British Land Company PLC · LSE:BLND
British Land — H1 2017 Earnings Presentation
104 slides from British Land's earnings presentation, Nov 16, 2016
Slide 1: Half Year Results Presentation
Half Year Results Presentation 6 months to 30 September 2016 www.britishland.com @BritishLandPLC #BLHY2017 $BLND
Slide 2: Introduction
Introduction Chris Grigg Chief Executive
Slide 3: Confident in our positioning
Confident in our positioning • Quality of the portfolio – Reflected in our activity and these 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 – Tactic
Slide 4: Results highlights
Results highlights • 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 4
Slide 5: Offices – Sustained leasing activity
Offices – Sustained leasing activity 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 House 37% let or under offer
Slide 6: Offices – Range of pre-let discussions
Offices – Range of pre-let discussions • In discussions on eight significant requirements (>30,000 sq ft) • Range of sectors – tech, media, finance, professional services, not-for-profit • Across all four campuses 4 Kingdom Street 1 Triton Square 100 Liverpool Street 6
Slide 7: Retail – Continued leasing momentum
Retail – Continued leasing momentum • 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% ahead of ERV • Encouraging deal pipeline – 290,000 sq ft under offer, ahead of ERV Multi-let portfolio –
Slide 8: 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 9: Residential – Further progress
Residential – Further progress • 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 M
Slide 10: Significant Retail sales – on strategy
Significant Retail sales – on strategy • £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 16 Sept 16 10
Slide 11: Investment market
Investment market • Strong demand for long, secure income • Falling values in secondary locations • Few transactions on large lot sizes Investment volumes £bn £bn 16 16 -40% 12 12 Q3 Q3 8 8 Q2 -54% Q2 Q1 Q1 4 4 0 0 2015 2016 2015 2016 Central London Office Retail Source: Shopping centres and OOT – CB
Slide 12: Positioning for the future
Positioning for the future Strategy Aligned to long term trends Resilience Secure income and robust finances Optionality Tactical decisions to respond to the changing environment 12
Slide 13: Our strategy
Our strategy British Land is a leading UK commercial property company focused on creating and operating great places for modern lifestyles Customer Orientation Right Places We understand our customers’ needs We connect with customers to design and identify major long-term trends engaging, sustainabl
Slide 14: Placemaking applies across our business
Placemaking applies across our 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 into the d
Slide 15: Resilience underpinned by secure income
Resilience underpinned by secure income 98% occupancy • High quality, diverse occupier base • No single occupier accounts for more than 6% of income 9 years average lease length • No sector accounts for more than 17% Occupier split by sector by rent Other 7% General DIY 7% Retail 16% TMT 7% Professi
Slide 16: 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 17: 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 18: 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 19: 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 19
Slide 20: Financial Review
Financial Review Lucinda Bell Chief Financial Officer
Slide 21: 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 22: 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 22
Slide 23: Net rental income
Net rental income £m (11) 6 8 309 Retail 1.5% 312 Offices 4.2% Total 2.3% Retail1 1.7% Offices 6.7% Total1 3.4% H1 2016 Capital activity Like for like Developments H1 2017 rental growth 1 Like for like rental growth is stated excluding the impact of surrender premia. 23
Slide 24: Financing Costs
Financing Costs Weighted average interest rate at 3.2% £m 12 5 (96) (1) 3 (1) (78) H1 2016 Financing Financing Acquisitions Disposals Completion of H1 2017 activity – debt activity – developments transactions lower rates 24
Slide 25: Income statement
Income statement HY to 30 September H1 20161 H1 2017 H1 Change % Net Rental Income (£m) 309 312 3 1.0 Fees & Other Income1 (£m) 7 8 1 14.3 Administrative Expenses1 (£m) (49) (43) 6 12.2 Net Finance Costs (£m) (96) (78) 18 18.8 Underlying Profit (£m) 171 199 28 16.4 Underlying Earnings per Share (p)
Slide 26: 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 27: 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 28: 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 29: 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 29
Slide 30: 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 31: 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 500 • Costs to complete of £280m on the co
Slide 32: 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 33: 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 34: Summary
Summary • Good results • Operationally strong • Modest development commitments • Strong capital structure 4 Kingdom Street 34
Slide 35: Summary
Summary Chris Grigg Chief Executive
Slide 36: Delivering performance with our actions
