British Land Company PLC · LSE:BLND
British Land — FY2012 Earnings Presentation
102 slides from British Land's earnings presentation, May 2012
Slide 1: Full Year Results Presentation
FULL YEAR RESULTS PRESENTATION FULL YEAR ENDED 31 MARCH 2012 www.britishland.com
Slide 2: Chris Grigg, Chief Executive
vr, British Land CHRIS GRIGG Chief Executive
Slide 3: Introduction
Introduction Good set of results • Profits: +5.1% • NAV: +4.9% • Q4 Valuation: +0.3% • Total Returns: 8.3% 2
Slide 4: Our Vision
Our Vision VISION To Build the Best REIT in Europe DELIVERY Asset Level Outperformance High Return on Capital To Deliver Superior Returns Over Time 3
Slide 5: Five Key Priorities
Five Key Priorities 1. Sustainable and growing income 2. Assets which protect and grow capital value 3. Creating incremental value 4. Controlling costs 5. Exploiting our scale and financial strength To Drive Superior Performance 4
Slide 6: Our Strategic Priorities
Our Strategic Priorities Key Priorities Long-Term Short-Term Decisions Actions Guiding our Long-Term Decisions and Short-term Actions 5
Slide 7: Our Long-Term Decisions
Our Long-Term Decisions Sector Choice Retail and London Offices Scale Overall and in key sectors Efficient Capital Structure To drive returns Adding Value Not just about asset management Translating Priorities 6
Slide 8: Our Short-Term Actions
Our Short-Term Actions Lease extensions Sharpen Focus on Income Improving ERVs Drake Circus Accretive Acquisitions Maidenhead Capitalised on Development Decisions Leading the market in pre-lets Successful Financings £2bn raised Increased Pace of Recycling £100m of sales Translating Priorities into A
Slide 9: Today's Agenda
Today’s Agenda Results Overview Chris Grigg Chief Executive Financial Review Lucinda Bell Finance Director Retail Review Charlie Maudsley Head of Retail Offices Review Tim Roberts Head of Offices Conclusion Chris Grigg Chief Executive 8
Slide 10: Financial Highlights
Financial Highlights • Announced 1.5% increase in the quarterly dividend to 6.6p Y/E 31 March FY 2011 FY 2012 Change Net Rental Income £518m £546m +5.4% Underlying PBT £256m £269m +5.1% Dividend per share 26.0p 26.1p - Valuation £10.3bn +2.6% NAV per share 567p 595p +4.9% Total Accounting Return 17.
Slide 11: Property Level Performance in 2011/12
Property Level Performance in 2011/12 Y/E 31 March BL IPD Performance vs IPD Rental Values (ERVs) +2.1% +0.5% +160 bps Capital Returns 3.0% 0.5% +250 bps Total Property Returns 8.3% 6.3% +200 bps Significant Outperformance at the Asset Level 10
Slide 12: Drivers of Property Level Performance
Drivers of Property Level Performance Contribution to Valuation Uplift • Sector and asset selection key to outperformance – Retail and offices outperformed sector benchmarks • Our actions drove capital value uplift – Over 40% from asset management – One third from development – A quarter from yield
Slide 13: Property Level Outperformance – The Long-Term Record
Property Level Outperformance – The Long-Term Record British Land Portfolio Returns Relative to IPD Bps 350 +310bps 300 +270bps +250bps 250 +200bps 200 +180bps +140bps 150 100 50 0 12 Months 3yr 5yr Capital Return Total Return Consistent Strong Outperformance at the Asset Level 12
Slide 14: Sharpened Focus on Income
Sharpened Focus on Income • £882 million of acquisitions over last 2 years • Adding £36 million of new rental income in the year Drake Circus Mayflower Maidenhead Virgin Active Growing Income Through Acquisition 13
Slide 15: Sharpened Focus on Income
Sharpened Focus on Income • 1 million sq ft of retail lettings and renewals – 6.9% ahead of ERV • 1 million sq ft of office lettings/lease extensions in investment portfolio – 3.3% ahead of ERV • Total Lettings and renewals at 6% ahead of ERV • £10.0m of new annual rent Securing Income Through Asset
