Preliminary Results Presentation Year ended 31 March

Transcription

1 Preliminary Results Presentation

2 Introduction Chris Grigg Chief Executive

3 Executive Summary Resilient operational performance underlying profits stable at 268m Management actions have mitigated the impact of market dislocation 740m rights issue Continued reshaping of portfolio including Meadowhall JV 1.9bn 1 of disposals in 2008/9 Portfolio and financial structure put British Land in a strong position Long leases with just 6% for renewal over next 3 years Substantial low cost debt facilities Sustainable dividend supported by secure income stream Expect to see exceptional buying opportunities over next 624 months 1 Gross 1

4 Financial Review Graham Roberts Finance Director

5 Financial Summary Underlying profits 1 268m, maintained excluding 2007/8 Songbird dividend Portfolio valuation reduced 28.2% in last 12 months (Q4 9.2%) NAV per share 2 398p down 64% reflecting valuation and rights issue NNNAV per share 508p reflecting value of fixed low cost, long maturity debt Q4 dividend at 6.5p. Quarterly dividend will be 6.5p for 2009/10 1 Underlying pretax profit excludes gains on property revaluations and disposals & intangible asset movements 2 EPRA (European Public Real Estate Association) basis 2

6 Underlying Profit 268m (Q4 61m) Underlying profits maintained at 2007/8 level excluding Songbird dividend Like for like rental income up 2.7% (IPD 2.1% 1 ) Significant disinvestment again in the year Reduced fee income Continued approach to recognition of fixed uplifts Release of share incentive accruals Increased interest charge following completed developments Reconciliation of Underlying Profit m YE 2008 Underlying Profit 284 Songbird dividend (16) YE 2008 Recurring Profit 268 Rent reviews, new lettings and lease renewals (net) 2 25 Effect of property sales Management & performance fees 3 (8) Prudent approach to recognition of fixed uplifts (9) Release of share incentive accruals 15 Interest on developments 4 (17) Interest on REIT conversion charge (6) YE 2009 Underlying Profit 268 Interest cover maintained at 1.9x YE 2009 Underlying EPS 41p 1 IPD Quarterly gross rental income growth for year ended March After lease determinations and expiries. Includes new lettings on developments 3 Fund management & performance fees Q4 4m (Q4 2007/8 5m); 12 months 14m (12 months 2007/8 21m) 4 Gross financing cost recognised in Income Statement on developments (including post PC costs), in addition interest capitalised Q4 16m (Q4 2007/8 10m); 12 months 38m (12 months 2007/8 43m) 3

7 Portfolio Valuation Retail Office Total Portfolio Valuation 4,867m 3,570m 1 8,625m Valuation change (Q4) 8.3% 10.5% 9.2% Valuation change (12 mths) 26.4% 30.4% 28.2% ERV Growth (12 mths) +0.8% 14.6% 5.9% Initial Yield Movement (12 mths) +189 bp +235 bp +209 bp Gross topup Initial Yield 2 7.3% 7.8% 7.6% Portfolio in line with IPD reflecting portfolio weighting, but Retail and London Offices outperformed 1 Includes developments 475m, 39.5% decline for the 12 months (City 37.0%, West End 44.3%) 2 Gross yield to British Land (without notional purchaser s costs), adding back rent frees & contracted rental uplifts 4

8 NAV Per Share 398p (NNNAV 508p) Movement in NAV 1 pence NAV 1 per share at 31 March 2008 (restated) 1,114 Property revaluations & asset disposals (475) Rights issue & movement in share options (217) Investment in Songbird 2 (19) Underlying profit after tax 30 Dividend paid (22) Close out of interest rate swaps (14) Other 1 NAV 1 per share at 31 March Deferred tax arising on revaluation movements (3) Mark to market of debt and derivatives 113 NNNAV 1 per share at 31 March EPRA (European Public Real Estate Association) basis 2 Songbird investment valued at 28m 5

9 Income Longevity & Security 98% of UK rent subject to upward only reviews/fixed uplifts less than 0.5% related to occupiers turnover Average lease length 13 years to first break High Occupancy & Long Leases Occupancy rate (%) 1 Lease length (yrs) 2 Retail Just 6% of rent subject to break/expiry over next 3 years High occupancy of 96% 1 Offices Occupiers in administration 1.8% of total rent at end of April; including 1.4% guaranteed or in negotiations Total % of March quarter rent collected within 10 working days 1 Underlying occupancy rate including accommodation subject to asset management and under offer 2 To first break 6

