British Land Company PLC · LSE:BLND
British Land — FY2018 Earnings Presentation
101 slides from British Land's earnings presentation, May 17, 2018
Slide 1: Full Year Results Presentation
Full Year Results Presentation Year ended 31 March 2018 www.britishland.com @BritishLandPLC #BLFY2018 $BLND
Slide 2: A year of progress
A year of progress Chris Grigg, Chief Executive
Slide 3: Robust financial performance
Robust financial performance • Underlying profits down 2.6% to £380m Meadowhall – Despite £1.5bn net sales of income-producing assets in two years • NAV up 5.7% to 967p – Valuation uplift of 2.2% – 15p impact of buyback • 2.4m sq ft lettings and renewals – 8.2% ahead of ERV – Occupancy at 97% • Stro
Slide 4: London Offices: Strong leasing activity
London Offices: Strong leasing activity • Lettings and renewals of 1.2m sq ft Regent’s Place – 4-times area achieved in FY17 – Meaningful activity at each campus – 5.6% ahead of ERV – Occupancy of 97% • Under offer or in negotiations on a further 550,000 sq ft – Across a mix of sectors: technology,
Slide 5: Retail: operational outperformance
Retail: operational outperformance • Leasing activity of 1.2m sq ft Teesside, Stockton – Terms 10.3% ahead of ERV – Incentives stable • Operational outperformance – Sales -1.6%; 130 bps ahead of benchmark – Footfall +0.3%; 340 bps ahead of benchmark • Well positioned in current market – Admins and C
Slide 6: Fort Kinnaird: thoughtful investment driving results
Fort Kinnaird: thoughtful investment driving results • £31m investment over five years; Fort Kinnaird, Edinburgh BL share £12m – 2015: leisure extension and public realm improvements – 2016: purpose built Primark store • Strong performance this year – 86,000 sq ft lettings – 17% ahead of ERV – ERV g
Slide 7: Disciplined use of capital
Disciplined use of capital • A proactive year, including: Regent’s Place – Sale of the Leadenhall Building crystallising £575m; 24% premium to book – £419m retail sales – £252m development and capital spend – £206m acquisitions, primarily mixed use, regeneration opportunities – £300m share buyback a
Slide 8: Transforming the shape of our business
Transforming the shape of our business Bank 6% Increase in London 41% as a % of Portfolio 60% exposure reduced to: March 2010 Current TMT 8% Increase in West End 35% 63% as a % of Offices exposure increased to: March 2010 Current Offices as a % 33% of Portfolio 49% Assets close to Crossrail: 4.6bn £
Slide 9: Our campus approach
Our campus approach Our campuses account for 78% of our offices portfolio Our leasing activity accounts for more than 7% of the London market 9
Slide 10: Paddington Central: 5 years ago
Paddington Central: 5 years ago Paddington Central 2013 • Acquired for £470m, July 2013 – 1 Sheldon Square, acquired for £210m, April 2015 • We had a clear vision and rationale – Supported West End re-weighting – Added a third London campus – High quality, long term income – Significant placemaking
Slide 11: Paddington Central: today
Paddington Central: today Pergola • Investment into Paddington 4 Kingdom Street – £85m development of 4 Kingdom Street – £10m investment into the public realm • Delivering value – 4 Kingdom Street nearly 90% let before launch – Top rents +30% during ownership – Total unlevered return of 12.2% pa ove
Slide 12: Transforming Broadgate
Transforming Broadgate 2
Slide 13: Developing a range of buildings for a range of occupiers
Developing a range of buildings for a range of occupiers Broadgate developments 32% pre-let or under offer (by ERV) 100 Liverpool Street 1 Finsbury Avenue 135 Bishopsgate PC Q1 2020 PC Q1 2019 PC Q2 2019 • 522,000 sq ft redevelopment • 291,000 sq ft refurbishment • 328,000 sq ft refurbishment • 160,
Slide 14: Delivering Storey
