Half Year 2009/10 Results - British Land/media/Files/B/... · market (IPD) vacancy rates at 7% –...

Half Year 2009/10 Results

Six months ended 30 September 2009

Agenda

• Introduction Chris Grigg

• Financial Review Graham Roberts

• Property Review Tim Roberts

• Planning for the Future Chris Grigg


An Encouraging Performance

• NAV per share up 3% in Q2

• Positive like for like income growth

• Good levels of lettings, maintaining high occupancy

• Portfolio rebalanced and balance sheet strengthened

• Structured investment framework focused on exploiting opportunities

1


Financial Review

Graham Roberts


Financial Highlights

1 Underlying profit before tax and Underlying EPS excludes gains on property revaluations and disposals & intangible asset movements2 EPRA (European Public Real Estate Association) basis3 Restated for Rights Issue4 The property income distribution (PID) of the cash dividend is nil 2

- 3.7%+ 1.4%- 10.8%- 2.4%Portfolio valuation movement

7p8p22p315pUnderlying EPS1

£63m£66m£144m£129mUnderlying profit before tax1

864p3

H1 2008

372p

Q2 2009

372p

H1 2009

361p

Q1 2009

NAV2 per share

• NAV per share up 3% since June

• Q2 dividend 6.5p4, equivalent to 26p for the full year 2009/10

• Scrip alternative to be offered for Q2 dividend. 40% take-up for Q1 dividend


Underlying Profit £129m (Q2: £66m)

1 Release of provisions made against the income recognised in advance on leases with contracted fixed uplifts due to an improvement in the covenant strength2 IPD Quarterly gross rental income for 6 months ended September 2009 compared to 6 months ended September 20083 Based on 3 months to 30 September 2009, after additional financing income from cash consideration (£77m) and £209m loan to the Joint Venture4 With proportional consolidation of Funds and Joint Ventures5 Fund management & performance fees £3m (H1 2008 £7m)6 Interest capitalised on developments £10m (H1 2008 £16m)

15p

129

(136)

(32)

6

291

H1 2009

22p

144

(150)

(33)

10

317

H1 2008

Administrative expenses

Fees & other income5

Underlying Profit

Net rental income

Net interest costs6

Underlying Profit (£m)4

Underlying EPS

• Underlying profits 10% below H1 2008 – Impact of sales (£18m)– Impact of developments (£10m)– Release of credit risk provision1 £16m

• Q2 2009 in line with Q1 2009

• 0.7% like for like income growth vs. IPD -1.4%2

• Interest costs lower as reduced net debt by£1.1bn since H1 2008. Interest cover 2.0x

• Broadgate JV prospective dilution impact of c.£7m per quarter3

• Re-investment capacity and development lettings enhance future earnings potential

3


Future Growth Potential

33282318£500m

56

47

39

31

6%

41

36

30

24

5%

70

59

49

38

7%

84

71

58

46

8%

£1,250m

£1,000m

£750m

£1,500m

£m pa

Net Initial Yield

New

inve

stm

ent

1 Illustrative impact on underlying (accounting) profit before tax – for detailed assumptions see Appendix

4

New investments – Profit Effect1 Letting of Completed Developments- Profit Effect1

28

21

14

7

Current

25

19

13

6

-10%

31

23

15

8

+10%

75%

50%

25%

100%

£m pa

Valuers’ ERV

% L

et


NAV Per Share 372p

1 EPRA (European Public Real Estate Association) basis

9Property and investment revaluations & asset disposals

8Underlying profit after tax

(6)Dividend paid (including scrip element)

372NAV1 per share at 30 September 2009

(6)Dividend paid

(38)Property and investment revaluations & asset disposals

398NAV1 per share at 31 March 2009

7Underlying profit after tax

Movement in NAV1 pence

NAV1 per share at 30 June 2009 361

5


Sustainable Cash Flow

1 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 20092 Annualised rent including contracted income from expiry of rent frees and fixed uplifts (net of lease breaks/expiries)3 Including (at valuers’ current headline ERV and after assumed income void) existing vacant space, future lease breaks/expiries, and Osnaburgh Street

• 98% of current rent still contracted in 3 years time:

– £24m pa of further cash contracted from

rents frees and fixed/minimum uplifts

– Only 6% of rent subject to break/expiry

• Occupiers in administration down to 0.8%

– 46% of units being assigned or re-let

6

0

100

200

300

400

500

600

TODAY 2010 2011 2012 2013 2014

Ann

ualis

ed R

ent £

m p

a Annualised rents Letting of vacant space

98% of current rent still contracted 3 years time1

2 3

+ Contracted uplifts - Lease expiries


Strong Balance Sheet & Liquidity

7

£2.9bn of Committed Undrawn Bank Facilities

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2009 2010 2011 2012 2013 2014 2015