10 Future Income Profile Rental income cash flow basis Annualised net rents Rent m pa 571 Gross Yield % Contracted from fixed uplifts and expiry of rent free periods Rent reviews & lease renewals Letting of vacant space Portfolio reversion (within 5 yrs) 73 Subtotal Investment Portfolio Committed developments prelet 12 Committed developments to let 42 Total Gross yields to British Land (without notional purchaser s costs) 2 Net of lease expiries (within 5 yrs) 7

11 Strong Balance Sheet & Liquidity 5.6bn of Drawn Debt 70% Non Recourse Non Recourse Securitisations ( 2.0bn) Non Recourse JV & Funds ( 1.9bn) 3.0bn of Committed Undrawn Bank Facilities bn Unsecured Debt ( 0.3bn) 1 Secured Debentures & Loans ( 1.4bn) m (113p per share) mark to market value Low cost (5.3%) & long average maturity (12.7 yrs) 215m of unencumbered cash 200m to complete committed developments No Group refinancing needs until Includes US Private Placements 8

12 Sustainable Dividend Supported by Secure Income Q4 dividend 6.5p on enlarged share capital Total dividend increased to 199m from 179m Dividend cover 1.3x Optional scrip alternative Quarterly dividend will be 6.5p for 2009/10 Contracted cash flow growth offsets lease expiries, impact of sales and tenant risk Dividend underpinned by long, secure income and fixed rate debt % of ERV Contracted Reversion Lease Expiries Contracted Reversion Lease Expiries Retail Lease Expiries Offices 9

13 Retail Andrew Jones Head of Retail

14 8.2bn Retail Portfolio (BL Share 4.9bn) Customerled approach dictates investment strategy Portfolio Reshaped 4.5bn 2 of sales last 3 years Income Longevity Average lease length 15 yrs to first break 4% of income subject to break/expiry over next 3 yrs Retail Warehouses (35%) 2006 In Town Retail (27%) Europe (1%) 98% occupancy 1 with limited development exposure Meadowhall (17%) Income Security 27% of retail rent from food stores (including M&S) 26% of retail rent subject to fixed/rpi/minimum uplifts 14m pa of further contracted income over next 5 yrs Superstores (20%) Retail Warehouses (42%) 2009 In Town Retail (18%) Europe (6%) Increasing focus on occupational costs 20% service charge reduction at Meadowhall Meadowhall (12%) Superstores (22%) 1 Underlying occupancy rate including accommodation subject to asset management and under offer 2 Gross 10

15 Retail Activity 1.3bn 1 sales of assets across all retail subsectors 588m sale of 50% of Meadowhall 13m of deferred payment already receivable 384m disposal of 8 retail parks & 2 superstores 298m In Town sales of Peacocks Centre, 8 department stores & 27 shops Since year end, 74m exchanged with further 65m under offer Active asset management 1.4m sq ft of lettings/renewals. Momentum remains good with 720,000 sq ft agreed in last 6 months and further 290,000 sq ft under offer 2.6m sq ft of rent reviews settled at 25% above previous rent Consciously stayed away from long cycle UK retail development Decision taken to delay completion of Zaragoza 2.9% like for like income growth Retail Warehouses 5.4%, Shopping Centres 1.7% and Superstores 1.6% Limited exposure to retail administrations due to portfolio positioning 2.2% of retail rent with 66% guaranteed or in negotiations 1 Gross 11

16 Retail Performance Capital return % 1 ERV growth % 2 Initial Yield (topup) % 3 Initial Yield movement bp Occupancy rate % 4 Lease length yrs 5 Retail Warehouses bp Superstores bp Shopping Centres bp Department Stores bp All Retail bp IPD All Retail n/a bp IPD Capital Return differs from BL Valuation Uplift as based on average capital employed and excludes capitalised interest and Europe 2 Standing investments like for like, IPD basis (excluding Europe) 3 Gross yield to British Land (without notional purchaser s costs), adding back rent frees & contracted rental uplifts 4 Overall occupancy rate (as a % of ERV) including accommodation subject to asset management and under offer as vacant (comparable to IPD) 5 To expiry (comparable to IPD) 12