Delivering Storey Appold Street • Successfully launched across all three campuses • Enhancing and broadening our offer – Expansion space for existing occupiers – New market segments (especially SMEs) • A clearly differentiated offering – Exclusively in British Land owned buildings – Contracted lease
Slide 15: Pursuing developments on a risk managed basis
Pursuing developments on a risk managed basis £m – ERV • Committed pipeline – ERV of £63 million 70 – 55% pre-let or under offer 60 – Speculative exposure 4.5% – As at March, 87% costs to go 50 covered by Clarges residential receipts 40 • Near term pipeline 30 – ERV of £30 million – Planning consent
Slide 16: Further good progress at Canada Water
Further good progress at Canada Water • Master Development Agreement signed and Canada Water planning application submitted in May 2018 • Includes detailed planning on three buildings in Phase 1 • Phase 1 covers 1.8m sq ft – 1m sq ft of commercial – 250,000 sq ft of retail and leisure – 650 new home
Slide 17: Finance Review
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Slide 18: Headlines
Headlines Financial Year to 31 March 2017 2018 Change % Underlying Profit (£m) 390 380 (2.6) Underlying earnings per share (p) 37.8 37.4 (1.1) Dividend per share (p) 29.20 30.08 3.0 Valuation performance -1.4% 2.2% EPRA net asset value per share (p) 915 967 5.7 Loan to value (LTV) 29.9% 28.4% Total
Slide 19: Net rental income
Net rental income £m (44) 6 (22) 6 20 610 Retail 1.5% Offices 4.2% Retail 1.2% 576 Total 2.3% Offices 2.4% Total1 1.8% 2017 Net divestment Development expiries Surrender premia Development lettings Like for like 2018 rental growth 1 Like for like rental growth is stated excluding the impact of surre
Slide 20: Financing costs
Financing costs £m 19 15 (9) (2) (151) (128) 2017 Financing Net divestment Developments Share buyback 2018 activity 20
Slide 21: Underlying Profit
Underlying Profit £m (29) 19 (4) 6 390 (22) 20 198 380 2017 Net divestment Development expiries Surrender premia Like for like rental Financing activity Other 2018 growth 21
Slide 22: Income statement
Income statement Financial Year to 31 March 2017 2018 Change % Net rental income (£m) 610 576 (5.6) Fees & other income (£m) 17 15 (11.8) Administrative expenses (£m) (86) (83) 3.5 Net finance costs (£m) (151) (128) 15.2 Underlying Profit (£m) 390 380 (2.6) Underlying earnings per share (p) 37.8 37.
Slide 23: Valuation performance
Valuation performance FY to March 2018 Valuation Movement Movement Yield ERV NEY Weighting £bn £m % movement growth % % bps % Offices 6.7 317 4.5 (7) 2.1 4.4 49 Retail 6.6 23 0.3 6 1.6 5.3 48 Residential 0.1 3 1.6 n/a n/a n/a 1 Canada Water 0.3 (21) (7.0) n/a n/a n/a 2 Total 13.7 322 2.2 1 1.8 4.8 1
Slide 24: Valuation growth drivers – Offices
Valuation growth drivers – Offices FY to March 2018 Valuation Movement Movement Yield movement ERV Growth £bn £m % bps % H1 H2 FY H1 H2 FY H1 H2 FY West End 4.3 236 3.2 2.6 5.8 (11) (2) (13) 1.0 1.5 2.5 City 2.4 81 1.7 1.3 2.8 1 1 2 1.3 0.2 1.5 Offices 6.7 317 2.6 2.1 4.5 (6) (1) (7) 1.2 1.0 2.1 Cam
Slide 25: Valuation growth drivers – Retail
Valuation growth drivers – Retail FY to March 2018 Valuation Movement Movement Yield movement ERV Growth £bn £m % bps % H1 H2 FY H1 H2 FY H1 H2 FY Regional 3.0 7 0.1 0.2 0.2 4 3 7 1.2 1.1 2.3 Local 2.3 (34) (0.9) (0.6) (1.5) 11 2 13 1.1 0.1 1.2 Multi-let 5.3 (27) (0.4) (0.2) (0.5) 7 2 9 1.1 0.7 1.9
Slide 26: Increase in EPRA net asset value
Increase in EPRA net asset value 37p (29p) 15p 2p (5p) 32p 967p 915p Mar 17 Valuation performance Underlying Dividends Financing activity Share buyback Other Mar 18 Profit 26
Slide 27: Strength of debt metrics
Strength of debt metrics Proportionally Consolidated 31 Mar 31 Mar 2017 2018 Loan to value (LTV) 29.9% 28.4% Weighted Average Interest Rate 3.1% 2.8% Interest Cover 3.6x 4.0x Available Undrawn Facilities £1.3bn £1.2bn Weighted Average Drawn Debt Maturity (years) 7.7 8.6 Senior unsecured credit ratin
