolio f l Offices ‐ Regent’s Place UK Retail ‐ Glasgow Fort Delivering Superior Total Returns 6

  7. Slide 7: Delivering Superior Total Returns

    Delivering l Superior Totall Returns 1 Sustainable 1. S t i bl and d growing i income i 2. Assets which p protect and grow g capital p value 3. Creating incremental value 4. Controlling costs 5. Exploiting our scale and financial strength British Land’s Objective is to Deliver Superior Total Returns

  8. Slide 8: Our Retail Strategy

    Our Retaill Strategy 1 Actively 1. A ti l manage our prime i portfolio tf li 2. Invest in high g qqualityy p prime assets 3. Invest in good quality secondary with good fundamentals 4. Recycle capital where values not justified by rental prospects 5. Increase exposure to assets where we can create in

  9. Slide 9: Retail Portfolio Consistently Outperforms

    Retaill Portfolio f l Consistently l Outperforms f BL Retail ERV Growth Relative to BL Retail Total Returns Relative to IPD All Retail IPD All Retail R il % % 2.0 3.0 1.5 2.0 10 1.0 1.0 0.5 0.0 0.0 1 year 3 years 5 years 1 year 3 years 5 years Source: IPD Reflects the Quality of Our Portfolio and St

  10. Slide 10: A Portfolio Delivering for Occupiers - Diversity

    A Portfolio f l Delivering l ffor Occupiers ‐ Diversity UK Retail Investment Market Share Total Market IPD British Land £163bn £67bn £9.9bn Department Department Stores Stores & High 100% and High g Street Shopsp Street Superstores Superstores 80% Shopping ShoppingCentres Centres 60% Fashion Fashion

  11. Slide 11: A Portfolio Delivering for Occupiers - Consumer Choice

    A Portfolio f l Delivering l ffor Occupiers – Consumer Choice h Convenience Shop p Food Experience p Shop p Tesco Consumers Looking for Different Shopping Experiences 11

  12. Slide 12: Polarisation Accelerating

    A Portfolio Delivering for Occupiers ‐ Polarisation l Accelerating l Retail Lease Expiries 2012‐2017 15% IPD Prime Retail IPD Secondary Retail 12% 9% 6% 3% 0% 2012 2013 2014 2015 2016 2017 Source: IPD Significant Lease Expiries in Secondary Retail 12

  13. Slide 13: Polarisation Accelerating - Retailer Expansion Profile

    A Portfolio Delivering for Occupiers ‐ Polarisation l Accelerating l Potential Retailer Expansion Profile “90% said they would use Physiccal Potentiaal High “90% said they would use a Primark Hollister physical stores to check the John Lewis physicalIKEA stores toDunelm check the product before buyi

  14. Slide 14: Where Modern Retailers Want to Trade

    A Portfolio Delivering for Occupiers – Where h Modern d Retailers l Want to Trade d Retailers Migrating to the Best Space 14

  15. Slide 15: Where Modern Retailers Want to Trade

    A Portfolio Delivering for Occupiers – Where h Modern d Retailers l Want to Trade d St Stephen’s, Hull Retailers Migrating to the Best Space 15

  16. Slide 16: Retailers Aggressively Managing Portfolios

    A Portfolio Delivering for Occupiers – Retailers l Aggressively l Managing Portfolios f l Expansion Improvement Rationalisation Retailers Adapting on British Land’s Portfolio 16

  17. Slide 17: Lettings and Lease Renewals By Industry

    A Portfolio Delivering for Occupiers – Retailers l Aggressively l Managing Portfolios f l Lettings and Lease Renewals By Industry BL Annual ‘000 Since July 2009 Rent £m sq ft DIY & Bulky Goods 12.5 903 Fashion h & Footwear 11.3 483 General Retail 4.4 244 Restaurants & Fast Food 3.2 106 Health & Beau

  18. Slide 18: Four Factors for Retail Success

    A Portfolio Delivering for Occupiers ‐ Four Factors for f Retaill Success 1 Location 1. • Locally dominant and accessible • Affordable rents 2 Rent 2. • Where h retailers l can trade d profitably f bl • The right type of space 3 Configuration/Flexibility 3. • Adaptable at right cost • Where consumer

  19. Slide 19: Four Factors - Location (Elgin)

    A Portfolio Delivering for Occupiers ‐ Four Factors for f Retaill Success 1. Location Locally Dominant and Accessible 2. Rent 3. Configuration/Flexibility 5. Environment Elgin ‐ Scotland Attracted 4 New Retailers – Over 50% Income Growth in Last 3 Years 19

  20. Slide 20: Four Factors - Rent (Glasgow Fort Mezzanine)

    A Portfolio Delivering for Occupiers ‐ Four Factors for f Retaill Success 1. Location Value for Money 2. Rent 3. Configuration/Flexibility 5. Environment Mezzanine at Glasgow Fort 2.4m sq ft of Mezzanines Across 9.6m sq ft Retail Park Portfolio 20

  21. Slide 21: Four Factors - Configuration (Deepdale)

    A Portfolio Delivering for Occupiers ‐ Four Factors for f Retaill Success 1. Location Units Easily Adapted 2. Rent 3. Configuration/Flexibility 5. Environment WH Smith Downsize at Deepdale Over 80 Capital Asset Management Projects Initiated 21

