Future income profile Annualised Gross Rents Cash Flow Basis Accounting Basis £m £m Current Passing Rent 624 Contracted Uplifts 61 636 Total Contracted Rent 685 Letting of Completed and Under Construction Developments 17 14 Lease Expiries – Committed Developments (100 Liverpool Street) (9) (9) Lease Expiries – Near Term Developments (1 Finsbury Avenue) (7) (7) Letting of Committed and Near Term Developments 30 25 Lease Expiries – Medium Term Office Developments (21) (20) RPI Linked Leases 1 9 9 Reversion 2 19 17 Sales exchanged but not completed (12) (13) Potential Rent in 5 Years excl. Medium Term developments 711 652 Letting of Medium Term Developments (excl. Canada Water) 113 88 Valuation rent, includes assumptions on outstanding rent review settlements 1 Assumed at 2.6% per annum and uplift at rent review based on ERVs determined by the Group’s valuers 2 Includes letting of vacant space and reversion on expiries and open market rent reviews within 5 years 20
Rent subject to lease break or expiry – Office expiries detail 2017 – 19 For period to 31 March 2017 2018 2019 2020 2021 At 30 September 2016 £m £m £m £m £m £m – – – – 100 Liverpool Street 9 9 – – – – Committed developments 9 9 – – – – 1 Finsbury Avenue 7 7 – – – – Near Term developments 7 7 – – – 1 Triton Square 4 5 9 – – – 2-3 Finsbury Avenue 3 2 5 – – – – 135 Bishopsgate 7 7 – – Medium Term developments 7 5 9 21 Other West End expiries 2 6 10 4 18 18 – – Other City expiries 9 11 8 9 Office expiries (excl. committed 16 11 28 15 26 55 developments) 21
Retail
How Britain shops today 39% of food eaten out of home in the UK c. 90% 30% of shopping spend touches of BL visitors the physical store use F&B/leisure Source: Verdict Source: ONS/British Land surveys <20 mins average customer drive time to BL assets Convenience ranked 35% #1 importance for a shopping trip more click and collect at Local centres than national average Source: Kantar Source: British Land surveys 23
Outstanding places for modern consumer lifestyles Places to shop, eat and be entertained 1 Our focus is on our customers We listen to our consumers and occupiers and respond to their needs 2 Data informs our strategy and benefits our occupiers Our superior insight into consumer behaviour helps make decisions 3 Placemaking lies at the heart of what we do We create Places People Prefer via our placemaking framework 4 Our core regional and local products can both succeed We meet a range of consumer lifestyle missions 24
Retail Multi-let Portfolio Our two core products each fulfil specific shopper missions 1 2 Regional Local Missions include Leisure-dominated Trips, Missions include Local Neighbourhood Shopper, Family Day Out and The Big Ticket Shop Convenient Leisure and Single Item Pick-Up Typically 30-60 occupiers Typically 15 – 30 occupiers Footfall 10-25m p.a. , Footfall often <5m p.a. , catchment potential spend >£100m p.a . catchment potential spend <£100m p.a. Drive-time >20 mins Drive-time <15 mins Dwell >60 mins Dwell <60 mins Retail offer covers multiple categories Retail offer covers multiple categories with depth of choice in each & includes local amenities Significant leisure and F&B Convenient leisure and F&B e.g. restaurants, cinema e.g. gym and coffee shops 25
Our data shows both regional and local can succeed Meadowhall Glasgow Fort Ealing Broadway Swindon Orbital Super-regional Shopping & In-town Out-of-town shopping centre leisure park shopping centre shopping park Role Regional Regional Local Local Size (k ft 2 ) 1,500k 510k 470k 212k Dwell time 97 min 115 min 77 min 71 min Frequency of visit 30 pa 37 pa 68 pa 75 pa Retail spend £154 £88 £50 £52 Retail conversion 83% 84% 81% 81% Catering spend £12 £17 £8 £8 Catering conversion 39% 25% 29% 58% Annualised spend £4,030 £3,028 £2,906 £3,271 Rent : sales 14% 9% 10% 11% 26
Retailers are creating hub and spoke networks To support fulfilment and maintain brand awareness 27 Source: CACI
Our portfolio is well positioned to meet both consumer and retailer demands Potential to reach 60 % BL regional centres of the population BL local centres BL asset Annual footfall of catchments 322 m Average rent to sales ratio 10 % 90 % of our car parking spaces are free Source: CACI Retail Footprint 2016 28
