British Land Company PLC · LSE:BLND
British Land — Investor Presentation (February 2017)
108 slides from British Land's investor presentation, February 2017
Slide 1: Investor Presentation February 2017
Investor Presentation February 2017 www.britishland.com @BritishLandPLC $BLND All figures as at last valuation date of 30 September 2016 unless noted otherwise
Slide 2: The 2016 Queen's Award for Enterprise
British Land is proud to have been awarded The 2016 Queen’s Award for Enterprise Acknowledging our economic, social and environmental contribution
Slide 3: Overview
Overview • Quality portfolio – Reflected in our activity and results • Resilience built into the business – Secure income and robust finances • Strategy aligned to long term trends – Endures through uncertainty • Optionality to respond to changing environment – Tactical decisions in light of Brexit
Slide 4: Activity in quarter to December
Activity in quarter to December 16 • Quality portfolio attracting strong occupier demand – 314,000 sq ft of Retail lettings and renewals, 8.7% ahead of ERV; a further 189,000 sq ft under offer – Retailer sales +0.6% (+200 bps vs benchmark); footfall -0.6% year on year (+220bps vs benchmark) – 51,000
Slide 5: Portfolio & Strategy
Portfolio & Strategy
Slide 6: Portfolio evenly split between London Offices and high quality Retail
Portfolio evenly split between London Offices and high quality Retail Offices Retail & Leisure £6.6bn £6.8bn Total portfolio valuation £13.9bn at September 16 including £0.3bn at Canada Water and £0.2bn of Residential assets 6
Slide 7: Resilience built into the portfolio
Resilience built into the portfolio 98% occupancy • High quality portfolio • Practically fully let at 98% occupancy 9 years average lease length • Average lease length of 9 years • Let to a high quality, diverse occupier base Occupier split by sector by rent General Other 7% Retail 16% DIY 7% TMT 7%
Slide 8: Our strategy is aligned to long term trends
Our strategy is aligned to long term trends Key long term trends Implications for British Land Globalisation Strength of London Transforming impact Rise of omnichannel of technology Population growth Sharpened focus and urbanisation on end user Importance of Blurring of work infrastructure and leisu
Slide 9: 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 understand our customers’ needs We connect with customers to design and identify major long-term trends to engaging, sustainable places enhance
Slide 10: Placemaking Framework applied across the business
Placemaking Framework applied across the business We We We We Connect Design Enhance Enliven Communication Form Occupier mix Customer service Branding, marketing Efficient and effective Occupiers & campus On-site hospitality & digital, messaging buildings & spaces community & customer service Access
Slide 11: Placemaking Framework applied across the business: Offices and Retail
Placemaking Framework applied across the business Offices Retail Lifestyle orientated mixed use offices Multi-let lifestyle centres Campuses Regional Large, office-led mixed use Attracting visitors from a wide lifestyle campuses catchment for a planned trip Campus-lite Local Smaller clusters Fitting
Slide 12: Our strategy informs our capital activity
Our strategy informs our capital activity £690m 3.6% ahead of valuation Retail Non-core Retail disposals in H1 2017 Other Other 24% £4.4bn gross investment activity 37% £5.9bn £6.8bn £1.5bn single-let disposals Multi-let £1.3bn multi-let acquisitions Multi-let 76% 63% Mar 2011 Sep 2016 Office West E
Slide 13: Investment activity
Investment activity £951m Gross investment activity in H1 2017 Net Spend £m £484m £52m £648m (£267m) £31m (£469m) Net Acquisitions & Disposals £m £244m (£326m) £386m (£524m) (£277m) (£620m) £m 1200 800 400 0 -400 -800 -1200 -1600 Year to 31 March 2012 2013 2014 2015 2016 H1 2017 Disposals Capital In
Slide 14: Significant Retail sales – on strategy
