Investor Presentation

Transcription

1 Investor Presentation February 2017 $BLND All figures as at last valuation date of 30 September 2016 unless noted otherwise

2 British Land is proud to have been awarded The 2016 Queen s Award for Enterprise Acknowledging our economic, social and environmental contribution

3 Overview Quality portfolio Reflected in our activity and results Resilience built into the business Secure income and robust finances Strategy aligned to long term trends Endures through uncertainty Optionality to respond to changing environment Tactical decisions in light of Brexit Resilient in uncertainty, well positioned to capture upside in the future 3

4 Activity in quarter to December 16 Quality portfolio attracting strong occupier demand 314,000 sq ft of Retail lettings and renewals, 8.7% ahead of ERV; a further 189,000 sq ft under offer Retailer sales +0.6% (+200 bps vs benchmark); footfall -0.6% year on year (+220bps vs benchmark) 51,000 sq ft of Office lettings and renewals, in-line with ERV. 7 Clarges Street offices now over 80% let at an average rent of 113psf, in line with pre-referendum ERVs Leasing discussions with a wide range of occupiers are progressing across our London campuses; ten major discussions are under way totalling 1.4 million sq ft. Further disposals ahead of valuation 119m of disposals exchanged including 85m of non-core Retail and Office disposals at 2% ahead of September 2016 valuations. Includes 34m of Residential disposals at 10% ahead of valuation including sales at Aldgate Place and one further apartment at Clarges Mayfair Pro-forma LTV of 30.5% (September 16: 31.6%); weighted average interest rate of 3.3% (September 16: 3.2%) 4

5 Portfolio & Strategy

6 Portfolio evenly split between London Offices and high quality Retail Offices Retail & Leisure 6.6bn 6.8bn Total portfolio valuation 13.9bn at September 16 including 0.3bn at Canada Water and 0.2bn of Residential assets 6

7 Resilience built into the portfolio High quality portfolio Practically fully let at 98% occupancy Average lease length of 9 years 98% occupancy 9 years average lease length Let to a high quality, diverse occupier base Occupier split by sector by rent TMT 7% Professional & Corporate 9% DIY 7% F&B and Leisure 10% Other 7% Supermarket 11% General Retail 16% Fashion & Beauty 16% Banks & Financial Services 17% Upcoming expiries 1 5% UBS 5 Broadgate 3% Other banks 4% Total banks 12% Asset Management & Other Financial 5% 1 Includes lease expiries on committed, near term and medium term developments 7

8 Our strategy is aligned to long term trends Key long term trends Implications for British Land Globalisation Strength of London Transforming impact of technology Rise of omnichannel Population growth and urbanisation Sharpened focus on end user Importance of infrastructure Sustainability Blurring of work and leisure Focus on health and wellbeing 8

9 Our Strategy British Land is a leading UK commercial property company focused on high quality retail and London offices Customer Orientation We understand our customers needs and identify major long-term trends to create environments in tune with changing lifestyles Capital Efficiency We allocate our capital, manage our finances and partner with like-minded organisations to deliver sustainable long-term value Places People Prefer Right Places We connect with customers to design engaging, sustainable places enhanced with the right mix of occupiers and services and enlivened by events and activities to create places at the heart of the community Expert People We employ expert people and work with partners to provide specialist knowledge and insight and develop skills and expertise By managing our business to be resilient, sustainable and responsive to long-term trends, we create enduring demand for our properties and value for our stakeholders 9

10 Placemaking Framework applied across the business We Connect We Design We Enhance We Enliven Communication Branding, marketing & digital, messaging Form Efficient and effective buildings & spaces Occupier mix Occupiers & campus community Customer service On-site hospitality & customer service Accessibility Convenience & access Authenticity How our users feel and interact with the space Segment mix Balance of different segments and uses Events Events to create a buzz and drive footfall Community Support & involvement of local community Function Facilities & safety Occupier service Clustering of occupiers & value added Memorable experience Creating lasting impressions 10

11 Placemaking Framework applied across the business Offices Lifestyle orientated mixed use offices Campuses Large, office-led mixed use lifestyle campuses Retail Multi-let lifestyle centres Regional Attracting visitors from a wide catchment for a planned trip Campus-lite Smaller clusters Local Fitting into the daily life of local communities 11

12 Our strategy informs our capital activity Retail Other 37% 5.9bn Other 24% 6.8bn 690m 3.6% ahead of valuation Non-core Retail disposals in H bn gross investment activity 1.5bn single-let disposals Mar 2011 Multi-let 63% Sep 2016 Multi-let 76% 1.3bn multi-let acquisitions Office 2.3bn gross investment activity West End 39% West End 58% 0.7bn development spend 3.1bn 6.6bn 0.5bn acquisition of Paddington Central campus City 61% City 42% Mar 2011 Sep 2016 All figures since March

