INVESTOR PRESENTATION
NOVEMBER 2010 www britishland comNOVEMBER 2010 www.britishland.com
British Land At A Glance
• One of Europe’s leading REITs• One of Europe’s leading REITs
• High quality £8.9bn prime UK retail and London office portfolio
• Secure income flows underpinned by long leases and quality occupiers
• Well positioned to deliver growth and value from existing portfolio
• Strong balance sheet and access to debt finance
• Opportunities to create further value through acquisitions and development
Generating Superior Total Shareholder Returns
2
High Quality £8.9bn Prime Real Estate Portfolio
• £14.0bn owned or under management (BL Share £8.9bn)
• Over 33m sq ft of prime retail and London office properties
Other 3%
Retail Warehouses 28% City Offices 20%
West End Offices
Superstores 15%
West End Offices12%
Europe 4%
Department Stores 5%
Shopping Centres 13%
Europe 4%
3
Property With Enduring Occupier Appeal: Retail
Glasgow Fort Shopping Park, Glasgow Meadowhall Shopping Centre, Sheffield
• One of 6 super regional shopping centres in the UK• Dominant out of town retail destination• Attracts more than 24m visitors each years• Over 280 retail national and international brands
• Premier 390,000 sq ft Open A1 fashion park • Convenient out of town location• Annual footfall of c.13m• 220,000 sq ft consented extensions, 80,000 sq ft
4
pre‐let to M&S
Property With Enduring Occupier Appeal: Offices
Broadgate, City of London Regent’s Place, West End of London
• 1.2 m sq ft of mixed office and retail• Further 500,000 sq ft: starting soon• Good infrastructure (national rail/6 tube lines)• Broad mix of quality tenants
• 4.4m sq ft premier City of London office estate• Built around Liverpool Street station• Agreement for leases with UBS to develop a new
700,000 sq ft building on site of 4 & 6 Broadgate
5
• Major refurbishment of 199 Bishopsgate
Secure Long‐Term Income ‐ Broad Base of High Quality OccupiersOccupiers
OfficeRetail Office
% of total rent
UBS 4
Retail
% of total rent
Tesco 8
HM Government 2
RBS 2
Bank of Tokyo‐Mitsubishi UFJ 2
Sainsbury’s 7
Debenhams 4
B&Q 2 Bank of Tokyo‐Mitsubishi UFJ 2
Macquarie Group 2
Herbert Smith 2
B&Q 2
Homebase 2
Next 2
JP Morgan 1
Aegis Group 1
Reed Smith 1
Asda 1
Boots 1
Marks & Spencer 1 eed S
Gazprom 1
Marks & Spencer 1
Curry’s 1
6
Secure Long‐Term Income ‐ High Occupancy and Long Leases
Income Profile
Leases
Income Profile
Annualised Rent £m1
Net Reversion (5 years) £m2
Occupancy Rate (%)3
Lease Length Years4
Retail Warehouses 164 14 98.9 11.0
Superstores 73 1 100.0 17.6
Shopping Centres 77 10 97.7 10.8
Department Stores2 26 2 98.7 26.3
All Retail 340 27 98.8 13.7
City 79 20 96.3 10.2
West End 45 18 98.0 8.6
All Offices 124 38 96.9 9.6
Oth 16 3 93 3 20 3Other 16 3 93.3 20.3
Total 480 70 98.0 12.5
1 Gross rent receivable plus any increases to current ERV from outstanding rent reviews (net of ground rents payable)
7
Gross rent receivable plus any increases to current ERV from outstanding rent reviews (net of ground rents payable) 2 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 uplifts
3 Including accommodation subject to asset management and under offer4 To first break
Secure Long‐Term Income – Lease Expiries
Year to 30 September (£m pa)Year to 30 September (£m pa)Excluding developments 2011 2012 2013 2014 2015 2011‐13 2011‐15
Retail Warehouses 3 2 5 4 5 10 19
SuperstoresSuperstores ‐ ‐ ‐ ‐ ‐ ‐ ‐
Shopping Centres 3 2 4 4 5 9 18
Department Stores1 ‐ 1 ‐ ‐ ‐ 1 1
All Retail 6 5 9 8 10 20 38
City 1 ‐ 2 10 11 3 24
West End 1 10 2 4 13 17West End 1 10 2 ‐ 4 13 17
All Offices 2 10 4 10 15 16 41
Other ‐ ‐ 2 ‐ ‐ 2 2
Total 8 15 15 18 25 38 81
% of Contracted Rent 1.5% 2.8% 2.8% 3.3% 4.9% 7.1% 15.3%
81Including High Street
Our Strategy
• High quality income stream to support strong dividend• High quality income stream to support strong dividend
• Optimal asset allocation to deliver future capital value growth
• Optimal financial structure to drive total returns
Our objective is to be the premier UK commercial real estate company
9
2010 Half Year Results
10
Results Highlights
• U d l i fit th +12%1• Underlying profit growth +12%1
• Continued strong lettings in offices
• E l i f t l th i i t il• Early signs of rental growth in prime retail
• 4% growth in Net Asset Value
£1 5b 2 L d ffi d l t• £1.5bn2 London office development programme
111Excluding £16m 2009 credit risk provision release2BL share £1bn