Delivering performance with our actions +16% underlying profit • 769,000 sq ft of leasing, 11.6% ahead of ERV • Low cost financing; reducing admin costs • £690m of non-core Retail disposals • Committed to 100 Liverpool Street • Planning successes across the pipeline Meadowhall Leisure Hall 36
Slide 37: Resilience built in; positioned to capture future upside
Resilience built in; positioned to capture future upside • Quality of the portfolio – High level of leasing activity and interest • Resilience built into the business – Secure income, robust finances and lean operating model • Strategy aligned to long term trends – Positions portfolio to capture gre
Slide 38: Appendices
Appendices
Slide 39: Portfolio evenly split between London Offices and Retail
Portfolio evenly split between London Offices and high quality Retail Offices Retail & Leisure £6.6bn £6.8bn Total portfolio valuation £13.9bn at March 16 including £0.3bn at Canada Water and £0.2bn of Residential assets 39
Slide 40: 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 41: 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 42: 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 43: 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 occupiers
Slide 44: Multi-let assets
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, Edinburgh1
Slide 45: Portfolio 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 330m Average rent to sales ratio 10% 90% of our car parking spaces are free Source: CACI Retail Footprint 2
Slide 46: 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) 46
Slide 47: 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 48: London Assets
London Assets @ campus @ CAMPUS-LITE REGENT’S @ DEVELOPMENT PLACE CROSSRAIL (ELIZABETH LINE) 1,590,000 sq ft LAUNCHING 2017-2018 ’ ’ PADDINGTON BROADGATE (50%) 4,721,000 sq ft 806,000 sq ft , 3@ WESTEND SID TOWN, ®e, THE CITY THE Portman Campus-Lite 1. MARBLE ARCH HOUSE 76,000 sq ft LEADENHALL BUILD
Slide 49: Broadgate – lease expiries opportunity
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 break in Dec 2016 • 3 Finsbury Avenue – expected lease break in late 2018 • Current size: 190k sq ft • Potential size: 560k sq
Slide 50: Regent's Place Campus
Regent’s Place Campus © BROCK STREET TRITON STREET REGENT'S ‘TRITON SQUARE PLAZA ® O) © Se eyst0n 08 GREAT PORTLAND STREET necenr's PARK DRUMMONO STREET (o) S WARREN. STREET O) 20 Triton Street @) 1 Osnaburgh Street ® 1-8 Longford Street © UKPN Substation ® 1,4&7 Triton Square © 10 Brock Street (O)
Slide 51: Paddington Central Campus
Paddington Central Campus 51
Slide 52: 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 53: 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 54: 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 55: 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 56: 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 57: 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 58: 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 59: 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 60: H2 income statement guidance
H2 17 income statement guidance • Rental Income • 2012 Convertible Bond – Virtually fully let portfolio with contracted accounting – Dilution of convertible bond will depend on share price gross rent of £631m as at 30 September 2016 at the end of the reporting period. If share price is at or – Retai
Slide 61: Reconciliation of Underlying Profit
Reconciliation of Underlying Profit HY to 30 September (£m) H1 2016 H1 2017 IFRS profit / (loss) before tax 823 (205) Net valuation (profit)/loss (614) 462 Profit on disposal of investment and trading properties (36) (42) Capital financing costs/(income) 6 (9) Non-controlling interests (8) (7) Under
Slide 62: 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 63: Reconciliation of EPRA NAV & NNNAV
Reconciliation of EPRA NAV & NNNAV 31 March 16 30 September 16 £m pence £m pence Balance Sheet (IFRS) Net Assets 9,619 935 9,181 891 Deferred tax arising on revaluation movements 5 2 Mark to market on effective cash flow hedges and 198 205 related debt adjustments Adjust to fully diluted on exercise
Slide 64: Gross and net debt reconciliation
Gross and net debt reconciliation As at 30 September 2016 Group JVs & Funds Less non-controlling £m £m £m interests £m Gross Debt (principal value) 3,297 1,631 (124) 4,804 IFRS adjustments: Issue costs and premia (13) (3) 1 (15) Fair value hedges 281 – – 281 Other Items (3) – – (3) IFRS gross debt 3
Slide 65: 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 65
Slide 66: Debt maturity – group
Debt maturity – group (£m) 1,000 800 600 400 200 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Year to March Bank RCF Drawn (Unsecured) US Private Placements (Unsecured) Bank RCF Undrawn (Unsecured) Convertible Bond (Unsecured) Debenture &
Slide 67: Debt maturity – joint ventures and funds
Debt maturity – joint ventures and funds1 (£m) 1,000 800 600 400 200 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Year to March JVs – Securitisations JVs & Funds – Bank drawn Funds – Bank undrawn 1 At British Land share (including share o
Slide 68: 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 • Extended £0.9bn of unsecured revolvi
Slide 69: 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 70: 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 71: Portfolio weighting
