WWW.BRITISHLAND.COM @BRITISHLANDPLC FULL YEAR RESULTS PRESENTATION FULL YEAR ENDED 31 MARCH 2014 #BLFY2014
RESULTS OVERVIEW Chris Grigg Chief Executive 2
INTRODUCTION • Strong full year results – Our decisions and actions continue to drive performance – Strengthening markets • In 2010 we set out a clear plan – Substantial net investors in the market – Take on more risk, mainly through development – Increase exposure to London and South East • Continued to execute well against that plan – Delivering 2010 development programme – Replenishing development pipeline – Investing in attractive assets – Improving operating metrics 3
PERFORMANCE HIGHLIGHTS FY to 31 March 2014 % Change NAV per Share 688p +15.4% UK Valuation £12.0bn +8.3% Total Property Return 14.2% Underlying Profit Before Tax £297m +8.4% Dividend per Share 27.0p +2.3% Total Accounting Return 20.0% 4
MATERIAL IMPROVEMENT IN VALUATIONS Valuation Drivers £m TOTAL VALUATION MOVEMENT £22m £309m £639m £90m 640 560 480 400 320 240 160 80 0 -80 H1 2012/13 H2 2012/13 H1 2013/14 H2 2013/14 Asset Management Development Yield Movement Total Valuation 5
STRONG OPERATIONAL PERFORMANCE • Continue to sign lettings/renewals ahead of ERV • Leasing activity added £24 million of new annual rent FY to 31 March 2014 Retail Office Total Lettings and renewals (000 sq ft) 1,674 632 2,306 Investment lettings/renewals vs ERV +4.9% +8.4% +6.3% Occupancy 98.5% 92.1% 96.1% LFL occupancy +100bps +190bps +130bps 6
EXECUTING SMARTLY AHEAD OF PLAN • Gross investment of £1.3bn focused on London and South East 1 Timely • Placing proceeds invested ahead of plan; accretive to Investment EPS and NAV • Completed 5 of our 2010 London developments on schedule; total estimated profits of £636m 2 Profitable • Replenished development pipeline development • 1.1m sq ft of new development potential: recently committed/near-term pipeline now 2.0m sq ft • Sale of £391m mature UK retail assets ahead of valuation Reshaping 3 Retail • Invested in high quality preferred retail destinations portfolio • 40% of retail portfolio turned over in last four years 7
KEY RETAIL AND LEISURE HIGHLIGHTS • Continued improvement in our retail returns – Total returns of 10.7%; further improvement in second half • Strength of operational metrics – Occupancy ahead; continued outperformance on rental growth and footfall • Successful developments – Whiteley and Glasgow Fort – Trading ahead of expectations • Continued recycling to reshape our retail portfolio – £953m gross investment activity in the year (acquisitions, disposals, development) 8
STRONGER RETAIL AND LEISURE PERFORMANCE • Annual total returns of 10.7%; capital returns 4.6% Retail Valuation Drivers £m TOTAL VALUATION MOVEMENT £96m £(63)m £(35)m £205m 240 160 80 0 -80 H1 2012/13 H2 2012/13 H1 2013/14 H2 2013/14 Asset Management & Development Yield Movement Total Valuation 9
STRONG RETAIL ASSET MANAGEMENT Increased Retail Lettings/Renewals Retail Leasing by Category Sq ft ‘000s By rent 290 GENERAL RETAIL 16% 1,384 FOOD, 106 BEVERAGE & LEISURE 13% 1,005 34% FASHION 16% HOMEWARES 9% 12% OTHER SUPERSTORES FY 2012/13 FY 2013/14 Development Investment 10
BROADER AND HIGHER QUALITY OCCUPIER DEMAND Leveraging Retailers taking Increasing Significant existing strong out of town restaurant and demand from retailer stores leisure offer home relationships improvement operators 11
CONSISTENTLY OUTPERFORMING ON FOOTFALL • BL footfall flat over full year; improved over H2 +1.2% (outperforming market by 320 bps) British Land Footfall compared to Experian Market Benchmark Index Jan 2010 = 100 140 130 120 +1% pa 110 100 - -3% pa 90 80 70 60 2010 2011 2012 2013 2014 British Land UK Market Source: Experian 12 12
CONSISTENTLY OUTPERFORMING ON RENTAL GROWTH • 1.5% ERV growth in the year, outperforming the market by 150 bps British Land Retail Rental Growth vs GDP Index 2001 = 100 130 120 110 100 90 80 Mar 01 Mar 02 Mar 03 Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 BL Retail IPD Secondary Retail GDP 13 13
UPGRADING OUR RETAIL PORTFOLIO THROUGH DEVELOPMENT – GLASGOW FORT LEISURE EXTENSION 46,000 sq ft cinema and restaurant extension Opened September 2013 Annual footfall up 8% to 12m Average peak dwell time up to 102 mins Catering spend increased more than 50% Average peak retail spend increased to £124 Further 112,000 sq ft retail led extension now on site including an 80,000 sq ft M&S anchor store 14