  22. Slide 22: Four Factors - Environment (Kingswood)

    A Portfolio Delivering for Occupiers ‐ Four Factors for f Retaill Success 1. Location Complementary Retailers and Leisure 2. Rent 3. Configuration/Flexibility 5. Environment Kingswood – Costa, Subway ... soon M&S Simply Food 49 Food Lettings and Renewals Agreed 22

  23. Slide 23: Four Factors for Retail Success

    A Portfolio Delivering for Occupiers ‐ Four Factors for f Retaill Success 1. Location • Locally dominant and accessible • Affordable rents 2. Rent • Where retailers can trade profitably • The right type of space 3. Configuration/Flexibility • Adaptable at right cost • Where consumers want to shop p

  24. Slide 24: Key Messages

    Key Messages • A Portfolio suitable for the modern retail environment – Delivering for occupiers – Delivering for shareholders • The right approach – Quality team, asset management and driving total returns • Defensively positioned for today …. Well positioned for future growth Delivering Superior T

  25. Slide 25: Delivering for Shareholders - Lettings Success

    A Portfolio Delivering for Shareholders ‐ Lettings Success New Lettings in the Last 12 Months Q2 Q3 Q4 Q1 Total 2010/11 2010/11 2010/11 2011/12 Number 51 55 46 54 206 ‘000 sq ft 208 142 175 222 747 Annual Rent £3 7m £3.7m £2 8m £2.8m £2 5m £2.5m £3 8m £3.8m £12 8m £12.8m vs ERV (0.7)% 7.9% 5.7% 4.3%

  26. Slide 26: Delivering for Shareholders - Rental Growth

    A Portfolio Delivering for Shareholders ‐ Rentall Growth h British Land Retail ERV Movement vs. All Retail IPD ERV growth (March 2010 = 100) 102% British Land IPD 101% 100% 99% Q4 09/10 Q1 10/11 Q2 10/11 Q3 10/11 Q4 10/11 Q1 11/12 Source: IPD Four Consecutive Quarters of ERV Growth and Outperformanc

  27. Slide 27: Delivering for Shareholders - Total Returns

    A Portfolio Delivering for Shareholders ‐ Totall Returns British Land Total Returns by Subsector To June 2011 15% 12% 9% 6% 3% 0% 1 year 3 years 5 years ‐3% 3% BL Retail Warehouses BL Shopping Centres BL Superstores ‐6% BL All Retail IPD All Retail Source: IPD Our Portfolio Diversity Has Driven Cons

  28. Slide 28: Subsector Performance

    A Portfolio Delivering for Shareholders – Subsector b Performance f British Land Total Returns by Subsector Relative to IPD All Retail To June 22% 12% 9% 6% 3% 0% 2009 2010 2011 ‐3% ‐6% Shopping Centres Superstores Retail Warehouses All Retail Source: IPD Our Portfolio Diversity Has Driven Consisten

  29. Slide 29: Regional Returns

    A Portfolio Delivering for Shareholders – Regionall Returns British Land Total Returns by Region Relative to IPD All Retail To June 2011 6% 4% 2% 0% London South East South West Midlands Yorkshire North West North East Scotland ‐2% 1 year 3 years 5 years Source: IPD Our Portfolio Diversity Has Drive

  30. Slide 30: Delivering for Shareholders - Lot Size

    A Portfolio f l Delivering l ffor Shareholders h h ld ‐ Lot Size British Land Total Returns by Lot Size To June % of BL Retail 2009 2010 2011 Portfolio % % % Over £150m 39% ‐24.2 25.0 12.3 £100‐150m 9% ‐27.3 28.8 13.8 £50‐100m 19% ‐20.9 28.5 10.7 Under £50m 33% ‐19.6 32.8 9.9 IPD All retail t il ‐25

  31. Slide 31: Key Messages

    Key Messages • A Portfolio suitable for the modern retail environment – Delivering for occupiers – Delivering for shareholders • The right approach – Quality team, asset management and driving total returns • Defensively positioned for today …. Well positioned for future growth Delivering Superior T

  32. Slide 32: The Right Approach

    The h Right h Approach h • The q qualityy of our team • How we manage the assets • How we allocate capital Generating Superior Total Returns 32

  33. Slide 33: Our Team - Strong and Experienced

    Our Team ‐ Strong and d Experienced d Head of Retail Charles Maudsley Asset Portfolio Operational Superstores Investment Development Management Management David Tudor Morgan Bryan Lewis Ben Grose Andrew Smith Darren Richards Richard Wise Integrated Team Generating Superior Total Returns 33

  34. Slide 34: Proactive Relationship with Joint Venture Partners

    Our Team ‐ Proactive Relationship with Joint Venture Partners • Bought, g , sold,, extended 11 stores;; renewed and refinanced 3 joint j ventures in last 18 months Bristol, Tesco Hoddesdon, Sainsbury’s Working in Partnership to Create Opportunity and Value 34

  35. Slide 35: Leveraging Expertise to Deliver Value

    Our Team – Leveraging Expertise to Deliver l Value l • Acquired q for £10m • Negotiated with local authority • Joint Venture with original borrower • Potentiall £125m+ development l Working in Partnership to Create Opportunity and Value 35