£bn

• £367m1 of cash (£144m currently unencumbered)• £101m to complete committed developments

1 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 20092 Calculated in accordance with standard banking agreement – see Appendix

2.0xInterest cover

5.3%Average interest rate

11.4 yrsWeighted average debt maturity

53%LTV – inc. share of Funds & JVs

41%Net Borrowings to Adjusted Capital & Reserves2

29%LTV – Group

Key Financing Ratios Pro forma1

Portfolio valuation £7.2bn

Net Debt – inc. share of Funds & JVs £3.9bn

Cash & undrawn committed bank facilities £3.3bn


Property Review

Tim Roberts


£11.3bn Portfolio (BL Share £7.2bn1)

1 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 2009 2 Underlying occupancy rate including accommodation subject to asset management and under offer

• Value add from active asset management

• Reduced exposure to single assets

• Customer-focused portfolio

– Well located properties with customer appeal

– 82% excellent/good customer satisfaction

• Secure income and diversity of customers

– 13 years average lease length to first break

– 94% occupancy (98% exc. completed developments)2

8

Dec-08: Retail 59% - Offices 39%

Sep-09: Retail 66% - Offices 31%

Broadgate 25%Meadowhall 12%

Other 2%

Rest of Retail 47% Rest of

Offices 14%

Broadgate 15%Meadowhall 8%

Other 3%

Rest of Retail 58%

Rest of Offices 16%

£10.2bn

£7.2bn1


Portfolio Activity

• Broadgate JV and £206m1 of other disposals

• £128m1 of new investments – Including 39 Victoria St (8.4% NIY) & Sunderland (8.6% NIY)

• £8.1m pa2 of additional rent from active asset management – 1.9m sq ft of rent reviews (16% above previous rent) – 1.4m sq ft of lettings & renewals (90% with term of over 5 years) – 50,000 sq ft of retail let post H1– 60,000 sq ft of London offices agreed/under offer post H1

• 0.7% like for like income growth (IPD -1.4%)– Retail up 2.7% (Retail Warehouses +5.0%, Superstores +2.8%)– Offices down 2.3% (City -3.3%, West End +2.4%)

1 BL Share2 Increase in BL Share of net effective rent (taking into account tenant incentives)

9

39 Victoria Street, SW1


Portfolio Valuation

• Portfolio value increased 1.4% in Q2 (-2.4% over 6 months)

• UK portfolio outperformed IPD by 1.1% over 6 months

• 70% of assets increased in value in Q2 (53% since March)

• ERV decline1 of 6.1% over 6 months, slowed in Q2 to 2.1%

– Retail -3.0% over 6 months (-0.3% in Q2)

– Offices -10.7% over 6 months (-4.7% in Q2)

• Portfolio gross top-up initial yield 7.4%2

– 11bp yield compression since June (+10bp since March)

10

Portfolio Valuation

+1.4%

-1.1%

-2.4%

+3.0%

-0.6%

-5.0%

LAST 3 MONTHS

LAST 6 MONTHS

1 Standing investments like for like, IPD basis (excluding Europe)2 Gross yield to British Land (without notional purchaser’s costs), adding back rent frees and contracted rental uplifts


Secure Income & High Quality Customers

• Secure income from quality portfolio – 94% occupancy1 (Retail 98%1; Offices 86%1)– New lettings and renewals achieved average

lease length of 13 years to first break – Only 6% of rent expiring over the next 3 years

• Diversity of customers & industries– No occupier more than 7% of rent– Food retailers represent 18% of rent – Major banks & lawyers 19% - reduced from 25%

• Limited development exposure– Only 2.5% of total assets under construction– But £137m of sites with potential/planning for c.4m sq ft

Only 6% of rent expiring in next 3 years (IPD 20%)

1 Underlying occupancy rate including accommodation subject to asset management and under offer

11

0

2

4

6

8

10

2010 2011 2012 2013 2014

% o

f ren

t

British Land IPD


Retail Market Outlook

12

• Like for like sales positive, but off weak comparables – BL retail footfall up 0.8% vs. national average 0.1%1

• Demand thin, but some new entrants (e.g. John Lewis Home, Republic, Best Buy)

• Competition for occupiers remains high, with average market (IPD) vacancy rates at 7%

– Meadowhall vacancy reduced to 1.6% (June 4.9%)

• Rental values remain under pressure – lease incentives may have stabilised on best schemes

– BL ERV growth -0.3% in Q2 (IPD -1.2%)

• Yields hardening as investor demand outstrips supply

• BL customer-led strategy benefits from combinationof strong retailer relationships and best locations