Significant Retail sales – on strategy 6 months to September 2016 • £690m of non-core retail disposals • 4.0% average yield • 3.6% above March values Non-core multi-let assets Superstores Department stores Westgate, Wakefield Debenhams, Oxford Street Multi-let share of Retail portfolio 71% 76% March
Slide 15: Major property holdings
Major property holdings At 30 September 2016 BL Share Sq ft Rent Occupancy Lease Length (excl. developments under construction) % 000’s £m pa1 Rate %2,4 yrs3,4 1 Broadgate 50 4,721 225 98.7 8.0 2 Regent's Place 100 1,590 80 99.1 7.1 3 Paddington Central 100 806 34 99.9 7.3 4 Meadowhall, Sheffield 50
Slide 16: Financial Results
Financial Results
Slide 17: Results highlights
Results highlights 6 months to September 2016 • Underlying profits up 16% to £199m (+£28m) – Strong leasing activity – Reducing finance and admin costs • NAV down 3% to 891p – Valuation fall of 2.8% • LTV down 50bps to 31.6% – £690m of Retail sales, 3.6% ahead of March values 17
Slide 18: Income statement
Income statement 2016 H1 20161 H1 2017 H1 Change % Net Rental Income (£m) 620 309 312 1.0 Fees & Other Income1 (£m) 17 7 8 14.3 Administrative Expenses1 (£m) (94) (49) (43) 12.2 Net Finance Costs (£m) (180) (96) (78) 18.8 Underlying Profit (£m) 363 171 199 16.4 Underlying Earnings per Share (p) 34.1
Slide 19: EPRA balance sheet (proportional consolidation)
EPRA balance sheet (proportional consolidation) £m 31 March 16 Group JVs & Funds 30 September 16 Total properties 14,648 9,321 4,598 13,919 Adjusted net debt (4,765) (3,110) (1,353) (4,463) Other net liabilities (209) (97) (105) (202) EPRA Net Assets (undiluted) 9,674 6,114 3,140 9,254 Dilution impa
Slide 20: Future income profile
Future income profile Annualised Gross Rents Cash Flow Basis Accounting Basis £m £m Current Passing Rent 624 Contracted Uplifts 61 636 Total Contracted Rent 685 Letting of Completed and Under Construction Developments 17 14 Lease Expiries – Committed Developments (100 Liverpool Street) (9) (9) Lease
Slide 21: Rent subject to lease break or expiry – Office expiries detail
Rent subject to lease break or expiry – Office expiries detail For period to 31 March 2017 2018 2019 2020 2021 2017–19 At 30 September 2016 £m £m £m £m £m £m 100 Liverpool Street 9 – – – – 9 Committed developments 9 – – – – 9 1 Finsbury Avenue 7 – – – – 7 Near Term developments 7 – – – – 7 1 Triton
Slide 22: Retail
Retail
Slide 23: How Britain shops today
How Britain shops today 39% ofof food eaten out home in the UK c. 90% of shopping spend touches the physical store 30% ofuseBLF&B/leisure visitors Source: Verdict Source: ONS/British Land surveys <20 mins average customer drive time to BL assets Convenience ranked #1 35% importance for a shopping tr
Slide 24: Outstanding places for modern consumer lifestyles
Outstanding places for modern consumer lifestyles Places to shop, eat and be entertained 1 Our focus is on our customers We listen to our consumers and occupiers and respond to their needs 2 Data informs our strategy and benefits our occupiers Our superior insight into consumer behaviour helps make
Slide 25: Retail Multi-let Portfolio
Retail Multi-let Portfolio Our two core products each fulfil specific shopper missions 1 2 Regional Local Missions include Leisure-dominated Trips, Missions include Local Neighbourhood Shopper, Family Day Out and The Big Ticket Shop Convenient Leisure and Single Item Pick-Up Typically 30-60 occupier
Slide 26: Our data shows both regional and local can succeed
Our data shows both regional and local can succeed Meadowhall Glasgow Fort Ealing Broadway Swindon Orbital Super-regional Shopping & In-town Out-of-town shopping centre leisure park shopping centre shopping park Role Regional Regional Local Local Size (k ft2) 1,500k 510k 470k 212k Dwell time 97 min
Slide 27: Retailers are creating hub and spoke networks
Retailers are creating hub and spoke networks To support fulfilment and maintain brand awareness 27 Source: CACI
Slide 28: Our portfolio is well positioned to meet consumer and retailer demands