  36. Slide 36: Our Asset Management Approach

    Our Asset Management Approach h • Understandingg the local retail hierarchyy • Staying close to customers • Creating the right environment Driving Income Growth Through Active Asset Management 36

  37. Slide 37: Future Proofing Our Assets

    Asset Management Approach h ‐ Future Proofing f Our Assets British Land Ipad App Creating the Right Environment for the Future 37

  38. Slide 38: Driving Total Returns

    The h Right h Approach h ‐ Driving Totall Returns • Rental Income • Yield • Capital Expenditure (tenant incentives and refurbishment) • Obsolescence A Balanced Approach ‐ Understanding The Wider Investment Criteria 38

  39. Slide 39: Owning and Investing in The Right Assets

    Driving Total Returns – Owning and d Investing in The h Right h Assets Prime Re‐engineering into prime Best Secondary • Effectively managed • Asset repositioning • Sustainable income • Positioned for growth • Aligning asset to consumer • Acceptable cap‐ex levels • First to see rental growth demand [

  40. Slide 40: Investing in Prime at Drake Circus

    Driving Total Returns – Investing in Prime at Drake k Circus • £240m acquisition q • 72% of space in large units • Modern, rack‐rented • 6.0% initiall yield l Drake Circus, Plymouth Regionally Dominant With 19m Visitors Each Year 40

  41. Slide 41: Re-engineering to Prime at Mayflower Retail Park

    Driving Total Returns – Re‐engineering to Prime at Mayflower fl Retaill Parkk • £51m acquisition q • Good tenant demand • Under offer on vacant MFI unit • 6.3% initiall yield l – 6.9% with letting of vacant unit • Swapped for ex‐growth Mayflower Retail Park, Basildon asset New Letting to Start Regen

  42. Slide 42: Investing in Best Secondary at Barnstaple

    Driving Total Returns – Investing in Best Secondary d at Barnstaple l • £30m acquisition q • Fully occupied • Sustainable income • Affordable rents • Low capex • 8.3% 8 3% initial yield Barnstaple Locally Dominant with Sustainable Income 42

  43. Slide 43: The Market Today

    The h Market k Today d Lettings Under Offer By Retailer Type Health & Beauty • 190,000 , sq q ft vacant Travel and Leisure 2% • 490,000 sq ft 5% currently under offer 8% ahead of ERV 9% 42% • Second quarter l lettings ahead h off ERV 13% 21% General Retail Continue to Believe Medium Term Rental Outl

  44. Slide 44: Ben Grose, Head of Retail Asset Management

    B G Ben Grose Head of Retail Asset Management

  45. Slide 45: Essentials of Retail Asset Management

    Essentials l off Retaill Asset Management • Understandingg an asset’s position p in its local hierarchyy • A close relationship with retailers – understanding their business and trading • Creating the right space in the right environment and time frame Leads to Income and Capital Value Growth 45

  46. Slide 46: Understanding the Retail Hierarchy - In Town

    Understanding d d the h ‐ In Town h Retaill Hierarchy Drake Circus, Plymouth Opportunities to Attract New Brands 46

  47. Slide 47: Retail Hierarchy - District Centre

    Understanding the Retail Hierarchy – District Centre Beaumont Leys, Leicester 3.5% Income Growth Over the Last 12 Months 47

  48. Slide 48: Retail Hierarchy - Out of Town

    Understanding d d theh Retaill Hierarchy h ‐ Out off Town Kingswood Retail Park, Hull 6% Income Growth Over the Last 12 Months 48

  49. Slide 49: Staying Close to Retailers

    Staying Close l to Retailers l “British Land know what’s going on, sometimes better than we do! They clearly want to increase the value of their investment, but recognise there must be something in it for us as well. We try to do the same. We identify highly profitable stores with a good future and

  50. Slide 50: Staying Close to Retailers - Our Senior Team

    Staying Close l to Retailers l ‐ Our Senior Team Ben Grose Steve Hadfield Edward Cree Dan Clark Simon Meacock Claire Barber Steven Rickard John Maddison Relationship Management is Not Separated from Asset Management 50

  51. Slide 51: Staying Close to Retailers - Transactions

    Staying Close l to Retailers l ‐ Transactions Nugent, Orpington New Mersey, Speke Evidence of Scale 51

  52. Slide 52: Staying Close to Retailers - Next

    Staying Close l to Retailers l ‐ Next St Stephen’s, Hull New Mersey, Speke Birstall, Leeds 170,000 sq ft of Lettings, Re‐gears, Refits and Extensions 52

  53. Slide 53: Staying Close to Retailers - M&S

    Staying Close l to Retailers l ‐ M&S Teesside, Stockton Deepdale, Preston 250,000 sq ft Under Offer or in Discussion Across the Portfolio 53

  54. Slide 54: Staying Close to Retailers - H&M

    Staying Close l to Retailers l ‐ H&M & Glasgow Fort St Nicholas Centre, Aberdeen Driving Rental Income with Key Occupiers 54