BL Retail Vacancy only 2% vs. 7% for IPD

1 British Retail Consortium

0

2

4

6

8

10

Vaca

ncy

rate

(%)

British Land IPD

RetailParks

ShoppingCentres

DeptStores

Super-stores

AllRetail


London Office Market Outlook

• London office vacancy 10%1, likely to peak next year

• Take up (annual rolling basis) 7.9m sq ft1, but signs of activity on Grade A accommodation

• Speculative development/refurbishment still unviable, so likely to continue falling

• Investment turnover increased (£5bn YTD1), with yields hardening in response to improved demand

• BL portfolio relatively well positioned with secure income from prime buildings. Over 90% of vacancy brand new Grade A space

0

2

4

6

8

10

2000 2002 2004 2006 2008 2010 2012

Spec

ulat

ive

Con

stru

ctio

n (m

sq

ft)

0

2

4

6

8

10

12

14

Vaca

ncy

rate

(%)

Under construction Vacancy

London Speculative Construction & Vacancy2

1 Average agents’ vacancy rate 2 Jones Lang LaSalle

13


Planning for the Future

Chris Grigg


Market Outlook

14

• Marked improvement in the investment market

– Greatest demand centred around smaller lot size, long lease and good covenants

– But transaction volumes still low – bidders currently outweigh available stock

– Bank lending has returned – albeit small scale

• Occupational market remains more challenging, but better than expected

• Economy and interest rates will be key going forward

• Investment opportunities for knowledgeable and patient investors


A Stronger, More Balanced Portfolio

• Limited single asset concentration

– Meadowhall now 8% (Dec-08: 12%)

– Broadgate now 15% (Dec-08: 25%)

• Better risk profile

– Reduced exposure to largest single tenant

– City now 20% (Dec-08: 29%)

• Increased income resilience

– Even now just 0.5% of rent turnover-related

– Occupiers in administration only 0.8%

– 98% of current rent contracted in 3 years time

15

West End (11%)

Other (3%)

Department stores (6%)

Retail Warehouses

(27%)

Shopping Centres (12%)(Meadowhall 8%)

City (20%)(Broadgate 15%)

1 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 2009

Superstores (16%)

Balanced exposure to sub-sectors1

Europe (5%)


Strengthened Financial Position

• Group LTV reduced from 54% to 29%1 since Dec-08

– Proportionally consolidated reduced from 60% to 53%1

• Strong debt profile with 11 years average maturity

• £3.3bn of cash and low cost undrawn facilities

• Financial structure providing flexibility and robustness for the future

16



Investing with Confidence

Value-Add Opportunistic

• Timeline of 3-7 years

• Medium liquidity requirement

• Heavy asset management

• Double-digit IRR


• High liquidity requirement

• Low asset management

• High double-digit IRR

17

BL competitive advantages:

• Retail & Office expertise

• Active asset management

• Scale


• Real estate expertise

• Strong portfolio combined with robust financials put British Land in a very good position

• At least £1bn of investment over the next 12-24 months

• Put in place investment framework to make more disciplined investment decisions


Investment Framework

Core Value-Add Opportunistic

• Timeline of 7+ years

• Liquidity requirement: Low

• Asset management: Low

• Lease length 15+ years


• Liquidity requirement: Medium

• Asset management: Heavy

• Timeline of < 3 years

• Liquidity requirement: High

• Asset management: Variable

18


• JV track record

• Customer relationships

• Scale


• Retail & Office expertise

• Active asset management

• Scale


• Real estate expertise

• Financial structure & flexibility

• Execution


Investment Framework – Existing Portfolio

19

20 yearsLease length2

180Properties

100%Occupancy rate3

Core

Including … SuperstoresDepartment Stores

Value1 £1.8bn (26%)

10 years

140

93%

Value-Add

Retail Parks, Shopping Centres, Offices, Development

£5.2bn (72%)

30

Opportunistic

Land, Sundry

£0.2bn (2%)

1 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 20092 To first break3 Underlying occupancy rate including accommodation subject to asset management and under offer


Case Study – Value-Add Investment

Transaction• £19m (BL Share £7m) (8.6% net initial yield)• 118,000 sq ft with Open A1 consent• Fully let, 12 years average lease length

Investment Thesis• Active asset management to increase footfall and rent

– Low average rents of £15 psf– Tenant mix of mostly bulky goods retailers– Planning consent for further 10,000 sq ft

(plus 10,000 sq ft of mezzanine)

• Ungeared IRR of 10%+

Hylton Riverside Retail Park, Sunderland (HUT)

20


Case Study – Value-Add Investment

Transaction• £40m (8.4% net initial yield)• 76,000 sq ft of offices • Fully let until July 2012

Investment Thesis• Good, well located building• Fully let for c.3 years (£47 psf)• Option play in 3 years time