Slide 16: Well-timed Developments
Well-timed Developments The Leadenhall Building 10, Brock Street, NEQ 5 Broadgate Pre-lets Secure Annual Income of £34m: 20 Year Average Term 15
Slide 17: Incremental Value – The Virgin Active Example
Incremental Value – The Virgin Active Example • Exploit our deal skills – Quality leisure operation – Strong asset backing – Attractive income (NIY of 7.3%) – Long leases (25 years) • Early recycling – 5 clubs sold to institutions – 18% premium to purchase price Virgin Active Portfolio Purchased fro
Slide 18: Successful, Well-timed Financings
Successful, Well-timed Financings • £2bn of unsecured and secured refinancing • Few property companies with comparable access to debt markets • Taking advantage of our size and strength Refinancing and Reducing Cost of Debt 17
Slide 19: Lucinda Bell, Finance Director
LUCINDA BELL Finance Director
Slide 20: Key Themes
Key Themes • Strengthened the quality and longevity of our cash flows • Raised £2bn of finance by leveraging our scale • Increase in dividend Confidence in the Portfolio for the Future 19
Slide 21: Highlights
Highlights FY to 31 March 2011 2012 Change Net Rental Income £518m £546m +5.4% Underlying PBT £256m £269m +5.1% Underlying EPS 28.5p 29.7p +4.2% Dividend per share 26.0p 26.1p Net Asset Value per share 567p 595p +4.9% Total Accounting Return 17.7% 9.5% Growth in Both Income and Capital 20
Slide 22: Growth in Underlying Profit of 5.1% (£13m)
Growth in Underlying Profit of 5.1% (£13m) +£7m +£24m £(8)m £(8)m £(2)m Like for like net rental growth +1.5% • Retail +0.8% • Offices +2.5% £269m £256m 2011 Net Like-for-like Developments Admin Other 2012 investment costs Investment and Asset Management Driving Growth in Profits 21
Slide 23: Income Statement
Income Statement • Net rents increased by £28m 2011 2012 Growth • Limited impact from FY to 31 March £m £m % tenant failures Net Rental Income 518 546 5.4% – Occupiers in administration Fees & Other Income 18 17 represent 0.6% of total rent Administrative Expenses (68) (76) • Cost base continues to
Slide 24: Management Action Drives 2.6% Valuation Uplift
Management Action Drives 2.6% Valuation Uplift Valuation Uplift ERV growth1 EPRA Topped-up NIY2 FY to 31 March 2012 £m % % % UK Retail 6,046 0.4 1.4 5.5 Office Investments 2,948 5.3 3.7 6.0 Office Developments 614 17.8 n/a n/a Other (inc. Europe) 729 (0.4) 0.0 7.5 Total 10,337 2.6 2.1 5.8 1 Like for
Slide 25: £2bn Financings Raised on Competitive Terms
£2bn Financings Raised on Competitive Terms Amount Term £m yrs • Exploiting the benefits of our scale Unsecured bank 760 5 Unsecured US Private Placement 300 11 • Diverse range of lenders Sub Total (BL) 1,060 • £850m of new debt for HUT Secured bank (Funds) 775 5 Secured insurer (Funds) 125 5 Sub To
Slide 26: Key Financing Highlights
Key Financing Highlights Proportionally consolidated 2011 2012 EPRA Net Debt £4,317m £4,690m Loan to Value (LTV) 44.7% 45.3% Interest Cover 2.2x 2.2x Average Interest Rate 4.9% 4.6% Average maturity of drawn debt 10.1 years 9.3 years Group 2011 2012 Loan to Value (LTV) 24.3% 29.1% Interest Cover 3.0
Slide 27: Diversified Sources and Well Spread Debt Maturities
Diversified Sources and Well Spread Debt Maturities Group Maturity £m 1,000 Undrawn Facilities 800 Private Placements Debentures & Loan Notes 600 Drawn Facilities 400 200 0 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 Year to 31 March Improved Average Maturity of our Total Resources 2
Slide 28: Good Liquidity
Good Liquidity • Well spread, well phased debt portfolio • Cash resources - £337m of cash and liquid investments • Total facilities available in 2 years time are £1.7bn • £480m of net development spend over next 3 years • No immediate debt refinancing requirements Well Managed Refinancing Risk 27