  55. Slide 55: Out of Town Mezzanines

    Staying Close l to Retailers l ‐ Out off Town Mezzanines New Look (Inverness) Dunelm (Dartford) Hobbycraft (Orpington) Working with Retailers to Enhance Affordability 55

  56. Slide 56: Staying Close to Retailers - Trading

    Staying Close l to Retailers l ‐ Trading d • Footfall • Car park stays • Path intelligence • Social media Meadowhall Student Lock‐in Sharing Information and Working Together 56

  57. Slide 57: Minimising Exposure to Tenants at Risk

    Minimising our Exposure to Tenants at Riskk Allied Carpets MFI Borders Focus 50 40 Number of Units 30 20 10 0 ‐3 ‐2 ‐1 0 Years to Administration All Five Focus Units Already Re‐let, Income Producing or Under Offer 57

  58. Slide 58: Creating the Right Space - Rotherham

    Creating the h Space ‐ Rotherham h Right h h Parkgate, Rotherham Improving Retailer Mix and Growing Rental Income 58

  59. Slide 59: Creating the Right Space - Peterborough

    Creating the h Right h Space – Peterborough b h Before After Improving ERV and Growing Income 59

  60. Slide 60: Creating the Right Environment - Leamington Spa

    Creating the h Environment ‐ Leamington Spa h Right Before After Breathing New Life and Attracting Modern Retailers 60

  61. Slide 61: Bon Accord & Surrey Quays Shopping Centres

    Creating the Right Environment ‐ Bon Accordd & Surrey Quays Shopping h Centres Bon Accord, Aberdeen Surrey Quays, London Continually Improving Our Assets 61

  62. Slide 62: Creating the Right Environment - Cambridge

    Creating the h Right h Environment ‐ Cambridge b d Before After Visitor Numbers Up 27%, Driving 5% ERV Growth 62

  63. Slide 63: Creating the Right Environment - Adding Food and Drink

    Creating the h Right h Environment ‐ Adding dd Food d and d Drinkk 85,000 sq ft of Transactions Generating over £2.5m of Rent 63

  64. Slide 64: Creating Tomorrow's Retail Environment

    Creating Tomorrow’s ’ Retaill Environment The Tollgate Centre, Colchester St James, Northampton Introducing New Concepts and Offering Greater Convenience 64

  65. Slide 65: Summary

    Summary • Drivingg occupier p demand even in a difficult environment • Expert asset management – Understandingg the retail hierarchyy – Staying close to retailers – Creating the right space and environment Sustainable Growth in Income and Capital Value 65

  66. Slide 66: Bryan Lewis, Head of Superstores

    B Bryan LLewis i Head of Superstores

  67. Slide 67: Key Themes

    Key Themes h • Why Foodstores fit so well in the BL Portfolio • How we drive outperformance • Defensive today but with growth tomorrow 67

  68. Slide 68: British Land Foodstore Portfolio

    British h Land d Foodstore d Portfolio f l • 22% of BL’s retail portfolio p At 30 June 2011 BL Share Lease Value £m • 99 stores totalling 6m sq ft Sainsbury’s JV 632 Open market review Tesco BL Holdings 296 Open market review • Average rent £21psff ((in lline Tesco Aqua 297 Annual RPI (0‐3.5%) with

  69. Slide 69: Rental Value Growth - BL Foodstores vs IPD

    Rentall Value l Growth h ‐ BL Foodstores d vs IPD ERV Growth To June 2011 4% 3% 2% 1% 0% 1 year 3 years 5 years 10 years 15 years ‐1% ‐2% ‐3% ‐4% BL Foodstores IPD Shops IPD Retail Warehouses IPD Shopping Centres Source: IPD Growth in the Good Times, Defensive in Difficult Times 69

  70. Slide 70: Strengths of Our Foodstore Portfolio

    Strengths h off Our Foodstore d Portfolio f l • Anchored in non‐discretionary non discretionary spending • Strong covenants • Retailers gaining market share • Average lease length remaining of 17 years Strong Covenants, Expanding Retailers and Long Leases 70

  71. Slide 71: Limited Capital Expenditure

    Limited d Capitall Expenditure d Tesco Bristol ‐ Before Tesco Bristol ‐ After Retailers Frequently Refreshing Their Stores 71

  72. Slide 72: Driving Income

    Driving Income Highest Open Market Lettings British Land Rent Reviews ‘000 sq ft £psf ‘000 sq ft £psf Over 100,000 sq ft: Over 100,000 sq ft: Colchester, Sainsbury’s 106 26.79 Peterborough, Tesco 136 28.50 Wakefield, Sainsbury’s 117 21.50 Milton Keynes, Tesco 141 26.00 35‐100,000 sq ft: 35‐100,000 s

  73. Slide 73: Stock Selection - Sales

    Stockk Selection l ‐ Sales l Birkenhead Portsmouth Newport Walthamstow £111m (Gross) of Foodstores Disposals Since Apr‐10 73

  74. Slide 74: Stock Selection - Purchases

    Stockk Selection l ‐ Purchases h Durham Hoddesdon Modern Conforming Stores Which Are Locally Dominant 74

  75. Slide 75: Stock Selection - Macclesfield

    Stockk Selection l ‐ Macclesfield l f ld Sold At 4.4% Yield Giving a Total Return of 17% 75