– Re-gear with existing occupiers– Refurbish– Expand area and refurbish

• Ungeared IRR of 10%


21


An Integrated Approach

22

• Investment framework provides a tool for improved decision-making – not a management structure

• Combines disciplined investment with key asset management advantage

• Added talent and real estate expertise with 2 new executive directors:

– Stephen Smith (CIO) will formulate decisions regarding sectors/weightings and individual assets

– Charles Maudsley will focus on Business Expansion through funds, partnerships or new sectors


Focused on Exploiting Opportunities

Core (48%)

Value-Add (36%)

Opportunistic (16%)

Offices (22%)

Other (36%)Retail (42%)

Screening: further £2bn

Core (18%)

Value-Add (82%)

Retail (78%)

Current bids: £500m

23

Offices (22%)


Well Positioned for the Future

• Strong property portfolio

• Robust financials

• Disciplined approach to exploit new investment opportunities– Better balance of risk and returns– Assess new investments across sectors– Evaluate existing portfolio more rigorously – Make more disciplined decisions on when to exit

• Improved performance and capital efficiency

24


Appendix


Investment Framework - Illustrative Criteria

Core Value-Add Opportunistic

25

Investment Criteria

• Security and quality of income

– strong covenant

• Lease length 15+ years

• Defensive qualities

• Steady rental growth

Investment Criteria

• Initial yield above cost of debt

• High rental growth potential

– Tenant base optimisation

– Extensions/refurbishment

– Lease re-gear opportunities

Investment Criteria

• Significant value to be created in

the short-term (1-3 years)

• High liquidity of assets

Exit consideration• Initial yield below cost of debt

• Asset management potential realised

• Weakening covenant

• Shortening leases with no option for

extension

Exit consideration• Projected capital value achieved

Exit consideration• Initial yield below cost of debt

• Weakening covenant

• Shortening leases with no option

for extension


EPRA Balance Sheet (proportional consolidation)

53%

29%

367p

3,159

(115)

(3,928)

7,202

Pro forma1

47%Loan to value ratio – Group

(269)(5)(264)Other net liabilities

3,2001,0272,173EPRA Net Assets

£m Group Funds & JVs Sept 2009

Total properties 5,532 2,761 8,293

Net debt (3,095) (1,729) (4,824)

EPRA Diluted NAV per share 372p

Loan to value ratio - inc. share of Funds & JVs 58%

26



Reconciliation of EPRA NAV & NNNAV

(25)(3)(30)Deferred tax arising on revaluation movements

--1Adjust to fully diluted on exercise of share options

96369597Mark to market of debt and derivatives

438

372

15

3

354

Pence per Share

153128Mark to market on effective cash flow hedges and related debt adjustments

3,3873,200EPRA NAV

Sept 2009 £m March 2009 £m

Balance sheet (IFRS) net assets 3,041 3,209

Deferred tax arising on revaluation movements 30 25

EPRA NNNAV 3,767 4,325

27


Rental Income Growth

Properties owned throughout2

131135+ 2.7%• Retail

9391- 2.3%• Offices & other

224226+ 0.7%Total – like for like

36Acquisitions

606Disposals

1519Developments

3133Fixed & minimum uplifts3

(2)5Other4

331295- 10.9%Total

H1 2009Gross Rental income (£m) H1 2008 • Gross rents 11% lower due to sales

• 0.7% like for like rental income growth due to

new lettings and rent reviews:

– Retail up 2.7% (Retail Warehouses +5.0%,

Superstores +2.8%, Shopping Centres -2.2%)

– Offices down 2.3% (City -3.3%, West End +2.4%)

• Market (IPD) income growth of -1.4%1

1 IPD Quarterly gross rental income for six months ended September 2009 compared to six months ended September 20082 Investment properties subject to open market reviews and owned throughout the current and comparative periods (proportional consolidation of Funds & JVs)3 Rental income from fixed and minimum guaranteed rent reviews is recognised on a straight line basis4 Includes surrender premiums, asset management determinations, back rents and other accounting adjustments 28


Income Statement (proportional consolidation)

(4)(3)(2)(1)Tax - Tax charge relating to underlying profit

(1,312)(112)(15)(97)(Loss) for the half year after tax

22p15pUnderlying EPS

1441293297Underlying profit before tax

(1,472)(232)(44)(188)Net valuation movement (includes disposals)

(150)(136)(48)(88)Net interest costs

271(1)2- Other tax arising

(33)(32)(3)(29)Administrative expenses

(7)(7)-(7)Amortisation of intangible asset

£m Group JVs & Funds H1 2009 H1 2008

Net rental income 208 83 291 317

Fees and other income 6 - 6 10

29


Reconciliation of Underlying Profit before Tax

77Amortisation of intangible asset

(8)3Deferred and current taxation of joint ventures & funds

144129Underlying profit before tax

£m H1 2009 H1 2008

IFRS (Loss) before tax (113) (1,327)