Slide 29: Loan To Value
Loan To Value • LTV at 45.3% - within 40-50% target range • Strength of financing structure • Strong operational fundamentals – 98% occupancy – Long lease length 11.3 years – 24% of leases fixed or RPI uplifts – 96% of rent collected within 7 days • Total letting risk significantly lower than IPD LT
Slide 30: Significant Rental Growth Potential
Significant Rental Growth Potential Annualised Rent Valuation Basis3 £m Current annualised cash rent 534 Expiry of rent free periods1 51 Fixed, minimum uplifts1 17 Developments – pre-let 40 Total contracted 642 Letting of developments 49 RPI uplifts1,2 7 Uplift from rent reviews, expiries and vacanc
Slide 31: Increase in Dividend
Increase in Dividend • Increase in Q4 dividend to 6.6p – 26.1p for the full year • Quarterly dividend to continue at this level for FY12/13 – total of 26.4p • Reflecting strength of contracted cash flows (including pre-lets) 1.5% Increase in Quarterly Dividend to 6.6p 30
Slide 32: Summary
Summary • Strengthened the quality and longevity of our cash flows • Raised £2bn of finance by leveraging our scale • Confidence in future: quality of portfolio and our actions Confidence in the Portfolio for the Future 31
Slide 33: Charles Maudsley, Head of Retail
Charles Maudsley Head of Retail
Slide 34: Robust Retail Performance
Robust Retail Performance • Outperformed the retail market • ERV growth 180 bps ahead of market; outperforming each subsector • 340 lettings/renewals 6.9% above ERV • 6.1% BL UK Retail Total Return - outperformed IPD All Retail by 110 bps Against Challenging Market Backdrop 33
Slide 35: Key Messages
Key Messages • A portfolio suitable for the modern retail environment – Meeting consumer needs – Attracting retailers – Delivering for investors • The right approach – Quality team, asset management and driving total returns Defensively Positioned Today; Well Positioned to Outperform in Future 34
Slide 36: Drivers of Our Performance
Drivers of Our Performance £9.5bn1 UK Retail Assets Under Management • Strength and diversity of our 23% retail portfolio • Strong asset management 45% 12% initiatives • Focus on creating the right 13% retail environment 7% Shopping centres Department 1 BL Share UK Retail £6.0bn Stores Performance D
Slide 37: Retail Market Summary
Retail Market Summary • Difficult year for retailers, particularly in second half • Rising number of retailer casualties • Polarisation increasingly marked – Retailer trading performance – Occupational market Retail Landscape Continues to Change 36
Slide 38: Retail Occupational Market
Retail Occupational Market • Retailers aggressively repositioning portfolios • Exercising lease breaks in secondary locations Retail Lease Expiries % of income 16% British Land 12% IPD All Retail IPD Secondary Retail 8% 4% 0% 2013 2014 2015 2016 2017 Source: IPD Polarisation Accelerating 37
Slide 39: Retail Occupational Market
Retail Occupational Market ERV Growth Indexed March 2010 = 100 104 British Land 102 100 98 IPD All Retail 96 94 IPD Secondary Retail 92 90 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Source: IPD British Land Benefiting from Polarisation 38
Slide 40: Investment Market
Investment Market Capital Returns % 2 0.9 0.4 0.4 0 (0.4) (0.8) -2 (1.3) (1.2) -4 -6 (5.0) (6.3) -8 H1 H2 FY British Land Retail IPD All Retail IPD Secondary Retail Source: IPD Capital Values Reflecting Weaker Sentiment: Prime More Resilient 39
Slide 41: Our Performance – Capital Returns
Our Performance – Capital Returns • Outperformed IPD capital returns by 120 bps: all sub-sectors outperformed • Continued outperformance: over 3 years by 210 bps pa Capital Return H1% H2% FY% Retail Parks 1.0 (0.7) 0.2 Superstores 1.2 (0.1) 1.1 Shopping Centres 0.6 (0.5) 0.0 Department Stores 0.1 0.
