WWW.BRITISHLAND.COM INVESTOR PRESENTATION MARCH 2014
INTRODUCTION – A LEADING UK REIT £17.1bn owned and managed portfolio • £17.1bn owned and managed portfolio • Focused on UK Retail and LONDON OFFICES London Offices 17% 23% • Delivering superior total returns by Creating Places People 22% 12% Prefer 4% 17% 5% UK RETAIL City of London West End Other Department stores Shopping Centres Superstores Retail Parks 1
KEY POINTS Strongly • Strong recent results 1 performing • Continued outperformance business Executing • Successfully deployed equity placing proceeds 2 smartly, • Delivering 2010 developments and replenishing the pipeline according • Repositioning Retail portfolio to plan • Increased economic and investment activity Positive 3 about the • Increased exposure to London/South East and replenished future development programme • Driving growth from standing investments 4 Clear • Delivering returns from developments priorities • Continued Retail repositioning 2
CONSISTENTLY OUTPERFORMING THE MARKET • Significant outperformance vs IPD, +9.2% since September 2010 (+260bps pa) • Outperformed IPD on a 5 year (+230bps pa) and 10 year basis (+70bps pa) HY to 30 September 2011 2012 2013 H1 2014 Total Accounting Return 17.7% 9.5% 4.6% 6.8% Total Property Return 13.1% 8.3% 6.3% 5.5% Total Property Return vs IPD +180bps +200bps +310bps +60bps 3
STRONGLY IMPROVING OPERATING PERFORMANCE IN BOTH OFFICES AND RETAIL • Good first half results, business performing well • Continued improvement in Q3 – Like-for-like occupancy +30 bps to 97.1% – Investment lettings/renewals +5.3% Vs ERV (Retail +3.3%, Office +6.8%) HY to 30 September Change UK Valuation £11.2bn +2.8% Capital Returns vs IPD +100bps NAV per Share 623p +4.5% Dividend per Share 13.5p +2.3% 6 month Total Accounting Return 6.8% 4
POSITIVE PERFORMANCE DRIVEN BY… • Strong position in retail large and high quality retail portfolio • Increasing focus on London/South East >60% of portfolio in South East • Successful asset management good leasing volumes; ahead of ERV • £1.2bn development programme started in 2010 IRRs >30% • Flexible and low cost finance 4.2% lowest of UK REITs • Ability to secure attractive value accretive deals acquired £1.4bn of assets over the last 2 years • Ability to sell well selling mature assets; £1.3bn of disposals over the last 2 years 5
VALUATION PERFORMANCE UK Valuation Drivers £m TOTAL VALUATION MOVEMENT £22m £90m £309m 320 220 120 20 -80 H1 2012/13 H2 2012/13 H1 2013/14 Asset Management Development Yield Movement Total Valuation 6
STRONGLY PERFORMING BUSINESS: RETAIL Marked improvement in Retail: strengthening capital returns • Occupancy up to 98.4%; rents in admin low at 0.2% (0.9% in March 2013) • Lettings ahead of ERV (3.3% in Q3, 3.8% in H1) • Continue to outperform on footfall: flat in Q3 vs decline of 3% in broader market Capital Returns (%) H1 2012/13 H2 2012/13 H1 2013/14 Retail Parks (2.3) (0.8) 1.0 Superstores 0.5 (1.1) 2.1 Shopping Centres (0.3) (1.0) 0.3 Department Stores (0.6) 3.2 6.5 Leisure 0.0 (0.2) 2.0 UK Retail (1.0) (0.6) 1.5 7
CONTINUED RETAIL POLARISATION Retail ERV Growth Retail Occupancy Indexed March 2010 = 100 % 105 98.0 97.4 95.3 100 94.7 95 88.9 88.3 90 85 Mar Sep Mar Sep Mar Sep Mar Sep Mar 13 Sep 13 10 10 11 11 12 12 13 13 BL All Retail IPD All Retail IPD Secondary BL All Retail IPD All Retail IPD Secondary 8
STRONGLY PERFORMING BUSINESS: OFFICES Step up in letting activity across investment and developments • Encouraging interest from a broad range of new and existing occupiers • 579,000 sq ft of lettings/extensions year to date; 7.9% ahead of ERV • 30 Brock St, Regent’s Place fully let 3 months after practical completion – Secures £18m of rent for 16 years • Leadenhall 52% pre-let – Latest letting to Servcorp at £72.50psf for 15 year term (c£5psf ahead of ERV) – RFPs out for a further 80,000 sq ft 9
EXECUTING SMARTLY AND ACCORDING TO PLAN: EQUITY PLACING • Raised £493m of equity in March 2013 at 550p per share • Fully deployed ahead of schedule • £790m acquisition spend including £100m of development opportunities • NIY of 5.7% on £690m of income producing investments • £230m of prospective development spend • Earnings neutral in H1; 0.5p accretive in FY14 Prospective Acquisition Spend Development Spend £m £m Paddington Central 470 180 Ealing Broadway Shopping Centre 143 - Surrey Quays JV buy-out 48 24 Other Acquisitions 126 26 Investments 787 230 10