Net valuation movement (includes disposals) 232 1,472

30


Gross Rental Income - Sectoral Analysis

1-1- non-recurring items5

Annualised as at 30 Sept 20092,36 months to 30 Sept 20091

240

18

65

1

39

25

157

33

17

8

99

Group

295

294

9

113

1

19

93

172

22

34

29

87

Total

88

88

-

-

-

-

-

88

2

25

25

36

Funds & JVs

207

206

9

113

1

19

93

84

20

9

4

51

Group

492252Total - recurring

Total

6649Shopping Centres

33-Department Stores4

5850Superstores

17273Retail Warehouses

329172All Retail

1-Provincial

14580All Offices

18-Other

39-West End Offices

Accounting Gross Rental Income (£m pa) Funds & JVs Total

City Offices 80 105

1 Gross rental income per Income Statement under IFRS (proportionally consolidated) analysed by sector2 Annualised contracted gross rental income under IFRS (proportionally consolidated) analysed by sector as at 30 September 20093 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 20094 Including High Street5 Including surrender premiums and back rents

31


Contracted Rental Increases

6

28

34

16

18

Lettings with fixed and minimum uplifts2

363636363618Retail

333333333216Offices & other

696969696834Total rent (accounting basis)

636259585628Of which total cash flow

1011126 67Of which IAS 17 fixed uplift adjustment

Under IFRS contracted rent and cash flows will differ 1 During rent free periods, IFRS requires rent to be recognised ahead of the related cash flow and allocated evenly over the lease term to the earliest

termination date 2 IFRS requires the total rental income relating to fixed and minimum guaranteed rent reviews to be recognised ahead of the related cash flow and allocated

evenly over the lease term to the earliest termination date

10

38

48

22

26

H1 2009

Lettings with rent free periods1

535354545327Retail

414344454523Offices & other

949698999850Total rent (accounting basis)

1029798887739Of which total cash flow

-

2012

11

2011

21

2010

11

H2 2009

(8)(1)Of which SIC 15 rent free adjustment

Contracted Accounting Gross Rental Income (£m) 2013 2014

32


Future Growth Potential - Assumptions

Illustrative impact on underlying (accounting) profit before tax generated from new property investments and letting of completed developments (including Regent’s Place One & Two – due for completion Q3 2009), using the following assumptions:

New investments • New property investments funded from available cash (at current deposit rates) and committed undrawn

bank facilities (at cost of 48bp over current 2-year LIBOR)• Profit based on annualised rental income (net of 5% operating costs) from well-let investment property, and

assuming no additional administration expenses or income from management and performance fees

Letting of completed developments• Income from lettings based on external valuers’ current net effective ERV (including tenant incentives, spread

over the full lease term) for a 15 year lease term with no breaks, if let today; and excluding costs associated with remaining vacant space

• No roll up of financing costs on retained cash impact

33


Debt Maturity Profile

Funds & JVs Non Recourse Finance (BL Share £2.9bn)1

0

100

200

300

400

500

600

700

2010 2015 2020 2025 2030 2035£m

34

0

100

200

300

400

500

600

700

2010 2015 2020 2025 2030 2035

£m

Group Debt (£1.7bn)1


Six months ended 30 September 2009 1 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 20092 TPP Investments Limited, a wholly owned ring-fenced special purpose subsidiary, is a partner in the Tesco British Land Property Partnership and, in that

capacity, has entered into a secured bank loan under which its liability is limited to £23m and recourse is only to the partnership assets

Unsecured Group Debt Financial Covenants

370Exceptional refinancing charges

106Mark to market on interest rate swaps

3,528

30

3,022

£m

Adjusted Capital & Reserves

Deferred tax on revaluations, capital allowances and derivatives

Share capital & reserves

Adjusted Capital & Reserves

23TPP Investments Limited2

(367)Cash & deposits

1,441

39

1,746

£m

Net Borrowings

Amounts owed to JVs

Gross Debt – Group

Net Borrowings

(144)Cash & deposits not subject to security interest

(1,416)Secured & Non Recourse Borrowings

225

39

1,746

£m

Net Unsecured Borrowings

Amounts owed to JVs

Gross Debt – Group

Net Unsecured Borrowings

3,350Group properties

(716)Investments in JVs

(1,935)Encumbered assets

2,063

274

1,090

£m

Unencumbered Assets

Other investments

Investments in Funds & JVs

Unencumbered Assets

175% maximum ratio for Net Borrowings to Adjusted Capital & Reserves – 41% pro forma1