Retail Multi-let assets Regional – attracting visitors from a wide catchment Local – fitting into the daily life of local communities for a planned trip St. Peter’s, Mansfield Southgate, Bath Mayflower, Basildon Broughton, Chester 1 Weston Lock, Bath Kingston Centre, Milton Keynes Fort Kinnaird, Edinburgh 1 Cornerhouse, Barrow Studlands, Newmarket Glasgow Fort 1 Hindpool, Barrow Newport, Harlech St. Stephen’s, Hull Forster Square, Bradford Elk Mill, Oldham Eden Walk, Kingston Woodfields, Bury Nugent, Orpington Gallagher, Cheltenham 1 Giltbrook, Nottingham Botley Road, Oxford Deepdale, Preston 1 Serpentine Green, Peterborough Tollgate, Colchester Prospect Place, Dartford 1 Queens, Stafford 1 Drake Circus, Plymouth Meadowhall, Sheffield Crown Point, Denton Orbital, Swindon New Mersey, Speke 1 Westgate, Wakefield 2 Wheatley, Doncaster Crown Wharf, Walsall 1 Teesside, Stockton Ealing Broadway Whiteley, Fareham Lion, Woking Clifton Moor, York 2 Old Market, Hereford Inverness 1 Westside, Leeds Beaumont, Leicester Valentine, Lincoln 1 Mostyn Champneys, Llandudno 1 Lisnagelvin, Londonderry 3 1 Assets held within Hercules Unit Trust or its subsidiaries 29 2 Properties where sale exchanged in six months to September 2016, completed in January 2017, post period end 3 Property sold in December 2016, post period end
We are expanding our addressable market By expanding into new segments to enhance the retail experience F&B and Leisure are often Consumer spend (2016) interlinked with Retail Leisure 6% Food & Beverage 73% 7% Housing 26% Health & Beauty 4% of F&B spenders in UK centres also spend on Retail Home & Leisure 10% 45% Transport & Fashion 6% Comms 16% of Leisure users also spend Education on F&B Grocery 2% 12% Other 11% Historical focus Recent additional focus Not relevant to BL Source: Oxford Economics, CACI 30
We are expanding our addressable market By attracting a broader range of occupiers Continued momentum in the 6 months to September 2016: • 656,000 sq ft of lettings and renewals – 12.9% ahead of March ERVs • 86 long term deals on multi-let portfolio – 50% since referendum – 373,000 sq ft, 12.2% ahead of ERV Multi-let portfolio – lettings and renewals 400 350 +12% +7% 300 vs ERV ‘000 sq ft 250 vs ERV 200 150 100 50 0 H1 2016 H1 2017 31
BL footfall performance vs benchmark +240 bps Outperformance in H1 2017 Mar-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 British Land UK Market (ShopperTrak) 32
Retail – Operational outperformance across the portfolio Total multi-let 6 months to Regional Local portfolio September 2016 +0.1% Footfall -2.3% +2.0% Ahead of market by 240 bps in-store Sales -0.2% Retailer -1.2% +0.1% Ahead of market by 190 bps ERV Growth +1.3% +1.3% +1.3% Ahead of market by 80 bps Source: Footfall benchmark – ShopperTrak; Sales benchmark – BRC-KPMG; ERV benchmark – IPD 33
1.3 % Continued polarisation in Retail Rental growth on ERV growth vs IPD and Retail sales, including online multi-let assets in H1 2017 Index Mar-13 = 100 115.0 112.5 110.0 107.5 105.0 102.5 100.0 97.5 95.0 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Retail sales inc. online BL Multi-let IPD All Retail IPD Prime IPD Secondary Source: Oxford Economics, IPD 34
Online sales increasingly integrated with physical stores 89% of retail sales touch the store Retail sales by channel (UK, all sectors, 2015) Online Mail order & Online sales pureplay TV shopping not browsed sales Online sales Click & in store browsed £4 bn Collect in store £13 bn sales £18 bn £8 bn £5 bn True 89% of total Total Physical Boost Value of retail sales retail sales store sales Stores +5% £266 bn in 2015 £313 bn £278 bn Total online sales Online sales of store operators Online that touched the store 35 Source: Verdict / British Land
Physical store openings significantly boost retailers’ online presence Postal area share of retailer website visits Indexed vs. store opening date 150 140 130 120 +55% 110 100 90 80 70 60 50 -20 -15 -10 -5 Store Opening 5 10 15 +20 weeks weeks Note: Based on a sample of 18 retailers opening at British Land centres between April 2014 and December 2015 Source: Hitwise 36
Meadowhall, Sheffield Proposed Meadowhall leisure extension Recent additions • On site with a £60m refurbishment • Attracting new occupiers • Substantial leisure extension planned 37
Eden Walk, Kingston • £250m mixed use redevelopment to include public spaces, leisure, retail and residential. • 562,000 sq ft consented scheme 38
Office
London Assets 40
74% Focused on London campuses which we plan to enhance and grow Our 3 campuses as a % of office assets Office-led, mixed-use environments in tune with modern lifestyles Regent’s Place Broadgate Paddington Central 41
Campus-lite assets Small clusters alongside more opportunistic single site assets Marble Arch House Yalding House 10 Portman Square Clarges Mayfair The Leadenhall Building 42
98 % Offices – Sustained leasing activity 6 months to September 2016 occupancy • 68,000 sq ft of lettings – 4.9% ahead of March ERVs The Leadenhall Building • Continued activity since referendum Clarges Mayfair – Let final floors at Leadenhall – 33,000 sq ft under offer – Clarges Mayfair and Yalding House 37% let or under offer Yalding House 43