Slide 28: Future British Land
Future British Land Chris Grigg, Chief Executive
Slide 29: Future British Land: increasingly mixed use
Future British Land: increasingly mixed use Mixed Use places to work, shop and live Offices Retail Build to Rent • Focused on London • Refined, refocused • Complementary to campuses portfolio our current strategy • Well connected, • Multi-let with mixed • Existing options within sustainable and smar
Slide 30: The highest quality offices, focused on our campuses
The highest quality offices, focused on our campuses • Focus on our three London campuses 100 Liverpool Street – World class, sustainable and smart office space – Capitalising on location, connectivity – Integrated alongside high quality retail and leisure • Balanced offering – Mix of type of space
Slide 31: Further reshaping and refocused retail
Further reshaping and refocused retail • We have been proactive Glasgow Fort in reshaping the portfolio – £2.3bn sales in four years – On track to make £500m sales in the 12 months to November – Significant refurbishments completed • We will further focus the business – Smaller number of assets – On
Slide 32: Residential will play an increasing role in our business
Residential will play an increasing role in our business Rationale is clear and compelling … … with several options to build scale • Structurally growing/highly • Existing opportunities within fragmented market our portfolio • Complementary and additive – Canada Water (650 homes in Phase I) to our e
Slide 33: We will remain focused on our customers
We will remain focused on our customers World Class Customer Service Informed Insights Operational Expertise • Focus on the customer • Collecting and interpreting • Broadgate Estates focused underpins our approach information about our places exclusively on BL owned assets • Consistent across the •
Slide 34: A disciplined approach to capital allocation
A disciplined approach to capital allocation • Strong financial position 1 Triton Square – Low leverage – Speculative development 4.5% of portfolio – Committed costs substantially covered by residential receipts • Options across our portfolio – Progressing development – Investing behind themes to dr
Slide 35: Outlook & conclusions
Outlook & conclusions • London Offices Broadgate – Occupiers remain cautious – But are continuing to plan long term and commit to London – Supply of high quality new space is relatively constrained – Polarisation will gather pace – Expect demand for our space to remain firm • Retail – Market remains
Slide 36: Appendices
Appendices
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’ We design engaging, sustainable needs and identify major long places which bring people term trends to create 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, branding Efficient and effective Occupiers and On-site hospitality and marketing buildings and spaces campus community & customer s
Slide 39: Sustainability – full year highlights
Sustainability – full year highlights Customer Orientation Right Places Wellbeing Community • We design for wellbeing in everything we do. This includes • Over 7,500 local children participated in our Young Readers Programme collaborating with suppliers. New facilities launched at Broadgate with the
Slide 40: Sustainability Indices
Sustainability Indices 2017 performance vs. benchmark MSCI ESG Ratings Global Real Estate Sustainability 2017: ESG Leaders Index. Benchmark AAA rating 2017: Five star rating for the 2nd year Green star for 8th year DJSI World & Europe1 EPRA Sustainability 2017: 91st percentile Reporting Awards 2017:
Slide 41: Case studies: sustainability in action – Meadowhall