70% maximum ratio for Net Unsecured Borrowings to Unencumbered Assets – 11% pro forma1

35


Sales & New Investments

1,464

10

5

224

159

1,066

Price

1,272

10

5

78

113

1,066

BL Share

Total

Other

2 High Street Shops

8 Retail Warehouses

13 Department Stores

50% interest in Broadgate, EC2

Sales (£m)

36

140

19

31

40

50

Price

128

7

31

40

50

BL Share

Total

Hylton Riverside Retail Park, Sunderland

Increase in PREF holding


Underwriting of HUT convertible bond issuance

New Investments (£m)


Committed Developments

58----1145110Q3 2009One Osnaburgh Street(Residential)

8.0

7.8

8.1

Yield

%4

101

71

19

Costs toComplete

£m1

218

35

138

Sep 2009 Value

£m

1,847

1,357

380

Sq ft

‘000

2011/12

Q3 2009

PC

24.7

9.1

15.6

Rent

£m3

12

11

1

Notional Interest

£m2

682.9Total

10

-

Sales

£m5

2.9

-

Pre-let

£m3

Puerto Venecia, Zaragoza (Shopping Centre)6

Regent’s Place One & Two(Offices)

1 Estimated construction cost to complete2 From 1 October 2009 to PC3 Current estimated headline rent (excludes provision for tenants’ incentives)4 Yield on current valuation plus costs to complete, notional interest to PC and valuers’ assumed tenant incentives5 Parts of development sold, no rent allocated6 Joint venture (Eurofund Investments Zaragoza) – BL share 50%

37


Prospective Developments

Detailed6Potential Land SaleMixed UseNew Century Park2

Detailed13Potential Land SaleResidentialTheale

16 PendingPotential Refurbishment or RedevelopmentCity Office4 Broadgate1

PendingMaster Planning in ProgressMixed UseEuston Station3

Detailed/OutlineMaster Planning in ProgressMixed UseCanada Water4

Detailed8280Provincial OfficeColmore Row

Detailed28500West End Office/ResidentialRegent’s Place – NEQ

Detailed57610City OfficeThe Leadenhall Building

Outline

Planning

9

Sep 2009 Value £m

2,200

Sq ft ‘000

Mixed Use

Sector

Meadowhall Additional Land

1 Joint Venture with Blackstone Group L.P.2 Joint Venture with Goodman Real Estate (UK) Limited3 In partnership with Network Rail4 Joint Venture with Canada Quays Limited 38


Portfolio Valuation By Sector

Pro forma3Change %2TotalFunds &Group

-2.4

1.1

-5.0

-4.4

-2.9

-5.7

-0.6

4.3

-5.9

5.5

-1.9

6 months

7,202

183

2,259

33

798

1,428

4,760

402

1,000

1,126

2,232

Total £m

8,293

183

3,350

33

798

2,519

4,760

402

1,000

1,126

2,232

£m

2,761

12

7

7

-

-

2,742

24

832

1,009

877

JVs £m1

5,532

171

3,343

26

798

2,519

2,018

378

168

117

1,355

£m

5.65.0Department Stores4

13.9-0.2Shopping Centres

66.13.0All Retail

15.64.9Superstores

19.8-1.9City5

2.54.1Other

100.01.4Total

31.4-1.1All Offices5

0.5-0.4Provincial5

3 months Portfolio %

Retail Warehouses 3.2 31.0

West End5 1.5 11.1

1 Group’s share of properties in Funds & Joint Ventures2 Includes valuation movements in developments (classified by end use), purchases and sales, net of capital expenditure3 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 20094 Including High Street with a total value of £19m, 9.7% decline in the 6 months (Q2 -4.0%) 5 Including developments with a total value of £323m, 6.6% decline in the 6 months (Q2 -1.5%)

39


Reconciliation of Portfolio Valuation Movement

8,2932,7615,532Valuation at 30 September 2009

(1,091)1,091(2,182)Broadgate JV3

(362)(141)(221)Disposals1

1263591Purchases, Development and Other Capital Expenditure

7,202

19

6

(232)

111

8,625

Total£m

3,852

(1)

-

(58)

111

2,815

Funds & JVs£m

3,350

20

6

(174)

-

5,810

Group£m

Change in ownership of PREF

Revaluations

Pro forma – at 30 September 2009

Other Adjustments2

Valuation at 31 March 2009

Decrease in Head Lease Liabilities

1 Includes transactions which completed in the half year2 Other adjustments relate to accounting adjustments for equalising rents (tenant incentives, guaranteed uplifts), as well as foreign exchange movements 3 Completed 3 November 2009 40


