British Land Company PLC · LSE:BLND
British Land — H1 2018 Earnings Presentation
103 slides from British Land's earnings presentation, Nov 16, 2017
Slide 1: Half Year Results Presentation
Half Year Results Presentation Six months ended 30 September 2017 www.britishland.com @BritishLandPLC #BLHY2018 $BLND
Slide 2: Significant progress
Significant progress Chris Grigg Chief Executive
Slide 3: Highly active first half
Highly active first half • Strong results reflecting good progress 1 Triton Square – 1.3m sq ft of leasing activity: £32m rent – 1.8m sq ft of planning approvals – £1bn sales: 13% ahead of valuation • Demonstrating: – Healthy demand for our space – Active capital management – Strong financial platfo
Slide 4: Delivering strong results
Delivering strong results Meadowhall • Underlying profits steady at £198m – Despite £1.5bn income-producing asset sales since March 2016 • NAV up 2.6% to 939p – Valuation uplift of 1.4% • 1.3m sq ft lettings and renewals across the business – 6.8% ahead of ERV – Occupancy at 98% • Leading sustainabi
Slide 5: London offices performance
London offices performance • Lettings and renewals of 741,000 sq ft Broadgate – 2.8% ahead of ERV – Incentives remaining steady • New lettings represent 8% share of central London activity – Average lease length of over 15 years • Under offer or in advanced negotiations on a further 570,000 sq ft –
Slide 6: Our Campuses represent c.80% of the office portfolio
Our Campuses represent c.80% of the office portfolio 6
Slide 7: Broadgate: transforming the experience
Broadgate: transforming the experience 36% of space let or under offer across the committed and near term pipeline 2 Finsbury Avenue Lettings 135 Bishopsgate 325,000 sq ft 1 Finsbury Avenue 288,000 sq ft 168,000 sq ft Under offer 100 Liverpool Street 78,000 sq ft 522,000 sq ft Under offer 161,000 sq
Slide 8: Broadgate: thriving neighbourhoods
Broadgate: thriving neighbourhoods Old Street Shoreditch Tech start-up Creative sector BROADGATE Barbican Spitalfields Cultural hub Modern markets The City Financial Centre 35minutes From Heathrow 8
Slide 9: Enhancing the campus offer through flexible workspace
Enhancing the campus offer through flexible workspace • Storey launched in June 2017 Appold Studios, Broadgate • Operational across 85,000 sq ft – 59,000 sq ft let or under offer to date – Terms at or ahead of budget – Median headcount of 50 • Fitting out another 50,000 sq ft – 27,000 sq ft at Paddi
Slide 10: Paddington Central: leasing well and broadening the mix
Paddington Central: leasing well and broadening the mix • Successful leasing of 4 Kingdom Street Pergola – 147,000 sq ft speculative development – 40% ahead of best rents at Paddington on acquisition in 2013 • Pergola attracted 130,000 visitors this summer – Christmas season launched with new brands
Slide 11: Leasing success at Regent’s Place
Leasing success at Regent’s Place • Commitment to redevelop 1 Triton Square 1 Triton Square • Fully pre-let on the office space – Dentsu Aegis Network taking 310,000 sq ft on a 20 year term – Largest West End pre-let in 22 years • Facebook increased their commitment at 10 Brock Street – Total occupa
Slide 12: Regent’s Place: proximity to exceptional talent
Regent’s Place: proximity to exceptional talent 8 universities 22 museums & galleries 580 research centres Regent’s Place 3,000 scientists 100,000 students 12
Slide 13: Retail performance: strong demand for our space
Retail performance: strong demand for our space St Stephen’s, Hull • Leasing activity of 578,000 sq ft – Terms 11.9% ahead of ERV • Market polarising • Occupancy of 98% 13
Slide 14: Omni-channel: the Changing Role of the Store
Omni-channel: the Changing Role of the Store Transaction Discovery Fulfilment 26% 30% Online sales browsed in store1 shoppers use Click+Collect at our Local centres3 52% 67% Increase in retailer website hits make an additional purchase ahead of new store openings2 when collecting3 1) UK retail marke