Our portfolio is well positioned to meet both consumer and retailer demands Potential to reach 60% BL regional centres of the population BL local centres BL asset Annual footfall of catchments 322m Average rent to sales ratio 10% 90% of our car parking spaces are free Source: CACI Retail Footprint 2
Slide 29: Retail Multi-let assets
Retail Multi-let assets Regional – attracting visitors from a wide catchment Local – fitting into the daily life of local communities for a planned trip Southgate, Bath Mayflower, Basildon St. Peter’s, Mansfield Broughton, Chester1 Weston Lock, Bath Kingston Centre, Milton Keynes Fort Kinnaird, Edin
Slide 30: We are expanding our addressable market
We are expanding our addressable market By expanding into new segments to enhance the retail experience Consumer spend (2016) F&B and Leisure are often Leisure interlinked with Retail 6% Food & Beverage 73% 7% Housing Health & 26% Beauty 4% of F&B spenders in UK Home & centres also spend on Retail L
Slide 31: We are expanding our addressable market
We are expanding our addressable market By attracting a broader range of occupiers Continued momentum in the 6 months to September 2016: • 656,000 sq ft of lettings and renewals – 12.9% ahead of March ERVs • 86 long term deals on multi-let portfolio – 50% since referendum – 373,000 sq ft, 12.2% ahea
Slide 32: BL footfall performance vs benchmark
BL footfall performance vs benchmark +240bps Outperformance in H1 2017 Mar-10 = 100 115 110 105 100 95 90 85 80 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 British Land UK Market (ShopperTrak) 32
Slide 33: Retail – Operational outperformance across the portfolio
Retail – Operational outperformance across the portfolio 6 months to Total multi-let September 2016 portfolio Regional Local +0.1% Footfall Ahead of market by -2.3% +2.0% 240 bps ERV Growth in-store Sales -0.2% Retailer Ahead of market by +0.1% -1.2% 190 bps +1.3% Ahead of market by +1.3% +1.3% 80 b
Slide 34: Continued polarisation in Retail
Continued polarisation in Retail 1.3% ERV growth vs IPD and Retail sales, including online Rental growth on multi-let assets in H1 2017 Index Mar-13 = 100 115.0 112.5 110.0 107.5 105.0 102.5 100.0 97.5 95.0 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Ju
Slide 35: Online sales increasingly integrated with physical stores
Online sales increasingly integrated with physical stores 89% of retail sales touch the store Retail sales by channel (UK, all sectors, 2015) Online Online sales pureplay Mail order & not browsed sales TV shopping Online sales Click & in store browsed £4 bn Collect in store £13 bn sales £18 bn £5 bn
Slide 36: Physical store openings boost retailers' online presence
Physical store openings significantly boost retailers’ online presence Postal area share of retailer website visits Indexed vs. store opening date 150 140 130 120 110 +55% 100 90 80 70 60 50 -20 -15 -10 -5 Store Opening 5 10 15 +20 weeks weeks Note: Based on a sample of 18 retailers opening at Briti
Slide 37: Meadowhall, Sheffield
Meadowhall, Sheffield Proposed Meadowhall leisure extension Recent additions • On site with a £60m refurbishment • Attracting new occupiers • Substantial leisure extension planned 37
Slide 38: Eden Walk, Kingston
Eden Walk, Kingston • £250m mixed use redevelopment to include public spaces, leisure, retail and residential. • 562,000 sq ft consented scheme 38
Slide 39: Office
Office
Slide 40: London Assets
London Assets @ CAMPUS @ CAMPUS-LITE REGENT'S @ DEVELOPMENT PLACE — CROSSRAIL (ELIZABETH LINE] 1.590.000 sq ft LAUNCHING 2017-2018 BROADGATE (50%) ea 4,724,000 sq ft 806,000 sq ft WEST END LEADENHALL BUILDING (50%) 603,000 sq ft Portman Campus-Lite 1. MARBLE ARCH HOUSE 76,000 sq ft 2. YORK HOUSE 132
Slide 41: Focused on London campuses which we plan to enhance and grow
Focused on London campuses which 74% we plan to enhance and grow Our 3 campuses as a % of office assets Office-led, mixed-use environments in tune with modern lifestyles Regent’s Place Broadgate Paddington Central 41
