British Land Company PLC · LSE:BLND
British Land — Merger or Acquisition (May 2005)
20 slides from British Land's merger presentation, May 20, 2005
Slide 1: Proposed Acquisition of Pillar Property PLC
We are investors in UK property and our focus is on activelyStephen managing, Hesterfinancing and developing prime Chief Executive commercial property to Proposed create Acquisition in the environment of Pillar Property PLC which modern business can thrive. Results ResultsPresentation Presentation Y
Slide 2: Agenda
Proposed Acquisition of Pillar AGENDA ! British Land Review of Strategy ! Outline Terms of the Transaction ! What is Pillar ! Why are We Doing it ! Financial Effects ! Conclusion
Slide 3: Review of Strategy: How British Land Will Evolve (Bedrock)
Review of 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
Slide 4: Review of Strategy: How British Land Will Evolve (Further develop)
Review of 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 beha
Slide 5: Portfolio Review
Portfolio Review POSITIONED FOR GROWTH WITH SECURITY PMA Forecast Total Property Returns ! Protected against downside Next 5 Years BL Weighting – prime, low voids, long leases Retail fully underpinning gearing Warehouses 26% (including Superstores) Shopping 20% ! Positioned for fundamental growth Ce
Slide 6: Outline Terms of the Transaction
Proposed Acquisition of Pillar OUTLINE TERMS OF THE TRANSACTION ! All cash recommended offer of 855p per Pillar share – Values Pillar at £811m on a fully diluted basis ! GE stake of 21.5% purchased, management holdings and ESOT of 5.8% irrevocably committed ! Terms represent a premium of – 9.6% to P
Slide 7: What Is Pillar
Proposed Acquisition of Pillar WHAT IS PILLAR ! Owns £1.3bn¹ of top quality real estate ! A leading property fund manager – 80% UK retail warehouse parks & – £3.3bn2 under management developments (large parks, open A1) – Flagship Hercules Unit Trust plus – 4% European retail warehouse parks “HIF”, “
Slide 8: Why Are We Doing It
Proposed Acquisition of Pillar WHY ARE WE DOING IT Attractive acquisition based on asset and fund management fundamentals Unique opportunity to leap forward in a key sector Asset Attractions Risk Adjusted Performance ! £2.5bn “HUT” GAV1 of “the best” retail warehouse 1991 -2003 12 assets (incl. 77%
Slide 9: Why We Are Doing It
Proposed Acquisition of Pillar WHY WE ARE DOING IT ! Attractive Fund Management business – Based on the “co-ownership” model – parallels to British Land’s JVs – Growing market, may take off more with REITs – Attractive stream of fee income – Attractive “performance” orientation – Adds to British Lan
Slide 10: Management
Proposed Acquisition of Pillar MANAGEMENT ! British Land welcomes Pillar’s talented management and staff ! Patrick Vaughan to join British Land as an Executive Director for transitional period to assist smooth integration ! Andrew Jones to join Group Executive Committee together with British Land’s
Slide 11: Why We Are Doing It: Strategic Evolution
Proposed Acquisition of Pillar WHY WE ARE DOING IT Accelerates, Emphasises and Underpins Strategic Evolution of British Land British Land Strategy Pillar Offer “Bedrock” ! Focus, bias to quality, long leases, +ve ! Fits perfectly with British Land preferred sectors supply/demand, superior long-term
Slide 12: Paying a Fair Price: 855p
Proposed Acquisition of Pillar PAYING A FAIR PRICE: 855P Assets Fund Management ! Pillar Fully Diluted NAV Mar 05 – 780p ! £3.3bn Funds Under Management Plus ! Precedent Transactions at 2-3% of FUM ! NAV growth to Aug 05 ! Potential development profits ! Gives value range of: £66-99m (69 -104p) Less
Slide 13: Financial Effects
Proposed Acquisition of Pillar FINANCIAL EFFECTS ! British Land’s LTV gearing will increase Earnings (impact from H2 05/061) by c.5 percentage points on a pro forma basis ! Value enhancing overall with faster growth expected in Pillar total returns ! Interest cover remains comfortable ! Pillar earni
Slide 14: Portfolio Review Revisited
Proposed Acquisition of Pillar PORTFOLIO REVIEW REVISITED PMA Forecast Total Property Returns ! Protected against downside Next 5 Years BL Proforma Weighting – prime, low voids, long leases fully underpinning gearing Retail Warehouses 31% (including Superstores) ! Positioned for fundamental growth S
Slide 15: Conclusion
Proposed Acquisition of Pillar CONCLUSION 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 evolution”
Slide 16: Appendix
We are investors in UK property and our focus is on actively managing, financing and developing prime commercial property to Appendix create the environment in which modern business can thrive. Results ResultsPresentation Presentation Year Yearended ended31 31March March2004 2004
Slide 17: British Land Sector Returns 1999-2004
Retail Market BRITISH LAND SECTOR RETURNS 1999 - 2004 200 Retail Warehouses (195) 190 Supermarkets (192) 180 Shops (180) Index March 1999 = 100 170 160 TOTAL PORTFOLIO (156) Shopping Centres (155) 150 West End Offices (154) 140 City Offices (141) 130 120 110 100 1999 2000 2001 2002 2003 2004 Year en
Slide 18: Out of Town: Increasing Share of Retail Sales
Retail Market 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 2001 2003
Slide 19: Forecast Returns by Sector
Retail Market FORECAST RETURNS BY SECTOR Total Property Returns by Sector Capital Growth Forecasts by Sector – alternative scenarios 2004 - 2009 12 6 5 Average capital growth % pa 10 Average total return % pa 4 8 3 2 6 1 0 4 -1 2 -2 -3 0 Retail Shopping High Street Central Industrial Retail Shopping
Slide 20: Disclaimer
This presentation does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any security, nor a solicitation or any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the securities referred to in this presentation in any jur
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