Slide 15: Retail: reshaping our portfolio for an omni-channel world
Retail: reshaping our portfolio for an omni-channel world 1. Disposals 2. Acquisitions 3. Investment Off strategy assets 10 – 40 The Broadway Orbital, Swindon £1.7bn in 3 years £49 m acquisition £43 m capital spend, £500m expected adjacent to Ealing improving our assets Broadway Shopping centre in n
Slide 16: Investment driving performance at Meadowhall
Investment driving performance at Meadowhall Meadowhall • £60m refurbishment completed – Occupiers invested a further £38m • Outperforming IPD on a 1, 3 and 5 year basis • Strong half year performance – 1.2% capital uplift – 1.3% ERV growth • Enhancing the brand mix 16
Slide 17: A sustainable approach supporting shareholder value
A sustainable approach supporting shareholder value • Planning received on 330,000 sq ft Meadowhall Leisure Hall leisure hall • Our refurbishment boosted the regional economy by £32m – 70% of construction spend went to local businesses within 25 miles – 200,000 hours of paid employment went to local
Slide 18: Investment driving performance at Whiteley
Investment driving performance at Whiteley • Local centre opened in 2013 Whiteley – Total return c.20% pa – ERV growth more than 6% pa • Strong half year performance – 3.3% capital uplift – 14.3% ERV growth • 33% customers use C&C • Attracting new occupiers 18
Slide 19: Summary
Summary Broadgate • Strong performance • Results demonstrate: – Healthy demand for our space – Actively management of capital – Positioned for low-risk growth – Strong financial platform Forster Square, Bradford 19
Slide 20: Finance Review
Finance Review Lucinda Bell Chief Financial Officer
Slide 21: Active focus on capital discipline
Active focus on capital discipline • Highly active first half: – Debt reduced by £500 million – LTV at 27% – Issued £300 million unsecured Sterling bond at 2.375% coupon – Settled 1.5% convertible bond – Launched £300 million share buyback – Reduced financing costs by another £12 million 21
Slide 22: Headlines
Headlines Period to H1 2017 H1 2018 Change % Underlying Profit (£m) 199 198 (0.5) Underlying earnings per share (p) 19.3 19.2 (0.5) Dividend per share (p) 14.60 15.04 3.0 As at H2 2017 H1 2018 Change % Valuation performance +1.6% +1.4% EPRA Net Asset Value per share (p) 915 939 2.6 Loan to value 29.
Slide 23: Net rental income
Net rental income £m (22) 5 (15) 15 2 312 Retail 1.5% Offices 4.2% 297 Total 2.3% Retail 1.7% Offices 1.9% Total1 1.8% HY 2017 Net divestment Expiries on RBS Surrender Development Like for like HY 2018 developments lettings rental growth 1 Like for like rental growth is stated excluding the impact o
Slide 24: Financing costs
Financing costs £m 8 7 (3) (78) (66) HY 2017 Financing Net divestment Developments and HY 2018 activity other 24
Slide 25: Underlying Profit
Underlying Profit £m (15) 1 8 5 (15) 15 199 198 198 H1 2017 Net divestment Development RBS surrender Like for like Financing Other H1 2018 expiries rental growth activity 25
Slide 26: Income statement
Income statement HY to H1 2017 H1 2018 Change 30 September % Net rental income (£m) 312 297 (4.8) Fees & other income (£m) 8 8 – Administrative expenses (£m) (43) (41) 4.7 Net finance costs (£m) (78) (66) 15.4 Underlying Profit (£m) 199 198 (0.5) Underlying earnings per share (p) 19.3 19.2 (0.5) Div
Slide 27: Valuation performance
Valuation performance 6 months to Valuation Movement Movement Yield ERV NEY Weighting September 2017 £bn £m % Movement Growth % % bps % Retail 6.6 20 0.3 5 1.0 5.3 49 Offices & Residential 6.6 185 2.6 (6) 1.2 4.4 49 Canada Water 0.3 (13) (4.5) 2 Total 13.5 192 1.4 – 1.0 4.8 100 - Of which Standing 1
Slide 28: Valuation growth drivers – Retail