UPGRADING OUR RETAIL PORTFOLIO THROUGH DEVELOPMENT – WHITELEY SHOPPING New 321,000 sq ft shopping destination Over 20% valuation uplift Annual footfall of 4.7m Estimated annual sales of £90m; £5.8m annual rent roll On On site with Phase II 58,000 sq ft cinema and restaurant extension. Increases food & leisure offer to 25% Voted ‘Best mid-sized shopping centre development in Europe’ by ICSC 15
RESHAPING OUR RETAIL PORTFOLIO SELLING MORE MATURE ASSETS • Taking advantage of market strength to sell more mature assets • Further £150m currently under offer/on the market UK Retail asset sales since 1 April 2013 No of Assets Sale Price Retail Parks 8 £167m Foodstores 6 £30m Shopping Centres 2 £183m High Street 1 £11m Total 17 £391m 16
RESHAPING OUR RETAIL PORTFOLIO RE-INVESTING IN PREFERRED DESTINATIONS £502m of acquisitions Well-located, high quality destinations SouthGate, Bath on a fully let NIY of 5.7% Increased share in HUT to 60% on an effective NIY of 6% 26% equity share in portfolio of Sainsbury’s superstores Reversionary yield of 5.7% Already made a return of over 10% 17
KEY OFFICE AND RESIDENTIAL HIGHLIGHTS • Successful completion of all our 2010 West End developments – Including 505,000 sq ft at Regent’s Place • Well timed acquisitions of Paddington and Shoreditch – Third major London campus at Paddington – Adds significant development potential • Achieved important milestones at Clarges – Obtained planning for an improved scheme; now on-site • Progressing our long-term vision at Broadgate – New JV partnership with GIC – Crossrail a game changer – Broadgate Circle 18
STRONG OFFICE AND RESIDENTIAL PERFORMANCE • Annual total returns of 19.4%; capital returns 15.5% Valuation Drivers £m TOTAL VALUATION MOVEMENT £213m £85m £434m £125m 400 320 240 160 80 0 -80 H1 2012/13 H2 2012/13 H1 2013/14 H2 2013/14 Asset Management Development Yield Movement Total Valuation 19
DEMAND FROM A BROADER RANGE OF OCCUPIERS Office Leasing Activity by Category • 632,000 sq ft of leasing activity By rent • Investment lettings/renewals 8.4% ahead of ERV INSURANCE • Strong demand from TMT BANKING & FINANCE 15% and insurance 18% • Increasing interest from financial services - hedge BUSINESS & 16% PROFESSIONAL fund and wealth 36% TMT management 6% 9% OIL & GAS OTHER 20
LEASING ACTIVITY ACROSS OUR OFFICE PORTFOLIO • Strengthening letting interest in recent months • Over 150,000 sq ft leasing activity completed/under offer since year end including at Leadenhall and 10 Portman Square • First letting at Marble Arch House; £78.50 psf for a 10 year term Completed/under FY to 31 March offer since March Office Leasing Activity sq ft Sq ft Broadgate 225,190 79,350 Leadenhall 106,920 13,600 Regent’s Place 196,480 16,320 Portman Village 18,300 34,750 Paddington Central 30,210 4,600 Other 54,900 3,810 Total 632,000 152,430 21
REGENT’S PLACE – GREAT LETTING SUCCESS 15.5% valuation uplift in year Nearly 200,000 sq ft of lettings Increased occupancy to 98.3% New rental high of £71 psf Standing investment ERVs up 11.8% over last 3 years Increasingly reversionary with average office rent of £46 psf Further refurbishment opportunities 22
PADDINGTON – GREAT PROGRESS Campus already increased in value by 11.1% Almost 40% of vacant space let/under offer at rents ahead of ERV Average office rent of £50 psf attractively priced Significant opportunities to develop as major West End campus Transfer our experience from Regent’s Place 23
HIGHLY PROFITABLE 2010 LONDON DEVELOPMENT PROGRAMME • £294m of additional profit generated in year; £45m to come • 73% let/under offer securing £54m pa of rent, 96% residential units sold/under offer £m £636m 45 £423m £359m 126 £257m 591 192 192 297 167 65 Mar 11 Mar 12 Mar 13 Mar 14 Profit Taken Profit to Come 24
PROGRESSING OUR NEW LONDON DEVELOPMENTS • Added 1.1m sq ft of new potential development • Expect to commit to 4 Kingdom Street later this year • Progressing 5 Kingdom Street and Shoreditch plans; retain optionality • Estimated profit of c£375m; of which c£290m to come CLARGES THE ALDGATE YALDING 4 KINGDOM SHOREDITCH SHOREDITCH 5 KINGDOM ESTATE HEMPEL PHASE 1 HOUSE STREET ESTATE ESTATE STREET NEAR-TERM PIPELINE RECENTLY COMMITTED 708,000 sq ft 555,000 sq ft 25
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