Offices – Range of pre-let discussions • In discussions on ten significant requirements totalling 1.4m sq ft • Range of sectors – tech, media, finance, professional services • Across all four campuses 100 Liverpool Street 4 Kingdom Street 1 Triton Square 44
Creating a world class, mixed-use destination at Broadgate • Excellent location, catchment and connectivity – Further enhanced by Crossrail in 2018 • Increase and diversify retail and leisure offer • Flexible accommodation to attract a broader range of occupiers • Vibrant environment enlivened with events 5 Broadgate & Broadgate Circle Exchange Square 100 Liverpool Street redevelopment Broadgate Circle 45
Broadgate sits at the heart of one of the most exciting parts of London with excellent transport links Crossrail • Forecast to carry c.14m Shoreditch Creative sector people per year, 20,000 workers Old Street ‘Tech City’ Crossrail will further 20,000 workers improve Broadgate’s connectivity BROADGATE • A simple, direct 30,000 workers connection from Liverpool Street to Heathrow and Liverpool St Station Barbican City airport 150m annual footfall Cultural hub • The Crossrail station will 40,000 workers Spitalfields sit directly outside 100 Contemporary market 35,000 workers Liverpool Street The City Financial centre 120,000 workers Broadgate’s location and connectivity are fundamental aspects in ensuring strong ongoing occupier demand for the campus 46
Broadgate – our lease expiries give us the opportunity to add a wider range of uses and attract a broader range of occupiers 2 – 3 Finsbury Avenue • 2 Finsbury Avenue – lease expired in Dec 2016 • 3 Finsbury Avenue – expected lease break in late 2018 • Current size: 190k sq ft • Potential size: 560k sq ft 1 Finsbury Avenue • Lease expired in Dec 2016 • Current size: 281k sq ft 135 Bishopsgate • Leases expiring in 2019 • Current size: 340k sq ft 100 Liverpool Street • Lease expired in Dec 2016 • Current size: 380k sq ft • Redevelopment: 520k sq ft % Rent Ave lease term – Broadgate Overview Current contracted rent £m (BL Share) yrs Core income, including recent developments 84 75% 9.5 Committed (100 Liverpool Street) 9 8% n/a Near term pipeline (1 Finsbury Avenue) 7 6% 0.2 Medium term pipeline (2 – 3 Finsbury Avenue, 135 Bishopsgate) 12 11% 1.8 Total 112 8.0 47
100 Liverpool Street 520,000 sq ft redevelopment • Major step in progressing plans at Broadgate 140,000 sq ft • Completes in 2019, benefitting from opening of Crossrail in 2018 additional space, including • Flexible space to appeal to range of occupiers 90,000 sq ft • Expect to more than double rental income retail and F&B • £164m development spend (BL share) 48
City development pipeline Q4 2016 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 10 year rolling average new and Completed Pipeline Pre-let Potential Speculative under-construction take-up U/C – Speculative U/C Pre-let 10 year rolling average dev completions Note: Forecast reflects agent’s estimate of earliest completions 49
Regent’s Place Campus 50
Paddington Central Campus 51
Canada Water
Canada Water • Encouraged by discussions with potential occupiers • Continue to work on masterplan; targeting planning application in 2017 • Hosting events at The Printworks to raise profile Mulberry: London Fashion Week Triumph motorcycle launch 53
Canada Water • 46 acre site; £250m acquisition cost • 5.5m sq ft of mixed-use space planned • Roger Madelin appointed Feb 2016 • 54 Planning submission in 2017 Photo credit: John Sturrock
Canada Water 55
Developments
5 % Development pipeline – Committed and Near Term Speculative development • Speculative commitment is £m – Current Value & Costs to Come commitment £660m including 100 Liverpool 700 Street, 5% of the portfolio 600 • Residential £250m pre-sold, £230m to sell Residential 500 pre-sold • Costs to complete of £280m on the committed programme 400 • Near term includes 1 Finsbury Avenue and leisure extensions 300 Residential at Speke and Plymouth & Retail 200 100 4 Kingdom Street 0 Committed – Committed – Near Term Under Construction 100 Liverpool Street Speculative development commitment Pre-sold / pre-let 57
Optionality in our development pipeline • Flexibility in timing of commitment; choices in approach Near term Medium term Income producing • Canada Water • Eden Walk, Kingston • Combined NIY 2.8% Eden Walk Income producing – upcoming breaks/expiries • 1 Finsbury Avenue 2 Finsbury Avenue (Dec 16) • 1 Triton Square (Feb 17) • 1 Finsbury Avenue • 3 Finsbury Avenue (Sep 18) • Retail Leisure Extensions 1 Triton Square • 135 Bishopsgate (Mar 19) (Plymouth, Speke) Non-income producing sites • 5 Kingdom Street • Blossom Street • Meadowhall Leisure Blossom Street 58