2010 Half Year Financial Results Summary
• New lettings result in profits at pre Broadgate JV levels• New lettings result in profits at pre‐Broadgate JV levels
• Dividend payment in line with 2009
• Loan to Value fallen for fourth consecutive quarterLoan to Value fallen for fourth consecutive quarter
Half Year to 30 SepFirst Half
2009First Half
2010Half Year to 30 Sep 2009 2010
Net Asset Value per share1 372p 525p
Underlying Profit Before Tax2 £129m £127m
Underlying Diluted EPS 14.8p 14.2p
Dividend per share 13.0p 13.0p
( )LTV (Group) 47% 22%
LTV (inc joint ventures and funds) 58% 45%
Total Return ‐3.0% +6.7%
121EPRA (European Public Real Estate Association) basis2Excluding gains on property revaluations & disposals, and intangible asset movements
Lettings and Reduced Operating Costs Offset Disposals
Reconciliation of Underlying Profit Before Tax1
(£14m) £127mFees: £3m £3m
£14m
Reconciliation of Underlying Profit Before Tax1
(£16m)
Costs: £6m£129m
£4m
£14m(£16m)
£99m(£2m)
H12009
H12009
proforma
H12010
Broadgate JV
formation
Netfinance costs
Credit provision release
Acquisitionsless otherdisposals
Leaseexpiries
Newlettings& rent
Operatingcosts & fees2
131With proportional consolidation of Funds & JVs2Operating costs consist of property outgoings and admin expenses
proformaformation costsrelease disposals & rentreviews
& fees
Continued Valuation Growth
BL Portfolio Valuation Movement1 BL Capital Return vs IPDBL Portfolio Valuation Movement1% change
BL Capital Return vs. IPD
+18 1%6 monthsS 2010
12 monthsS 2010+18.1% to Sept 2010 to Sept 2010
Capital Return2
ERV +1.3% +1.1%
Yield compression3 9 bps 112 bps
Total 2.7% 19.2%
+2.6%
Performance Relative to IPD
ERV growth 1 5% +2 8%2.6%+1.2%
ERV growth 1.5% +2.8%
Yield impact ‐0.5% +2.2%
Total +0.1% +3.2%
14
1Valuation movement (net of capital expenditure) of properties held at the balance sheet date2Calculated by IPD for all UK assets on average capital employed and excluding capitalisedinterest
3Equivalent yield
Retail Performance Highlights
• Continued ERV outperformance • All BL sectors ahead or stable in Q2• Continued ERV outperformance
• Q2 ERV ahead +0.1%
• All BL sectors ahead or stable in Q2
l h b l
BL
BL Retail ERV movement vs. IPDERV growth %
Q2 ERV growth by Retail Sector
Retail Warehouses +0.1%
Superstores +0.0%
Shopping Centres +0.2%
D t t St 0 0%Department Stores +0.0%
Total +0.1%Q22009
Q32009
Q42009
Q12010
Q22010
15
Retail Performance Highlights
• Nearly 500 000 sq ft of new lettings and lease renewals 80% long term leases• Nearly 500,000 sq ft of new lettings and lease renewals: 80% long term leases
• Improving rental trends through the half
− 210,000 sq ft new lettings in Q2 broadly in line with ERV, q g Q y
− Average lease to first break 9 years ahead of industry at 5 years
• £23.7 million of annual rental income
New Lettings, Renewals and Rent ReviewsNew Lease Rent
6 months to 30 Sep 2010New
LettingsLease
RenewalsRent
Reviews Total
Number 99 51 54 204
Sq ft (’000s) 393 96 1 208 1 697Sq ft ( 000s) 393 96 1,208 1,697
Lease to first break (yrs) 9.3 2.7 n/a n/a
Annual Rent (BL Share) £6.6m £1.2m £15.9m £23.7m
16
Office Performance Highlights
• Over 200 000 square feet of new lettings in first half• Over 200,000 square feet of new lettings in first half
• Occupancy levels increased to 97%: new buildings almost fully let
• Over 200 000 square feet of rent reviews/renewals (incl Axa and Barings)Over 200,000 square feet of rent reviews/renewals (incl. Axa and Barings)
• £14.4 million of annualised rent
New Lettings, Renewals and Reviews (excludes UBS agreement) in Half Year
Half year to Sept 2010
Sq ft (000s) excl pre‐lets
Annual Rent £m
Relative to ERV
Lease to 1st Break
New Lettings 217 9.4 +14% 11.9 years
Lease Renewals 139 2.4 +11% 14.8 years
Rent Reviews 76 2.6 +2% n/a
Total 432 14.4 +11% n/a
17
Well Positioned to Deliver Growth
18
Portfolio Development – Increasing Exposure to Growth Sectors
Portfolio Weighting by Value • Increased exposure to out of town retail
Increasing Exposure to Growth Sectors
Portfolio Weighting by Value
September 2010 Reported Pro forma1
Retail Warehouses 31% 28%
• Increased exposure to out‐of‐town retail
− Retail warehouses up from 13% in 2005
Superstores 15% 14%
Shopping Centres 14% 13%
• London offices increases from 33% to nearly 40% of portfolio
• Increasing long term West End exposureDepartment Stores 5% 4%
Retail 65% 59%
City Offices 20% 23%