Valuation growth drivers – Retail 6 months to Valuation Movement Movement Yield ERV September 2017 £bn £m % movement Growth bps % H1 H1 H1 Regional 3.0 2 0.1 4 1.2 Local 2.2 (21) (0.9) 11 1.1 Multi-let 5.2 (19) (0.4) 7 1.1 Other 1.4 39 2.5 (3) 0.5 Retail 6.6 20 0.3 5 1.0 Multi-let assets represent 7
Slide 29: Valuation growth drivers – Offices
Valuation growth drivers – Offices 6 months to Valuation Movement Movement Yield ERV September 2017 £bn £m % Movement Growth bps % H1 H1 H1 West End 4.1 128 3.2 (11) 1.0 City 2.4 50 1.7 1 1.3 Offices 6.5 178 2.6 (6) 1.2 Residential 0.1 7 3.6 Offices & Residential 6.6 185 2.6 Campuses represent 79% o
Slide 30: Increase in EPRA Net Asset Value
Increase in EPRA Net Asset Value 19p (14p) (3p) 4p 18p 939p 915p Mar 17 Valuation Underlying Dividends Liability Share buyback Sep 17 performance Profit management costs 30
Slide 31: Strength of debt metrics
Strength of debt metrics 31 Mar 30 Sept Proportionally Consolidated 2017 2017 Loan to value (LTV) 29.9% 26.9% Weighted Average Interest Rate 3.1% 3.0% Interest Cover 3.6x 4.0x Available Undrawn Facilities £1.0bn £1.5bn Weighted Average Maturity of Drawn Debt (years) 7.7 8.9 31
Slide 32: De-risked development pipeline
De-risked development pipeline £76m ERV of Committed & Near Term Developments • Committed pipeline £m – ERV Pre-let or under offer - ERV of £55 million 70 ERV - Almost 60% pre-let or 60 £55m Plymouth (Leisure) under offer 50 - Speculative exposure just 4% 40 - 85% costs to go covered by Clarges resi
Slide 33: Illustrative future income profile – 5 year basis
Illustrative future income profile – 5 year basis Annualised Gross Rents Cash Flow Accounting Basis Basis £m £m Current Passing Rent 588 Contracted Uplifts 39 585 Total Contracted Rent 627 Letting of Completed Developments 4 3 Sales completed post period end (5) (5) Lease Expiries – Development pipe
Slide 34: Summary - Robust financial platform
Summary - Robust financial platform Over the last 6 years: - LTV reduced from almost 45% to under 27% - Weighted average interest rate reduced from 4.9% to 3.0% - Interest cover almost doubled from 2.2x to 4.0x - Financing costs reduced by 38% - 50% growth in profits 4 Kingdom Street, Paddington - D
Slide 35: Positioned for Growth
Positioned for Growth Chris Grigg Chief Executive
Slide 36: Canada Water: a unique opportunity in central London
Canada Water: a unique opportunity in central London 36
Slide 37: Canada Water
Canada Water 46 acre mixed use opportunity in Central London 37
Slide 38: Canada Water Masterplan
Canada Water Masterplan 5.5m sq ft Net internal area 2m sq ft Commercial 1m sq ft Retail & Leisure 3,500 New homes 38
Slide 39: 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 39
Slide 40: Substantial growth opportunities
Substantial growth opportunities Near term pipeline Medium term pipeline 135 Bishopsgate, Broadgate £ 21 m Eden Walk Kingston Additional rent Gateway, Paddington 2&3 Finsbury Avenue Leisure-led Retail opportunities 3.2m 5 Kingdom Street sq ft Stockton, Teesside 40
Slide 41: London Campuses: a winning strategy
London Campuses: a winning strategy 41
Slide 42: Capital discipline
Capital discipline • Disciplined approach Broadgate to capital allocation – Investing in opportunities that deliver long term value • Expect to be a net seller this year • Our options include – Development Hempel Gardens – Acquisitions – Returning capital • Flexibility in our decisions – Dividend co
Slide 43: Positioned for Growth
Positioned for Growth Three distinct advantages: 100 Liverpool Street 1. Our strategy – Attracting a broader occupier mix 2. Our financial strength and flexibility – Long-term income – Resilient balance sheet – Lower leverage 3. Attractive development pipeline – Diverse and well-funded – Delivering
Slide 44: Appendices
Appendices
Slide 45: 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 We design engaging, customers’ needs and identify sustainable places which major long term trends to bring people together