  76. Slide 76: Delivering Total Returns

    Delivering l Totall Returns Total Property Returns To June 2011 BL Foodstores IPD Shops IPD Retail Warehouses IPD Shopping Centres 12% 9% 6% 3% 0% 1 year 3 years 5 years 10 years 15 years ‐3% Source: IPD Foodstores Consistently Outperformed IPD 76

  77. Slide 77: Continued Increase in Grocery Share of Retail

    C i Continued d IIncrease iin G Grocery Sh Share off R Retailil Grocery Retail Market Size £bn 200 6.0% Market Value (LHS) Annual Growth (RHS) 5.0% 150 4.0% 100 3.0% 2.0% 50 1.0% 0 0.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: IGD Research Grocery Share Expected to Grow to

  78. Slide 78: Retailer New Store Activity

    Retailer l New Store Activity Foodstore Requirements • 1.5m sq ft of new stores will open in 2011 • 1.3m sq ft of new stores will open in 2012 • 188 new stores opened p in 2011 • Expanded its estate by 6.3% with a total of 3,153 stores • Expect to open c.2m sq ft • 250 stores in next fives years of

  79. Slide 79: Growing Internet Sales

    Growing Internet Sales l “Online grocery purchases only account for 3.2 per cent of total grocery sales in the UK, although overall internet sales account for nearly 10 per cent of all retail sales.” sales. Marketing Week Multi channel shopping is a key feature of “Multi‐channel online grocery – the

  80. Slide 80: Foodstore Supply - Development Pipeline

    Foodstore d Supply l ‐ Development l Pipeline l Foodstore Development Pipeline m sq ft • 40% of the pipeline has 50 Proposed With Consent Under Construction no consent 40 • 50% is developer led 30 with no occupier 20 • Only O l 5% off pipeline i li iis under construction 10 0 2002 2003 2004 2005 200

  81. Slide 81: Growing Through Extensions

    Growing Through h h Extensions • BL average site density only 27% • Over 100,000 sq ft funded or currently under construction • Further 120,000 sq ft under discussion Preston, Sainsbury’s – 14% increase in store size 81

  82. Slide 82: Summary

    Summary • A significant g p part of British Land’s p portfolio • Delivered excellent historic returns relative to the market • Sensibly priced on a risk adjusted basis – 5.0% Yield • Strong underlying business model and attractive long terms fundamentals continue to apply l • Good prospects for futu

  83. Slide 83: John Maddison, Senior Asset Manager - Out of Town Retail

    J h M John Maddison ddi Senior Asset Manager ‐ Out of Town Retail

  84. Slide 84: The Largest Owner/Manager of Retail Parks

    The Largest Owner/Manager of R t il P Retail Parks k • 80 assets; 9.6m sq ft • 82% open A1 consent 22% 25% • Low void rate – 99.1% let (from 97.7% in 13% June 2009)) • Average lease length of 10.3 years 9% 31% British Land Manages £4.4bn of Retail Warehouses 84

  85. Slide 85: Out of Town - Key Asset Criteria

    Out off Town ‐ Key Asset Criteria 1. Location • Locally dominant and accessible • Affordable rents 2 R 2. Rentt • Where retailers can trade profitably • The right g type yp of space p 3. Configuration/Flexibility • Adaptable at right cost • Where consumers want to shop 4. Environment • Right mix of

  86. Slide 86: Driving Value Through Controlling Costs

    Driving Value l Through h h Controlling ll Costs • BL average g Shopping/Super pp g/ p Park service charge g onlyy £1.50psf p • Average benchmark for UK Shopping Centres is £6.34psf • Landlord of the Year 2009/10 • Service Charge Provider of the Year 2009/10 • Platinum Audit Award 2011 (only one eve

  87. Slide 87: Examples of Our Retail Parks

    Examples l off Our Retaill Parks k Super Park Traditional Retail Park Purpose Built Shopping Park Teesside Stafford Glasgow Fort Different Assets, Same Strong Fundamentals 87

  88. Slide 88: Teesside - Dominant and Accessible

    Teesside d ‐ Dominant and d Accessible bl • 750,000 sq ft retail/ leisure park • Annual footfall of 8m • Easily accessible Number One Super Park in the UK 88

  89. Slide 89: Teesside - Scale and Strength

    Teesside d ‐ Scale l and d Strength h • Average rent £29psf • Achieving headline p rents of £47.50psf Trades Really Well and Headline Rents Are Growing 89

  90. Slide 90: Teesside - Affordability

    Teesside d – Affordability ff d b l • Consistently trades in top 5 stores in UK out of 450 stores • In the top 20 stores in the UK out of 400 stores • In the top 10 stores in the UK out of 80 stores • Best store in the region out of 65 stores • In the top 10 retail park stores in the UK out of 49 st

  91. Slide 91: Teesside - Configuration and Flexibility

    Teesside d ‐ Configuration f and d Flexibility l bl Republic and TUI Units Subdivision Increases Fascias and Enhances Retailer Mix 91

  92. Slide 92: Teesside - Configuration and Flexibility

    Teesside d ‐ Configuration f and d Flexibility l bl Next Mezzanine Mezzanine Drives Sales Densities and Rental Growth 92