17 Retail Outlook Investment Market Investment activity has remained weak reflecting buyer confidence and debt availability Large lot size deals almost impossible to execute unless already come with debt Some increase in activity for prime assets from high net worth individuals, overseas buyers and several UK pension funds Asset pricing will be dictated by rental sustainability and longevity Signs that yields beginning to stabilise for prime assets due to long and secure income, regardless of rental deflation Secondary yields will continue to drift out as the market prices underlying property fundamentals Repricing will present real opportunities as individual assets get mispriced 13

18 Retail Outlook Occupier Market Whilst total sales holding up well, retail environment remains challenging with most retailers reporting negative like for like sales Increased prospect of rental deflation, particularly where voids, lease expiries and corporate failures creating demand/supply imbalance and forcing rents down Homerelated and electrical retailers facing brunt of consumer downturn. Clothing mixed, entertainment faring better and food retailing continuing to perform strongest Demand for new stores thin as retailers preserve cash and reduce capex BL occupierled strategy predicated on owning assets in most profitable locations. Portfolio now more aligned to customers than ever, ensuring rents better protected against voids and corporate failures 4.5bn 1 sales to reposition our portfolio over last 3 years 27% of our retail rent from food stores (including M&S) 98% occupancy 2 1 Gross 2 Underlying occupancy rate including accommodation subject to asset management and under offer 14

19 Offices Tim Roberts Head of Offices

20 3.6bn Office Portfolio Active Property Management 1.8bn 1 of disposals last 3 years 1.4bn 1 in City Reduced development 2 committed projects Prime Portfolio Customer focused with concentration on modern, well located properties 6% 2 vacancy rate (of which 93% new Grade A space) Gross topup initial yield 7.8% 3 Average rent 46 psf 4 74% of offices in the City Income Security & Longevity Average lease length 9 yrs to first break 16% of office rent subject to guaranteed/rpi uplifts 23m pa of further contracted income over next 5 yrs 9% of income subject to break/expiry over next 3 yrs 26% in West End Development 4% total portfolio 5 1 Gross 2 Underlying vacancy rate excluding accommodation subject to asset management and under offer 3 Gross yield to British Land (without notional purchaser s costs), adding back rent frees & contracted rental uplifts 4 Average contracted passing rent (post expiry of rent free periods) 5 Committed developments only 15

21 Office Activity 616m 1 of sales, 10.5% below March 2008 valuation Willis Building ( 400m) and 2 & 3 Triton Square ( 115m) Osnaburgh residential sales 58m, 9% above March 2008 valuation 300,000 sq ft of new London lettings at average 48 psf, plus further 63,000 sq ft under offer Major prelet of 186,500 sq ft 2 at Ropemaker with minimum uplift to psf At Broadgate Tower, let 52,000 sq ft with further 63,000 sq ft under offer Further 51,000 sq ft let at 201 Bishopsgate Agreed 86,000 sq ft of lease renewals in London 760,000 sq ft of rent reviews agreed at average rent of 45 psf, 3% above ERV 650,000 sq ft settled at Broadgate at average rent of 47 psf 47,000 sq ft agreed at 350 Euston Rd at average rent of 56 psf Like for like income growth 2.5% City 1.3%; West End 7.6% 1 Gross 2 Option up to June 2009 to take a further 21,630 sq ft 16

22 Securing Income From High Quality Modern Buildings 94% occupancy 1 (90% pro forma for Ropemaker 2 ) 93% of vacant accommodation brand new Grade A space Key Office Voids Investments To Let Sq ft % Let/ Under Offer Lease Length yrs 4 Assumed Income void mths 5 Average ERV psf 6 58% of recently completed developments let/under offer New lettings achieved at average 48 psf for 17 yrs Only 9% of rent subject to break/expiry over next 3 yrs (compared to IPD 24%) 201 Bishopsgate Broadgate Tower Ropemaker Subtotal Developments Valuers build in assumptions on breaks/expiry Average ERV 39 psf Average void of 32 months Capex of 40 psf Regents Place One & Two Total Underlying occupancy rate including accommodation subject to asset management and under offer 2 PC achieved in May Office space only (excludes storage) 4 To first break 5 Valuers assumed combined letting void and tenant incentive package 6 Current estimated headline rent (excludes provision for tenants incentives) on space to let 17