• Increasing long‐term West End exposure
− Up from 5% in 2005 to 15%
• Taking advantage of shortage of Grade A City Offices 20% 23%
West End Offices 12% 15%
Provincial Offices 1% 1%
g g gspace in the City
Offices 33% 39%
Other 2% 2%
191Pro forma reflecting independent valuation of committed London development programme at completion
Portfolio Well Positioned For Growth
BL Sector Weightings Relative to IPDERV Growth Forecasts by Sector1 BL Sector Weightings Relative to IPD
Retail Parks
ERV Growth Forecasts by Sector1
S t
Retail Parks
Sh
Shopping Centres
Superstores
Shops
Shopping Centres
Superstores
West End offices
City offices
Shops
West End offices
City offices
Shops
Industrial
Provincial offices
Industrial
Provincial offices
‐15 ‐10 ‐5 0 5 10 15 20‐2 0 2 4 6 8
YOY Change (%) ‐ next 5 years
201 PMA Autumn 2010 forecast
Strong Balance Sheet And Access To Capital ‐ Group
Group Financing Statistics Group Debt Maturity ProfileGroup Financing Statistics
As at 30 Sept (£m) 2009 2010 500£m
Group Debt Maturity Profile
Property & Investments 6,570 6,070
Net debt 3,171 1,378400
Interest cover 2.1x 3.0x
d b i 2 0 200
300
Average debt maturity 14.7 yrs 12.0 yrs
LTV 47% 22% 100
200
FY
Cash & undrawn facilities 3,519 3,206
Unsecured credit rating BBB+ A‐
0
2011 2012 2013 2014 2015FY
21
g
Retail
22
UK Portfolio Focused on High Performing Locations
• Average BL assets rank in top 5% of mostBritish Land UK Retail Portfolio • Average BL assets rank in top 5% of most dominant retail centres (source: CACI)
• BL retail parks: 5% of market covering 32% of UK population1
British Land UK Retail Portfolio
UK population1
• Superstores 31% by value
− Consistent above average rental growth 31%
4%
of over 4% pa
• 37% of portfolio in CACI rated top 50 retail and retail park locations
Top 50
31% 23%
− 3rd most attractive shopping centre
− 9 of top 25 retail parks
− 3 of top 4 super parks
Top 50
14%3 of top 4 super parks
28%
231CACI2Includes superstores at retail parks and shopping centres
Strong Regional Presence Drives Rental Outperformance
• High occupancy rates across the portfolio• High occupancy rates across the portfolio
• Positive relative ERV performance in every region except London
Retail Portfolio Performance
Share of BL UK retail portfolio
Occupancy1
%6 month ERV
movement vs. IPD
London 11% 98.4% ‐30 bps
South East/East 17% 97.6% +90 bps
South West/Wales 10% 99 6% +80 bpsSouth West/Wales 10% 99.6% +80 bps
Midlands 11% 99.2% +130 bps
Yorkshire/Humberside2 24% 99.4% + 40 bps
North West 12% 98.8% +160 bps
North East 6% 100.0% +230 bps
Scotland 9% 97.9% +100 bps
241Including accommodation subject to asset management and under offer2Principally Meadowhall
Scotland 9% 97.9% +100 bps
Continued Retail Market Polarisation
• Large retailers significantly increasing • Polarisation of performance between• Large retailers significantly increasing share
• Polarisation of performance between best locations and the rest
Share of all UK Retail Sales1 All Retail ERV Growth (IPD)2
Large Food Retailers
Share of all UK Retail Sales1% share
All Retail ERV Growth (IPD)2March 2007 = 100
Large Food RetailersPrime
Large Non‐Food Retailers
SecondarySmall Retailers
Jun07
Dec07
Jun08
Dec08
Jun09
Dec09
Jun10
251ONS2IPD
07 07 08 08 09 09 10
Retailers Renewed Focus on Higher Performing LocationsLocations
“Phase2 will deliver a significant shift in footprint from in‐town to the more profitable
t f t ti t f t d i i
“Arcadia could shrink by as many as 200 stores over the coming three years as the group
fi it t tf liout‐of‐town parenting centre format – driving profit per square foot but leaving the overall retail space unchanged.”
reconfigures its property portfolio.
About 500 leases expire over the next three years, giving Arcadia a good opportunity to reshape the portfolio”reshape the portfolio .
“New Look’s average store size has grown from 2,000 sq ft 10 years ago to 6,000 sq ft today. Its shops have 10 size formats that range from 800
“M&S will increase the pace of its store openings, to ensure 95 per cent of UK consumers are no more than a 30‐minute drive shops have 10 size formats that range from 800
sq ft to 30,000 sq ft.
Most UK high streets cannot cater for this size, so growing our presence out of town will be
consumers are no more than a 30 minute drive from an M&S store by 2015.
The run‐rate of store space will increase from 2 to 3 per cent pa over the next five years.”