Slide 42: Campus-lite assets
Campus-lite assets Small clusters alongside more opportunistic single site assets Marble Arch House Yalding House 10 Portman Square Clarges Mayfair The Leadenhall Building 42
Slide 43: Offices – Sustained leasing activity
Offices – Sustained leasing activity 6 months to September 2016 98% occupancy • 68,000 sq ft of lettings – 4.9% ahead of March ERVs The Leadenhall Building • Continued activity since referendum Clarges Mayfair – Let final floors at Leadenhall – 33,000 sq ft under offer – Clarges Mayfair and Yalding H
Slide 44: Offices – Range of pre-let discussions
Offices – Range of pre-let discussions • In discussions on ten significant requirements totalling 1.4m sq ft • Range of sectors – tech, media, finance, professional services • Across all four campuses 4 Kingdom Street 1 Triton Square 100 Liverpool Street 44
Slide 45: Creating a world class, mixed-use destination at Broadgate
Creating a world class, mixed-use destination at Broadgate • Excellent location, catchment and connectivity – Further enhanced by Crossrail in 2018 • Increase and diversify retail and leisure offer • Flexible accommodation to attract a broader range of occupiers • Vibrant environment enlivened with
Slide 46: Broadgate sits at the heart of one of the most exciting parts of London
Broadgate sits at the heart of one of the most exciting parts of London with excellent transport links Crossrail Shoreditch • Forecast to carry c.14m Creative sector people per year, Old Street ‘Tech City’ 20,000 workers Crossrail will further 20,000 workers improve Broadgate’s connectivity BROADGAT
Slide 47: Broadgate – lease expiries give opportunity to add wider range of uses
Broadgate – our lease expiries give us the opportunity to add a wider range of uses and attract a broader range of occupiers 2–3 Finsbury Avenue • 2 Finsbury Avenue – lease expired in Dec 2016 • 3 Finsbury Avenue – expected lease break in late 2018 • Current size: 190k sq ft • Potential size: 560k s
Slide 48: 100 Liverpool Street redevelopment
100 Liverpool Street 520,000 sq ft redevelopment • Major step in progressing plans at Broadgate • Completes in 2019, benefitting from opening of Crossrail in 2018 140,000 sq ft additional space, including • Flexible space to appeal to range of occupiers • Expect to more than double rental income 90,
Slide 49: City development pipeline
City development pipeline Q4 2016 m sq ft 6.0 5.0 4.0 3.0 2.0 1.0 0.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Source: CBRE 10 year rolling average new and Completed Pipeline Pre-let Potential Speculative under-construction take-up U/C Pre-let U/C – Speculative 10 year rolli
Slide 50: Regent's Place Campus
Regent’s Place Campus O) 20 Triton Street @) 1 Osnaburgh Street ® 1-8 Longford Street © UKPN Substation ® 1,4&7 Triton Square © 10 Brock Street (O) 20 Brock Street © 15-31 Hampstead Road ® 30 Brock Street © (©) Euston Tower @ 2 Triton Square @ 338 Euston Road rock STREET ) 350 Euston Road EUSTON @®
Slide 51: Paddington Central Campus
Paddington Central Campus 51
Slide 52: Canada Water
Canada Water
Slide 53: Canada Water
Canada Water • Encouraged by discussions with potential occupiers • Continue to work on masterplan; targeting planning application in 2017 • Hosting events at The Printworks to raise profile Mulberry: London Fashion Week Triumph motorcycle launch 53
Slide 54: Canada Water
Canada Water • 46 acre site; £250m acquisition cost • 5.5m sq ft of mixed-use space planned • Roger Madelin appointed Feb 2016 • 54 Planning submission in 2017 Photo credit: John Sturrock
Slide 55: Canada Water
Canada Water @) Surrey Quays Shopping Centre * 23 acres * Tesco anchored scheme * Acquired a 50% leasehold interest in 2009 * Acquired the remaining 50% leasehold from Tesco in 2013 for £48m * Freehold owned by Southwark Council @ Former Daily Mail Printworks * I4acres * Reached a conditional agreem