DEPLOYMENT OF EQUITY PLACING: PADDINGTON CENTRAL Acquired in July for £470m Fully let yield of 6.2% Significant opportunity to create value from asset management and development Third of vacant office space already let at terms ahead of ERV on acquisition 2.3% valuation increase by September 2013 Initial design and master planning underway at 4 and 5 Kingdom Street development sites 11
DELIVERING RENTAL GROWTH AT REGENT’S PLACE 2009/10 2010/11 2011/12 2012/13 2013/14 10/20 Triton St 20 Triton St 10/30 Brock Street Debenhams £ Manchester City FC PSF 70psf 70 65 60 55 50 45 42.50psf 12
COMPLETING 2010 LONDON DEVELOPMENTS • 817,000 sq ft completed and 309,000 sq ft pre-lets agreed/under offer this year; now 70% pre-let • Good demand for Residential; pre-sales secured above valuation; now over 80% pre-sold 10-30 BROCK STREET, NW1 199 BISHIOPSGATE EC2 10 PORTMAN SQUARE, W1 MARBLE ARCH HOUSE, W1 £20.1m ERV ; 91% let; 80% resi sold £3.5m ERV ; 55% let £9.7m ERV; 51% let £3.9m ERV ; unlet; 90% resi pre- sold COMPLETED COMPLETED COMPLETED COMPLETED 39 VICTORIA STREET, SW1 LEADENDHALL EC3 5 BROADGATE EC2 BROADGATE CIRCLE, EC2 £4.9m ERV ; unlet £18.6m ERV ; 52% pre-let £1.2m ERV ; unlet £19.2m ERV 100% pre-let EARLY 2015 COMPLETED LATE 2014 MID 2014 13
DELIVERING STRONG RETURNS FROM 2010 OFFICE DEVELOPMENT PROGRAMME • Profit on cost over 40%; IRRs of c30% £m £490m £423m 90 £391m £359m 126 £321m 175 £257m 192 188 400 192 297 216 167 133 65 Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Profit Taken Profit to Come 14
REPLENISHING LONDON DEVELOPMENT PIPELINE • 2.1m sq ft next phase London and retail development (recently committed and near-term) • £1.1bn total development cost • Estimated profit to come of around £275m Clarges The Aldgate Yalding 4 Kingdom Shoreditch 5 Kingdom Estate Hempel Phase 1 House Street Estate Street RECENTLY COMMITTED NEAR-TERM PIPELINE Now on site 2014 2015 1,044,000 sq ft 458,000 sq ft 562,000 sq ft 15
CONTINUING TO REPOSITION RETAIL PORTFOLIO • £304m of UK retail assets sold; Basildon Eastgate sold recently for £89m, ahead of valuation • £385m bought year to date; SouthGate, Bath and HUT units • £200m of disposals under offer/in the market Retail Asset Sales (Year to Date) No of Assets Sale Price Retail Parks 4 £81m Foodstores 5 £29m Shopping Centres 3 £183m High Street 1 £11m Total 13 £304m 16
INVESTING IN THE RIGHT RETAIL LOCATIONS: SOUTHGATE, BATH 50% acquired for £101m 430,000 sq ft Top 10 Bath as a UK Tourist Destination 18m Visitors pa 17
WELL PLACED AND POSITIVE ABOUT THE FUTURE • Improving sentiment across key markets – London to remain strong – Higher rents in offices – Decent read through for development and residential – Improving confidence in retail – Improving outlook for right type of retail assets • Expect to continue to benefit from our actions – Increased exposure to London and the South East – Investment in up and coming London locations – Replenished development pipeline with optionality – Increased focus on locally preferred retail assets 18
FINANCIAL POSITION A CORE STRENGTH OF BRITISH LAND • Average interest rate of 4.2% Diverse Debt Profile (30 September 2013) £0.6bn • 75% fixed over 5 years £0.9bn • Average maturity of 9 years • £1.3bn of facilities in place for £1.7bn more than two years £1.7bn • £710m of new financing arranged year to date £1.0bn • £2.7bn of debt raised since £0.4bn March 2011 £0.7bn • LTV 41.8% at December 2013 Drawn Unsecured Debt-undrawn (based on September valuations) Debentures & Loan Notes US Private Placements Convertible Bonds Securitisations Other JV & funds debt 19
CLEAR PRIORITIES Driving • Focusing on leasing and asset management 1 growth from • Bedding down new assets such as Ealing Broadway and standing Southgate, Bath investments • Completing and letting up our 2010 programme Delivering • Starting on site on recently committed developments 2 returns from • Taking Paddington and Shoreditch through planning developments • Selectively adding to the development pipeline Continued • Continued sale of more mature retail assets 3 Retail • Disciplined acquisitions repositioning 20
APPENDICES
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