£780m Development programme – Medium Term Value of medium term pipeline • £320m income producing, £m – Current Value yielding 2.8% 700 – Canada Water 600 – Eden Walk • £330m with upcoming 500 lease expiries – 2-3 Finsbury Avenue 400 – 135 Bishopsgate – 1 Triton Square 300 • £130m non-income producing 200 sites, including 5 Kingdom Street 100 0 Income Upcoming Non-income producing expiries producing sites 59
Residential sales • Residential exposure of £230m, less than 2% of the portfolio The Hempel Collection Clarges Mayfair Aldgate Place • PC June 2016 • PC: Phase 1 November 2016, • 12 units remaining, £159m Phase 2 December 2016 • 16 units sold in H1, • To be marketed at PC, • 4 units sold in H1, 5% ahead of March values late 2017 8% below March values • 40 units remaining, • 14 units remaining, £53m £16m (BL share) 60
Appendices – H1 2017 Results
Highlights Period to H1 2016 H1 2017 Change % Underlying Profit (£m) 171 199 16.4 Underlying Earnings per Share (p) 16.0 19.3 20.6 Dividend per Share (p) 14.18 14.60 3.0 As at H2 2016 H1 2017 Change % Valuation Performance 2.0% (2.8%) EPRA Net Asset Value per Share (p) 919 891 (3.0) LTV 32.1% 31.6% H1 Total Accounting Return 9.1% (1.5%) 62
Underlying Profit up £28 million £m 7 17 5 (9) 8 199 171 H1 2016 Capital activity Like for like Developments Financing Administrative H1 2017 rental growth activities expenses and Fee income 63
Gross rental income 1,2 Accounting Basis £m 6 months to 30 September 2016 Annualised as at 30 September 2016 Group JVs & Funds 3 Total Group JVs & Funds 3 Total Regional 29 43 58 84 72 142 Local 49 13 62 97 26 123 Multi-let 78 56 134 155 110 265 – – Department Stores & Leisure 26 26 43 43 Superstores 5 16 21 10 31 41 – – Solus & Other 10 10 20 20 Retail and Leisure 119 72 191 228 141 369 – – West End 66 66 127 127 City 2 60 4 120 62 124 Offices 68 60 128 131 120 251 Residential 4 – – 2 3 2 3 Offices and Residential 70 60 130 134 120 254 – – Canada Water 5 5 8 8 Total 194 132 326 370 261 631 1 Excluding developments under construction and assets held for development 2 Gross rental income will differ from annualised rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives 3 Group’s share of properties in joint ventures and funds including HUT at share 4 Stand-alone residential 64
Operating costs metric HY to 30 September (£m) H1 2016 H1 2017 Property operating expenses 17 15 Administrative expenses 1 49 43 (7) (8) Net fees and other income 1 (1) (1) Ground rent costs EPRA Costs (including direct vacancy costs) 58 49 Gross rental income 326 327 Ground rent costs (1) (1) Gross Rental Income (EPRA basis) 325 326 EPRA Cost Ratio (including direct vacancy costs) 17.8% 15.0% Table shows figures on a proportionately consolidated basis which includes the Group's share of joint ventures and funds and excludes non-controlling interests in the Group's subsidiaries. 1 Net fees & other income and administrative expenses have been restated by £2m to reflect the change in presentation of the results of Broadgate Estates, a wholly owned subsidiary of the Group. This restatement has had no impact on Underlying Profit. 65
Administrative Expenses HY to 30 September (£m) H1 2016 H1 2017 26 26 Personnel Costs Share Scheme Costs 8 3 15 14 Other Administrative Expenses Total – British Land 49 43 2 2 Broadgate Estates Total – Group 51 45 Capitalised Costs (2) (2) Total Administrative Expenses 49 43 Table includes the Group's share of joint ventures and funds and excludes non-controlling interests in the Group's subsidiaries. 66
Reduction in diluted EPRA net asset value (22p) 18p (13p) (17p) 10p (4p) 919p 891p Mar 16 Offices & Retail & Underlying Dividends Debt Reversal of Sep 16 Residential Leisure Profit transaction 2012 costs & other convertible bond dilution 67
Strength of debt metrics Proportionally Consolidated 31 Mar 2016 30 Sep 2016 Loan to Value (LTV) 32.1% 31.6% Weighted Average Interest Rate 3.3% 3.2% Interest Cover 3.0x 3.5x Average Maturity of Drawn Debt (years) 8.1 8.0 Group 31 Mar 2016 30 Sep 2016 Loan to Value (LTV) 25.2% 24.6% Available undrawn facilities £1.2bn £1.0bn Weighted Average Interest Rate 2.6% 2.5% Interest Cover 3.3x 4.4x Fitch Senior Unsecured rating A- A- 68
Adjusted net debt – proportionally consolidated (£bn) LTV LTV 32.1% 31.6% 0.1 (0.5) 0.1 4.8 4.5 Mar 16 Acquisitions Development & Capex Disposals Sep 16 Net Debt Net Debt 69
Debt maturity (£m) 1400 1200 1000 800 600 400 200 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Year to March Debenture & loan notes (Secured) Bank RCF Undrawn (Unsecured) Convertible Bond (Unsecured) JVs – Securitisations Funds – Bank undrawn Bank RCF Drawn (Unsecured) JVs & Funds – Bank drawn US Private Placements (Unsecured) 70
