British Land Company PLC · LSE:BLND
British Land — Non-Deal Roadshow (June 2005)
26 slides from British Land's roadshow presentation, June 2005
Slide 1: Investor Roadshow: Results Presentation
We are investors in UK property and our focus is on actively managing, financing and developing prime commercial property to Investor Roadshow create the environment in which modern business can thrive. Results ResultsPresentation Presentation Year Yearended ended31 31March March2004 2004
Slide 2: Contents
CONTENTS ! BRITISH LAND TODAY ! STRATEGY ! INVESTMENT CASE – SUPERIOR GROWTH WITH SECURITY ! MARKET OUTLOOK ! CONCLUSION
Slide 3: British Land Today: Strong Record of Value Creation
British Land Today BUILDING ON STRONG RECORD OF VALUE CREATION Profits Growth1 Total Return2 18% 2 26% 1 Average Annual Growth Average Annual Return 22% 14% 2 18% 1 Total Shareholder Return3 1 10% 30% 14% 1 Average Annual Return 2 25% 6% 10% 20% 3 2 2% 6% 15% 5 YRS 3 YRS 1 YR 5 YRS 3 YRS 1 YR 10% 5%
Slide 4: British Land Today: Total Assets
British Land Today £13,807M TOTAL ASSETS1 58% Retail: 37% Offices: 71% Out of Town 95% Central London Retail Warehouses 20% Central London Superstores 33% 11% Provincial Out of Town Shopping 2% Centres Development 10% In Town Shopping Other 2% High Street 5% Centres 9% 8% 1 Proforma for the proposed
Slide 5: Sustainable Income: Long Leases and Low Vacancy
British Land Today SUSTAINABLE INCOME: LONG LEASES & LOW VACANCY Average lease term to Vacancy rate1 first break, years1 % 2005 2004 2005 2004 Total Portfolio 15.9 15.8 3.5 3.1 City Offices 11.9 12.0 6.8 3.7 West End Offices 9.8 10.1 1.0 10.0 Retail Warehouses 16.0 17.0 1.5 1.0 Superstores 21.8 22.7
Slide 6: 2004/5: A Year of Successful Asset Activity
British Land Today 2004/5: A YEAR OF SUCCESSFUL ASSET ACTIVITY Portfolio Reshaping ! £1,361m attractive property acquisitions, already increased in value by 7% ! £344m disposals, 8% in excess of valuation – & more to come Active Asset Management ! Over 3m sq ft new letting/development success ! 226
Slide 7: A Strong Financial Performance in 2004/5
British Land Today A STRONG FINANCIAL PERFORMANCE IN 2004/5 March 2005 March 2004 Increase Net rental income £572m £523m 9.3% Underlying profit before tax1 £175m £149m 17.0% Underlying EPS1,2 34.3p 31.2p 9.9% Dividend per share (cover 2.2 times3) 15.7p 14.5p 8.3% Total properties £12,507m £10,639m 1
Slide 8: Strategy: How British Land Will Evolve (Bedrock)
Strategy HOW BRITISH LAND WILL EVOLVE ! Bedrock – Focus on areas of competitive advantage – Bias to high quality assets, long lease profiles, favourable demand/supply characteristics complemented by efficient capital structure – Distinctive ability to add value through purchases, disposals and partn
Slide 9: Strategy: How British Land Will Evolve (Further Develop)
Strategy HOW BRITISH LAND WILL EVOLVE ! Further develop – Pro-active asset management, customer focus & flexibility – Disciplined and dispassionate asset review process – Outstanding human capital, focused on performance for shareholders – Positioning at forefront of investor friendly behaviour And
Slide 10: "Investor Friendly" Proposition
Strategy “INVESTOR FRIENDLY” PROPOSITION ! Fundamental value ! 2005 Initiatives ! Business performance, with security – quarterly reporting from December ! Strong corporate governance – change of valuers from September ! Most liquid stock in sector – early adoption of OFR ! Well balanced share regis
Slide 11: Investment Case: Positioned for Growth with Security
Investment Case POSITIONED FOR GROWTH WITH SECURITY ! Protected against downside PMA Forecast Total Property Returns BL Proforma1 Next 5 Years Weighting – prime, low voids, long leases fully underpinning gearing Retail 31% Warehouses (including Superstores) ! Positioned for fundamental growth Shoppi
Slide 12: Investment Case: Strong Growth in Cash Rents
Investment Case STRONG GROWTH IN CASH RENTS March 2005 Of which £m contracted £m Annualised net rents 625.6 625.6 Net reversions1 103.5 66.9 Committed developments 31.3 23.5 Increase 134.8 90.4 Total 760.4 716.0 Development prospects 151.1 1 Reversions include rent reviews, expiry of rent free perio
Slide 13: Recommended Acquisition of Pillar
Investment Case RECOMMENDED ACQUISITION OF PILLAR Makes Sense in its Own Right Excellent Fit & Wider Relevance ! Attractive Assets with good growth ! Value creating prospects ! Synergy with existing assets & business ! Fund Management adds income growth and future options ! Accelerates “strategy evo