13 Investment activity 951m Gross investment activity in H Net Spend m m m 52m 648m ( 267m) 31m ( 469m) Net Acquisitions & Disposals m 244m ( 326m) 386m ( 524m) ( 277m) ( 620m) Year to 31 March H Disposals Capital Investment Acquisitions Net Spend Net Acquisitions/ Disposals 13

14 Significant Retail sales on strategy 6 months to September m of non-core retail disposals 4.0% average yield 3.6% above March values Non-core multi-let assets Superstores Department stores Westgate, Wakefield Debenhams, Oxford Street Multi-let share of Retail portfolio 71% March 16 76% Sept 16 14

15 Major property holdings At 30 September 2016 (excl. developments under construction) BL Share % Sq ft 000 s Rent Occupancy m pa 1 Rate % 2,4 Lease Length yrs 3,4 1 Broadgate 50 4, Regent's Place 100 1, Paddington Central Meadowhall, Sheffield 50 1, The Leadenhall Building Sainsbury's Superstores , Drake Circus, Plymouth , Teesside, Stockton Glasgow Fort Ealing Broadway Annualised EPRA contracted rent including 100% of Joint Ventures & Funds 2 Includes accommodation under offer or subject to asset management at 30 September Weighted average to first break 4 Excludes committed developments (100 Liverpool Street) 5 Comprises stand-alone stores 6 Includes New George Street Estate, Plymouth acquired during the period 15

16 Financial Results

17 Results highlights 6 months to September 2016 Underlying profits up 16% to 199m (+ 28m) Strong leasing activity Reducing finance and admin costs NAV down 3% to 891p Valuation fall of 2.8% LTV down 50bps to 31.6% 690m of Retail sales, 3.6% ahead of March values 17

18 Income statement 2016 H H H1 Change % Net Rental Income ( m) Fees & Other Income 1 ( m) Administrative Expenses 1 ( m) (94) (49) (43) 12.2 Net Finance Costs ( m) (180) (96) (78) 18.8 Underlying Profit ( m) Underlying Earnings per Share (p) Dividend per Share (p) EPRA Cost Ratio (%) (2.8%) 1 Fees & other income and administrative expenses have been restated to reflect the change in presentation of the results of Broadgate Estates, a wholly owned subsidiary of the Group. This restatement has had no impact on Underlying Profit. 18

19 EPRA balance sheet (proportional consolidation) m 31 March 16 Group JVs & Funds 30 September 16 Total properties 14,648 9,321 4,598 13,919 Adjusted net debt (4,765) (3,110) (1,353) (4,463) Other net liabilities (209) (97) (105) (202) EPRA Net Assets (undiluted) 9,674 6,114 3,140 9,254 Dilution impact of 2012 convertible bond 400 EPRA Net Assets (diluted) 10,074 6,114 3,140 9,254 Loan to Value (LTV) % 24.6% 31.6% Average interest rate 3.3% 2.5% 3.2% Interest cover 3.0x 4.4x 3.5x Average maturity of drawn debt (years) Group LTV based on Group Properties and net investment in JV & Funds, and Group net debt 19

20 Future income profile Annualised Gross Rents Cash Flow Basis m Current Passing Rent 624 Contracted Uplifts 61 Accounting Basis m 636 Total Contracted Rent 685 Letting of Completed and Under Construction Developments Lease Expiries Committed Developments (100 Liverpool Street) (9) (9) Lease Expiries Near Term Developments (1 Finsbury Avenue) (7) (7) Letting of Committed and Near Term Developments Lease Expiries Medium Term Office Developments (21) (20) RPI Linked Leases Reversion Sales exchanged but not completed (12) (13) Potential Rent in 5 Years excl. Medium Term developments Letting of Medium Term Developments (excl. Canada Water) Valuation rent, includes assumptions on outstanding rent review settlements 1 Assumed at 2.6% per annum and uplift at rent review based on ERVs determined by the Group s valuers 2 Includes letting of vacant space and reversion on expiries and open market rent reviews within 5 years 20

21 Rent subject to lease break or expiry Office expiries detail For period to 31 March At 30 September 2016 m m m m m m 100 Liverpool Street 9 9 Committed developments Finsbury Avenue 7 7 Near Term developments Triton Square Finsbury Avenue Bishopsgate 7 7 Medium Term developments Other West End expiries Other City expiries Office expiries (excl. committed developments)

22 Retail

23 How Britain shops today c.90% of shopping spend touches the physical store 39% 30% of food eaten out of home in the UK of BL visitors use F&B/leisure Source: Verdict Source: ONS/British Land surveys Source: Kantar Convenience ranked #1 importance for a shopping trip <20 mins average customer drive time to BL assets 35% more click and collect at Local centres than national average Source: British Land surveys 23