Debt Financing – Diverse profile • Weighted Average Interest Rate Diverse Debt Profile 1 (30 September 2016) reduced by 10 bps to 3.2% £0.5bn £0.7bn • Average debt term 8.0 years • £1.7bn of revolving credit facilities £0.6bn available within British Land £1.4bn • Proportion of debt at fixed rate 52% average over the next 5 years • The Group has no requirement to £0.8bn refinance until 2020 • Fitch Senior Unsecured rating A- £0.8bn Bank RCFs Drawn (Unsecured) Convertible Bonds (Unsecured) US Private Placements (Unsecured) JVs Securitisations JV & Funds Term Loans (Secured) 2 Debentures & loan notes (Secured) 1 Proportionally Consolidated 2 HUT’s debt shown at our share (£0.4 billion) within JV & Funds 71
Number of shares Number of shares (m) 31 Mar 16 30 Sep 16 IFRS Basic Weighted Average 1 1,025 1,029 IFRS Diluted Weighted Average 2 1,089 1,091 Underlying/EPRA Diluted Weighted Average 3 1,089 1,033 Period End 4 1,096 1,039 1 For use in IFRS basic earnings per share 2 For use in IFRS diluted earnings per share, includes dilution for 2012 1.5% convertible bond 3 For use in Underlying/EPRA diluted earnings per share. Movement since March 2016 reflects 2012 1.5% convertible no longer being treated as dilutive 4 For use in EPRA net asset value per share and EPRA triple net asset value per share. Movement since March 2016 reflects 2012 1.5% convertible no longer being treated as dilutive 72
Valuation performance 6 months to Valuation Movement Movement Yield ERV NEY Weighting September 2016 £bn £m % Expansion Growth % % bps % Retail & Leisure 6.8 (178) (2.4) 18 0.9 5.3 49 Offices & Residential 6.8 (238) (3.3) 21 0.1 4.6 49 Canada Water 0.3 (6) (2.1) 4 0.9 3.3 2 Total 13.9 (422) (2.8) 19 0.5 4.9 100 – Of which Standing 13.1 (395) (2.8) Investments – Of which 0.8 (27) (3.0) Development 73
Valuation growth drivers – Retail & Leisure 6 months to September 2016 Valuation Movement Movement Yield ERV £bn £m % Expansion Growth bps % H1 H1 H1 Regional 2.9 (83) (2.8) 16 1.3 Local 2.2 (116) (4.8) 29 1.3 Multi-let 5.1 (199) (3.7) 22 1.3 Dept St + Leisure 0.6 32 3.2 4 0.4 Superstores 0.7 (24) (3.0) 8 (3.0) 9 Solus/Other 0.3 13 3.7 4.8 18 Retail & Leisure 6.8 (178) (2.4) 0.9 74
Valuation growth drivers – Offices & Residential 6 months to September 2016 Valuation Movement Movement Yield ERV £bn £m % Expansion Growth bps % H1 H1 H1 West End 3.9 (95) (2.4) 16 0.3 City 2.7 (143) (4.9) 27 (0.2) Offices 6.6 (238) (3.5) 21 0.1 – – Residential 0.2 Offices & Residential 6.8 (238) (3.3) 75
Investment Activity 6 months to 30 September 2016 Retail Offices Residential Canada Water Total £m £m £m £m £m – – Purchases 82 8 90 Sales 1 – – (690) (20) (710) – Net Purchases/Sales (608) (20) 8 (620) Development Spend 12 70 13 5 100 – – Capital Spend 47 4 51 Net Investment (549) 74 (7) 13 (469) Gross Investment 831 74 33 13 951 1 Of which £191m Retail sales and £9m Residential sales completed in January 2017, post period end 76
Acquisitions Sector Region Price Price Annual 6 months to 30 September 2016 (Gross) (BL Share) Passing Rent £m 2 £m £m Completed New George Street Estate, Plymouth Retail South 64 64 5 Hercules Unit Trust unit purchase 1 Retail Various 18 18 1 – Dock Offices Canada Water London 8 8 Total 90 90 6 1 Units purchased over the course of the period. £18m represents purchased GAV 2 BL share of annualised rent topped up for rent frees 77
Disposals Sector Region Price Price Annual 6 months to 30 September 2016 (Gross) (BL Share) Passing Rent £m 1 £m £m Completed Debenhams, Oxford Street Retail London 400 400 13 Superstores Retail Various 147 79 3 Dumfries Cuckoo Bridge Retail Scotland 20 20 1 – The Hempel Collection Residential London 5 5 – Aldgate Place Residential London 13 6 Exchanged 2 Portfolio of retail assets (Debenhams Manchester, Retail North 191 191 12 York Clifton Moor, Wakefield Westgate) – The Hempel Collection Residential London 8 8 – Aldgate Place Residential London 1 1 Total 785 710 29 1 BL share of annualised rent topped up for rent frees 2 Sales completed in January 2017. post period end 78
Total Property Return (as calculated by IPD) 6 months to 30 September 2016 Retail Offices Total % British British British IPD IPD IPD Land Land Land Capital Return (2.4) (3.0) (3.4) (2.9) (2.8) (2.1) - ERV Growth 0.9 0.5 0.1 1.0 0.5 0.8 - Yield Expansion 1 18 bps 20 bps 21 bps 21 bps 19 bps 15 bps Income Return 2.6 2.5 1.7 1.8 2.1 2.3 Total Property Return 0.1 (0.5) (1.8) (1.1) (0.8) 0.2 1 Net equivalent yield movement 79
BL property outperformance vs IPD – 5 years 5 years ended 30 September 2016 Outperformance bps pa 350 300 310 250 200 200 150 160 100 120 100 90 50 0 Retail Offices Total Capital Returns Total Returns 80