Case studies: sustainability in action – Meadowhall Meadowhall How our integrated approach Input to sustainability enhanced our refurbishment of Meadowhall this year £ 60m refurbishment investment including £51m construction spend, applying placemaking expertise to transform the look and feel of the
Slide 42: Case studies: sustainability in action – Broadgate
Case studies: sustainability in action – Broadgate Broadgate How Broadgate Connect, Input 325,000 part of our Bright Lights skills and employment programme, has created £ tangible outcomes in the Invested in Broadgate Connect since 2012, along with support from British Land management local communit
Slide 43: 80% of our Retail & Office assets are within our managed environments
80% of our Retail & Office assets are within our managed environments Retail & Leisure Offices £6.6bn £6.7bn 81% of Retail assets 78% of Office assets are multi-let are at our campuses Further £0.3bn at Canada Water and £0.1bn of standalone Residential assets Figures shown on a proportionally consol
Slide 44: Retail Multi-let Portfolio
Retail Multi-let Portfolio Our two core products each fulfil specific shopper missions Regional Local Attracting visitors from a wide Fitting into the daily life catchment for a planned trip of local communities Missions include Leisure-dominated Trips, Missions include Local Neighbourhood Shopper,
Slide 45: Multi-let Retail assets
Multi-let Retail assets Regional Local Attracting visitors from a wide Fitting into the daily life catchment for a planned trip of local communities Southgate, Bath Mayflower, Basildon Old Market, Hereford Studlands, Newmarket Broughton, Chester1 Weston Lock, Bath Inverness1 Harlech, Newport Fort Ki
Slide 46: Our Retail portfolio is well positioned to meet both consumer and retailer demands
Our Retail portfolio is well positioned to meet both consumer and retailer demands BL local centres Potential to reach 60% BL regional centres BL asset catchments of the population Annual footfall of 315m Average rent to sales ratio 11% Occupancy cost ratio 18% Source: CACI Retail Footprint 2017, BL
Slide 47: 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 Click & Collect Online sales browsed in store browsed in store £2bn sales £19 bn £7 bn £20
Slide 48: 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 +52% 120 110 100 90 80 -20 weeks -15 -10 -5 Store Opening 5 10 15 +20 weeks Note: Based on a sample of 29 retailers openin
Slide 49: BL footfall performance vs benchmark
BL footfall performance vs benchmark Jan-10 = 100 +340bps Outperformance in FY18 115 110 105 BL Index 100 95 90 85 80 Tyco (formerly Experian) Index 75 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 British Land UK Market (ShopperTrak UK National Index) 49
Slide 50: Continued polarisation in Retail
Continued polarisation in Retail 1.9% ERV growth vs IPD Rental growth on multi-let assets in FY18 Index Mar-14 = 100 113 BL Multi-let ERV 110 IPD Prime 108 105 IPD All Retail 103 100 98 IPD Secondary 95 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17
Slide 51: Major property holdings
Major property holdings At 31 March 2018 BL Share Sq ft Rent Occupancy Lease % 000’s £m pa1 Rate %2,4 Length yrs3,4 1 Broadgate 50 4,850 176 97.2 7.9 2 Regent's Place 100 1,740 75 98.1 7.4 3 Paddington Central 100 958 44 97.0 6.2 4 Meadowhall, Sheffield 50 1,500 89 97.9 6.3 5 Teesside, Stockton 100
Slide 52: Top 20 occupiers & occupier split by industry
Top 20 occupiers & occupier split by industry As at 31 March 2018 % of Contracted Rent Occupier Split by Industry (%) Tesco1 4.3 Other 8% J Sainsbury 3.8 Fashion & Debenhams (incl. Head Office) 3.5 Home & DIY 7% Beauty 17% UBS AG 3.3 HM Government 2.8 Grocery & Next 2.5 Convenience 8% Kingfisher (in
Slide 53: Broadgate Campus
Broadgate Campus 2 FA & 3 FA • 2FA & 3FA - Emerging Innovation cluster inc. 53k sq ft of Storey space • 3FA – UBS surrendered lease in Jan 2018. ‘Light touch’ refurb completes May 2019. • Current size: 184k sq ft • Potential size: 563k sq ft 1 FA • Pre-let 79k sq ft to Mimecast • Size: 291k sq ft •