Slide 46: Sustainability – half year highlights
Sustainability – half year highlights Customer Orientation Right Places Wellbeing Community • Independent consultancy Happy City report highlighting • Young Readers Programme with the National Literacy the positive impact on wellbeing and productivity of our Trust expanded to 28 assets; over 7,500 c
Slide 47: Sustainability Indices
Sustainability Indices 2017 performance vs. benchmark . MSCI ESG Ratings Global Real Estate 2017: ESG Leaders Index. Sustainability 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 201
Slide 48: 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 Digital connectivity, Efficient and effective Occupiers and campus On-site hospitality branding and marketing buildings and spaces community & customer servic
Slide 49: Portfolio evenly split between London Offices and Retail
Portfolio evenly split between London Offices and Retail; 65% situated in London & South East Offices Retail & Leisure £6.5bn £6.6bn Further £0.3bn at Canada Water and £0.1bn of standalone Residential assets Figures shown on a proportionally consolidated basis including the group's share of propertie
Slide 50: Retail Multi-let Portfolio
Retail Multi-let Portfolio Our two core products each fulfil specific shopper missions Regional Local Attracting visitors from a wide catchment Fitting into the daily life for a planned trip of local communities Missions include Leisure-dominated Trips, Missions include Local Neighbourhood Shopper,
Slide 51: Multi-let Retail assets
Multi-let Retail assets Regional Local Attracting visitors from a wide catchment Fitting into the daily life for a planned trip of local communities Southgate, Bath Mayflower, Basildon Beaumont, Leicester Broughton, Chester1 Weston Lock, Bath Valentine, Lincoln1 Fort Kinnaird, Edinburgh1 Cornerhouse
Slide 52: Our portfolio is well positioned to meet consumer and retailer demands
Our portfolio is well positioned to meet both consumer and retailer demands BL local Potential to reach centres 59% BL regional centres of the population BL asset catchments Annual footfall of 315m Average rent to sales ratio 10% Occupancy cost ratio 16% Source: CACI Retail Footprint 2017. 52
Slide 53: Online sales increasingly integrated with physical stores
Online sales increasingly integrated with physical stores 89% of UK retail sales touch the store Retail sales by channel (UK, all sectors, 2015) Online Online sales pureplay Mail order & not browsed sales TV shopping Online sales Click & in store browsed £4 bn Collect in store £13 bn sales £18 bn £5
Slide 54: 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 55: BL footfall performance vs benchmark
BL footfall performance vs benchmark +340bpsOutperformance in H1 FY18 Jan-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 Mar-17 Sep-17 British Land UK Market (ShopperTrak UK National Index) 55
Slide 56: Continued polarisation in Retail
Continued polarisation in Retail 1.1% Rental growth on multi-let assets in ERV growth vs IPD H1 FY18 Index Mar-14 = 100 111 BL Multi-let ERV 109 IPD Prime 107 105 IPD All Retail 103 101 99 IPD Secondary 97 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
Slide 57: Major property holdings
Major property holdings At 30 September 2017 BL Share Sq ft Rent Occupancy Lease % 000’s £m pa1 Rate %2,4 Length yrs3,4 1 Broadgate 50 4,850 180 98.4 8.3 2 Regent's Place 100 1,740 75 97.2 7.7 3 Paddington Central 100 958 41 93.8 6.8 4 Meadowhall, Sheffield 50 1,500 85 97.8 6.7 5 Teesside, Stockton
Slide 58: Top 20 occupiers & occupier split by industry
Top 20 occupiers & occupier split by industry As at % of Contracted Rent Occupier Split by Industry (%) 30 September 2017 Other 7% Fashion Tesco plc 4.6 & Beauty J Sainsbury plc 4.3 DIY 8% 17% UBS AG 3.6 Debenhams plc 3.5 Kingfisher (B&Q) 3.0 TMT 8% HM Government 2.8 Next plc 2.5 General Facebook 1.