  93. Slide 93: Teesside - Continually Improving the Environment

    Teesside d ‐ Continually ll Improving the h Environment COSTA unit and Public Information Centre Improving Offer and Increasing Dwell Time 93

  94. Slide 94: Stafford - Key Facts

    Stafford ff d ‐ Key Facts • 172,500 sq ft • Purchased 2008 • 11 new lettings since ownership Rental Income Increased From £1.4m to £3.1m Since Purchase 94

  95. Slide 95: Stafford - Wholesale Refurbishment

    Stafford ff d ‐ Wholesale h l l Refurbishment f b h Before After Modernising and Continually Improving 95

  96. Slide 96: Stafford - Configuration and Flexibility

    Stafford ff d ‐ Configuration f and d Flexibility l bl Before After Regenerating Space and Increasing Retail Offer 96

  97. Slide 97: Stafford - Affordability

    Stafford ff d ‐ Affordability ff d b l Trading Well Above Expectations 97

  98. Slide 98: Stafford - Continually Improving

    Stafford ff d ‐ Continually ll Improving Before After Enhancing Space for the Right Occupiers 98

  99. Slide 99: Stafford - Improving Customer Experience

    Stafford‐Improving ff d Customer Experience COSTA unit and Carphone Warehouse Essential Facilities Key to Growth 99

  100. Slide 100: Glasgow Fort - Scotland's Premier Shopping Park

    Glasgow l Fort ‐ Scotland’s l d’ Premier Shopping h Parkk • Dominates East Glasgow g • Extended opening hours – 50% of trade between 5pm and 10pm • Significant extension growth potential Locally Dominant – 12.5m Visitors a Year 100

  101. Slide 101: Glasgow Fort - Flexibility, Configuration and Affordability

    Glasgow Fort ‐ Flexibility, Configuration and Affordability ff d b l in Practice Before After Reconfiguring Space to Create Capital Growth & Increase Income 101

  102. Slide 102: Glasgow Fort - The Finished Article

    Glasgow l Fort ‐ The h Finished h d Article l High Sales Densities for Fashion Retailers 102

  103. Slide 103: Glasgow Fort - Further Improving the Environment

    Glasgow l Fort ‐ Further h Improving the h Environment Adding New Pre‐let 8‐screen Cinema and Five Restaurants 103

  104. Slide 104: Glasgow Fort - Continually Adding Value

    Glasgow l Fort ‐ Continually ll Adding dd Value l Converting 15,000 sq ft Leisure Unit to Retail 104

  105. Slide 105: Summary

    Summary • Right g assets • Doing the right things • Meeting customers’ needs • Achieving targeted total returns Well Placed to Meet Customer Needs and Deliver Returns 105

  106. Slide 106: Claire Barber, Senior Asset Manager - Shopping Centres

    Cl i B Claire Barber b Senior Asset Manager – Shopping Centres Well Placed to Meet Customer Needs and Deliver Returns

  107. Slide 107: Our UK Shopping Centres Portfolio

    h Our UK Shopping f l Centres Portfolio Bon Accord & St Nicholas, Aberdeen Lisnagelvin, Londonderry St Stephen’s, Hull Meadowhall, Sheffield Serpentine Green, Peterborough Beaumont Leys, Leicester Eastgate, Basildon Green Lanes, Barnstaple Surrey Quays, London Drake Circus, Plymouth 107

  108. Slide 108: Our UK Shopping Centres Portfolio

    Our UK Shopping h Centres Portfolio f l • £2.3bn 3b under u de management a age e t (BL Share £1.5bn) • High Occupancy of 97.6% • Average lease 9.7 years • 14.6% 14 6% of income expiring in next 3 years (IPD 25.8%) Quality Assets With Strong Income Profiles 108

  109. Slide 109: Drake Circus, Plymouth

    Drake k Circus, Plymouth l h • 560,000 , sq q ft • Opened in 2006 • Anchor tenants include M&S, Primark, Next, Boots and H&M • 1,270 car parking spaces Dominates Catchment – 19m Visitors Each Year 109

  110. Slide 110: Drake Circus - Plymouth's Only Modern Retail Environment

    Drake k Circus ‐ Plymouth’s l h’ Only l Modern d Retaill Environment 72% of Space in Units of Over 7,500 sq ft 110

  111. Slide 111: Drake Circus - Understanding our Customer Base

    Drake Circus ‐ Understanding our Customer Base • 30,000 30 000 students • Over‐representation of key customer group (15 (15‐34 34 years) • Dominated by ACORN group described as ‘Comfortably off’ Opportunity to Attract More Affluent Shoppers 111

  112. Slide 112: Drake Circus - Enhancing the Future Offer

    Drake k Circus ‐ Enhancing h the h Future Offer ff To Drive Future Rental Growth 112

  113. Slide 113: Meadowhall

    Meadowhall d h ll • 1.4m 1 4m sq ft • Annual footfall 24m • Anchored by House of Fraser, M&S, and Debenhams • 11 screen Vue Cinema • 12,000 12 000 ffree parking ki spaces One of Only Six ‘Super Regional’ Shopping Centres in the UK 113