Slide 54: Paddington Central Campus
Paddington Central Campus 54
Slide 55: Regent’s Place Campus
Regent’s Place Campus DRUMMOND STREET ©, ) Carls bis ma e ® @ @ aan = C) 20Triton Street @ 1 Osnaburgh Street @ 1-8 Longford Street ) UKPN Substation ® 1 Triton Square ©) 10 Brock Street @) 20Brock Street 15-31 Hampstead Road (@) 30 Brock Street GO) Euston Tower @) 2 Triton Square (2) 338 Euston Roa
Slide 56: Capital Activity
Capital Activity Since 1 April 2017 Retail Offices Residential Canada Water Total £m £m £m £m £m Purchases 199 – – 7 206 Sales1 (419) (577) (312) – (1,308) Development Spend 31 82 54 23 190 Capital Spend 57 5 – – 62 Net Investment (132) (490) (258) 30 (850) Gross Investment 706 664 366 30 1,766 On a
Slide 57: Capital Activity £1.8bn
Capital Activity £1.8bn Gross investment activity in FY18 Net Spend £m £52m £648m (£267m) £31m (£461m) (£850m) 1,600 1,200 800 400 - (400) (800) (1,200) (1,600) (2,000) 2013 2014 2015 2016 20171 20182 Disposals Capital Investment Acquisitions Net Spend 1 2017 restated to exclude transactions complet
Slide 58: Purchases
Purchases Since 1 April 2017 Sector Price Price Annual (100%) (BL Share) Passing £m £m Rent £m2 Completed Tesco, Brislington – Tesco exchange transaction1 Retail 46 23 2 Harlech, Newport – Tesco exchange transaction1 Retail 41 20 1 10-40 The Broadway, Ealing Retail 49 49 2 Hercules Unit Trust units3
Slide 59: Sales
Sales Since 1 April 2017 Sector Price Price Annual (100%) (BL Share) Passing £m £m Rent £m5 Completed The Leadenhall Building1 Offices 1,150 575 17 Superstores2 Retail 545 302 18 B&Q, Bury & Grimsby Retail 56 56 4 Virgin Actives, Sunderland & Coventry Retail 8 8 1 Richmond Homebase3 Retail 45 45 1 O
Slide 60: FY19 income statement guidance
FY19 income statement guidance • Gross Rents • Financing – Annualised accounting gross rent of £576m – Weighted average interest rate now 2.8% as at 31 March 2018 on gross debt of £4.3bn – Transactions already exchanged but completing • Dividend after 31 March 2018 are expected to reduce annualised
Slide 61: 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 31 March 2018 £m £m £m £m £m £m Current Passing Rent 588 Contracted uplifts 37 580 4 Contracted rent 625 Sales completing post year end (1) – – – – (1) (1) Letting of
Slide 62: Gross rental income
Gross rental income1 Accounting Basis £m 12 months to 31 March 2018 Annualised as at 31 March 2018 Group JVs & Funds Total Group JVs & Funds Total Regional 62 89 151 61 88 149 Local 92 29 121 90 26 116 Multi-let 154 118 272 151 114 265 Department Stores 43 – 43 40 – 40 and Leisure Superstores 4 22 2
Slide 63: Administrative expenses
Administrative expenses Financial Year to 31 March 2017 2018 £m £m Personnel costs 50 52 Share scheme costs 4 – Other administrative expenses 32 31 Total – British Land 86 83 Broadgate Estates 5 5 Total – Group 91 88 Capitalised costs (5) (5) Total administrative expenses 86 83 On a proportionally c
Slide 64: Operating costs metric
Operating costs metric Financial Year to 31 March 2017 2018 £m £m Property operating expenses 33 37 Administrative expenses 86 83 Net fees and other income (17) (15) Ground rent costs (2) (2) EPRA Costs (including direct vacancy costs) 100 103 Gross rental income 643 613 Ground rent costs (2) (2) Gr
Slide 65: Reconciliation of Underlying Profit
Reconciliation of Underlying Profit Financial Year to 31 March 2017 2018 £m £m IFRS profit before tax 195 501 Net valuation loss/(profit) 225 (254) Profit on disposal of investment and trading properties (20) (29) Deferred and current taxation of joint ventures & funds (1) – Capital financing (incom
Slide 66: Number of shares