Slide 56: Developments
Developments
Slide 57: Development pipeline – Committed and Near Term
Development pipeline – Committed and Near Term 5% Speculative development • Speculative commitment is £m – Current Value & Costs to Come commitment £660m including 100 Liverpool 700 Street, 5% of the portfolio 600 • Residential £250m pre-sold, £230m to sell Residential 500 pre-sold • Costs to comple
Slide 58: Optionality in our development pipeline
Optionality in our development pipeline • Flexibility in timing of commitment; choices in approach Near term Medium term Income producing • Canada Water • Eden Walk, Kingston • Combined NIY 2.8% Eden Walk Income producing – upcoming breaks/expiries 1 Finsbury Avenue • 2 Finsbury Avenue (Dec 16) • 1
Slide 59: Development programme – Medium Term
Development programme – Medium Term £780m Value of medium term pipeline • £320m income producing, £m – Current Value yielding 2.8% 700 – Canada Water 600 – Eden Walk • £330m with upcoming 500 lease expiries – 2-3 Finsbury Avenue 400 – 135 Bishopsgate – 1 Triton Square 300 • £130m non-income producin
Slide 60: Residential sales
Residential sales • Residential exposure of £230m, less than 2% of the portfolio Aldgate Place The Hempel Collection Clarges Mayfair • PC June 2016 • PC: Phase 1 November 2016, • 12 units remaining, £159m • 16 units sold in H1, Phase 2 December 2016 • To be marketed at PC, 5% ahead of March values •
Slide 61: Appendices – H1 2017 Results
Appendices – H1 2017 Results
Slide 62: Highlights
Highlights Period to H1 2016 H1 2017 Change % Underlying Profit (£m) 171 199 16.4 Underlying Earnings per Share (p) 16.0 19.3 20.6 Dividend per Share (p) 14.18 14.60 3.0 As at H2 2016 H1 2017 Change % Valuation Performance 2.0% (2.8%) EPRA Net Asset Value per Share (p) 919 891 (3.0) LTV 32.1% 31.6%
Slide 63: Underlying Profit up £28 million
Underlying Profit up £28 million £m 7 17 5 (9) 8 199 171 H1 2016 Capital activity Like for like Developments Financing Administrative H1 2017 rental growth activities expenses and Fee income 63
Slide 64: Gross rental income
Gross rental income1,2 Accounting Basis £m 6 months to 30 September 2016 Annualised as at 30 September 2016 Group JVs & Funds3 Total Group JVs & Funds3 Total Regional 29 43 72 58 84 142 Local 49 13 62 97 26 123 Multi-let 78 56 134 155 110 265 Department Stores & Leisure 26 – 26 43 – 43 Superstores 5
Slide 65: Operating costs metric
Operating costs metric HY to 30 September (£m) H1 2016 H1 2017 Property operating expenses 17 15 Administrative expenses1 49 43 Net fees and other income1 (7) (8) Ground rent costs (1) (1) EPRA Costs (including direct vacancy costs) 58 49 Gross rental income 326 327 Ground rent costs (1) (1) Gross R
Slide 66: Administrative Expenses
Administrative Expenses HY to 30 September (£m) H1 2016 H1 2017 Personnel Costs 26 26 Share Scheme Costs 8 3 Other Administrative Expenses 15 14 Total – British Land 49 43 Broadgate Estates 2 2 Total – Group 51 45 Capitalised Costs (2) (2) Total Administrative Expenses 49 43 Table includes the Group
Slide 67: Reduction in diluted EPRA net asset value
Reduction in diluted EPRA net asset value (22p) (17p) 18p (13p) 10p (4p) 919p 891p Mar 16 Offices & Retail & Underlying Dividends Debt Reversal of Sep 16 Residential Leisure Profit transaction 2012 costs & other convertible bond dilution 67
Slide 68: Strength of debt metrics
Strength of debt metrics Proportionally Consolidated 31 Mar 2016 30 Sep 2016 Loan to Value (LTV) 32.1% 31.6% Weighted Average Interest Rate 3.3% 3.2% Interest Cover 3.0x 3.5x Average Maturity of Drawn Debt (years) 8.1 8.0 Group 31 Mar 2016 30 Sep 2016 Loan to Value (LTV) 25.2% 24.6% Available undraw
Slide 69: Adjusted net debt – proportionally consolidated
Adjusted net debt – proportionally consolidated (£bn) LTV LTV 32.1% 31.6% 0.1 0.1 (0.5) 4.8 4.5 Mar 16 Acquisitions Development & Capex Disposals Sep 16 Net Debt Net Debt 69
Slide 70: Debt maturity