BL property outperformance vs IPD – 3 years 3 years ended 30 September 2016 Outperformance bps pa 180 170 160 140 120 100 80 80 60 70 60 50 40 20 10 0 Retail Offices Total Capital Returns Total Returns 81
Appendices – Portfolio
High quality, diverse occupier base As at 30 September 2016 % of Contracted Occupier split by sector by rent Rent UBS AG 1 5.8% Other 7% Tesco plc General 5.7% Retail 16% DIY 7% J Sainsbury plc 4.7% Debenhams 3.8% TMT 7% Kingfisher (B&Q) 2.6% Next plc 2.3% Fashion & HM Government 2.2% Beauty 16% Professional & Corporate Virgin Active 2.0% 9% Facebook 1.7% Wesfarmers (Homebase/Bunnings) 1.6% Spirit Group 1.6% Food/Leisure Banks & 10% M&S Plc 1.5% Financial Alliance Boots 1.5% Services 17% Supermarket 11% Visa Inc 1.4% Dixons Carphone 1.4% Dentsu Aegis 1.4% Upcoming expiries 2 5% Arcadia Group 1.3% UBS – 5 Broadgate 3% Herbert Smith 1.2% Other banks 4% RBS 1.1% TJX Cos Inc (TK Maxx) 1.0% Total banks 12% 1 Rent contracted on 5 Broadgate, 1-3 Finsbury Avenue and 100 Liverpool Street. Asset Management & 5% 3.0% pro-forma for run off of rent at 1-3 Finsbury Avenue and 100 Liverpool Street. Other Financial 2 Includes lease expiries on committed, near term and medium term developments 83
Portfolio valuation by sector JVs & Funds 1 H1 Change 2 Group Total At 30 September 2016 £m £m £m % £m Regional 1,087 1,791 2,878 (2.8) (83) Local 1,796 471 (4.8) (116) 2,267 Multi-let 2,883 2,262 5,145 (3.7) (199) Department Stores and Leisure 638 1 639 3.2 32 Superstores 139 542 681 (3.0) (24) – Solus and Other 346 346 3.7 13 Retail and Leisure 4,006 2,805 6,811 (2.4) (178) – West End 3,868 (2.4) (95) 3,868 City 103 2,653 2,756 (4.9) (143) Offices 3,971 2,653 6,624 (3.5) (238) Residential 3 – – 173 22 195 Offices and Residential 4,144 2,675 6,819 (3.3) (238) – Canada Water 289 289 (2.1) (6) Total 8,439 5,480 13,919 (2.8) (422) Standing Investments 7,810 5,287 13,097 (2.8) (395) Developments 629 193 822 (3.0) (27) 1 Group’s share of properties in joint ventures and funds including HUT at ownership share 2 Valuation movement during the period (after taking account of capital expenditure) of properties held at the balance sheet date, including developments (classified by end use), purchases and sales 3 Stand-alone residential 84
Portfolio yields & ERV movements 1,2 At 30 September 2016 EPRA EPRA Overall Net Net Net ERV Growth 5,6 net initial topped up topped up equivalent equivalent reversionary % yield % net initial net initial yield % yield yield % 3 4 yield % yield % expansion 5 bps Regional 4.5 4.7 4.7 5.0 16 5.0 1.3% Local 5.1 5.3 5.4 5.5 29 5.5 1.3% Multi-let 4.8 4.9 5.0 5.2 22 5.2 1.3% Department Stores and 6.0 6.0 7.5 6.1 4 4.5 0.4% Leisure Superstores 5.5 5.5 5.5 5.4 8 5.3 (3.0%) Solus & Other 5.7 5.7 5.7 5.3 9 4.9 4.8% Retail and Leisure 5.0 5.1 5.3 5.3 18 5.1 0.9% West End 3.8 4.0 4.1 4.5 16 4.8 0.3% City 3.3 4.6 4.6 4.6 27 5.3 (0.2%) Offices 3.6 4.2 4.3 4.6 21 5.0 0.1% Canada Water 2.7 2.7 2.8 3.3 4 3.4 0.9% Total 4.3 4.7 4.8 4.9 19 5.0 0.5% 1 Including notional purchaser's costs 2 On a proportionately consolidated basis. Excluding developments under construction, committed developments, assets held for development and residential assets 3 Including rent contracted from expiry of rent-free periods and fixed uplifts not in lieu of rental growth 4 Including fixed/minimum uplifts (excluded from EPRA definition) 5 6 months to 30 September 2016 6 As calculated by IPD 85
Lease length and occupancy 1 Average Lease Length (yrs) Occupancy Rate (%) At 30 September 2016 To Expiry To Break Occupancy Occupancy (underlying) 2 Regional 8.0 6.9 96.6 98.1 Local 8.4 7.4 97.6 98.0 Multi-let 8.2 7.2 97.1 98.1 Department Stores and Leisure 18.3 18.2 99.9 99.9 Superstores 12.0 11.6 100.0 100.0 Solus & Other 13.0 12.8 100.0 100.0 Retail and Leisure 10.0 9.2 97.8 98.5 West End 9.1 7.2 95.5 96.7 City 10.1 8.5 98.2 98.5 Offices 9.6 7.8 96.8 97.5 Canada Water 7.1 6.9 96.9 98.1 Total 9.8 8.5 97.3 98.1 1 On a proportionately consolidated basis. Excluding developments under construction, committed developments, assets held for development and residential assets 2 Including accommodation under offer or subject to asset management and owner-occupied space 86