Slide 42: Our Performance – Rental Growth
Our Performance – Rental Growth • Outperformed IPD ERV growth by 180 bps: all sub-sectors positive ERV Growth H1% H2% FY% Retail Parks 0.7 0.3 1.0 Superstores 0.3 1.9 2.2 Shopping Centres 0.5 0.3 0.8 Department Stores 0.0 5.1 5.1 BL UK Retail 0.5 0.9 1.4 IPD UK Retail (0.3) (0.1) (0.4) Significant O
Slide 43: Asset Management Initiatives
Asset Management Initiatives • UK occupancy robust at 98.3% • Admin exposure only 0.9%1 of retail rent • 526 income initiatives across 3.8m sq ft • Lettings / renewals 6.9% ahead of ERV H1 H2 FY Lettings/Renewals Sq ft ‘000s 527 568 1,095 vs ERV % 5.4 9.0 6.9 Rent Reviews Sq ft ‘000s 996 1,671 2,667
Slide 44: Leasing Activity
Leasing Activity 14% 22% 39% 8% Homeware 6% 1% Grocery 10% Electrical Attracting Broad Spread of Retail Demand 43
Slide 45: Leasing Activity
Leasing Activity Sq ft Annual Rent Increase in rent Vs ERV Lettings/Renewals ‘000 £m £m % Retail Parks 625 9.2 3.3 5.2 Shopping Centres 287 8.4 2.8 9.3 Developments 87 1.0 0.6 n/a Other 96 1.1 0.5 7.9 Total 1,095 19.7 7.2 6.9 Lettings/Renewals Ahead of ERV in all Subsectors 44
Slide 46: Leasing Activity – Leveraging Relationships
Leasing Activity – Leveraging Relationships 109,000 sq ft 60,000 sq ft (plus 63,000 sq ft of mezzanine) (including 30,000 sq ft of mezzanine) Top rent £55 psf Rent £20 psf 29,000 sq ft 65,000 sq ft (plus 24,500 sq ft of mezzanine) (plus 33,000 sq ft of mezzanine) Top rent £40 psf Top rent £50 psf Co
Slide 47: Leasing Activity – Retail Parks
Leasing Activity – Retail Parks • Swarovski at Glasgow • Jack & Jones at Glasgow • Whole Foods at Cheltenham • Simply Be in Teesside Park • Boots drive through in Northampton First Retail Park Swarovski • First ever UK Retail Park formats in Glasgow Fort Attracting New Retailers to our Retail Parks
Slide 48: Evolving the Retailing Environment
Evolving the Retailing Environment • Obtained 62 planning consents covering 850,000 sq ft • 142 capital projects underway • Signed 39 food and beverage lettings – Upgrade of Oasis food court at Meadowhall • Under offer with 3 cinema pre-lets • Investing in digital media including WiFi Future Proofin
Slide 49: Retail Footfall
Retail Footfall BL Experian Performance vs Region FY % FY % Experian Midlands 0.8 (2.6) +340 bps North East (0.1) 0.2 -30 bps North West (0.8) (4.1) +330 bps Scotland 1.9 (1.7) +360 bps South East (0.3) (2.1) +180 bps South West 0.0 (0.6) +60 bps Wales (0.3) (0.6) +30 bps Yorkshire 0.8 (0.3) +110 bp
Slide 50: Resilient Operational Performance
Resilient Operational Performance At 31 March 2012 British Land IPD UK Occupancy Rate 98.3% 95.7% Rents - Index Linked/fixed Uplifts 24.3% n/a Lease Length 12.1 years 11.5 years Income Expiring (Mar 2012-15) 7.5% 16.1% Rent Collection within 2 weeks of due date 97% n/a Occupiers in Administration1 0
Slide 51: UK Retail Market Development Pipeline
UK Retail Market Development Pipeline • Continued demand – 440,000 sq ft under offer on our portfolio • Little new stock in the pipeline UK Retail Development Completions m sq ft 12 Retail Parks Town Centre 8 4 0 2001 2003 2005 2007 2009 2011 2013 2015 Source: PMA Shortage of the Right Space 50
Slide 52: Our Retail Development Pipeline
Our Retail Development Pipeline • 100,000 sq ft extension to Surrey Quays • 302,000 sq ft development of Whiteley Shopping Centre, near Southampton – Strong demand from high quality retailers – 68% pre-let/under offer • 1m sq ft of Potential New Space Across Portfolio Developing the Next Generation
Slide 53: Retail Outlook
