Half Year Results Presentation Six months ended 30 September 2018 www.britishland.com @BritishLandPLC #BLHY2019 $BLND
Progressing our Strategy Chris Grig g , Chief Executive 2
Further good operational and strategic progress • Leasing well across the business – 421,000 sq ft Offices leasing – Office developments letting up ahead of schedule and on better terms than expected – Retail demand firm with 457,000 sq ft leasing • Good operational performance – Occupancy high at 97.8% – Outperforming on Retail footfall and sales – Further roll out of Storey in Offices – Progress at Canada Water: master development agreement signed and planning submitted • Thoughtful allocation of capital – £842m asset sales – 5 Broadgate sold for £500m; 18% pa return – Share buyback extended by £200m; £94m 10 0 Liverpool Street, PC Q1 20 20 completed 3
Finance Review Sim on Ca rter, CFO 4
Focus on capital discipline since the referendum Selling W ell £2.4bn incom e producing sales at 4.2% Inv esting In Our Prop erties At c.6% yield via developm ents and share buyback Build ing Ba la nce Sheet Strength Leverage dow n 5.4% Cost of debt dow n 40bps 5
Headlines Period to H1 2018 H1 2019 Change % Underlying earnings per share (p) 19.2 17.2 (10.4%) Underlying Profit (£m) 198 169 (14.6%) Dividend per share (p) 15.04 15.50 3.0% As at H2 2018 H1 2019 Change % Valuation performance +0.9% (1.9%) EPRA net asset value per share (p) 967 939 (2.9%) Loan to value (LTV) 28.4% 26.7% 6
Net rental income £m (20) (10) (6) (1) 7 297 Offices 5.8% 267 Retail 0.2% Total 1 2.3% HY 2018 Prior period Net divestment Impact of CVAs Like-for-like Developments HY 2019 surrender premia and rental growth administrations exc. CVAs and administrations 1 Like for like rental growth is stated excluding the impact of surrender premia, CVAs and administrations 7
Financing costs £m 4 6 (2) (4) (66) (62) HY 2018 Financing Net divestment Developments Share buyback HY 2019 activity 8
Underlying earnings per share Pence (1.9p) (0.8p) 0.6p 0.7p (0.6p) 19.2p 17.3p 17.2p HY 2018 Prior period HY 2018 excl. Net divestment Impact of LFL rental Share HY 2019 1 surrender surrender and CVAs growth buybacks and admins premia developments Com m itted d ev elop m ents a nd buy ba ck exp ected to a d d a p p rox. 5p to future a nnua lised EPS 1 Like for like rental growth is stated excluding the impact of surrender premia, CVAs and administrations 9
Income statement HY to 30 September H1 2018 H1 2019 Change % Net rental income (£m) 297 267 (10.1%) Fees & other income (£m) 8 6 (25.0%) Administrative expenses (£m) (41) (42) (2.4%) Net finance costs (£m) (66) (62) 6.1% Underlying Profit (£m) 198 169 (14.6%) Underlying earnings per share (p) 19.2 17.2 (10.4%) Dividend per share (p) 15.04 15.50 3.0% 10
CVAs and Administrations Contacted rent Number of % of Annualised contracted rent impact by Quarter (£’m) reduction £’m Stores CVAs Number of stores in c.2,000 7 CVAs - reduced rents portfolio CVAs - stores closing Stores exposed to 6 114 CVA/admins Admins - stores closing 5 Administrations 5.8 38 4 CVAs 76 Unaffected - 36 47% 3 Reduced 5.2 27 36% 2 Rents 1 Closures 3.7 13 17% Total Rent Impact 14.7 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY18 FY18 FY18 FY18 FY19 FY19 FY19 Rent on stores closing: £ 9.5m | Rent reductions: £ 5.1m 58 % of £ 9.5m rent on stores closing is let or in negotia tions 11 All numbers as of 13 th November 2018, over the last 18 months
Valuation performance 6 months to Valuation Movement Movement Yield ERV NEY Weighting September 2018 £m £m % movement growth % % Bps % Offices 6,130 50 0.7 +1 0.2 4.4 48 Retail 6,305 (307) (4.5) +14 (1.5) 5.4 49 Residential 128 (4) (3.1) n/a n/a n/a 1 Canada Water 293 1 0.3 n/a n/a n/a 2 Total 12,856 (260) (1.9) +7 (0.8) 4.9 100 • Of which 11,918 (323) (2.5) +7 (0.8) 4.9 93 Standing Investments • Of which Development 938 63 7.2 n/a n/a n/a 7 12 As calculated by IPD, ERV Growth doesn’t take into account asset management initiatives
Retail Valuation Movements 6 7% of rent lost throug h CVA/ a d m in is a t a ssets seeing m ore tha n 5% Sept ’18 Valuations (£’m) v a lua tion d ecline 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 More than 0% 0% to -2.5% -2.5% to -5% -5% to -10% More than -10% Local Multi-let Regional Multi-let Superstores Leisure Solus Department Stores % Va lua tion Mov em ent in H1 FY19 13