Number of shares As at 31 Mar 2017 31 Mar 2018 (m) (m) IFRS Basic Weighted average1 1,029 1,013 IFRS Diluted Weighted average2 1,091 1,016 Underlying/EPRA diluted Weighted average3 1,033 1,016 Year end4 1,038 989 1 For use in IFRS basic earnings per share. 2 For use in IFRS diluted earnings per shar
Slide 67: EPRA balance sheet
EPRA balance sheet 31 March 17 Group JVs & Funds 31 March 18 Total properties (£m) 13,940 9,682 4,034 13,716 Adjusted net debt (£m) (4,223) (2,812) (1,161) (3,973) Other net liabilities (£m) (219) (91) (92) (183) EPRA Net Assets (£m) 9,498 6,779 2,781 9,560 Loan to value (LTV)1 29.9% 22.1% 28.4% Wei
Slide 68: Reconciliation of EPRA NAV & NNNAV
Reconciliation of EPRA NAV & NNNAV 31 March 17 31 March 18 £m pence £m pence IFRS Net Assets 9,476 921 9,506 967 Deferred tax arising on revaluation movements 3 5 Mark to market on derivatives and related debt adjustments 155 137 Adjust to fully diluted on exercise of share options 36 32 Surplus on
Slide 69: Gross and net debt reconciliation
Gross and net debt reconciliation As at 31 March 2018 Group JVs & Funds Less non- Total £m £m controlling £m interests £m Gross Debt (principal) (3,007) (1,392) 134 (4,265) IFRS adjustments: Issue costs and premia 15 2 – 17 Fair value hedge adjustments (150) – – (150) Other items 14 3 – 17 IFRS gros
Slide 70: Loan to value (LTV)
Loan to value (LTV) As at Valuation Acquisitions Capital Disposals Share Other As at 31 March movement spend buyback 31 March 2018 2017 £m £m Total properties 13,940 294 206 246 (971) – 1 13,716 Other investments 151 5 17 5 (2) – (4) 172 LTV assets 14,091 299 223 251 (973) – (3) 13,888 Adjusted net
Slide 71: Strength of debt metrics
Strength of debt metrics Proportionally Consolidated 31 Mar 2017 31 Mar 2018 Loan to value (LTV) 29.9% 28.4% Weighted average interest rate 3.1% 2.8% Interest cover 3.6x 4.0x Weighted average maturity of drawn debt (years) 7.7 8.6 Group 31 Mar 2017 31 Mar 2018 Loan to value (LTV) 22.6% 22.1% Availab
Slide 72: Debt maturity (£m)
Debt maturity (£m) £m 1200 1000 800 600 400 200 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 Bank RCF Undrawn (Unsecured) Bank RCF Drawn (Unsecured) Debenture & loan notes (Secured) Convertible Bond (Unsecured) Sterling Bond (Unsecured) U
Slide 73: Debt financing – diverse profile
Debt financing – diverse profile • LTV reduced from 29.9% to 28.4% £4.3bn Drawn Debt1 (31 March 2018) • Weighted average interest rate reduced £0.5bn £0.6bn from 3.1% to 2.8% • Issued £300 million unsecured Sterling £0.6bn bond at 2.375% coupon £1.3bn • Repaid £400 million 1.5% convertible bond at m
Slide 74: Portfolio valuation by sector
Portfolio valuation by sector At 31 March 2018 Group JVs & Funds Total Movement %1 £m £m £m H1 H2 FY Regional 1,132 1,898 3,030 0.1 0.2 0.2 Local 1,840 458 2,298 (0.9) (0.6) (1.5) Multi-let 2,972 2,356 5,328 (0.4) (0.2) (0.5) Department Stores and Leisure 593 1 594 2.4 2.6 5.1 Superstores 99 261 360
Slide 75: Portfolio weighting
Portfolio weighting At 31 March 2018 2017 2018 2018 2018 % (current) (current) (pro-forma1) % £m % Regional 21.3 22.1 3,030 21.3 Local 15.4 16.7 2,298 15.9 Multi-let 36.7 38.8 5,328 37.2 Department Stores and Leisure 4.1 4.3 594 4.1 Superstores 4.5 2.6 360 2.5 Solus and Other 2.5 2.3 314 2.2 Retail
Slide 76: Lease length and occupancy
Lease length and occupancy At 31 March 2018 Average Lease Length (yrs) Occupancy Rate (%)1 To Expiry To Break EPRA Occupancy2,4 Occupancy Regional 7.7 6.6 96.8 97.1 Local 7.4 6.3 97.4 98.1 Multi-let 7.6 6.5 97.1 97.6 Department Stores and Leisure 16.4 16.4 99.8 99.8 Superstores 9.4 9.4 100.0 100.0 S
Slide 77: Portfolio net yields
Portfolio net yields1,2 At 31 March 2018 EPRA EPRA topped up Overall topped up Net equivalent Net reversionary net initial net initial net initial yield % yield % 3 4 yield % yield % yield % Regional 4.5 4.7 4.7 5.0 5.0 Local 5.0 5.1 5.2 5.5 5.5 Multi-let 4.7 4.9 4.9 5.2 5.3 Department Stores 5.7 5.