Slide 59: Broadgate Campus
Broadgate Campus 2–3 Finsbury Avenue • 2 Finsbury Avenue – Emerging FinTech cluster • 3 Finsbury Avenue – expected lease break in late 2018 • Current size: 189k sq ft • Potential size: 563k sq ft 1 Finsbury Avenue • Lease expired in Dec 2016 • Current size: 288k sq ft 135 Bishopsgate • RBS leases su
Slide 60: Paddington Central Campus
Paddington Central Campus 60
Slide 61: Regent’s Place Campus
Regent’s Place Campus @ 20 Triton Street @ 1 Osnaburgh Street @) 1-8 Longford Street G@) VKPN Substation ® 1 Triton Square © 10Brock Street @ 20 Brock Street 15-31 Hampstead Road ) ©, @ 30 Brock Street @) Euston Tower ) @) 2 Triton Square (42) 398 Euston Road ROCK STREET 8) 350 Euston Road Euston (1
Slide 62: Capital Activity £1.2bn
Capital Activity £1.2bn Gross investment activity in H1 FY18 Net Spend £52m £648m (£267m) £31m (£461m) (£777m) £m 1,600 1,200 800 400 - (400) (800) (1,200) (1,600) (2,000) Financial Year 2013 2014 2015 2016 20171 H1 2018 Disposals Capital Investment Acquisitions Net Spend 1 2017 restated to exclude
Slide 63: Capital Activity
Capital Activity Since 1 April 2017 Retail Offices Residential Canada Water Total £m £m £m £m £m Purchases 92 – – – 92 Sales1 (298) (575) (119) – (992) Development Spend 8 62 3 11 84 Capital Spend 35 4 – – 39 Net Investment (163) (509) (116) 11 (777) Gross Investment 433 641 122 11 1,207 On a propor
Slide 64: Acquisitions
Acquisitions 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 Total 136 92 5 1 Part o
Slide 65: Disposals
Disposals Since 1 April 2017 Sector Price Price Annual (100%) (BL Share) Passing £m £m Rent £m6 Completed The Leadenhall Building1 Offices 1,150 575 17 Superstores2,3 Retail 428 242 15 B&Q, Bury & Grimsby4 Retail 56 56 4 The Hempel Collection Residential 50 50 – Exchanged Clarges, Mayfair5 Residenti
Slide 66: H2 18 income statement guidance
H2 18 income statement guidance • Gross Rents • Operating costs – Annualised accounting gross rent of £582m as – Administrative costs expected to be at, or slightly at 30 September 2017 below, H1 level – Transactions already exchanged but completing after 30 September 2017 are expected to reduce • D
Slide 67: Illustrative future income profile breakdown (cash basis)
Illustrative future income profile breakdown (cash basis) For the year to 31 March 2018 2019 2020 2021 2022 Total At 30 September 2017 £m £m £m £m £m £m Contracted rent 627 Letting of completed developments 4 – – – – 4 Sales and purchases completing post year end (5) – – – – (5) Lease Expiries – Dev
Slide 68: Gross rental income
Gross rental income1 Accounting Basis £m 6 months to 30 September 2017 Annualised as at 30 September 2017 Group JVs & Total Group JVs & Total Funds Funds Regional 31 44 75 59 87 146 Local 45 15 60 92 27 119 Multi-let 76 59 135 151 114 265 Department Stores 23 – 23 38 – 38 and Leisure Superstores 2 1
Slide 69: Administrative expenses
Administrative expenses HY to 30 September H1 2017 H1 2018 £m £m Personnel costs 26 26 Share scheme costs 3 2 Other administrative expenses 14 14 Total – British Land 43 42 Broadgate Estates 2 2 Total – Group 45 44 Capitalised costs (2) (3) Total administrative expenses 43 41 On a proportionally con
Slide 70: Operating costs metric
Operating costs metric HY to 30 September H1 2017 H1 2018 £m £m Property operating expenses 15 19 Administrative expenses 43 41 Net fees and other income (8) (8) Ground rent costs (1) (1) EPRA Costs (including direct vacancy costs) 49 51 Gross rental income 327 316 Ground rent costs (1) (1) Gross Re