Retail Outlook • Market environment will remain challenging • Key challenge over next 12/24 months is growing income • Short-term variability in performance, reflecting sentiment • Prime will be more resilient, but not immune to market sentiment • Shortage of high quality space • Confidence about ou
Slide 54: Tim Roberts, Head of Offices
vr, British Land Tim Roberts Head of Offices
Slide 55: Key Messages
Key Messages • Strong performance over year Office Value by Subsector1 – 7.8% capital return Balancing City and West End – 12.1% total return • Strategy and actions delivering outperformance: – Focus on London 57% – £1.2bn development commitment 43% – 1m sq ft of lettings/re-gears securing £26m pa –
Slide 56: Strong Office Performance
Strong Office Performance • Outperformed IPD at sector and subsector level, and on capital and total return basis • Developments showed 24.9% capital return • Continued ERV growth 3.7% Capital Return BL % IPD % Performance vs IPD City 6.3 5.0 +130bps West End 10.4 8.3 +210bps All Offices 7.8 2.6 +52
Slide 57: Office Performance Drivers
Office Performance Drivers Contribution to Valuation Uplift Full Year • Good capital returns throughout the year – H1 +5.6% – H2 +2.1% • H1 boosted by yield • H2 no yield impact Over Two-Thirds of Valuation Uplift Driven by Our Actions 56
Slide 58: Strong and Secure Income Flow
Strong and Secure Income Flow • 2.1m sq ft of pre-lets/lettings and lease extensions in year, securing £60m pa of rent • British Land accounts for one fifth of London take-up over last 2 years BL IPD Central London Occupancy rate 98.0% 89.9% Lease length 8.8 yrs 8.0 yrs Income expiring: Mar 2012-15
Slide 59: Revitalising Broadgate
Revitalising Broadgate • Nearly 50% of Estate recently developed, refurbished or under construction • UBS retained as anchor occupier at 5 Broadgate – Also 755k sq ft of lease extensions • In addition re-geared and let c. 130,000 sq ft, totalling £3.2m pa • Improved 3 year lease expiry from 15.3% to
Slide 60: Enhancing Broadgate – Broadgate Circle
Enhancing Broadgate – Broadgate Circle Significant Asset Management Opportunities 59
Slide 61: Enhancing Broadgate – 100 Liverpool Street
Enhancing Broadgate – 100 Liverpool Street • Existing building 380,000 sq ft • Lease break extended from 2013 to 2016 • Capital value net of dilapidations, break penalty and income of c.£345 psf • Crossrail station due to open in 2018 Significant Asset Management Opportunities 60
Slide 62: Transforming Regent's Place
Transforming Regent’s Place • Estate will grow to 2.0m sq ft • Development of NEQ (500,000 sq ft) completing in June 2013 • Debenhams pre-let of 174,500 sq ft – 25 year lease term – Including further 30,000 sq ft at £56 psf • 62,000 sq ft of lease extensions securing £3m pa Transformed into a Vibran
Slide 63: Achieved Major Development Milestones
Achieved Major Development Milestones • Tendered 74 construction contracts totalling £500m • Secured final planning consent on over 900,000 sq ft • Entered 47 third party legal agreements • Unconditional pre-lets for lease on 1.1m sq ft, ahead of investment case NEQ 10 Portman Sq Marble Arch Hse 5 B
Slide 64: Attractive Development Pre-lets
Attractive Development Pre-lets £m pa Term Rent Free Sq ft (BL Share) £ psf yrs mths 700,000 19.1 54.50 18.2 18 191,000 5.6 56.60 19.0 33 174,500 9.4 53.90 25.0 32 Total 1,065,500 34.1 54.70 20.2 24 Secured 1.1m sq ft Pre-lets - 50% of Committed Programme 63
Slide 65: Profitable Development Programme On Track
Profitable Development Programme On Track • Valuers’ expected £192m profit to come: £167m already recognised • Over £40m still provided within cost as a contingency Sq ft End Value Income % % costs Development ‘000s £m £m Pre-let placed Yield % City 1,452 671 41.2 62 76 7.0 West End 837 733 36.3 26