Slide 78: Portfolio yield & ERV movements
Portfolio yield & ERV movements1 3 2 3,4 At 31 March 2018 NEY ERV Growth % NEY Yield Movement bps % H1 H2 FY H1 H2 FY Regional 5.0 1.2 1.1 2.3 4 3 7 Local 5.5 1.1 0.1 1.2 11 2 13 Multi-let 5.2 1.1 0.7 1.9 7 2 9 Department Stores 5.7 5.9 0.3 6.2 (11) 4 (7) and Leisure Superstores 5.4 (1.2) (1.1) (2.3
Slide 79: Annualised rent & estimated rental value (ERV)
Annualised rent & estimated rental value (ERV) At 31 March 2018 Annualised Rents ERV Average Rent (Valuation Basis) £m1 £m (£psf) Group JVs & Funds Total Total Contracted2 ERV Regional 63 88 151 168 32.2 34.2 Local 98 26 124 137 24.1 25.9 Multi-let 161 114 275 305 28.0 29.9 Department Stores 36 – 36
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 31 March 2018 £m £m £m £m £m £m £m Regional 19 11 18 14 11 48 73 Local 18 11 12 6 18 41 65 Multi-let 37 22 30 20 29 89 138 Department Stores 7 – – – – 7 7 and Leisure Superstores 3 8 6 1 1 17
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 31 March 2018 £m £m £m £m £m £m £m Regional 14 14 9 14 20 37 71 Local 12 10 10 12 13 32 57 Multi-let 26 24 19 26 33 69 128 Department Stores – – – – – – – and Leisure Superstores – – – – 2 – 2
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 31 March 2018 £m £m £m £m £m £m £m Expiry of rent free periods 22 5 – – – 27 27 Fixed uplifts (EPRA basis) 1 – – – – 1 1 Fixed & minimum uplifts 1 1 1 1 1 3 5 Total 24 6 1 1 1 31 33 On
Slide 83: Total Property Return (as calculated by IPD)
Total Property Return (as calculated by IPD) Full Year to 31 March 2018 Retail Offices Total % British British British IPD IPD IPD Land Land Land Capital Return 0.4 1.1 5.2 4.2 2.5 5.3 – ERV Growth 1.6 0.9 2.1 1.1 1.8 2.0 – Yield Movement1 6 bps -11 bps -7 bps -21 bps 1 bps -26 bps Income Return 5.3
Slide 84: BL property performance vs IPD – 5 years
BL property performance vs IPD – 5 years 5 years ended 31 March 2018 Relative performance bps p.a. 250 200 150 100 50 0 Retail Offices Total -50 -100 Capital Returns ERV Growth Total Returns 84
Slide 85: Recently Completed and Committed developments
Recently Completed and Committed developments At 31 March 2018 Sector BL Sq PC Current Cost to ERV Let & Share ft Calendar Value Come Under Year Offer % '000 £m £m1 £m2 £m Clarges Mayfair – Mixed Use 100 104 Q4 2017 473 14 0.7 – Retail & Residential3 Speke (Leisure) Retail 67 66 Q1 2018 15 3 1.1 0.9
Slide 86: Near term development pipeline
Near term development pipeline At 31 March 2018 Sector BL Sq Expected Current Cost to ERV Let & Planning Share ft Start on Value Come Under Status Site Offer % '000 £m £m1 £m2 £m Near term Pipeline Gateway Building Leisure 100 105 Q3 2018 7 123 6.0 – Consented Blossom Street, Shoreditch Office 100 3
Slide 87: Medium term development pipeline
Medium term development pipeline At 31 March 2018 Sector BL Sq ft Planning status Share % '000 Medium term Pipeline 2-3 Finsbury Avenue Office 50 563 Consented 1-2 Broadgate Office 50 507 Pre-submission 5 Kingdom Street Office 100 332 Consented1 Meadowhall (Leisure) Retail 50 330 Resolution to Grant
Slide 88: Estimated future development spend and capitalised interest
Estimated future development spend and capitalised interest At 31 March 2018 PC Cost to Come £m Calendar (excluding notional interest) – 6 months breakdown Year Sep-18 Mar-19 Sep-19 Mar-20 Sept-20 Mar-21 Sept-21 Mar-22 Clarges Mayfair – Retail & Residential Q4 2017 7 7 – – – – – – Speke (Leisure) Q1