Company reports
g g p fimportant.”
p p f y
26
Renewed Demand from Quality Retailers
Expansion of Existing Formats New Formats Out of TownExpansion of Existing FormatsLettings 000 sq ft
New Formats Out of TownLettings 000 sq ft
0 5 10 15 20 25 30 35
27
6 months to 30 Sep 2010
High Level of Secondary Lease Expiries Facilitates Further Polarisation
• Significant near term expiries in secondary
Further Polarisation
Retail Lease Expiries 2011 2015 (IPD)
12 0
• Significant near term expiries in secondary retail in next five years
• 43% of all secondary retail income
Retail Lease Expiries 2011‐2015 (IPD)%
12.0
Secondary Primary• 47% of secondary shopping centre income
• Compares with:
− 19% for all prime8.0
19% for all prime
− 11% for British Land
4.0
0.0
2011 2012 2013 2014 2015
28
But a Growing Shortage of Prime Retail Locations
Retail Vacancy Rate (IPD) Retail Development Completions1
14Retail Warehouses
Forecast
Retail Vacancy Rate (IPD) Retail Development Completions1
m sq ft
Vacancy rate %
10
12Town Centre Forecastrate %
ShoppingCentres
Prime 3.3
Secondary 11.9
6
8RetailWarehouses
Prime 1.6
Secondary 10.5
Prime 2 5
2
4
All RetailPrime 2.5
Secondary 11.4
0
2
2000 2002 2004 2006 2008 2010 2012 2014
291PMA
ERV Growth Forecast to Return – But Continued PolarisationPolarisation
End 2010‐15 2010
Solus Ret Warehouse
Supermarkets
Big Shopping Centre
Retail Parks
Prime Smaller SC's
Secondary SC's
Retail Big Towns
Central London
5 4 3 2 1 0 1 2 3 4
Retail Small Towns
Retail Big Towns
30PMA
‐5 ‐4 ‐3 ‐2 ‐1 0 1 2 3 4ERVs % change pa
Planned and Prospective Retail Development
Planned/Prospective UK Retail ExtensionsPlanned/Prospective UK Retail Extensions
Sq ft(’000)
BLShare
Whiteley Village Southampton 278 50%
Glasgow Fort Glasgow 220 38%
Broughton Park Chester 70 38%g
Fort Kinnaird Edinburgh 110 19%
Surrey Quays London 101 50%
S i 8 0%Superstore extensions 87 50%
Other 66 28%
Total 932
31
Re‐developing an Existing Scheme ‐Whiteley Village
• Existing outlet scheme close to Southampton
• Core catchment of 1.1m population
• Re‐development to provide 278,000 sq ft of A1/A2/A3 space
32
Re‐developing an Existing Scheme ‐Whiteley Village
33
Extending an Existing Scheme ‐ Glasgow Fort
• 395 000 sq ft395,000 sq ft
• Open A1
• Annual footfall c 13mAnnual footfall c 13m
• Planning for 220,000 sq ft extensions
• Phase II ‐ Retail anchored by M&S pre‐let
Ph III L i d• Phase III ‐ Leisure and food
34
Extending an Existing Scheme ‐ Glasgow Fort
35
Offices
36
Office Portfolio ‐ Shifting toward Developments
• 40% high quality long term incomeOffice Portfolio1 • 40% high quality long‐term income
• 31% active management
− Includes near term potential pipeline Active Management
Office Portfolio1
p p pdevelopments 16%
• 29% committed development
Lease Length5‐10 yrs Lease
Length0‐5 yrs
15%
− Of which 30% pre‐let
Pre‐let8%
0 5 yrs
16%
L t
40%
Spec
8%
CommittedDevelopmentLong‐term
income21%
Development
371Pro forma to reflect independent valuation of committed London office developments at completion
Long‐Term Income – New Offices with High Quality OccupiersOccupiers
Value Lease length Occupancy1 Rent2 Equiv. Yield3 CV psf
£1,520 m 13.2 years 95% £93m 5.7% £635
10 & 20 Triton Street Ropemaker Place
The Broadgate Tower
38
1Including asset management and under offer
2Total contracted rent3After notional purchaser’s costs
Active Management – Offices with Medium to Longer‐Term Development PotentialTerm Development Potential
Value Lease length Occupancy1 Rent2 Initial Yield3 CV psf
39 Victoria Street • 76 000 sq ft
£1,132m 5.6 years 99% £82m 7.1% £575
• 76,000 sq ft• 1.8 yrs average lease length
• 7.2% initial yield
100 Liverpool Street • 382,000 sq ft• 4.9 yrs average lease lengthlease length
• 9.1% initial yield
39
1Including asset management and under offer2Total contracted rent3After notional purchaser’s costs
2.1m sq ft of London Office Developments
• 2 1m sq ft of prime office space• 2.1m sq ft of prime office space
• Attractive development yields of >7% net of current letting voids/tenant incentives
C i d L d D lCommitted London Developments
Sq ft’000
BL Share
Practical Completion
Site Value £m
Total Cost1
£mERV2
£m
NEQ, Regent’s Place 500 100% Q2 2013 39 257 19
Baker Street 158 100% Q1 2013 40 79 8
5 Broadgate 700 50% Q3 2014 57 200 195 Broadgate 700 50% Q3 2014 57 200 19
Leadenhall 610 50% Q3 2014 39 204 19
199 Bishopsgate 142 50% Q4 2012 19 23 3
Total 2,110 194 763 68
401Estimated costs to complete including notional 6% finance (excludes site value)2Headline (excluding tenant incentives)