Slide 71: Reconciliation of Underlying Profit
Reconciliation of Underlying Profit HY to 30 September (£m) H1 2017 H1 2018 IFRS (loss)/profit before tax (205) 238 Net valuation loss/(profit) 462 (167) Profit on disposal of investment and trading properties (42) (20) Capital financing (income)/costs (9) 153 Non-controlling interests (7) (6) Under
Slide 72: Number of shares
Number of shares As at (m) 31 Mar 2017 30 Sept 2017 IFRS Basic Weighted average1 1,029 1,028 IFRS Diluted Weighted average2 1,091 1,031 Underlying/EPRA diluted Weighted average3 1,033 1,031 Year/Period end4 1,038 1,027 1 For use in IFRS basic earnings per share. 2 For use in IFRS diluted earnings pe
Slide 73: EPRA balance sheet
EPRA balance sheet £m 31 March 17 Group JVs & Funds 30 September 17 Total properties 13,940 9,502 4,013 13,515 Adjusted net debt (4,223) (2,491) (1,200) (3,691) Other net liabilities (219) (106) (72) (178) EPRA Net Assets 9,498 6,905 2,741 9,646 Loan to value (LTV)1 29.9% 20.1% 26.9% Weighted averag
Slide 74: Reconciliation of EPRA NAV & NNNAV
Reconciliation of EPRA NAV & NNNAV 31 March 17 30 September 17 £m pence £m pence IFRS Net Assets 9,476 921 9,632 945 Deferred tax arising on revaluation movements 3 5 Mark to market on effective cash flow hedges 155 137 and related debt adjustments Adjust to fully diluted on exercise of share option
Slide 75: Gross and net debt reconciliation
Gross and net debt reconciliation As at 30 September 2017 Group JVs & Funds Less non- Total £m £m controlling £m interests £m Gross Debt (principal) (2,711) (1,422) 132 (4,001) IFRS adjustments: Issue costs and premia 17 3 (1) 19 Fair value hedges (190) – – (190) Other Items 12 3 – 15 IFRS gross deb
Slide 76: Loan to value (LTV)
Loan to value (LTV) As at Valuation Acquisitions Capital Disposals Other As at 31 March movement spend 30 September 2017 2017 £m £m Total 13,940 180 92 118 (815) – 13,515 properties Other 151 3 – – – 1 155 investments LTV assets 14,091 183 92 118 (815) 1 13,670 Adjusted 4,223 – 92 118 (828) 86 3,691
Slide 77: Strength of debt metrics
Strength of debt metrics Proportionally Consolidated 31 Mar 2017 30 Sept 2017 Loan to value (LTV) 29.9% 26.9% Weighted Average Interest Rate 3.1% 3.0% Interest cover 3.6x 4.0x Weighted Average Maturity of Drawn Debt (years) 7.7 8.9 Group 31 Mar 2017 30 Sept 2017 Loan to value (LTV) 22.6% 20.1% Avail
Slide 78: Debt maturity (£m)
Debt maturity (£m) £m 1,600 1,400 1,200 1,000 800 600 400 200 0 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Year to March Convertible Bond (Unsecured) JVs – Securitisations Bank RCF Drawn (Unsecured) US Private Placements (Unsecured) Funds
Slide 79: Debt financing – diverse profile
Debt financing – diverse profile • LTV reduced from 30% to 27% £4.0bn Drawn Debt1 (30 September 2017) £0.4bn £0.2bn • Weighted average interest rate reduced from 3.1% to 3.0% £0.6bn • Issued £300 million unsecured Sterling bond at 2.375% coupon £0.4bn £1.3bn • Repaid £400 million 1.5% convertible bo
Slide 80: Portfolio valuation by sector
Portfolio valuation by sector At 30 September 2017 Group JVs & Funds Total H1 Movement £m £m £m %1 £m Regional 1,121 1,866 2,987 0.1 2 Local 1,745 461 2,206 (0.9) (21) Multi-let 2,866 2,327 5,193 (0.4) (19) Department Stores and Leisure 588 1 589 2.4 14 Superstores 130 315 445 0.8 5 Solus and Other