Debt maturity (£m) 1400 1200 1000 800 600 400 200 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Year to March Convertible Bond (Unsecured) Debenture & loan notes (Secured) Bank RCF Undrawn (Unsecured) Bank RCF Drawn (Unsecured) JVs – Securitisa
Slide 71: Debt Financing – Diverse profile
Debt Financing – Diverse profile • Weighted Average Interest Rate Diverse Debt Profile1 (30 September 2016) reduced by 10 bps to 3.2% £0.5bn £0.7bn • Average debt term 8.0 years • £1.7bn of revolving credit facilities £0.6bn available within British Land £1.4bn • Proportion of debt at fixed rate 52%
Slide 72: Number of shares
Number of shares Number of shares (m) 31 Mar 16 30 Sep 16 IFRS Basic Weighted Average1 1,025 1,029 IFRS Diluted Weighted Average2 1,089 1,091 Underlying/EPRA Diluted Weighted Average3 1,089 1,033 Period End4 1,096 1,039 1 For use in IFRS basic earnings per share 2 For use in IFRS diluted earnings pe
Slide 73: Valuation performance
Valuation performance 6 months to Valuation Movement Movement Yield ERV NEY Weighting September 2016 £bn £m % Expansion Growth % % bps % Retail & Leisure 6.8 (178) (2.4) 18 0.9 5.3 49 Offices & Residential 6.8 (238) (3.3) 21 0.1 4.6 49 Canada Water 0.3 (6) (2.1) 4 0.9 3.3 2 Total 13.9 (422) (2.8) 19
Slide 74: Valuation growth drivers – Retail & Leisure
Valuation growth drivers – Retail & Leisure 6 months to September 2016 Valuation Movement Movement Yield ERV £bn £m % Expansion Growth bps % H1 H1 H1 Regional 2.9 (83) (2.8) 16 1.3 Local 2.2 (116) (4.8) 29 1.3 Multi-let 5.1 (199) (3.7) 22 1.3 Dept St + Leisure 0.6 32 3.2 4 0.4 Superstores 0.7 (24) (
Slide 75: Valuation growth drivers – Offices & Residential
Valuation growth drivers – Offices & Residential 6 months to September 2016 Valuation Movement Movement Yield ERV £bn £m % Expansion Growth bps % H1 H1 H1 West End 3.9 (95) (2.4) 16 0.3 City 2.7 (143) (4.9) 27 (0.2) Offices 6.6 (238) (3.5) 21 0.1 Residential 0.2 – – Offices & Residential 6.8 (238) (
Slide 76: Investment Activity
Investment Activity 6 months to 30 September 2016 Retail Offices Residential Canada Water Total £m £m £m £m £m Purchases 82 – – 8 90 Sales1 (690) – (20) – (710) Net Purchases/Sales (608) – (20) 8 (620) Development Spend 12 70 13 5 100 Capital Spend 47 4 – – 51 Net Investment (549) 74 (7) 13 (469) Gr
Slide 77: Acquisitions
Acquisitions 6 months to 30 September 2016 Sector Region Price Price Annual (Gross) (BL Share) Passing Rent £m £m £m2 Completed New George Street Estate, Plymouth Retail South 64 64 5 Hercules Unit Trust unit purchase1 Retail Various 18 18 1 Dock Offices Canada Water London 8 8 – Total 90 90 6 1 Uni
Slide 78: Disposals
Disposals 6 months to 30 September 2016 Sector Region Price Price Annual (Gross) (BL Share) Passing Rent £m £m £m1 Completed Debenhams, Oxford Street Retail London 400 400 13 Superstores Retail Various 147 79 3 Dumfries Cuckoo Bridge Retail Scotland 20 20 1 The Hempel Collection Residential London 5
Slide 79: Total Property Return (as calculated by IPD)
Total Property Return (as calculated by IPD) 6 months to 30 September 2016 Retail Offices Total % British British British IPD IPD IPD Land Land Land Capital Return (2.4) (3.0) (3.4) (2.9) (2.8) (2.1) - ERV Growth 0.9 0.5 0.1 1.0 0.5 0.8 - Yield Expansion1 18 bps 20 bps 21 bps 21 bps 19 bps 15 bps In
Slide 80: BL property outperformance vs IPD – 5 years
BL property outperformance vs IPD – 5 years 5 years ended 30 September 2016 Outperformance bps pa 350 300 310 250 200 200 150 160 100 120 100 90 50 0 Retail Offices Total Capital Returns Total Returns 80
Slide 81: BL property outperformance vs IPD – 3 years
BL property outperformance vs IPD – 3 years 3 years ended 30 September 2016 Outperformance bps pa 180 160 170 140 120 100 80 80 60 70 60 40 50 20 0 10 Retail Offices Total Capital Returns Total Returns 81
Slide 82: Appendices – Portfolio
Appendices – Portfolio
Slide 83: High quality, diverse occupier base