Portfolio weighting At 30 September 2015 2016 (current) 2016 (current) 2016 (pro-forma1) % % £m % Regional 19.5% 20.7% 2,878 19.5% Local 16.3% 16.3% 2,267 16.1% Multi-let 35.8% 37.0% 5,145 35.6% Department Stores and Leisure 7.0% 4.6% 639 4.4% Superstores 6.0% 4.9% 681 4.8% Solus and Other 2.6% 2.5%
Slide 72: 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 73: 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 74: 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 75: 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 76: 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 77: 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 78: 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 79: 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 80: 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 81: 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 82: 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 82
Slide 83: 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 83
Slide 84: 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 85: 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 86: 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 87: 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 88: Estimated future development rental income
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 89: 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 Property Yield vs 10 Year Gilt Yields 6.0 Gap as multiple of gilt yield 5.0 4.0 3.0 2.0 1.0 - -1.0 1994 1997 2000 2002 2005 2007 2010 2012 2015 201
Slide 90: Central London development pipeline
Central London development pipeline Q3 2016 c. 7.3m sq ft in ’16–’20 m sq ft pipeline delayed since Brexit 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 Source: CBRE 10 year rolling average new and Completed Pipeline Pre-let Potential Speculative under-
Slide 91: West End development pipeline
West End development pipeline Q3 2016 m sq ft 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 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 rolling
Slide 92: City development pipeline
City development pipeline Q3 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 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 rolling
Slide 93: 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 Q3 2016 Source: CBRE (historic) West End Void Rate (Period end) City Void Rate (Period end) 93
Slide 94: 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 95: Additional Disclosures – Previous Retail Classification Basis
Additional Disclosures – Previous Retail Classification Basis 95
Slide 96: Retail Portfolio Valuation – previous classification
Retail Portfolio Valuation – previous classification At 30 September 2016 Group JVs & Funds1 Total H1 Change2 £m £m £m % £m Shopping parks 2,104 1,137 3,241 (4.1) (139) Shopping centres 1,125 1,121 2,246 (2.1) (47) Superstores 139 542 681 (3.0) (24) Department stores 241 1 242 5.6 34 Leisure 397 4 4
Slide 97: Retail portfolio net yields – previous classification
Retail portfolio net yields1,2 – previous classification 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 5 yield % yield % expansion Shopping parks 5.0 5.1
Slide 98: Retail gross rental income – previous classification
Retail gross rental income1,2 – previous classification Accounting Basis £m 6 months to 30 September 2016 Annualised as at 30 September 2016 Group JVs & Funds3 Total Group JVs & Funds3 Total Shopping parks 57 30 87 112 59 171 Shopping centres 31 26 57 63 51 114 Superstores 5 16 21 10 31 41 Departmen
Slide 99: Retail portfolio weighting – previous classification
Retail portfolio weighting – previous classification At 30 September 2015 2016 (current) 2016 (current) 2016 (pro-forma1) % % £m % Shopping parks 23.3 23.3 3,241 22.8 Shopping centres 15.1 16.1 2,246 15.0 Superstores 6.1 4.9 681 4.8 Department stores 4.2 1.8 242 1.7 Leisure 2.7 2.9 401 2.8 Retail &
Slide 100: Retail portfolio lease length and occupancy – previous classification
Retail portfolio lease length and occupancy1 – previous classification At 30 September 2016 Average Lease Length (yrs) Occupancy Rate (%) To Expiry To Break Occupancy Occupancy (underlying)2 Shopping parks 8.6 7.5 97.7 98.5 Shopping centres 8.5 7.6 96.6 97.6 Superstores 12.0 11.6 100.0 100.0 Departm
Slide 101: Retail portfolio annualised rent & ERV – previous classification
Retail portfolio annualised rent & estimated rental value (ERV)1 – previous classification At 30 September 2016 Annualised Rents ERV Average Rent (Valuation Basis) £m2 £m (£psf) Group JVs & Funds4 Total Total Contracted3 ERV3 Shopping parks 115 62 177 185 26.1 26.8 Shopping centres 63 51 114 126 28.
Slide 102: Retail portfolio rent subject to open market rent review
Retail portfolio rent subject to open market rent review1– previous classification 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 Shopping parks 6 22 24 15 15 52 82 Shopping centres 4 14 14 7 13 32 52 Superstores 1 4 8 11 13 13 37 Department
Slide 103: Retail portfolio rent subject to lease break or expiry
Retail portfolio rent subject to lease break or expiry1– previous classification 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 Shopping parks 6 11 11 14 12 28 54 Shopping centres 6 9 8 10 7 23 40 Superstores – – – – – – – Department stores
Slide 104: 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