London Office Market – Demand Outlook
• London has deep embedded advantages asLondon Financial & Business Services Employment1
300City West End & Mid‐town Docklands
• London has deep embedded advantages as
a financial centre
− Time zone
Size/expertise of financial and business
London Financial & Business Services Employment1
Jobs (‘000)
200
250
− Size/expertise of financial and business
services sectors
− Hard and soft infrastructure
• Global financial firms require London
150
200 • Global financial firms require London
quality advisory support
• GDP growth forecast of 4.3% pa to 20202
B t h ll
50
100• But challenges:
− Long‐term trend for capital and financial
& business services activity to migrate
i k0
198019841988199219962000200420082012
to emerging markets
− Increasing taxation and regulationActual Forecast
681 PMA2 Oxford Economics real GDP growth forecast for Inner London (compares with New York: 3.8%; Tokyo: 2.0%; Paris: 2.2%)
Demand For Modern Office Working Environments
Average City Development Size1 City & West End Take up1Average City Development Size1
175
City & West End Take‐up1
12’000 sq ft m sq ft
125
150
9
Other
Grade A
75
1006
50
75
3
0
25
82 85 88 91 94 97 00 03 06 09
0
FY 05 FY 06 FY 07 FY 08 FY 09 Q1 10
42
82 85 88 91 94 97 00 03 06 09 FY 05 FY 06 FY 07 FY 08 FY 09 Q1 10
1 Jones Lang LaSalle
Classic Signs Of A Cyclical Recovery in London Offices
Vacancy rate (%)1 2003 Peaked at
16
18
20City West End
2008 Peaked at
17.8% City10.4% West End
1992 Peaked at 17 3% City
12
14
16 2008 Peaked at 12.9% City7.8% West End
17.3% City14.2% West End
8
10
4
6
0
2
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Actual Forecast
51 PMA
Significant City Office Lease Expiries
City Office Lease Expiries1• Long‐term annual City take up of 5m sq ft
m sq ft
City Office Lease Expiries1
• 12m sq ft of lease expiries 2010 ‐ 2015
4.0Known City Office Requirements
Sq ft3.0Bloomberg 500,000
PWC 300,000
CMS Cameron McKenna 250,0002.0
Schroders 250,000
Bank of America 200,000
Aon 130,000 – 180,0001.0
Trowers & Hamlins 110,000
Capita Symonds 100,000
Markel 70,0000.0
2011 2012 2013 2014 2015
91 Drivers Jonas Deloitte
Shortage of Prime Office Space in the City
• Supply pipeline constrained by lack of Major City Offices Under Construction or Committed• Supply pipeline constrained by lack of development finance
City Office Market – Development1
Major City Offices Under Construction or Committed
‘000 Sq ft Completion Let
5 Broadgate2
700 2014 100%m sq ft
6.0
Available under construction
Completed
A T k U
122 Leadenhall St 610 2014 0%
20 Fenchurch St 690 2013 0%
199 Bishopsgate 142 2012 0%
4.0
Av Take UpHeron Tower 440 2011 6%
Cannon Place 389 2011 0%
200 Aldersgate 370 2010 0%
2.0
40 Gracechuch Street 120 2010 0%
0.085 90 95 00 05 10
451Drivers Jonas Deloitte
85 90 95 00 05 10
Long‐Term Shortage of Prime Offices in the West End
Major West End Offices Under Construction/CommittedWest End Market Development1 Major West End Offices Under Construction/Committed
‘000 Sq ft Completion Let
NEQ, Regent’s Place 380 2013 0%4.0
West End Market – Development1
m sq ft
62 Buckingham Gate 269 2013 0%
Park House 163 2012 0%
2‐14 Baker Street 139 2013 0%3.0
3.5
Available under Completed
2.0
2.5construction
Av Take Up
1.0
1.5
0.0
0.5
85 90 95 00 05 10
61 Drivers Jonas Deloitte2 Subject to planning approval
85 90 95 00 05 10
Prime London Rents Growing Strongly
Prime Rent £psf1
100
120City West End Docklands
Prime Rental Growth Forecasts 2010‐20151
City
80
y
% change pa 7.3%
Implied Rent £68 psf
40
60 West End
% change pa 6.8%
Implied Rent £106 psf
20
40p p
0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Actual Forecast
1 Average agents’ consensus (including PMA) 4
West End Development ‐ Creating Incremental Rental Growth at Regent’s Placeat Regent s Place
• Adjacent to core West End withEvolution of Regent’s Place rents • Adjacent to core West End with excellent transport links
• 18% growth in rental value since 2000140
Evolution of Regent s Place rents vs. core West End Offices Index 2000 = 100
− Significantly above West End market
• Latest rents over £50 psf120
140Regents PlaceIPD West EndVictoriaMayfair
• Latest rents over £50 psf
• Strong growth in net effective rents at Triton Street
100
120
80
100
60
80
60
2000 2002 2004 2006 2008 201048
West End Development – Completing Regent’s Place
• NEQ completes the final phase• NEQ completes the final phase
• 500,000 sq ft (including some retail and residential)
• Due for completion in Q2 2013
49
West End Office Development ‐ Investing in Portman Village