23 Office Performance Capital return 1 ERV growth 2 Gross IY (topup) 3 IY movement Occupancy rate 4 Lease length 5 BL % IPD % BL % IPD % BL % BL bp IPD bp BL % IPD % BL yrs IPD yrs City West End All Offices IPD Capital Return differs from BL Valuation Uplift as based on average capital employed and excludes capitalised interest and Europe 2 Standing investments like for like, IPD basis (excluding Europe) 3 Gross yield to British Land (without notional purchaser s costs), adding back rent frees & contracted rental uplifts 4 Overall occupancy rate (as a % of ERV) including accommodation subject to asset management and under offer as vacant (comparable to IPD) 5 To expiry (comparable to IPD) 18

24 Office Outlook Investment Market Volume of investment transactions low, but early indications of improving investor demand Yields have moved out significantly City up 320 bp 1 Prime now at 7.2% 2 West End up 270 bp 1 Prime now at 6.0% 2 0 Investor demand concentrated on prime assets with income London Investment Turnover Domestic Purchasers Overseas Purchasers security helping to stabilise yields City & West End Yields Prime vs IPD Secondary assets lacking occupier appeal and/or with poor security of income remain vulnerable to further correction Yield (%) bn BL Offices offer relatively strong income security with 3.5 topup initial yield City 7.9% 3 ; West End 7.4% City (Prime) West End (Prime) City (IPD) West End (IPD) 1 IPD Quarterly peak (June 2007) to March 2009 movement in Net Equivalent Yield 2 PMA 3 Gross yield to British Land (without notional purchaser s costs), adding back rent frees & contracted rental uplifts 4 CBRE 19

25 Office Outlook Occupier Market London office vacancy 7.3% (longterm average 8.1% 1 ) Development activity 48% less than early 90s across all London submarkets 2 Speculative development unviable and made worse by increasing tax burden Occupier market fragile with takeup on a rolling annual basis low Increased signs of activity within BL s prime, modern and well located portfolio Increased viewings 210,000 sq ft of City lettings, 49% of Q1 total takeup Further 63,000 sq ft under offer 1 Jones Lang LaSalle based on last 20 yrs 2 PMA 5 yr Rolling Annual from m sq ft % London Vacancy City West End Development Completions over Cycles 2 City West End Midtown Docklands Yr Rolling Annual

26 Business Overview Chris Grigg Chief Executive

27 First Impressions High quality management, proactive decision making and good execution Financial strength and sound debt structure Well positioned prime portfolio Deep sector expertise giving understanding of market dynamics Customer focused approach attracting high quality occupiers 21

28 Key Actions in Fourth Quarter 740m rights issue underpinning balance sheet and future opportunities Meadowhall JV reduces asset concentration and increases financial flexibility 450m 1 of further asset management disposals with another 140m exchanged/under offer Lettings progress 500,000 sq ft preserving high occupancy and another 350,000 sq ft under offer 50:50 Meadowhall JV agreed 115m sale of 2 & 3 Triton Square 186,500 sq ft major prelet for Ropemaker 1 Gross 22

29 Active Property Management Buying well Expect good opportunities over next 624 months Efficient use of capital 10 Only 6% of income subject to break or expiry over next 3 yrs (IPD 18%) Managing well Strong tenant base with low exposure to administrations Enduring tenant appeal based on prime locations and good service Long leases and secure rental income % of ERV Selling well Disposals helped protect against difficult market conditions Future selling activity will be a function of active management rather than balance sheet pressure BL IPD 23

30 Expanding Management Disciplines Drawing on best practice from fund management Regular review of sectors and sector weighting Managing diversification benefits of specialised portfolio Liquidity and manoeuvrability at asset and portfolio level Constant focus on risk and return on all assets Broadening and deepening talent base 24

31 Priorities for the Future Continually evolving, dynamic property portfolio Rigorous and analytical overlay to support core property skills Robust and flexible financial structure and balance sheet Sustainable dividend supported by long, strong income streams 25

32 Appendix

33 EPRA Balance Sheet (proportional consolidation) m Group Funds & JVs Total properties 5,810 2,815 8,625 13,471 Net debt (3,145) (1,796) (4,941) (6,413) Other net liabilities (288) (9) (297) (122) EPRA Net Assets 2,377 1,010 3,387 6,936 EPRA Diluted NAV per share 398p 1,114p Loan to value ratio Group 46% 41% Loan to value ratio inc. share of Funds & JVs 57% 47% 26