Portfolio Performance

-2.1

0.1

-4.7

-8.1

-3.9

-0.3

-0.3

-0.6

-

-0.4

3 months

Initial yield movement, bp2ERV Growth, %2Capital Return, %1

10

11

38

17

44

- 7

- 22

34

- 32

- 9

6 months

-6.1

0.1

-10.7

-12.5

-10.3

-3.0

-8.9

-3.9

0.4

-2.9

6 months

-1.4

1.3

-4.9

-2.4

-5.7

1.2

4.9

-4.6

5.5

0.8

6 months

1.7

4.1

-1.0

2.1

-1.9

3.7

5.2

-0.2

4.9

4.5

3 months

-25Department Stores

11Shopping Centres

- 24All Retail

- 30Superstores

14City

- 48Other

- 11Total

11All Offices

3 months

Retail Warehouses - 37

West End -

1 IPD Capital Return differs from BL Valuation Uplift as based on average capital employed and excludes capitalised interest and Europe2 Standing investments like for like, IPD basis (excluding Europe)

41


Top 10 Properties

91001718%570Fort Kinnaird Shopping Park4

10

9

8

7

6

5

3

2

1

370

500

570

450

590

390

830

1,400

4,400

Sq ft000

99317950%Broadgate

100

97

100

100

35

100

99

98

Occupancyrate %

100%

50%

36%

100%

100%

36%

100%

50%

BL Share

8

15

13

13

8

13

30

77

Rent£m pa1

7Bon Accord Shopping Centre

10Parkgate Shopping Park

20Ropemaker

8Regent’s Place2

12Meadowhall Shopping Centre

30

11

10

Lease length, yrs

Glasgow Fort Shopping Park

Teesside Shopping Park

Debenhams, Oxford Street

42

1 Annualised contracted rent (100% basis)2 Excluding Regent’s Place One & Two (380,000 sq ft), completing Q3 2009


Future Income Profile

1 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 20092 Within next 5 years3 Including portfolio voids on break/expiry4 Of which £24m pa within next 3 years

19

-

-

19

1

-

2

16

Other£m pa

372

6

3

363

8

14

13

328

Retail£m pa

162

16

-

146

24

(26)

21

127

Office£m pa

3Committed developments – pre-let

22Committed developments - to let

528Reversionary income - Investment Portfolio

33Letting of current vacant space

364Contracted from fixed uplifts and expiry of rent free periods3

471Annualised rents

553

(12)

Total£m pa

Rent reviews & lease renewals2,3

Rental Income – Cash Flow Basis1

Total

43


Top 10 Retail & Office Customers

1%

1%

1%

1%

1%

2%

2%

2%

2%

5%

% of rent1

Cable & Wireless

Mayer Brown

Deutsche Bank

Reed Smith

JP Morgan

Herbert Smith

Bank of Tokyo-Mitsubishi UFJ

RBS

HM Government

Office

UBS

1%

1%

1%

1%

2%

2%

2%

5%

7%

7%

% of rent1

M&S

Curry’s

Boots

Asda

Next

Kingfisher (B&Q)

Homebase

Debenhams

Sainsbury’s

Tesco

Retail


44


Average Rent psf

24

18

37

35

38

22

12

30

21

23

ERV3

24

15

45

41

47

20

11

27

20

21

Rent2

Department Stores4

Shopping Centres

Superstores

All Retail

Other

Total

All Offices

West End

Excluding Developments (£psf pa)1

Retail Warehouses

City

1 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 20092 Average contracted passing rent (post expiry of rent free periods) 3 Average Headline ERV4 Including High Street 45


Annualised Rents & ERV Analysis

1 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 20092 Net rental income under IFRS differs from annualised rents which are cash based, due to accounting items such as spreading lease incentives and

contracted future rental uplifts, as well as direct property costs and disposals in the year 3 Gross rent receivable plus any increases to current ERV from outstanding rent reviews (net of ground rents payable) 4 Within 5 years - includes rent reviews, lease break/expiry, and letting of vacant space at current ERV (as determined by external valuers), plus expiry of rent

free periods and contracted fixed/minimum uplifts5 Including High Street

143-4342-42West End

528

19

146

103

363

32

86

71

174

Total

272

1

75

75

196

2

66

63

65

Funds & JVs

256

18

71

28

167

30

20

8

109

Group

Estimated rental value (£m pa)4

213

15

47

5

151

26

17

8

100

Group Net reversion

Annualised rents (£m pa)3Rental Income - Cash Flow Basis1,2

(Excluding Developments)