Slide 66: Residential
Residential • Increased investment in London residential • Over £600m owned or under management – £330m BL development portfolio (end value) – £300m standing investment portfolio managed on behalf of a Fund • Develop and sell approach for our £330m development portfolio – £140m in the context of mix
Slide 67: Market Outlook – London Development Pipeline
Market Outlook – London Development Pipeline City and West End Development Completions m sq ft 9 8 Committed Pre-let Completed 7 6 5 Average 4 Grade A Take up 3 2 1 0 1990 1995 2000 2005 2010 2015 Source: Drivers Jonas Deloitte Expected Completions Below Historical Average, Leaving Limited Choice 66
Slide 68: Market Outlook – Occupational Demand
Market Outlook – Occupational Demand London Active Demand m sq ft 12 • Active demand picked up City Active Demand 10 West End Active Demand • 18.7m sq ft of lease breaks or expiries between 2013 and 2015 8 6 • West End requirements driven by TMT sector 4 2 0 Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Source
Slide 69: Market Outlook – Positive Rental Outlook
Market Outlook – Positive Rental Outlook Agents’ Consensus Rental Growth Forecast Rental Index 2011 = 100 130 City West End + 4.1% pa 120 + 3.7% pa 110 100 2011 2012 2013 2014 2015 2016 Source: Average Agents’ Consensus Imbalance Between Demand and Supply 68
Slide 70: Confident About Our Future Prospects
Confident About Our Future Prospects • High quality portfolio with growth opportunities • Profitable development programme well on track • Focus on London, well balanced between City and West End Positive About Outlook for London Offices 69
Slide 71: Chris Grigg, Chief Executive
vr, British Land CHRIS GRIGG Chief Executive
Slide 72: Outlook
Outlook Building the Best REIT in Europe 71
Slide 73: Summary
Summary • Strong results – Driven by decisions – Driven by actions • Management team “Defensively positioned today with growth tomorrow” Building the Best REIT in Europe 72
Slide 74: Appendices
vr, British Land APPENDICES
Slide 75: Reconciliation of Underlying Profit Before Tax
Reconciliation of Underlying Profit Before Tax 2011 2012 Year Ended £m £m IFRS Profit before tax 830 479 Net valuation movement (includes disposals) (591) (215) Deferred and current taxation of joint ventures & funds 6 - Amortisation of intangible assets 10 - Capital financing costs 1 2 Non-recurrin
Slide 76: Gross Rental Income – Sectoral Analysis
Gross Rental Income1 – Sectoral Analysis 12 months to 31 March 2012 Annualised as at 31 March 2012 (Accounting Basis) £m Group JVs & Funds Total Group JVs & Funds Total Retail parks 104 43 147 107 44 151 Superstores 8 64 72 8 65 73 Shopping centres 36 60 96 34 60 94 Department stores 33 - 33 33 - 33
Slide 77: Growth in Rental Income
Growth in Rental Income FY Reported Net Annualised Gross Rental Income Rental Income £m £m 31 March 2011 518 546 Like-for-like 7 5 Acquisitions 36 25 Disposals (7) (6) Development (6) (4) Other (2) 1 31 March 2012 546 567 76
Slide 78: Operating Costs Metric
Operating Costs Metric • Our measure of efficiency: 2011 2012 FY to 31 March £m £m • Controlling costs a strategic priority Property Outgoings 23 26 • Metric introduced 2011 Administrative Expenses; • Net operating costs: 14.9% of Gross Property related 46 Rental Income 68 Corporate expenses 30 • No
Slide 79: EPRA Balance Sheet (Proportional Consolidation)