34 Reconciliation of EPRA NAV & NNNAV 2009 m Pence per Share 2008 m Balance sheet (IFRS) net assets 3, ,790 Deferred tax arising on revaluation movements Mark to market on effective cash flow hedges and related debt adjustments Adjust to fully diluted on exercise of share options (3) 47 EPRA NAV 3, ,936 Deferred tax arising on revaluation movements (25) (3) (102) Mark to market of debt and derivatives EPRA NNNAV 4, ,419 27

35 Rental Income Growth Gross rents 8% lower due to 4bn net disinvestment over last 2 years 2.7% like for like rental income growth due to new lettings and rent reviews: Retail up 2.9% Retail Warehouses 5.4%, Shopping Centres 1.7% and Superstores 1.6% Offices up 2.5% City 1.3%, West End 7.6% Gross rental income ( m) Properties owned throughout 2 Retail + 2.9% Offices & other + 2.5% Total like for like + 2.7% Acquisitions Disposals Developments Fixed & minimum uplifts Market (IPD) income growth of 2.1% 1 Other Total 8.3% IPD Quarterly gross rental income growth for year ended March Investment properties subject to open market reviews and owned throughout the current and prior year (proportional consolidation of Funds & JVs) 3 Rental income from fixed and minimum guaranteed rent reviews is recognised on a straight line basis 4 Includes surrender premiums, asset management determinations, back rents and other accounting adjustments 28

36 Income Statement (proportional consolidation) m Group JVs & Funds Net rental income Fees and other income Administrative expenses (51) (7) (58) (73) Net interest costs (207) (85) (292) (350) Underlying profit before tax Songbird dividend (capital) 30 Net valuation movement (includes disposals) (3,241) (833) (4,074) (1,916) Interest rate derivatives & debt refinancing items (119) (119) 9 Amortisation of intangible asset (14) (14) (15) Impairment of goodwill (3) Tax Tax charge relating to underlying profit (7) (2) (9) (8) Other tax arising (Loss) for the year after tax (3,114) (767) (3,881) (1,563) Underlying EPS 41p 44p 29

37 Reconciliation of Underlying Profit before Tax m IFRS (Loss) before tax (3,928) (1,609) Net valuation movement (includes disposals) 4,074 1,916 Songbird dividend (capital) (30) Deferred and current taxation of joint ventures & funds (11) (2) Amortisation of intangible asset Impairment of goodwill 3 Interest rate derivatives & debt refinancing items 119 (9) Underlying profit before tax

38 Gross Rental Income Sectoral Analysis m 1 Annualised as at 31 March Group Funds & JVs Total Group Funds & JVs Total Retail Warehouses Superstores Shopping Centres Department Stores High Street Shops All Retail City Offices West End Offices Development 6 6 Provincial Offices All Offices Other Total recurring nonrecurring items Total Gross rental income per Income Statement under IFRS (proportionally consolidated) analysed by sector 2 Annualised contracted gross rental income under IFRS (proportionally consolidated) analysed by sector as at 31 March 2009 (excluding 2 & 3 Triton Square) 3 Includes surrender premiums and back rents 31

39 Contracted Rental Increases Contracted Accounting Gross Rental Income ( m) Lettings with rent free periods 2 Retail Offices & other Total rent (accounting basis) Of which total cash flow Of which SIC 15 rent free adjustment (7) (7) (7) Lettings with fixed and minimum uplifts 3 Retail Offices & other Total rent (accounting basis) Of which total cash flow Of which IAS 17 fixed uplift adjustment Under IFRS contracted rent and cash flows will differ 1 17m less income recognised in respect of rent due under contracted fixed uplifts in view of current credit conditions 2 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 3 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 32

40 Income Diversity Department Stores 8% Entertainment & Books 2% DIY & Bulky Goods 7% Broad Diversity of Customers & Industries Electrical 2% General Retail 5% Other 7% Banks 20% Top 20 Customers represent 53% of Rent % of total rent 1 UBS 8% 11 Reed Smith 2% 2 Tesco 6% 12 Deutsche Bank 2% 3 Sainsbury 6% 13 Mayer Brown 2% 4 Debenhams 1 5% 14 Next 1% 5 RBS 4% 15 Spirit Group 1% Food 15% Health & Beauty 2% Fashion & Footwear 12% Professional & Business Services 8% Government 2% Corporates & Other Financial 10% 6 Herbert Smith 3% 16 ICAP 1% 7 Kingfisher (B&Q) 2% 17 Credit Lyonnais 1% 8 HM Government 2% 18 Henderson 1% 9 Homebase 2% 19 Somerfield 1% 10 House of Fraser 2% 20 ASDA 1% Remaining 47% comprises over 1,000 customers, each < 1% 1 Of which Oxford Street, Manchester & Meadowhall stores represent 44% of rent 33