• Prime location north of Oxford Street
Village
• Prime location north of Oxford Street
• British Land investment
− York House, Seymour St, y
− 2‐14 and 95‐99 Baker St
• Prospective purchase of Marble Arch House, Seymour St
• Revitalising Portman village
R ti ill t f th• Regeneration will create further incremental value
50
City Office Development ‐ Investing in Broadgate
• 5 Broadgate• 5 Broadgate
− 700,000 sq ft
− Secures UBS on the estate
− £54.50 psf rising with inflation
− 18.2 year average lease
• 199 Bishopsgate
− 142,000 sq ft
− Substantial refurbishmentSubstantial refurbishment
− Ready for delivery in 2012
51
City Office Development – Leadenhall
• Leadenhall Building in the City• Leadenhall Building in the City
• Joint venture with Oxford Properties
• 610 000 sq ft of spectacular space610,000 sq ft of spectacular space
• Due to complete in 2H 2014
52
The Leadenhall Building – Broad Occupier Appeal
6 000 sq ft
• In the heart of the insurance district
• Half an acre of public 6,000 sq ft a a ac e o pub cspace at the base
• Regular, rectangular floor platesfloor plates
• Floor plates ranging from 21,000 sq ft to
f
21,000 sq ft
6,000 sq ft
• Expected to appeal to a broad occupier base
53
APPENDIX
54
Income Statement
Summary Income Statement1Summary Income Statement1
Half Year to 30 Sep£m 2009
2009 Pro forma2 2010
Q1 2010
Q2 2010
Gross rental income 295 251 267 135 132
Property outgoings (4) (18) (12) (7) (5)
N t i t t (136) (108) (105) (53) (52)Net interest (136) (108) (105) (53) (52)
Net rental income less interest 155 125 150 75 75
Fees & other income 6 6 9 4 5
Admin expenses (32) (32) (32) (15) (17)
Underlying Profit Before Tax 129 99 127 64 63
Underlying Diluted EPS 14.8p 14.2p 7.1p 7.1p
551With proportional consolidation of Funds & JVs2Pro forma for Broadgate JV formation and release of credit risk provision
Gross (Accounting) Rental Income – Sectoral Analysis
Gross Rental Income (£m pa) Annualised as at 30 Sept 2010Gross Rental Income (£m pa) Annualised as at 30 Sept 2010
Group Funds & JVs Total
Retail Warehouses 101 64 165
S 10 62 72Superstores 10 62 72
Shopping Centres 16 59 75
Department Stores1 33 ‐ 33
All Retail 160 185 345
City Offices 24 81 105
West End Offices 56 ‐ 56
All Offices 80 81 161
Other 18 ‐ 18
Total – recurring items 258 266 524g
561 Including High Street
Like for Like Rental Income Growth
Analysis of annualised gross rental income1 2Analysis of annualised gross rental income1,2
As at 30 Sep2009£m
2010£m
Properties owned throughout:
Retail 327 330 +0.9%
Offices 123 124 +1.3%
Other 18 18 +0.6%
Total ‐ like for like 468 472 +1.0%
A i i i 1Acquisitions ‐ 17
Disposals 88 ‐
Developments 7 35
Annualised gross rental income 563 524
57
1With proportional consolidation of Funds & JVs2As an improvement to previous disclosures, the calculation here is based on annualised accounting rental income, not the gross rental income recognised in the period
Future Income
Analysis of Gross Reversion (based on current ERV)Analysis of Gross Reversion (based on current ERV)
As at 30 Sept 2010 (£m)Cash Flow
BasisAccounting
Basis
Annualised rent 480524
Expiry of rent frees and fixed/minimum uplifts1 73
Total contracted 553 524
Letting of current vacant space 12 10
Rent reviews 6 6
G i 571 540Gross reversion 571 540
Committed developments at ERV 78 67
Total 649 607
581Within 5 years
Reconciliation of Underlying Profit Before Tax
30 Sept 30 Sept£m
30 Sept 2010
30 Sept 2009
IFRS Profit/(Loss) before tax 328 (113)
Net valuation movement (includes disposals) (216) 232
Deferred and current taxation of joint ventures & funds 3 3
Amortisation of intangible asset 8 7
Other non‐recurring items 4 ‐
Underlying profit before tax 127 129
59
Further Growth in Net Asset Value
Reconciliation of Net Asset Value1
525p14p
Reconciliation of Net Asset Value1
Scrip: (6p)Cash: (7p) (3p)13p
10
504p
14p Sc p (6p)10p
601EPRA basis
Portfolio Valuation by Sector
Group Funds & Total Portfolio Change2Group Funds & Total Portfolio Change2
As at 30 Sept 2010 £m JVs £m1 £m % 6 months % 3 months %
Retail Warehouses 1,699 1,028 2,727 30.8 1.1 0.4
Superstores 169 1,169 1,338 15.1 2.6 1.9
Shopping Centres 203 1,023 1,226 13.8 2.6 0.9
Department Stores3 435 ‐ 435 4.9 (0.3) (0.4)
All Retail 2,506 3,220 5,726 64.6 1.7 0.8
City4 521 1,292 1,813 20.5 3.7 1.3
West End4 1,075 ‐ 1,075 12.1 6.0 3.3
Provincial4 33 7 40 0.5 19.8 12.2
All Offices4 1,629 1,299 2,928 33.1 4.8 2.1
Other 191 12 203 2 3 0 7 (0 7)Other 191 12 203 2.3 0.7 (0.7)