  114. Slide 114: Meadowhall - Improving the Customer Profile

    Meadowhall d h ll ‐ Improving the h Customer Profile fl • Targeted marketing ‐ focus on 3 key high spending groups • Proportion of visitors from these 3 key groups increased by 5% • 42% of first time visitors from these key groups Symbols of Success Happy Families Suburban Comforts Generated Income

  115. Slide 115: Leveraging Customer Relationships - House of Fraser

    Leveraging Customer Relationships l h ‐ House off Fraser Store Under Investment by Tenant Since Opening 21 Years Ago 115

  116. Slide 116: Leveraging Customer Relationships - House of Fraser

    l h ‐ House off Fraser Leveraging Customer Relationships Strong Double Digit Sales Growth Post Refurbishment 116

  117. Slide 117: A More Premium Retail Offer

    A More Premium Retaill Offer ff • First Fashion Rocks in the UK Increasing Rental Income With Lettings At or Above ERV 117

  118. Slide 118: Working with Retailers to Grow their Businesses

    Working k with h Retailers l to Grow their h Businesses • At Meadowhall …….. • and Bon Accord, Aberdeen…….. By Delivering the Right Space in the Right Environment 118

  119. Slide 119: St Stephen's, Hull

    St Stephen’s, h ’ Hullll • 563,000 sq ft • Annual footfall 10m • Anchored h db by Tesco, Next, H&M and TK Maxx • 1,500 car parking spaces Dominant City Centre Scheme – Fully Let 119

  120. Slide 120: Modern Retail Space in a City Centre Environment

    Modern d Retaill Space in a City Centre Environment Demand Outstrips Supply ‐ Recent Letting Increased Zone A by 5% 120

  121. Slide 121: Expanding Our Restaurant Offers

    Expanding d Our Restaurant Offers ff Extending Dwell Time and Increasing Spend 121

  122. Slide 122: Improving the Food Offer at Meadowhall

    Improving the h Food d Offer ff at Meadowhall d h ll • Fast food dominates and over trades • Underperforms relative l to its out off town peers due to the lack of premium offers Oasis Food Court ‐ Before Major £7m Refurbishment and Reconfiguration 122

  123. Slide 123: Improved Offer, Appealing to a More Affluent Customer

    Improved d Offer, ff Appealing l to a More Affluent ffl Customer Oasis Food Court ‐ After Creative Use of Space Generating Yield on Cost of Over 14% 123

  124. Slide 124: Future Growth Potential - Meadowhall

    Future Growth h Potentiall ‐ Meadowhall d h ll Imaginative Tenant Engineering Attracting New International Brands 124

  125. Slide 125: Future Growth Potential - Peterborough and Surrey Quays

    Future Growth h Potentiall ‐ Peterborough b h and d Surrey Quays Satisfying demand at Serpentine Green Investing to reposition Surrey Quays In Discussions to Meet a Number of Active Retailer Requirements 125

  126. Slide 126: Future Growth Potential - Barnstaple

    Future Growth h Potentiall ‐ Barnstaple l Improving the Retail Mix By Reconfiguring and Refurbishing Units 126

  127. Slide 127: Summary

    Summary • Understandingg the retail hierarchyy • Delivering the right space for retailers • Understanding our customers Strategic Asset Management Leads to Outperformance 127

  128. Slide 128: Richard Wise, Head of Retail Development

    Ri h d Wise Richard Wi Head of Retail Development

  129. Slide 129: Four Central Themes

    Four Centrall Themes h • The supply shortage of prime space • Planning policy supports regeneration • Our competitive advantages • We have the right strategy Opportunity to Add Incremental Value 129

  130. Slide 130: The Supply Shortage

    The h Supply l Shortage h Retail Development Completions m sq ft 15.0 Retail Warehouses Town Centre 12 0 12.0 9.0 60 6.0 3.0 00 0.0 2001 2003 2005 2007 2009 2011 2013 2015 Source: Verdict Current Development at Historic Low 130

  131. Slide 131: Public Sector Support

    Public bl Sector Support • Central and local planning policy uncertain • Regeneration and job creation is strongly supported • Now is the right time to bring forward tomorrow’s developments Planning Window is Opening 131

  132. Slide 132: Our Competitive Advantages

    Our Competitive Advantages d • Scale and volume • Experienced team • No significant UK development exposure prior to the recession • Development partner of choice • Financial strength Experienced Team with Financial Strength 132

  133. Slide 133: The Right Development Strategy

    The h Right h Development l Strategy • Focus on mid mid‐sized sized projects (£50‐250m) (£50 250m) • Buy control today to develop tomorrow • Develop more food stores Whiteley Shopping Centre Lower Costs Lead to Affordable Rents 133

  134. Slide 134: Proposed Major UK Projects

    Proposed d Major UK Projects ‘000 BL ERV Total Cost sq ft Share (BL Share) (BL Share) £m £m Power Court,, Luton c.200 100% TBC TBC Whiteley Shopping Centre 302 50% 2.5 34 Surrey Quays 100 50% 10 1.0 13 Development Funding 310 100% 5.9 88 (under offer) • Plus 400,000 sq ft of unimplemented planning c