41 Key Financing Statistics Key Financing Ratios Net Debt book value ( 4,941) Positive mark to market on debt & derivatives 963m LTV Group 46% LTV inc. share of Funds & JVs 57% Net Borrowings to Adjusted Capital & Reserves 2 83% m Group Debt Maturity Profile Interest cover 3 1.9x 200 Average interest rate 5.3% 100 Weighted average debt maturity Undrawn committed bank facilities 12.7 yrs 2,950m Non Recourse Securitisations Secured Debentures & Loans Unsecured Debt 1 With proportional consolidation of Funds and Joint Ventures (unless stated as Group) 2 Calculated in accordance with standard banking agreement 3 Underlying profit before interest and tax (UPBIT) / net interest 34

42 Unsecured Group Debt Financial Covenants 175% maximum ratio for Net Borrowings to Adjusted Capital & Reserves 83% as at 31 March 2009 Adjusted Capital & Reserves Share capital & reserves Deferred tax on revaluations, capital allowances and derivatives m 3,209 Exceptional refinancing charges 444 Mark to market on interest rate swaps 153 Adjusted Capital & Reserves 25 3,831 70% maximum ratio for Net Unsecured Borrowings to Unencumbered Assets 6% as at 31 March 2009 Unencumbered Assets Group properties 5,810 Investments in Funds & JVs 952 Other investments 38 Investments in JVs (585) Encumbered assets (3,666) Unencumbered Assets m 2,549 Net Borrowings m Net Unsecured Borrowings m Gross Debt Group 3,746 Gross Debt Group 3,746 Amounts owed to JVs 33 Amounts owed to JVs 33 TPP Investments Limited 1 23 Cash & deposits not subject to security interest (215) Cash & deposits (616) Secured & Non Recourse Borrowings (3,412) Net Borrowings 3,186 Net Unsecured Borrowings TPP Investments Limited, a wholly owned ringfenced 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 35

43 JVs & Funds Non Recourse Finance Financed & interest rate managed separately on non recourse basis 700 Funds & JVs Debt Maturity Profile Average maturity 7.9 yrs; average interest rate 5.2% m due over next 2 years under maturity & amortisation 500 Variety of covenants LTV maximum levels range from 55% 1 to 90%, (average currently 64%) Several also have interest cover requirements (range of 1x to 1.75x; average currently 1.65x) No obligation on British Land to remedy By way of illustration, if values fell by 20% our share of total amount to remedy LTV ratios is only c. 140m m Securitisations Bank Debt Except for one Fund in which British Land has a small interest where the LTV is 35% 36

44 1.9bn Sales (Q4 1.0bn) m Price BL Share Gain /Loss 1 m m % Shopping Centres: Meadowhall, Sheffield (50% interest) Peacocks, Woking Retail warehouse properties Department Stores High Street Shops Superstores Total Retail 1,270 1,064 (22.1) Willis Building, Lime Street, London EC & 3 Triton Square, London NW Osnaburgh Street, London NW1 (residential) Other Office Buildings Total Offices (10.5) Others (26.9) Total 1,928 1,718 (18.5) Sales value enhancing at average yield of 6.5% 2, 18.5% below valuation 1 Sales price versus last year end valuation, March Net initial yield (assuming topup of rent frees) 37

45 2.1m sq ft of New Lettings/Renewals at 2.4% above ERV New Lettings & Lease Renewals (Including Funds & JVs) 1 Number Sq ft 000s Total Rent m pa 2 BL Share of Rent m pa 2 BL Share of Increase m 3 Retail Warehouses 146 1, Shopping Centres High Street Offices Other Total 395 2, Including unconditional contracts exchanged with forward completions and lettings of less than two years to first break ( 1.1m pa of BL Share of rent increase) 2 Headline rent, before tenant incentives 3 Above previous passing rent 38

46 1.4m sq ft of Retail Lettings/Renewals Top 15 Retailer Lettings m pa 1 Sq Ft Asda ,210 Next ,430 Toys R Us ,840 Clinton Cards ,200 Arcadia/Bhs ,680 New Look ,360 Carpetright ,080 Laura Ashley ,070 Hollister/Abercrombie ,100 Focus ,390 Comet ,920 Brantano ,250 Boots ,190 Clarks ,650 Mothercare ,695 1 Headline rent, before tenant incentives 39