Total 4,326 4,531 8,857 100.0 2.6 1.21Group’s share of properties in Funds & Joint Ventures2Valuation movement during the period (after taking account of capital expenditure) of properties held at the balance sheet date, including developments (classified by end use) and
61
p p , g p ( y )purchases
3Including High Street with a total value of £20m (0.2% of portfolio), 1.5% decrease for the 6 months
4Includes developments: total value £273m (3.1% of portfolio), 3.4% increase for the 6 months
Yield Profile
Excluding developments (%) Net Gross Gross Gross NetExcluding developments (%) NetInitialYield1
GrossInitial Yield2
GrossTop‐up
Initial Yield2,3
GrossReversionary
Yield2
NetEquivalent Yield1
Retail Warehouses 5.6 6.1 6.3 6.7 5.9Retail Warehouses 5.6 6.1 6.3 6.7 5.9
Superstores 5.1 5.4 5.4 5.5 5.1
Shopping Centres 5.6 6.3 6.7 7.2 6.2
Department Stores4 5.7 6.1 7.0 7.0 6.8
All Retail 5.5 6.0 6.2 6.5 5.9
City 4.6 4.8 7.1 6.0 5.9y
West End 4.2 4.5 6.5 6.3 5.7
All Offices 4.4 4.7 6.9 6.1 5.8
Other 8.4 8.7 9.5 10.1 9.4
Total 5.2 5.6 6.5 6.5 5.9
62
1After notional purchaser’s costs2Excluding notional purchaser’s costs (i.e. yield to British Land)3Adding back rent frees and contracted rental uplifts 4Includes High Street
Dividend Supported by Strong Income Profile
• Q2 dividend of 6 5p• Q2 dividend of 6.5p
• Focus on prime assets and high occupancy (98%)
• Optional scrip take‐up over 40% to dateOptional scrip take up over 40% to date
Dividend Cover
H lf Y t 30 S 2010Half Year to 30 Sep 2010
On Earnings 1.1x
On cash profits 0 9x1On cash profits 0.9x
Cash dividend (i.e. exc. scrip) on cash profits 1.6x
631Underlying EPS less spreading of tenant incentives & guaranteed rent increases,and non-cash admin expenses
Contracted Cash Flow Growth
Annualised Rent (cash flow and accounting basis)Annualised Rent (cash flow and accounting basis)
30 SeptCumulative
£mCumulative
£m
Annualised gross rental income 2010 524
Annualised net rents 2010 480
Rent free shortfall (44)Rent free shortfall (44)
Run‐off of rent frees and fixed/minimum uplifts 2011 18 (26)
2012 34 (10)
2013 58 14
2014 68 24
2015 73 29
Cumulative annualised surplus after 2015 29
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Net Debt
d lAs at 30 Sept 2010
Group £m
Funds & JVs £m
Total £m
Gross debt 1,746 2,853 4,599
Market value of derivatives 61 125 186
Cash & liquid investments (429) (187) (616)
EPRA adjustments1 (62) (117) (179)j ( ) ( ) ( )
Net debt (EPRA basis) 1,316 2,674 3,990
Average interest rate 5.3% 5.1% 5.2%
Interest cover2 3.0x 1.8x 2.2x
651 Excludes mark to market on effective cash flow hedges and related debt adjustments2 Underlying profit before interest and tax (UPBIT)/net interest
Further Reduction in Net Debt
Reconciliation of Movement in Net Debt (EPRA Basis)Reconciliation of Movement in Net Debt (EPRA Basis)
As at 30 Sep 2010 £m
Opening Net debt as at 31 Mar 2010 (4 081)Opening Net debt as at 31 Mar 2010 (4,081)
Operating cash flow after interest – Group 43
Operating cash flow after interest – Funds & JVs 52Operating cash flow after interest Funds & JVs 52
Dividends paid (64)
Operating cash flow less dividends paid 31p g p
Purchases, development & other capital expenditure (61)
Re‐payment of loans and deferred considerations 132
Other (11)
Closing Net Debt as at 30 Sep 2010 (3,990)
66
Strengthened Balance Sheet – Proportionally Consolidated
• Market pricing and availability of debt continues to improve• Market pricing and availability of debt continues to improve
Key Financing Statistics (inc share of Funds & JVs)Key Financing Statistics (inc. share of Funds & JVs)
As at 30 Sep2009£m
2010£m
P t & I t t 8 358 8 908Property & Investments 8,358 8,908
Net debt 4,824 3,990
Interest cover 1.9x 2.2x
Average debt maturity 12.2 yrs 10.7 yrs
LTV 58% 45%
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Fund and Joint Venture Financing
Fund & JV Financing (BL Share) Funds & JVs Debt Maturity Profile (BL Share)Fund & JV Financing (BL Share)
As at 30 Sep 10Funds
£mJVs£m
Total£m 500
£m
Funds & JVs Debt Maturity Profile (BL Share)
Net debt 402 2,389 2,791
Interest cover 1 9x 1 8x 1 8x 300
400
Interest cover 1.9x 1.8x 1.8x
Average interest rate 5.5% 5.1% 5.1% 200
300
Average debt maturity
3.0 yrs
11.4 yrs
9.9 yrs
100
LTV 45% 62% 59% 0
2011 2012 2013 2014 2015FY
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Top 10 Properties
S ft BL R t O LAs at 30 Sept 2010
Sq ft’000
BL Share
Rent£m pa1
Occupancyrate %2
Lease length, yrs3
1 Broadgate3 3,866 50% 171 96.5 8.7
2 Meadowhall Shopping Centre 1,387 50% 78 99.2 10.8
3 Regent’s Place4 1,210 100% 47 97.4 9.4