Slide 89: Canada Water
Canada Water 53 acre mixed use opportunity in Central London 89
Slide 90: Canada Water Masterplan
Canada Water Masterplan 5m sq ft Net internal area 2m sq ft Commercial 1m sq ft Retail & Leisure 3,000 New homes 90
Slide 91: Canada Water Phase 1
Canada Water Phase 1 1.8m sq ft Net Internal Area 1m sq ft Commercial 250k sq ft Retail & Leisure 650 New homes 91
Slide 92: Clarges Residential receipts
Clarges Residential receipts £344m Clarges residential sales to date £’m 500 £141m 400 344m 300 £113m 200 £39m £119m 100 £25m £48m 0 Completed by 31 March 2018 Completed post year end Exchanged, not yet completed Launching Summer 2018 Cash received as at 31 March 18 92
Slide 93: Central London development pipeline
Central London development pipeline Q1 2018 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 17 18 19 20 21 22 Source: CBRE Completed Pipeline Pre-let Potential Speculative 10 year average new and under-construction take-up U/C Pre-let U/C – Speculative Moveme
Slide 94: West End development pipeline
West End development pipeline Q1 2018 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 22 Source: CBRE Completed Pipeline Pre-let Potential Speculative 10 year average new and under-construction take-up U/C Pre-let U/C – Speculative 10 year averag
Slide 95: City development pipeline
City development pipeline Q1 2018 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 22 Source: CBRE Completed Pipeline Pre-let Potential Speculative 10 year average new and under-construction take-up U/C Pre-let U/C – Speculative 10 year average de
Slide 96: 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 NIY % 6.0 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 8 6 4 % 2 - (2) 1994 1997 2000 2002 200
Slide 97: 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 2005 1990 1995 2000 2010 2020 2015 West End City Source: CBRE (historic) and Average Agents' Consensus (including PMA Spring 18) for forecasts 97
Slide 98: Vacancy Central London
Vacancy Central London West End & City Vacancy Rates 20 18 16 14 12 10 8 6 6.1% 4 3.6% 2 0 1985 1990 1995 2000 2005 2010 2015 Q1 2018 West End West End 10 year average City City 10 year average Source: CBRE (historic) 98
Slide 99: Retail Portfolio Valuation – previous classification
Retail Portfolio Valuation – previous classification At 31 March 2018 Valuation Change %1 ERV Growth %2 NEY Yield Movement bps £m H1 H2 FY H1 H2 FY H1 H2 FY Shopping parks 3,180 (0.1) 0.3 0.2 0.8% 0.2% 0.9% 11 (0) 10 Shopping centres 2,359 0.2 (0.5) (0.3) 0.7% 1.4% 2.1% 3 4 7 Superstores 360 0.8 (1.
Slide 100: Retail Portfolio Net Yields – previous classification
Retail Portfolio Net Yields1,2 – previous classification At 31 March 2018 EPRA EPRA topped up Overall topped up Net equivalent Net reversionary net initial net initial net initial yield % yield % 3 4 yield % yield % yield % Shopping parks 4.9 5.1 5.2 5.3 5.3 Shopping centres 4.5 4.7 4.8 5.1 5.1 Supe
Slide 101: Disclaimer
Disclaimer The information contained in this presentation has been extracted largely from the Year End Results Announcement for the period ended 31 March 2018. This presentation may contain certain “forward-looking” statements. Such statements reflect current views on, among other things, our market