47 Rent Reviews at 3.1% above ERV Rent Reviews (Including Funds & JVs) Number Sq ft 000s Total Rent m pa BL Share of Rent m pa BL Share of Increase m 1 Retail Warehouses 114 1, Superstores Shopping Centres High Street Offices Other Total 215 3, Above previous passing rent 40

48 Committed Developments PC Sq ft 000 Mar 2009 Value m Costs to Complete m 1 Notional Interest m 2 Rent m 3 Prelet m 3 Yield % 4 Sales m 5 Ropemaker 6 Q Regents Place One & Two Q One Osnaburgh Street (Residential) Q Puerto Venecia, Zaragoza Shopping Centre /12 1, Total 2, Estimated construction cost to complete 6 PC achieved in May From 1 April 2009 to PC 7 Option up to June 2009 to take a further 21,630 sq ft 3 Current estimated headline rent (excludes provision for tenants incentives) 8 Joint venture (Eurofund Investments Zaragoza) BL share 50% 4 Yield on current valuation plus costs to complete, notional interest to PC and valuers assumed tenant incentives 5 Parts of development sold, no rent allocated 41

49 Prospective Developments Sector Sq ft 000 March 2009 Value m Planning The Leadenhall Building City Office Detailed Regent s Place NEQ West End Office/Residential Detailed Colmore Row Provincial Office Detailed Meadowhall Additional Land Mixed Use 2, Outline 4 Broadgate City Office Potential Refurbishment or Redevelopment 40 Pending New Century Park 1 Mixed Use Potential Land Sale 7 Detailed Theale Residential Potential Land Sale 13 Detailed Euston Station 2 Mixed Use Master Planning in Progress Pending Canada Water 3 Mixed Use Master Planning in Progress Detailed/Outline 1 Joint Venture with Goodman Real Estate (UK) Limited 2 In partnership with Network Rail 3 Joint Venture with Canada Quays Limited 42

50 Portfolio Valuation By Sector Group m Funds & JVs m Total m Portfolio % 3 months Change % 1 12 months Change % 1 Retail Warehouses 1, , (9.2) (29.4) Superstores , (2.6) (16.4) Shopping Centres , (10.8) (26.6) Department Stores (7.5) (29.1) High Street (12.7) (24.6) All Retail 2,071 2,796 4, (8.3) (26.4) City 2 2,653 2, (9.7) (30.4) West End (12.8) (30.7) Provincial (6.4) (25.3) All Offices 2 3, , (10.5) (30.4) Other (10.2) (34.3) Total 5,810 2,815 8, (9.2) (28.2) 1 Includes valuation movements in developments (classified by end use), purchases and sales, net of capital expenditure 2 Including developments with a total value of 475m, 5.5% of portfolio, 39.5% decline in the 12 months (Q4 14.7%) 43

51 Reconciliation of Portfolio Valuation Movement Group m Funds & JVs m Total m Valuation at 31 March ,469 3,002 13,471 Meadowhall JV 1 (1,175) 588 (587) Other Disposals 2 (1,000) (203) (1,203) Purchases, Development and Other Capital Expenditure Change in ownership of PREF Revaluations Investment properties (2,729) (738) (3,467) Revaluations Development properties & Other 3 (312) (24) (336) Decrease in Head Lease Liabilities 21 (3) 18 Other Adjustments 4 (29) Valuation at 31 March ,810 2,815 8,625 1 Transfer of Meadowhall to Funds & JVs is shown at valuation at date of sale. Other related accounting movements are included within other lines of the reconciliation 2 Includes transactions which completed in the year 3 Revaluation of developments and the Head Office are included in the SORIE, not the income statement 4 Other adjustments relate to accounting adjustments for equalising rents (tenant incentives, guaranteed uplifts), as well as foreign exchange movements 44