  135. Slide 135: Whiteley Shopping Centre

    Whiteley h l Shopping h Centre • 1 mile from J9 of the M27 • 302,000 sq q ft in 50 units • Likely start 2012 Over 40% (by Value) Now Under Offer 135

  136. Slide 136: Power Court, Luton

    Power Court, Luton c.200,000 sq ft Scheme with Food Store Anchor 136

  137. Slide 137: Surrey Quays Shopping Centre

    Surrey Quays Shopping h Centre Before After Major 100,000 sq ft Extension Adding 17 Units 137

  138. Slide 138: Summary

    Summary • Veryy little A grade g stock beingg developed p • Planning policy supportive of urban regeneration • Limited UK development exposure prior to the recession • Focus on mid‐sized urban projects and food stores • We are looking l k to buy b controll today and develop l tomorrow British Land i

  139. Slide 139: Charlie Maudsley, Head of Retail

    Ch li Maudsley Charlie M dl Head of Retail

  140. Slide 140: Key Messages

    Key Messages • A Portfolio suitable for the modern retail environment – Delivering for occupiers – Delivering for shareholders • The right approach – Quality team, asset management and driving total returns • Defensively positioned for today …. Well positioned for future growth Delivering Superior T

  141. Slide 141: Our Portfolio - Defensive Today

    Our Portfolio f l ‐ Defensive f Today d At 30 June 2011 Occupancy rate 98.7% Fixed uplifts 24 4% 24.4% Lease length 12.6 years Income expiring (June 2011‐14) 6.9% Strong and Secure Income Profile 141

  142. Slide 142: Our Portfolio - Defensive Today

    Our Portfolio f l ‐ Defensive f Today d • 75% % of income from top p 50 retailers • Rent collection 98% within two weeks of quarter day • 0.5% occupiers in administration and only 0.5% temporary lettings % of Retail Rent % of Retail Rent Tesco 11.8 House of Fraser 1.7 Sainsbury 10.1 New Look 1.5 Deb

  143. Slide 143: Our Portfolio - Defensive Today

    Our Portfolio f l ‐ Defensive f Today d • Portfolio is rack rented or reversionaryy todayy At 30 June 2011 British Land IPD Average contracted rent £21psf £17psf Average ERV £22psf £19psf EPRA Net Initial Yield 5.4% 5.8% Net Equivalent Yield 5.7% 6.3% Strong and Sustainable Platform for Growth 143

  144. Slide 144: Positioned For Future Growth

    Positioned d For Future Growth h • Growth from existingg p portfolio • Adding space through extensions and development • Recycling Delivering Superior Total Returns 144

  145. Slide 145: Growth From Existing Portfolio - Shortage of the Right Space

    Growth From Existing Portfolio ‐ Shortage h off the h Right h Space UK Retail Development Completions • Continued demand – m sq ft 490,000 sq ft under offer 12.0 Retail Warehouses Town Centre • Shortage of the right 9.0 space – little littl new stock t k iin the pipeline 6.0 3.0 0.0 2001 2003 2005 2

  146. Slide 146: Growth From Existing Portfolio - Rents

    Growth h From Existing Portfolio f l ‐ Rents At 30 June 2011 Contracted Rent ERV £ f £psf £ f £psf Superstores 21 21 Meadowhall 58 60 Other Shopping Centres 19 19 Retail Warehouses 23 23 Retail Warehouses (inc. mezzanine) 19 21 Department Stores 12 9 T l Total 21 22 Affordable Rents With Good Potent

  147. Slide 147: Growth From Existing Portfolio - Affordable Rents

    Growth h From Existing Portfolio f l ‐ Affordable ff d bl Rents Illustrative Comparison of In Town and Out of Town Total Occupational Costs In Town Out of Town Out of Town Out of Town Typical yp 5,000 , sq q ft Unit ((Zone A)) ((No Cover)) ((50% Cover)) (100% ( Cover)) £150psf £45psf £70psf £90psf £

  148. Slide 148: Potential Extensions and Developments

    Growth From Existing Portfolio ‐ Potentiall Extensions and d Developments l ‘000 sq ft BL Share Whiteley Village, Fareham 302 50% Glasgow Fort Shopping Park 175 39% Glasgow Fort Shopping Park (leisure) 48 39% Fort Kinnaird, Edinburgh 223 19% Surrey Quays Shopping Centre 103 50% Deepdale Retail Park

  149. Slide 149: Capital Recycling - Available Investments

    Capitall Recycling l ‐ Available l bl Investments • Veryy little p prime assets openly p y available £m Prime Secondary Total Retail Warehouses (above £15m) ‐ 238 238 Shopping centres (above £20m) 325 909 1,234 Total 325 1,147 1,472 Source: CBRE (September) Greater Opportunities in More Challenging

  150. Slide 150: Summary

    Summary • We have the right g assets for the modern retail environment • The right approach to deliver superior returns • Defensively position for today …. Well positioned for future growth Delivering Superior Total Property Returns from Retail 150

  151. Slide 151: Glasgow Fort Shopping Park

    Glasgow l Fort Shopping h Parkk Delivering Superior Total Property Returns from Retail 151

British Land Company — Investor Presentation (October 2011) on 6ix