Annualised rent & estimated rental value (ERV) 1 At 30 September 2016 Annualised Rents ERV Average Rent (Valuation Basis) £m 2 £m (£psf) JVs & Funds 3 Contracted 4 Group Total Total ERV Regional 60 85 145 158 31.2 33.3 Local 98 28 126 135 24.3 25.2 Multi-let 158 113 271 293 27.6 29.0 – Department Stores and Leisure 41 41 32 13.8 10.6 Superstores 8 32 40 38 20.7 19.7 – Solus & Other 20 20 17 19.8 17.0 Retail and Leisure 227 145 372 380 23.7 23.7 – West End 137 137 171 53.0 61.7 City 4 88 92 149 51.0 60.2 Offices 141 88 229 320 52.4 60.9 Residential 5 – 4 4 4 Offices and Residential 145 88 233 324 – Canada Water 8 8 10 18.5 21.7 Total 380 233 613 714 29.7 31.9 1 Excluding developments under construction, committed developments (100 Liverpool Street with annualised rents £9m and ERV £13m) and assets held for development 2 Gross rents plus, where rent reviews are outstanding, any increases to ERV (as determined by the Group’s external valuers), less any ground rents payable under head leases, excludes contracted rent subject to rent free and future uplift 3 Group’s share of properties in joint ventures and funds including HUT at share 4 Annualised rent, plus rent subject to rent free 87 5 Stand-alone residential
Rent subject to open market rent review 1 2017 – 19 2017 – 21 For period to 31 March 2017 2018 2019 2020 2021 At 30 September 2016 £m £m £m £m £m £m £m Regional 6 11 17 10 18 34 62 Local 4 25 21 12 10 50 72 Multi-let 10 36 38 22 28 84 134 – – – – – – – Department Stores and Leisure Superstores 1 4 8 11 13 13 37 – – – – – – – Solus & Other Retail and Leisure 11 40 46 33 41 97 171 West End 4 22 20 15 9 46 70 – City 4 14 14 16 18 48 Offices 4 26 34 29 25 64 118 – – – – Canada Water 2 2 2 Total 15 68 80 62 66 163 291 Potential uplift at current ERV 2 – 2 4 3 1 6 10 1 On a proportionately consolidated basis. Excluding developments under construction, committed developments and assets held for development 2 As determined by the Group’s valuers, excluding near term developments 88
Rent subject to lease break or expiry 1 2017 – 19 2017 – 21 For period to 31 March 2017 2018 2019 2020 2021 At 30 September 2016 £m £m £m £m £m £m £m Regional 6 15 9 13 10 30 53 Local 6 5 8 11 9 19 39 Multi-let 12 20 17 24 19 49 92 – – – – Department Stores and Leisure 1 1 1 – – – – – – – Superstores – – – – Solus and Other 2 2 2 Retail and Leisure 12 21 19 24 19 52 95 West End 6 11 10 4 18 27 49 – 18 City 10 11 8 28 47 Offices 2 16 11 28 15 26 55 96 – – – Canada Water 1 1 1 2 Total 29 32 47 39 46 108 193 % of contracted rent 4.3% 4.7% 6.9% 6.0% 6.7% 15.9% 28.6% Potential uplift at current ERV (excl. 2 2 6 1 2 10 13 Near and Medium Term developments) 1 On a proportionately consolidated basis. Excluding developments under construction, committed developments and assets held for development 2 For further detail, see following slide 89
Rent resetting to market 2017 – 19 2017 – 21 For period to 31 March 2017 2018 2019 2020 2021 At 30 September 2016 £m £m £m £m £m £m £m Rent expiring – existing portfolio 29 32 47 39 46 108 193 (per slide 76) Developments – committed & under – – – 10 19 10 29 Construction Total Rent Resetting to Market 29 42 47 58 46 118 222 excluding Near Term Developments Near term developments – expiries – – – – (7) (7) (7) Near term developments – completions – – – 8 3 8 11 Total Rent Resetting to Market 22 42 55 61 46 119 226 including Near Term Developments ERV of current vacancies 1,2 – – – – 19 19 19 Vacant & Income Expiring 41 42 55 61 46 138 245 1 Including space under offer of £4m and space subject to asset management of £1m 2 Including £7m of vacant space at recently completed developments 90
Contracted rental increases (cash flow basis) 2017 – 19 2017 – 21 For period to 31 March 2017 2018 2019 2020 2021 At 30 September 2016 £m £m £m £m £m £m £m – Expiry of rent free periods 29 14 3 1 46 47 – – – Fixed uplifts (EPRA basis) 1 1 2 2 Fixed & minimum uplifts in lieu 3 1 1 1 1 5 7 of rental growth Total 32 16 5 2 1 53 56 91
Superstores Stand-alone Superstores 1 In Multi-let assets 2 Total Exposure 1,2,3 Store Size Number Valuation Capital WALL Number Valuation Capital WALL Number Valuation Capital WALL ‘000 sq ft of (BL share) Value to FB of (BL share) Value to FB of (BL share) Value to FB stores £m psf yrs stores £m psf yrs stores £m psf yrs >100 8 171 256 11.9 5 339 423 12.5 13 510 347 12.3 75 – 100 11 197 398 12.1 3 61 276 15.8 14 258 361 13.0 50 – 75 16 248 353 12.1 1 12 189 10.6 17 260 339 12.0 25 – 50 8 50 220 7.8 2 27 502 13.0 10 77 274 9.4 0 – 25 2 6 145 8.6 18 79 426 10.6 20 85 373 10.4 September 2016 45 672 315 11.6 29 518 391 12.6 74 1,190 344 12.1 March 2016 47 763 383 13.9 28 536 482 12.7 75 1,299 419 13.5 Geographical Spread Gross Rent (BL Share) Lease Structure RPI and Fixed London & South 54% Tesco £38m 9% Sainsbury’s Rest of UK 46% £26m OMRR 91% Other £5m 1 Excludes £9m non-foodstore occupiers in superstore led assets 2 Excludes non food-format stores e.g. Asda Living 3 Excludes £93m of investments held for trading comprising freehold reversions in a pool of Sainsbury’s Superstores 92
Appendices – Developments