EPRA Balance Sheet (Proportional Consolidation) £m Group JVs & Funds March 2012 March 2011 Total properties 5,414 4,923 10,337 9,572 Net debt (2,229) (2,461) (4,690) (4,317) Other net liabilities (113) (153) (266) (154) EPRA Net Assets 3,072 2,309 5,381 5,101 EPRA Diluted NAV per share 595p 567p Loa
Slide 80: Reconciliation of EPRA NAV & NNNAV
Reconciliation of EPRA NAV & NNNAV 2011 2011 2012 2012 As at 31 March £m Pence £m Pence Balance sheet (IFRS) net assets 4,930 548 5,104 565 Deferred tax arising on revaluation movements 37 4 31 3 Mark to market on effective cash flow hedges and 89 10 189 21 related debt adjustments Adjust to fully d
Slide 81: Growth in EPRA Net Asset Value
Growth in EPRA Net Asset Value +29p +23p +1p +1p (26)p 595p 567p 2011 Office Retail/Other Underlying Dividends Other 2012 Revaluation Revaluation Profit 80
Slide 82: Net Debt
Net Debt Group JVs & Funds Total As at 31 March 2012 £m £m £m Gross debt 2,621 2,601 5,222 Market value of derivatives 19 121 140 Cash & liquid investments (337) (146) (483) EPRA adjustments1 (74) (115) (189) Net debt (EPRA basis) 2,229 2,461 4,690 Average interest rate 4.2% 4.6% Interest cover2 3.0
Slide 83: Diverse Funding Profile
Diverse Funding Profile £5bn £0.8bn Other JV & Funds debt £4bn £1.8bn Securitisations £3bn Debentures & loan notes £1.0bn £1.0bn US Private Placements £2bn Unsecured debt £0.5bn £0.5bn £1bn £1.1bn £1.1bn £0bn Group (LTV: 29.1%) Prop. Consol. (LTV: 45.3%) 82
Slide 84: Debt Maturity – Joint Ventures and Funds
Debt Maturity – Joint Ventures and Funds BL Share £m1 1,200 JVs - securitisations 1,000 JVs - bank debt Funds - bank debt 800 600 400 200 0 2013 2014 2015 2016 2017 2018 2019-2023 2024-2036 Year to 31 March 1 Pro forma for financings completed since year end 83
Slide 85: Movement in Cash Flow
Movement in Cash Flow Group JVs & Funds Total FY to 31 March 2012 £m £m £m Net cash from operations 206 33 239 Investment acquisitions (382) - (382) Other purchases (22) 11 (11) Disposals 71 11 82 Development and other capital expenditure (106) (101) (207) Investment in and loans to JVs & Funds (110
Slide 86: Major Assets
Major Assets BL Sq ft Rent Occupancy Lease length As at 31 March 2012 (excluding developments) Share % ‘000 £m pa1 rate %2 yrs3 1 Broadgate, EC2 50 4,009 173 97.3 7.5 2 Regents Place, NW1 100 1,210 51 98.4 8.8 3 Meadowhall Shopping Centre 50 1,374 82 97.4 9.3 4 Ropemaker Place, EC2 100 594 27 100.0
Slide 87: Top Customers
Top 20 Customers At 31st March 2012 % of total rent % of total rent Tesco 7.2 Spirit Group 1.7 Sainsbury’s 6.2 Bank of Tokyo-Mitsubishi UFJ 1.6 Debenhams 4.3 Macquarie Group 1.5 UBS AG 3.6 DSG International 1.4 Home Retail Group 3.0 Herbert Smith 1.4 HM Government 2.3 Asda Group (inc. Asda Living) 1
Slide 88: Portfolio Valuation by Sector
Portfolio Valuation by Sector Group JVs & Funds Total Change%2 At at 31 March 2012 £m £m1 £m H1 H2 FY Retail parks 1,879 839 2,718 1.0 (0.7) 0.2 Superstores 142 1,223 1,365 1.2 (0.1) 1.1 Shopping centres 474 1,038 1,512 0.6 (0.6) 0.0 Department stores 451 - 451 0.1 0.8 0.8 UK Retail 2,946 3,100 6,04
Slide 89: Portfolio Net Yields
Portfolio Net Yields1 At 31st March 2012 EPRA initial EPRA topped-up Overall topped-up Reversionary Equivalent (excluding developments) yield % initial yield %1 initial yield%2 yield % yield % Retail parks 5.4 5.6 5.7 5.7 5.8 Superstores 5.1 5.1 5.1 5.0 5.1 Shopping centres 5.5 5.7 5.8 6.0 5.8 Depar
Slide 90: Lease Length and Occupancy
Lease Length and Occupancy At 31st March 2012 Average lease length (yrs) Occupancy rate (%) (excluding developments) To expiry To break Occupancy Occupancy (overall)1 Retail parks 10.6 9.7 98.2 98.8 Superstores 15.9 15.9 100.0 100.0 Shopping centres 9.9 9.1 94.7 95.9 Department stores 28.6 25.2 100.