High quality, diverse occupier base As at 30 September 2016 % of Contracted Rent Occupier split by sector by rent UBS AG1 5.8% Other 7% Tesco plc 5.7% General Retail 16% J Sainsbury plc 4.7% DIY 7% Debenhams 3.8% Kingfisher (B&Q) 2.6% TMT 7% Next plc 2.3% Fashion & HM Government 2.2% Professional Be
Slide 84: Portfolio valuation by sector
Portfolio valuation by sector At 30 September 2016 Group JVs & Funds1 Total H1 Change2 £m £m £m % £m Regional 1,087 1,791 2,878 (2.8) (83) Local 1,796 471 2,267 (4.8) (116) Multi-let 2,883 2,262 5,145 (3.7) (199) Department Stores and Leisure 638 1 639 3.2 32 Superstores 139 542 681 (3.0) (24) Solus
Slide 85: Portfolio yields & ERV movements
Portfolio yields & ERV movements1,2 At 30 September 2016 EPRA EPRA Overall Net Net Net ERV Growth 5,6 net initial topped up topped up equivalent equivalent reversionary % yield % net initial net initial yield % yield yield % 3 4 yield % yield % expansion 5 bps Regional 4.5 4.7 4.7 5.0 16 5.0 1.3% Lo
Slide 86: Lease length and occupancy
Lease length and occupancy1 At 30 September 2016 Average Lease Length (yrs) Occupancy Rate (%) To Expiry To Break Occupancy Occupancy (underlying)2 Regional 8.0 6.9 96.6 98.1 Local 8.4 7.4 97.6 98.0 Multi-let 8.2 7.2 97.1 98.1 Department Stores and Leisure 18.3 18.2 99.9 99.9 Superstores 12.0 11.6 1
Slide 87: Annualised rent & estimated rental value (ERV)
Annualised rent & estimated rental value (ERV)1 At 30 September 2016 Annualised Rents ERV Average Rent (Valuation Basis) £m2 £m (£psf) Group JVs & Funds3 Total Total Contracted4 ERV Regional 60 85 145 158 31.2 33.3 Local 98 28 126 135 24.3 25.2 Multi-let 158 113 271 293 27.6 29.0 Department Stores a
Slide 88: Rent subject to open market rent review
Rent subject to open market rent review1 For period to 31 March 2017 2018 2019 2020 2021 2017–19 2017–21 At 30 September 2016 £m £m £m £m £m £m £m Regional 6 11 17 10 18 34 62 Local 4 25 21 12 10 50 72 Multi-let 10 36 38 22 28 84 134 Department Stores and Leisure – – – – – – – Superstores 1 4 8 11 1
Slide 89: Rent subject to lease break or expiry
Rent subject to lease break or expiry1 For period to 31 March 2017 2018 2019 2020 2021 2017–19 2017–21 At 30 September 2016 £m £m £m £m £m £m £m Regional 6 15 9 13 10 30 53 Local 6 5 8 11 9 19 39 Multi-let 12 20 17 24 19 49 92 Department Stores and Leisure – 1 – – – 1 1 Superstores – – – – – – – Sol
Slide 90: Rent resetting to market
Rent resetting to market For period to 31 March 2017 2018 2019 2020 2021 2017–19 2017–21 At 30 September 2016 £m £m £m £m £m £m £m Rent expiring – existing portfolio 29 32 47 39 46 108 193 (per slide 76) Developments – committed & under – 10 – 19 – 10 29 Construction Total Rent Resetting to Market 2
Slide 91: Contracted rental increases (cash flow basis)
Contracted rental increases (cash flow basis) For period to 31 March 2017 2018 2019 2020 2021 2017–19 2017–21 At 30 September 2016 £m £m £m £m £m £m £m Expiry of rent free periods 29 14 3 1 – 46 47 Fixed uplifts (EPRA basis) – 1 1 – – 2 2 Fixed & minimum uplifts in lieu 3 1 1 1 1 5 7 of rental growt
Slide 92: Superstores
Superstores Stand-alone Superstores1 In Multi-let assets2 Total Exposure1,2,3 Store Size Number Valuation Capital WALL Number Valuation Capital WALL Number Valuation Capital WALL ‘000 sq ft of (BL share) Value to FB of (BL share) Value to FB of (BL share) Value to FB stores £m psf yrs stores £m psf
Slide 93: Appendices – Developments
Appendices – Developments
Slide 94: Recently completed & committed developments
Recently completed & committed developments At 30 September 2016 Sector BL Sq PC Current Cost to ERV Let & Resi Sales Share ft Calendar Value Complete Under Exchanged & Year Offer not Completed % '000 £m1 £m2 £m3 £m £m4 Aldgate Place, Phase 1 Residential 50 221 Completed 7 9 – n/a – Clarges Mayfair
Slide 95: Development pipeline
Development pipeline At 30 September 2016 Sector BL Share Sq ft Start On Total Status 1 % '000 Site Cost £m Near term Pipeline 1 Finsbury Avenue Offices 50 281 2017 102 Consented Speke (Leisure) Retail 67 66 2017 18 Consented Plymouth (Leisure) Retail 100 102 2018 35 Consented Total Near Term 449 15