Slide 14: Market Outlook: Summary
Market Outlook SUMMARY ! Rents affordable in most sectors across the economy ! But global competiveness issues may restrain occupancy and rental growth except where supply/demand imbalances exist ! Yield shift supported by fundamentals of comparison to alternative asset class risk vs real returns…Yi
Slide 15: Property Still Offers Relative Value
Market Outlook PROPERTY STILL OFFERS RELATIVE VALUE 2004 Real Income Return 4.1% 20 20 Year Average 3.3% 15 % 10 6.3% 5 2.2% 0 1976 1980 1984 1988 1992 1996 2000 2004 Property Income Returns Inflation (RPIX) Gilt Yield FTSE All Share Yield Source: IPD, National Statistics, Datastream 13
Slide 16: IPD: Sharp Narrowing of Yields Spread 2001-2004
Market Outlook IPD: SHARP NARROWING OF YIELDS SPREAD 2001 - 2004 Range in Equivalent Yields Lower to upper quartile spreads, 2001 and 2004 Standard Shops Shopping Centres Retail Warehouses 2004 spread Offices - City Offices - West End 2001 spread Offices - Rest of South East Offices - Rest of UK Sta
Slide 17: Conclusion
Conclusion Real Estate Market is in good shape ! British Land’s portfolio is well positioned ! “Sweating the assets” will intensify for the next 5 years – but more to do ! The portfolio will be actively managed ! Management transition is working well – Company is active and confident ! Human capital
Slide 18: Appendix
We are investors in UK property and our focus is on actively managing, financing and developing prime Appendix commercial property to create the environment in which modern business can thrive. Results ResultsPresentation Presentation Year Yearended ended31 31March March2004 2004
Slide 19: Market Fundamentals: Property Still Offers Relative Value
Market Fundamentals PROPERTY STILL OFFERS RELATIVE VALUE Asset Yields Prime Property Initial Yields RPIX 10 Yr Gilts Equities Office Retail Industrial 1980 16.90 14.20 6.10 4.50 3.50 6.90 1990 8.10 11.00 5.50 5.25 5.00 7.75 2000 2.10 4.90 2.20 5.75 5.00 6.50 Jan 2005 2.10 4.60 3.00 5.00 4.25 6.25 So
Slide 20: Out of Town: Increasing Share of Retail Sales
Retail Sector Drivers OUT OF TOWN: INCREASING SHARE OF RETAIL SALES Out of Town vs Total Retail Sales Out of Town Share of Fashion Sales 12 36 20% 34 Estimated share of clothing and 10 % OOT Share of Total Sales 32 16% 8 30 footwear sales Growth % 12% 6 28 26 8% 4 24 2 4% 22 0 20 0% 1995 1997 1999 2
Slide 21: City: Demand Fundamentals Solid
Office Sector Drivers CITY: DEMAND FUNDAMENTALS SOLID City Employment Set to Rise Office Rent are a Low % of Salary Costs 400 140 60% 350 120 300 50% 100 Index (2000 = 100) Rent as % of salary 250 40% 80 '000 200 60 30% 150 40 100 20% 50 20 10% 0 0 1991 1993 1995 1996 1997 1998 1999 2000 2001 2002 2
Slide 22: City: Cyclical Recovery
Office Sector Drivers CITY: CYCLICAL RECOVERY Headline and Effective Rents Agents’ Consensus BL City Rent Reviews 80 Range £psf Average % of rent roll 70 Increase 60 2005 45.00 – 48.00 + 1.9% 14% 50 £ psf 2006 47.50 – 50.40 + 5.1% 19% 40 30 2007 52.50 – 55.40 + 9.3% 14% 20 2008 57.00 - 59.00 + 8.3%
Slide 23: Sustainable Income: Strong Tenant Covenants
Income and Cash Flow Year Ended 31 March 2005 SUSTAINABLE INCOME: STRONG TENANT COVENANTS Top 10 Retail Tenants Top 10 Office Tenants 1. J Sainsbury 1. UBS 2. Tesco 2. Lehman Brothers 3. Debenhams 3. Accenture 4. Great Universal Stores 4. EBRD 5. House of Fraser 5. Herbert Smith 6. Dixons Group 6. R
Slide 24: Long Term Income Profile
Income and Cash Flow Year Ended 31 March 2005 LONG TERM INCOME PROFILE Plus Rental Growth 1000 900 800 700 600 £m 500 400 300 200 100 0 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Development programme (committed and prospective) Reversionary income (not contracted) Renewal of lea
Slide 25: Long Term Income Profile Assumptions
Income and Cash Flow Year Ended 31 March 2005 LONG TERM INCOME PROFILE ASSUMPTIONS • Annualised net rents of £625.6m at 31 March 2005 are shown to decrease on the first to occur of lease expiry or tenant’s break. Annualised net rents are increased for the contracted reversions of £66.9m receivable o
Slide 26: The information contained in this presentation has been extracted largely from the Preliminary Announcement
The information contained in this presentation has been extracted largely from the Preliminary Announcement for the year ended 31 March 2005. General property market data has been extracted from Jones Lang LaSalle, PMA, Verdict and other agents’ reports (please note that their definitions may differ