Slide 91: Annualised Rent & Estimated Rental Value (ERV)
Annualised Rent & Estimated Rental Value (ERV) At 31st March 2012 Annualised rents (valuation basis) £m1 ERV £m Average rent (£psf) (excluding Developments) Group JVs & Funds Total Total Contracted ERV Retail parks 108 46 154 162 22.5 23.0 Superstores 8 65 73 73 21.5 21.4 Shopping centres 35 58 93 9
Slide 92: Significant Rental Growth Potential
Significant Rental Growth Potential Accounting Annualised Rent Gross Rent Valuation Basis3 EPRA Net Yield £m £m %4 Current annualised cash rent 534 5.2 Expiry of rent free periods1 567 51 - Fixed and minimum uplifts1 17 - Developments – pre-let 35 40 - Total contracted 602 642 5.8 Letting of develop
Slide 93: Contracted Rental Increases (Cash Flow Basis)
Contracted Rental Increases (Cash Flow Basis) Year to 31 March (£m pa) Excluding developments 2013 2014 2015 2016 2017 2013-15 2013-17 Expiry of rent free periods 20 28 1 1 - 49 50 Fixed uplifts (EPRA basis) 1 1 3 1 - 5 6 Fixed & minimum uplifts in lieu of 1 1 1 1 6 3 10 rental growth Total 22 30 5
Slide 94: Rent Subject to Open Market Rent Review
Rent Subject to Open Market Rent Review 12 months to 31 March (£m) 2013 2014 2015 2016 2017 2013-15 2013-17 Retail parks 27 23 21 22 18 71 111 Superstores 2 9 17 19 5 28 52 Shopping centres 16 9 5 15 13 30 58 Department stores - - - 5 - - 5 UK Retail 45 41 43 61 36 129 226 Europe Retail - - - - - -
Slide 95: Rent Subject to Lease Break or Expiry
Rent Subject to Lease Break or Expiry At 31 March (£m) 2013 2014 2015 2016 2017 2013-15 2013-17 Retail parks 4 5 4 8 8 13 29 Superstores - - - - - - - Shopping centres 5 6 3 6 8 14 28 Department stores - - - - - - - UK Retail 9 11 7 14 16 27 57 Europe Retail 3 3 2 2 2 8 12 All Retail 12 14 9 16 18 3
Slide 96: Rent Resetting to Market
Rent Resetting to Market Year to 31 March (£m pa) 2013 2014 2015 2016 2017 2013-15 2013-17 Income expiring – existing portfolio1 16 18 13 21 46 47 114 Speculative developments – City 3 - 13 - - 16 16 Speculative developments – West End - 27 - - - 27 27 Speculative developments – Retail - 4 1 - - 5 5
Slide 97: Rent Resetting to Market
Rent Resetting to Market Total ERV Resetting to Market (Next 3 Years) 30% 25% 20% 15% 7% 27% 10% 5% 9% 0% British Land IPD (exc. development) Vacant & Income Expiring Developments (Speculative) 96
Slide 98: Committed Developments
Committed Developments Cost to BL Share Sq ft PC Calendar Current Value complete Notional interest ERV Pre-let Resi End Value At 31 March 2012 % '000 Year £m £m £m1,2 £m3 £m £m4 5 Broadgate 50 700 Q4 14 117 141 26 19.1 19.1 - The Leadenhall Building5 50 610 Q2 14 88 136 19 18.6 5.6 - NEQ, Regents Pl
Slide 99: Prospective Developments
Prospective Developments At 31 March 2012 BL Share % Sq ft '000 6-9 Eldon Street 100 47 Pre-submission Colmore Row 100 284 Detailed planning consent 100 Liverpool Street 50 383 Planning pending New Century Park 50 1,000 Outline Total Offices 1,714 Fort Kinnaird, Edinburgh 21 84 Planning pending Glas
Slide 100: Estimated Future Development Spend for Offices and Retail
Estimated Future Development Spend for Offices and Retail Prelet PC ERV Cost to complete £m (excluding notional interest) – Six mths As at 31 March 2012 Calendar Year £m Sep 12 Mar 13 Sep 13 Mar 14 Sep 14 Mar 15 199 Bishopsgate, EC2 Q4 12 6 2 10 Portman Square, W1 Q2 13 10 18 9 NEQ, Regent’s Place,
Slide 101: Illustrative Unrealised Office Development Profits
Illustrative Unrealised Office Development Profits Unrealised profit illustration1 Average Valuation Yield (£m) +75bps +50bps +25bps 5.4% (25bps) (50bps) (75bps) (10%) (24) 22 73 131 194 265 342 (5%) 3 50 102 162 227 299 379 £58 29 78 131 192 260 334 416 Estimated Rental Value2 +5% 67 118 173 236 30
Slide 102: Disclaimer
Disclaimer The information contained in this presentation has been extracted largely from the Full Year Results Announcement for the year ended 31 March 2012. This presentation may contain certain “forward-looking” statements. By their nature, forward-looking statements involve risk and uncertainty