Slide 81: Portfolio weighting
Portfolio weighting At 30 September 2016 2017 (current) 2017 (current) 2017 % % £m (pro-forma1) % Regional 20.7 22.1 2,987 20.8 Local 16.3 16.3 2,206 15.4 Multi-let 37.0 38.4 5,193 36.2 Department Stores and Leisure 4.6 4.4 589 4.1 Superstores 4.9 3.3 445 3.1 Solus and Other 2.5 2.7 365 2.5 Retail 4
Slide 82: Lease length and occupancy
Lease length and occupancy At 30 September 2017 Average Lease Length (yrs) Occupancy Rate (%)1 To Expiry To Break EPRA Occupancy2 Occupancy Regional 7.9 6.8 96.9 97.4 Local 7.7 6.7 97.6 98.4 Multi-let 7.8 6.7 97.2 97.9 Department Stores and Leisure 16.9 16.9 99.7 99.7 Superstores 10.7 10.0 100.0 100
Slide 83: Portfolio net yields
Portfolio net yields1,2 At 30 September 2017 EPRA EPRA Overall Net Net Net ERV net initial topped up topped up equivalent equivalent reversionary Growth 5,6 yield % net initial net initial yield % yield yield % % 3 4 yield % yield % movement 6 bps Regional 4.4 4.7 4.8 4.9 4 5.0 1.2 Local 5.1 5.3 5.4
Slide 84: Annualised rent & estimated rental value (ERV)
Annualised rent & estimated rental value (ERV) At 30 September 2017 Annualised Rents ERV Average Rent (Valuation Basis) £m1 £m (£psf) Group JVs & Funds Total Total Contracted2 ERV Regional 61 86 147 166 31.5 33.7 Local 95 26 121 132 25.3 26.5 Multi-let 156 112 268 298 28.4 30.0 Department Stores 36
Slide 85: Rent subject to open market rent review
Rent subject to open market rent review For the year to 31 March 2018 2019 2020 2021 2022 2018–20 2018–22 At 30 September 2017 £m £m £m £m £m £m £m Regional 7 17 11 17 14 35 66 Local 16 17 11 12 6 44 62 Multi-let 23 34 22 29 20 79 128 Department Stores – – – – – – – and Leisure Superstores 3 5 8 7 1
Slide 86: Rent subject to lease break or expiry
Rent subject to lease break or expiry For the year to 31 March 2018 2019 2020 2021 2022 2018–20 2018–22 At 30 September 2017 £m £m £m £m £m £m £m Regional 10 10 13 10 15 33 58 Local 7 8 10 9 12 25 46 Multi-let 17 18 23 19 27 58 104 Department Stores – – – – – – – and Leisure Superstores – – – – – –
Slide 87: Rent subject to lease break or expiry – Developments detail
Rent subject to lease break or expiry – Developments detail For year to 31 March 2018 2019 2020 2021 2022 2018–22 At 30 September 2017 £m £m £m £m £m £m 1 Triton Square 2 – – – – 2 Committed developments 2 – – – – 2 2&3 Finsbury Avenue – 3 – – – 3 1&2 Broadgate – 6 – – – 6 10 – 40 The Broadway, Eali
Slide 88: Contracted rental increases (cash flow basis)
Contracted rental increases (cash flow basis) For the year to 31 March 2018 2019 2020 2021 2022 2018–20 2018–22 At 30 September 2017 £m £m £m £m £m £m £m Expiry of rent free periods 11 14 5 – – 30 30 Fixed uplifts (EPRA basis) 1 1 – – – 2 2 Fixed & minimum uplifts – 1 1 1 1 2 4 Total 12 16 6 1 1 34
Slide 89: Total Property Return (as calculated by IPD)
Total Property Return (as calculated by IPD) 6 months to 30 September 2017 Retail Offices Total % British British British IPD IPD IPD Land Land Land Capital Return 0.3 0.9 2.9 2.2 1.5 2.6 - ERV Growth 1.0 0.5 1.2 0.6 1.0 1.0 - Yield Movement1 5 bps -6 bps -6 bps -10 bps 0 bps -13 bps Income Return 2
Slide 90: BL property performance vs IPD – 5 years
BL property performance vs IPD – 5 years 5 years ended 30 September 2017 Relative performance bps p.a. 300 250 240 200 150 150 100 50 70 60 40 1 0 Retail Offices Total Capital Returns Total Returns 90
Slide 91: Committed developments