Retail Operational Performance New Lettings & Renewals Rent Reviews Occupancy Floor Floor Net Vs Net Effective Vs Area (Sq Area (Sq Effective Previous Rent (£’m) ERV ft ‘000) ft ‘000) Rent (£’m) Rent Total Retail 457 8.0 +5.0% 622 15.4 +2.2% 97.6% Regional multi-let 269 3.9 +6.6% 232 6.5 4.1% 97.3% Local multi-let 183 3.8 +3.7% 362 8.7 0.9% 97.0% British Land H1 FY19 (yoy) Outperformance vs Benchmark (bps) Footfall -1.2% +210 Retailer LFL Sales -2.5% +90 Retailer Total Sales -0.6% +150 14
EPRA net asset value (28p) 17p (15p) (1p) (3p) 2p 967p 939p Mar 18 Valuation Underlying Dividends Financing Share buyback Other Sep 18 performance Profit activity 15
Pursuing developments on a risk managed basis £m – ERV • Committed pipeline 70 – ERV of £63 million – Delivering c.4p to EPS once fully occupied 60 – 69% pre-let or under offer 50 – Speculative exposure now 3.7% – As at September, 65% costs to go 40 covered by Clarges residential receipts – 93% of costs are fixed 30 Pre-let or • Near term pipeline under offer 20 £43m – ERV of £27 million – Planning consent achieved 10 0 £ 63 m Committed Near Term Costs to g o £ 353m Costs to g o £ 36 4 m ERV of committed developments 16
Strength of debt metrics Proportionally Consolidated 31 Mar 2018 30 Sept 2018 Loan to value (LTV) 28.4% 26.7% Weighted Average Interest Rate 2.8% 2.9% Interest Cover 4.0x 3.7x Available Undrawn Facilities £1.2bn £1.5bn Weighted Average Drawn Debt Maturity 8.6yrs 8.5yrs Senior unsecured credit rating (Fitch) A A £ 1.1bn of new fina nce since Ma rch 20 18 17 Including impact of repayment of secured Broadgate bonds and associated swaps, committed prior to 30 September 2018 and completed on 5 October 2018
Update on Strategy Chris Grig g , Chief Executive 18
Future British Land: progressing our mixed use strategy Mixed Use places to work, shop and live Offices Reta il Build to Rent • Focused on London campuses • Smaller more focused portfolio • Complementary to our current strategy • Well connected, • Multi-let with mixed sustainable and smart use potential • Existing options within our portfolio (e.g. Canada • Balance of type of • High quality, diverse Water) space, lease length retail integrated within our campuses • Bolt on acquisitions • Further build out of Storey may play a role • Significant pre-let progress • £634m assets sold or under • In exclusive discussions to at Campus developments offer in the last 12 mths acquire a BTR operator • Further roll out of Storey • Investing in assets which fit • Opportunities identified including the acquisition our strategy across our portfolio, including of a standalone building Canada Water 19
Our unique London campuses Ca m p uses a ccount for 8 0 % of Offices p ortfolio 421,0 0 0 sq ft Office leasing 6.5% ahead of ERV Developments 69% let or under offer 20
A range of developments attracting a broader mix of occupier • McCann: 148,000 sq ft at 135 Bishopsgate – Leading global advertising group – Non-conventional city occupier relocating from the West End – “21 st Century Warehouse” …the build ing’s loca tion a t the intersection of Shored itch, Sp ita lfield s a nd The City w ill connect us to som e of the m ost im p orta nt crea tiv e, tech a nd historic hubs tha t Lond on ha s to offer.” Ma rk Lund , CEO McCa nn W orld group UK 135 Bishopsgate, PC Q3 20 19 21
Mimecast – the largest tech letting in the City this year • Mimecast: 113,000 sq ft at 1FA – 79,000 sq ft let in April 2018 – Exercised option over 34,000 sq ft • Now 42% let or under offer • Further 73,000 sq ft allocated to Storey “British La nd ’s p rogressiv e a p p roa ch w ill ensure our new Lond on office a t 1FA is grea t for colla bora tion, innov a tion a nd rela xing a t the end of the d a y .” Neil Murra y , Co-found er, Mim eca st 1FA, PC Q1 20 19 22
TP ICAP – maintaining our appeal to financial services • TP ICAP: 123,000 sq ft at 135 Bishopsgate – Existing occupier recommitting to Broadgate – Vote of confidence in London and Broadgate • 135 Bishopsgate now 94% pre-let – Includes 42,000 sq ft let to Eataly “…op ening a p la ce in Lond on w here p eop le ca n buy , ea t a nd lea rn is a v ery im p orta nt a nd exciting m ilestone for us. This is rea l Lond on.” Luca Ba ffig o, CEO Ea ta ly 135 Bishopsgate, PC Q3 20 19 23
Opening up Broadgate to the neighbourhood Ea ta ly ’s fronta ge is 8 0 m long a nd 12m high, lev era ging the p ublic rea lm a long Bishop sga te benefitting from high footfa ll 135 Bishopsgate, previous 135 Bishopsgate, PC Q3 20 19 24
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