4 Ropemaker Place 594 100% 24 94.9 15.8p %
5 Fort Kinnaird Shopping Park 510 19% 18 99.5 7.5
6 New Mersey Shopping Park 473 19% 16 100.0 10.0
7 Glasgow Fort Shopping Park 389 38% 15 99.2 8.0
8 Teesside Shopping Park 458 100% 13 100.0 10.0
9 Bon Accord Shopping Centre 476 50% 15 99 4 7 39 Bon Accord Shopping Centre 476 50% 15 99.4 7.3
10 Parkgate Shopping Park 560 38% 12 100.0 9.1
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1Annualised contracted rent including 100% of Funds and Joint Ventures2Including accommodation subject to asset management and under offer3Excludes 4 & 6 Broadgate and 199 Bishopsgate (classified as development)4Excluding NEQ (classified as development)
Lease Length & Occupancy
E l di d l t Average Lease Length (yrs) Occupancy Rate (%)Excluding developments Average Lease Length (yrs) Occupancy Rate (%)
To Expiry To First Break Underlying1 Overall
Retail Warehouses 12.0 11.0 98.9 98.9
Superstores 17.6 17.6 100.0 100.0
Shopping Centres 11.4 10.8 97.7 94.8
Department Stores2 29 5 26 3 98 7 98 7Department Stores2 29.5 26.3 98.7 98.7
All Retail 14.5 13.7 98.8 98.1
City 12.3 10.2 96.3 96.0
West End 11.5 8.6 98.0 97.8
All Offices 12.0 9.6 96.9 96.7
Other 20 6 20 3 93 3 93 3Other 20.6 20.3 93.3 93.3
Total 13.9 12.5 98.0 97.5
701Including accommodation subject to asset management and under offer2Including High Street
Estimated Future Development Spend
Costs to complete
300 Retail
Costs to complete(excluding land and notional interest)£m
278£m Offices Retail Total
Offices
189
278Current value1
194 30 224
Cost to648 75 723200 189
171Cost to compete2
648 75 723
Notional interest2
115 9 124
100
22
56
interest
Total 957 114 1,071
0
2011 2012 2013 2014 2015
22
711As at 30 Sept 20102To PC (based on notional cost of finance of 6%)
FY
Creating Value Through Office Development
• Largest office developer in Central London over the past five years
l d f i• Completed 4m sq ft since 2004
• 54% of schemes were pre‐let with typical lease terms of around 20 years
• Over 95% of developments let or sold
Willis Building( ld)
201 Bishopsgate & Broadgate Tower (85% let)
RopemakerPlantation Place (sold)
Plantation Place South (sold)
York House(100% let)
(sold)35 BasinghallStreet (sold)
1 ColemanS ( ld)
Ludgate West (sold)
pPlace (95% let)
10 & 20 Triton Street (95% let)10 Exchange Sq
Street (sold) (95% let)g q(100% let)
20040.9m sq ft
20050.2m sq ft
20060.1m sq ft
20071.0m sq ft
20080.8m sq ft
20091.0m sq ft
11
201 Bishopsgate & Broadgate Tower
• Completed in 2008
• 35 storey tower and 13 storey building
• 822,000 sq ft
• 58% pre‐let to Henderson Global investors, Mayer Brown and Reed Smith
201 Bi h t 97% l t d• 201 Bishopsgate 97% let and Broadgate Tower 73% let
• Contracted annual income £33mContracted annual income £33m
• Average lease 14 years
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Ropemaker Place
• New office development completed in May 2009
• 594,000 sq ft building over 20 floors
Cl M d Li l• Close to Moorgate and Liverpool Street transport hubs
• 95% occupied: average lease 16 years
• Contracted annual income £25m
• Occupiers include major financial i i i l diservices companies, including
– The Bank of Tokyo‐Mitsubishi, Macquarie Group and Markit
74
10 & 20 Triton Street, Regent’s Place
• Second phase of development of Regent’s Place completed end‐2009
• Two buildings totalling 376,000 sq ft of officesof offices
• 110,000 sq ft of residential pre‐sold ahead of expectations
• 10 Triton Street offices fully let to Aegis
• Contracted annual income £16mContracted annual income £16m
• 20 Triton Street 93% let with range of quality occupiers, including
– Gazprom, Lend Lease, Ricoh Europe and Dimensional Fund Advisors
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Disclaimer
The information contained in this presentation has been extracted largely from the Half Year Results announcement for the six months ended 30 September2010.
This presentation may contain certain “forward‐looking” statements. By their nature, forward‐looking statements involve risk and uncertainty because theyrelate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by suchforward‐looking statements. Any forward‐looking statements made by or on behalf of British Land speak only as of the date they are made and norepresentation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. British Landd t d t k t d t f d l ki t t t t fl t h i B iti h L d’ t ti ith d th t h i tdoes 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.
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