Committed developments At 30 September 2017 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 100 104 Q4 2017 402 26 0.8 – Retail & Residential3 Use 100 Liverpool Street Office 50 522 Q4 2019 132 136 18.8 5.1 1 Triton
Slide 92: Near term development pipeline
Near term development pipeline At 30 September 2017 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 135 Bishopsgate Office 50 325 Q4 2017 89 49 9.1 4.4 Consented Resolution Gateway Building Leisure
Slide 93: Medium term development pipeline
Medium term development pipeline At 30 September 2017 Sector BL Sq ft Planning status Share % '000 Medium term Pipeline Resolution 2-3 Finsbury Avenue Office 50 563 to Grant 1-2 Broadgate Office 50 471 Pre-submission Blossom Street Office 100 340 Consented 5 Kingdom Street Office 100 332 Consented1
Slide 94: Estimated future development spend and capitalised interest
Estimated future development spend and capitalised interest At 30 September 2017 PC Cost to Come £m Calendar (excluding notional interest) – 6 months breakdown Year Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sept-20 Clarges Mayfair – Q4 2017 20 4 2 – – – Retail & Residential 100 Liverpool Street Q4 2019 24
Slide 95: Central London development pipeline
Central London development pipeline Q3 2017 m sq ft 9m sq ft (2.25 years of 12.0 average supply) deferred since Referendum 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 Source: CBRE Completed Pipeline Pre-let Potential Speculative 10 year average new and
Slide 96: West End development pipeline
West End development pipeline Q3 2017 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 21 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 devel
Slide 97: City development pipeline
City development pipeline Q3 2017 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 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 devel
Slide 98: 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 99: 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 1990 1995 2000 2005 2010 2021 2016 West End City Source: CBRE (historic) and Average Agents' Consensus (including PMA Autumn 17) for forecasts. 99
Slide 100: Vacancy Central London
Vacancy Central London West End & City Vacancy Rates 20 18 16 14 12 10 8 6 5.9% 4 3.7% 2 0 1985 1990 1995 2000 2005 2010 2015 Q3 2017 West End City Source: CBRE (historic). West End 10 year average City 10 year average 100
Slide 101: Retail Portfolio Valuation – previous classification
Retail Portfolio Valuation – previous classification At 30 September 2017 Group JVs & Funds Total Movement £m £m £m %1 £m Shopping parks 2,056 1,154 3,210 (0.1) (3) Shopping centres 1,175 1,169 2,344 0.2 4 Superstores 130 315 445 0.8 5 Department stores 168 1 169 2.1 4 Leisure 420 4 424 2.5 10 Retai
Slide 102: Retail Portfolio Net Yields – previous classification
Retail Portfolio Net Yields1,2 – previous classification At 30 September 2017 EPRA EPRA Overall Net Net Net ERV net initial topped up topped up equivalent equivalent reversionary Growth 5 yield % net initial net initial yield % yield yield % % 3 4 yield % yield % movement bps Shopping parks 5.0 5.2
Slide 103: Disclaimer
Disclaimer The information contained in this presentation has been extracted largely from the Half Year Results Announcement for the period ended 30 September 2017. This presentation may contain certain “forward-looking” statements. Such statements reflect current views on, among other things, our m