52 Retail Portfolio Valuation 100 Retail Warehouses 103 Superstores Meadowhall 1 In Town Valuation 2,252m 1,071m 573m 878m Valuation change 29.4% 16.4% 25.8% 28.0% Rent pa 157m 69m 36m 69m Total Reversionary Income pa 178m 72m 42m 80m Average Rent 22 psf 21 psf 57 psf 13 psf Average ERV 25 psf 22 psf 63 psf 14 psf Occupancy Rate % 100.0% 95.7% 96.9% Gross Initial Yield 3 7.3% 6.4% 6.3% 8.9% Gross Reversionary Yield 3 8.3% 6.7% 7.4% 10.3% Net Equivalent Yield 4 7.6% 6.2% 6.7% 8.3% Weighted average lease length to first break 11.6 yrs 18.1 yrs 12.0 yrs 21.0 yrs to expiry 12.9 yrs 18.1 yrs 12.4 yrs 22.5 yrs 1 Shopping Centre only (50% share) 2 Underlying occupancy rate including accommodation subject to asset management and under offer 3 Gross yields to British Land (without notional purchaser s costs) 4 After purchaser s costs 45

53 Office Portfolio Valuation Broadgate 1 Regent s Place 2 Valuation 2,284m 529m Valuation change 32.1% 25.4% Rent pa 160m 39m Contracted Reversionary Income pa 179m 41m Average Office Contracted Rent 48 psf 41 psf Headline Office ERV Range psf psf Occupancy Rate % 99.1% Gross Initial Yield 4 7.0% 7.3% Gross Reversionary Yield 4 8.2% 7.2% Top up Net Initial Yield 5,6 7.4% 7.3% Net Equivalent Yield 6 7.3% 7.1% Weighted average lease length to first break to expiry 9.0 yrs 11.0 yrs 9.8 yrs 12.6 yrs 1 Excludes 4 Broadgate (held as development) 2 Excludes Osnaburgh Street and NEQ (held as developments) 3 Underlying occupancy rate including accommodation subject to asset management and under offer 4 Gross yields to British Land (without notional purchaser s costs) 5 Assumes top up of rent free periods and guaranteed minimum uplifts to first review 6 After purchaser s costs 46

54 European Out of Town Retail Value 1 m BL Share 1 m Average Capital Value psf 2 Average ERV psf 2 Average Initial Yield % 3 Spain Portugal France Italy Total Total Estimated (as at 31 March 2009) end capital value when complete 2 Based on Retail Warehousing only 3 Gross initial yield 4 sterling equivalent (based on 31 March 2009 exchange rate of 1= 1.081) 47

55 Portfolio Yield Profile Excluding developments (%) Initial Yield 1 Topup Initial Yield 1,2 Reversionary Yield 1 Net Equivalent Yield 3 Retail Warehouses Superstores Shopping Centres Department Stores All Retail City West End All Offices Other Total Gross yield to British Land (without notional purchaser s costs) 2 Adding back rent frees and contracted rental uplifts 3 After purchaser s costs 48

56 Annualised Rents & ERV Analysis Rental income cash flow basis 1 Annualised rents m 2 Estimated rental value m 3 Excluding developments Group Funds & JVs Total Group Funds & JVs Total Net reversion Retail Warehouses Superstores Shopping Centres Department Stores All Retail City West End All Offices Other Total 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 2 Gross rent receivable plus any increases to current ERV from outstanding rent reviews (net of ground rents payable) 3 Includes rent reviews and lease break/expiry and letting of vacant space at current ERV (as determined by external valuers) within 5 years, plus expiry of rent free periods 49

57 Long Leases & High Occupancy Excluding developments Average lease length (yrs) Occupancy rate (%) To expiry To first break Underlying 1 Overall Retail Warehouses Superstores Shopping Centres Department Stores All Retail City West End All Offices Other Total Underlying occupancy rate including accommodation subject to asset management and under offer 50

58 Rental Income Subject to Lease Break or Expiry m Retail Warehouses Superstores 1 1 Shopping Centres Department Stores All Retail City West End All Offices Other Total % of total ERV 1 1% 3% 2% 2% 7% 6% 15% 1 Excluding developments 51

59 Disclaimer The information contained in this presentation has been extracted largely from the Results Announcement for the year ended 31 March General property market data has been extracted from Jones Lang LaSalle, PMA, CBRE, and other agents reports (please note that their definitions may differ slightly). This presentation may contain certain forwardlooking statements. By their nature, forwardlooking 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 forwardlooking statements. Any forwardlooking 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 forwardlooking 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) (ii) (iii) (iv) a person who is authorised or exempt under FSMA; and 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 a government, local authority (whether in the United Kingdom or elsewhere) or an international organisation; and 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.