Slide 96: Residential development programme
Residential development programme At 30 September 2016 Sq Ft No. PC BL Current Cost to Sales Market Date/ Share Value1 come2 Exchanged & Units Status not Completed1,3 '000 % £m £m £m Clarges Mayfair4 103 34 Q4 2017 100 308 72 259 Mixed use 103 34 308 72 259 The Hempel Phase 1 25 15 Q4 2016 100 16 1
Slide 97: Estimated future development spend and capitalised interest
Estimated future development spend and capitalised interest At 30 September 2016 PC Cost to complete £m Calendar (excluding notional interest) – 6 mths Year Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Total 4 Kingdom Street 2017 30 4 4 1 – – 39 Clarges Mayfair 2017 53 13 3 3 1 – 74 The Hempel Phase 1
Slide 98: Estimated future development rental income (accounting basis)
Estimated future development rental income (accounting basis) At 30 September 2016 PC Gross Rental Income (Accounting basis) Calendar £m Year Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Under Construction & Committed developments Clarges Retail Q4 2017 Non-contracted – – 1 1 1 4 Kingdom Street Q2 2017 Non-co
Slide 99: Appendices – Market
Appendices – Market
Slide 100: Investment market
Investment market • Strong demand for long, secure income • Falling values in secondary locations Investment volumes £bn £bn 20 20 15 -36% 15 -51% 10 10 5 5 0 0 2015 2016 2015 2016 Q1 Q2 Q3 Q4 Long term average Q1 Q2 Q3 Q4 Long term average Central London Office Retail Source: Shopping centres and OO
Slide 101: Property Yields and interest rate yield gap
Property Yields and interest rate yield gap All Retail Central London Offices Retail and London Office Yields 10.0 8.0 6.0 NIY % 4.0 2.0 0.0 Source: IPD Yield Gap UK 10 Year Gilt Yield Property Yield vs 10 Year Gilt Yields IPD All Property Net Initial Yield 10.00 8.00 6.00 % 4.00 2.00 - (2.00) 1994
Slide 102: Central London take up
Central London take up Q4 2016 m sq ft 12.0 10.0 8.0 6.0 4.0 2.0 0.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Source: CBRE 10 year rolling average new and Completed Pipeline Pre-let under-construction take-up 102
Slide 103: Central London development pipeline
Central London development pipeline Q4 2016 m sq ft 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Source: CBRE, British Land 10 year rolling average new and Completed Pipeline Pre-let Potential Speculative under-construction take-up U/C Pre-let
Slide 104: West End development pipeline
West End development pipeline Q4 2016 m sq ft 3.0 2.5 2.0 1.5 1.0 0.5 0.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Source: CBRE 10 year rolling average new and Completed Pipeline Pre-let Potential Speculative under-construction take-up U/C Pre-let U/C – Speculative 10 year r
Slide 105: City development pipeline
City development pipeline Q4 2016 m sq ft 6.0 5.0 4.0 3.0 2.0 1.0 0.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Source: CBRE 10 year rolling average new and Completed Pipeline Pre-let Potential Speculative under-construction take-up U/C Pre-let U/C – Speculative 10 year rolli
Slide 106: Vacancy Central London
Vacancy Central London West End & City Vacancy Rates 20 18 16 14 12 10 8 6 4 2 0 1985 1990 1995 2000 2005 2010 Q4 2016 Source: CBRE (historic) West End Void Rate (Period end) City Void Rate (Period end) 106 10 year rolling average – West End 10 year rolling average - City
Slide 107: London office market rental outlook
London office market rental outlook Prime London Office Rents £ psf 140 120 100 80 60 40 20 Actual Forecast 0 2011 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: CBRE (historic) and Average
Slide 108: Disclaimer
Disclaimer The information contained in this presentation has been extracted largely from the Half Year Results Announcement for the period ended 30 September 2016 and is provided solely for information purposes. It does not constitute an offer to sell or the solicitation of an offer to subscribe fo