471

16

127

85

328

28

75

69

156

Total

258

1

80

80

177

2

58

61

56

Funds & JVs

4Department Stores5

11Shopping Centres

2Superstores

35All Retail

3Other

57Total

19All Offices

Retail Warehouses 18

City 18

46


Portfolio Yield Profile

7.1

11.0

7.0

6.5

7.2

7.0

7.8

7.2

5.9

7.3

Net Equivalent Yield4

7.8

11.3

7.5

7.1

7.7

7.7

8.1

8.6

6.3

8.0

Reversionary Yield2

7.4

10.5

7.6

7.4

7.7

7.3

8.0

7.8

6.1

7.5

Top-up Initial Yield2,3

6.9

9.4

6.5

7.0

6.3

7.0

7.0

7.4

6.1

7.2

Initial Yield2

Department Stores5

Shopping Centres

Superstores

All Retail

Other

Total

All Offices

West End

Excluding Developments (%)1

Retail Warehouses

City

1 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 20092 Gross yield to British Land (without notional purchaser’s costs)3 Adding back rent frees and contracted rental uplifts 4 After purchaser’s costs5 Including High Street

47


Long Leases & High Occupancy

100.0100.019.422.5Provincial

Occupancy rate (%)Average lease length (yrs)Excluding Developments1

94.4

93.8

85.8

97.8

81.2

98.4

100.0

96.7

100.0

98.4

Underlying2

13.0

21.3

9.2

8.2

9.6

14.4

27.5

11.4

17.6

11.7

To first break

14.3

21.6

11.5

11.3

11.6

15.3

30.5

12.0

17.6

12.8

To expiry

100.0Department Stores3

94.7Shopping Centres

100.0Superstores

97.7All Retail

93.8Other

93.5Total

84.5All Offices

97.6West End

Overall

Retail Warehouses 97.8

City 79.4

1 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 20092 Underlying occupancy rate including accommodation subject to asset management and under offer3 Including High Street 48


Rental Income Subject to Rent Review

1 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 20092 Excluding developments3 Including rent reviews currently outstanding4 Based on current ERV and assuming nil increase where ERV is lower than current passing rent5 Including High Street

Potential Uplift4Annualised Rent

5

-

-

-

-

5

-

1

2

2

20103

2

-

-

-

-

2

-

1

-

1

2011

1

-

-

-

-

1

-

-

-

1

2012

213

2

43

14

29

168

-

38

43

87

Total

8585798Total

1

12

1

11

44

-

6

13

25

2011

-

23

10

13

35

-

14

4

17

2012

1

8

3

5

89

-

18

26

45

20103

-

-

-

-

8

-

2

2

4

Total

Department Stores5

Shopping Centres

Superstores

All Retail

Other

All Offices

West End

Year to 30 September (£m pa)1,2

Retail Warehouses

City

49


Rental Income Subject to Lease Break or Expiry

1 Pro forma for Broadgate JV (50% share of Broadgate), completed 3 November 20092 Excluding developments3 Including High Street

-------Provincial

74321923111110Total

2%

-

7

2

5

4

-

2

-

2

2011

2%

-

6

6

-

5

-

3

-

2

2012

2%

1

3

-

3

6

-

4

-

2

2010

13%

3

40

10

30

31

-

16

1

14

2010-14

6%

1

16

8

8

15

-

9

-

6

2010-12

3%

-

10

-

10

9

-

5

-

4

2014

4%

2

14

2

12

7

-

2

1

4

2013

Department Stores3

Shopping Centres

Superstores

All Retail

Other

% of total rent

All Offices

West End

Year to 30 September (£m pa)1,2

Retail Warehouses

City

50


The information contained in this presentation has been extracted largely from the Half Year Results Announcement for the six months ended 30 September 2009.

This presentation may contain certain “forward-looking” statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of British Land speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. British Land does not undertake to update forward-looking statements to reflect any changes in British Land’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

This presentation is made only to investment professionals as defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 ('the FP Order'). The content of this presentation has not been approved by a person authorised under the Financial Services and Markets Act 2000 (“FSMA”). Accordingly, this presentation may only be communicated in the UK with the benefit of an exemption set out in the FP Order. An investment professional includes:(i) a person who is authorised or exempt under FSMA; and(ii) a person who invests, or can reasonably be expected to invest, on a professional basis for the purposes of a business carried on by him; and(iii) a government, local authority (whether in the United Kingdom or elsewhere) or an international organisation; and(iv) any director, officer, executive or employee of any such person when acting in that capacity.

This presentation is published solely for information purposes. This presentation does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any security, nor a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the securities referred to in this presentation in any jurisdiction in contravention of applicable law. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein.

The distribution of this presentation in jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the UK should inform themselves about, and observe, any applicable requirements. This presentation has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this presentation had been prepared in accordance with the laws of jurisdictions outside the UK.

All opinions expressed in this presentation are subject to change without notice and may differ from opinions expressed elsewhere.

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