Recently completed & committed developments Sector BL Sq PC Current Cost to ERV Let & Resi Sales At 30 September 2016 Share ft Calendar Value Complete Under Exchanged & Offer Year not Completed £m 1 £m 2 £m 3 £m 4 % '000 £m – – Aldgate Place, Phase 1 Residential 50 221 Completed 7 9 n/a Clarges Mayfair – Offices Offices 100 51 Completed 120 9 5.5 2.0 n/a – Glasgow Fort Leisure Quarter Retail 75 12 Completed 8 0.4 0.3 n/a – Total Completed in Period 284 135 18 5.9 2.3 – 4 Kingdom Street Offices 100 147 Q2 2017 111 39 9.4 n/a Clarges Mayfair – – Residential 100 114 Q4 2017 322 74 0.8 259 Retail and Residential The Hempel Phase 1 Residential 100 25 Q4 2016 16 1 n/a n/a 13 The Hempel Phase 2 Residential 100 32 Q4 2016 55 6 n/a n/a 14 – – 100 Liverpool Street Offices 50 520 Q4 2019 115 157 18.5 – Total Under Construction & Committed 838 619 277 28.7 286 Retail Capital Expenditure 5 117 Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 Excludes completed sales of £93m 2 From 1 October 2016. Cost to complete excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 3 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives) 4 At agreed sales price 5 Capex committed and underway within our investment portfolio relating to leasing and asset management 94
Development pipeline At 30 September 2016 Sector BL Share Sq ft Start On Total Status 1 % '000 Site Cost £m Near term Pipeline 1 Finsbury Avenue Offices 50 281 2017 102 Consented Speke (Leisure) Retail 67 66 2017 18 Consented Plymouth (Leisure) Retail 100 102 2018 35 Consented Total Near Term 449 155 Retail Capital Expenditure 2 100 Medium term Pipeline 2-3 Finsbury Avenue Offices 50 560 Resolution to grant 135 Bishopsgate Offices 50 340 Pre-submission Blossom Street Offices 100 340 Consented 1 Triton Square Offices 100 338 Submitted 5 Kingdom Street Offices 100 240 Consented Gateway Building Offices 100 104 Pre-submission Aldgate Phase 2 Residential 50 145 Consented Canada Water Phase 1 3 Mixed Use 100 5,500 Pre-submission Bradford (Retail & Leisure) Retail 100 43 Consented Meadowhall Leisure Retail 50 330 Submitted Eden Walk Retail & Residential Mixed Use 50 562 Resolution to grant Total Medium Term 8,502 Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 Total cost including site value. Excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 2 Forecast capital commitments within our investment portfolio over the next 12 months relating to leasing & asset enhancement 3 Assumed net area based on gross area of up to 7m sq ft 95 95
Residential development programme At 30 September 2016 Sq Ft No. PC BL Current Cost to Sales Value 1 come 2 Market Date/ Share Exchanged & Units Status not Completed 1,3 '000 % £m £m £m Clarges Mayfair 4 103 34 Q4 2017 100 308 72 259 Mixed use 103 34 308 72 259 The Hempel Phase 1 25 15 Q4 2016 100 16 1 13 The Hempel Phase 2 32 19 Q4 2016 100 55 6 14 Aldgate Place Phase 1 221 154 Completed 50 7 9 - Residential-led 278 188 78 16 27 Total Committed Residential 381 222 386 88 286 Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 Excludes completed sales of £93m 2 From 1 October 2016. Cost to complete excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 3 At agreed sales price 4 Includes 9,500 sq ft of affordable housing (11 units) 96
Estimated future development spend and capitalised interest PC Cost to complete £m At 30 September 2016 (excluding notional interest) – 6 mths Calendar Year Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Total – – 4 Kingdom Street 2017 30 4 4 1 39 – Clarges Mayfair 2017 53 13 3 3 1 74 – – – – – The Hempel Phase 1 2016 1 1 – – – The Hempel Phase 2 2016 4 1 1 6 100 Liverpool Street 2019 12 18 29 32 26 19 157 Total Committed & 100 36 37 36 27 19 277 Under Construction Total Near Term 2 9 19 16 15 12 76 Indicative Interest Capitalised on above at 4 1 2 2 1 2 attributable rates 1 – – – – Contracted Residential receipts 28 184 1 Financing costs are capitalised at 4% on qualifying expenditure for developments 97
Estimated future development rental income (accounting basis) At 30 September 2016 PC Gross Rental Income (Accounting basis) Calendar £m Year Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Under Construction & Committed developments – – Clarges Retail Q4 2017 Non-contracted 1 1 1 Non-contracted – 4 Kingdom Street Q2 2017 3 8 8 8 – – – 100 Liverpool Street Q4 2019 Non-contracted 3 15 Non-contracted – 3 9 12 24 98
Appendices – Market
Investment market • Strong demand for long, secure income • Falling values in secondary locations Investment volumes £bn £bn 20 20 -36% 15 15 -51% 10 10 5 5 0 0 2015 2016 2015 2016 Q1 Q2 Q3 Q4 Long term average Q1 Q2 Q3 Q4 Long term average Central London Office Retail Source: Shopping centres and OOT – CBRE; Supermarkets – Morgan Williams; Central London offices – Knight Frank. Retail data includes: Shopping centres, out of town (£15m+ parks, 3+ tenants) and supermarkets 100
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