24 Outstanding places for modern consumer lifestyles Places to shop, eat and be entertained 1 Our focus is on our customers We listen to our consumers and occupiers and respond to their needs 2 Our superior insight into consumer behaviour helps make decisions Data informs our strategy and benefits our occupiers 3 4 Placemaking lies at the heart of what we do We create Places People Prefer via our placemaking framework Our core regional and local products can both succeed We meet a range of consumer lifestyle missions 24

25 Retail Multi-let Portfolio Our two core products each fulfil specific shopper missions 1 2 Regional Missions include Leisure-dominated Trips, Family Day Out and The Big Ticket Shop Local Missions include Local Neighbourhood Shopper, Convenient Leisure and Single Item Pick-Up Typically occupiers Typically occupiers Footfall 10-25m p.a., catchment potential spend > 100m p.a. Footfall often <5m p.a., catchment potential spend < 100m p.a. Drive-time >20 mins Drive-time <15 mins Dwell >60 mins Dwell <60 mins Retail offer covers multiple categories with depth of choice in each Significant leisure and F&B e.g. restaurants, cinema Retail offer covers multiple categories & includes local amenities Convenient leisure and F&B e.g. gym and coffee shops 25

26 Our data shows both regional and local can succeed Meadowhall Glasgow Fort Ealing Broadway Swindon Orbital Role Super-regional shopping centre Shopping & leisure park In-town shopping centre Out-of-town shopping park Regional Regional Local Local Size (k ft 2 ) 1,500k 510k 470k 212k Dwell time 97 min 115 min 77 min 71 min Frequency of visit 30 pa 37 pa 68 pa 75 pa Retail spend Retail conversion 83% 84% 81% 81% Catering spend Catering conversion 58% 39% 25% 29% Annualised spend 4,030 3,028 2,906 3,271 Rent : sales 14% 9% 10% 11% 26

27 Retailers are creating hub and spoke networks To support fulfilment and maintain brand awareness Source: CACI 27

28 Our portfolio is well positioned to meet both consumer and retailer demands Potential to reach 60% of the population Annual footfall of 322m BL regional centres BL local centres BL asset catchments Average rent to sales ratio 10% 90% of our car parking spaces are free Source: CACI Retail Footprint

29 Retail Multi-let assets Regional attracting visitors from a wide catchment for a planned trip Local fitting into the daily life of local communities Southgate, Bath Mayflower, Basildon St. Peter s, Mansfield Broughton, Chester 1 Weston Lock, Bath Kingston Centre, Milton Keynes Fort Kinnaird, Edinburgh 1 Cornerhouse, Barrow Studlands, Newmarket Glasgow Fort 1 Hindpool, Barrow Newport, Harlech St. Stephen s, Hull Forster Square, Bradford Elk Mill, Oldham Eden Walk, Kingston Woodfields, Bury Nugent, Orpington Giltbrook, Nottingham Gallagher, Cheltenham 1 Botley Road, Oxford Serpentine Green, Peterborough Tollgate, Colchester Deepdale, Preston 1 Drake Circus, Plymouth Prospect Place, Dartford 1 Queens, Stafford 1 Meadowhall, Sheffield Crown Point, Denton Orbital, Swindon New Mersey, Speke 1 Wheatley, Doncaster Westgate, Wakefield 2 Teesside, Stockton Ealing Broadway Crown Wharf, Walsall 1 Whiteley, Fareham Lion, Woking Old Market, Hereford Clifton Moor, York 2 Inverness 1 Westside, Leeds Beaumont, Leicester Valentine, Lincoln 1 Mostyn Champneys, Llandudno 1 Lisnagelvin, Londonderry 3 1 Assets held within Hercules Unit Trust or its subsidiaries 2 Properties where sale exchanged in six months to September 2016, completed in January 2017, post period end 3 Property sold in December 2016, post period end 29

30 We are expanding our addressable market By expanding into new segments to enhance the retail experience Consumer spend (2016) Health & Beauty 4% Home & Leisure 10% Food & Beverage 7% Leisure 6% Housing 26% F&B and Leisure are often interlinked with Retail 73% of F&B spenders in UK centres also spend on Retail Fashion 6% Grocery 12% Other 11% Education 2% Transport & Comms 16% 45% of Leisure users also spend on F&B Historical focus Recent additional focus Not relevant to BL Source: Oxford Economics, CACI 30

31 000 sq ft We are expanding our addressable market By attracting a broader range of occupiers Continued momentum in the 6 months to September 2016: 656,000 sq ft of lettings and renewals 12.9% ahead of March ERVs 86 long term deals on multi-let portfolio 50% since referendum 373,000 sq ft, 12.2% ahead of ERV Multi-let portfolio lettings and renewals % vs ERV +12% vs ERV H H

32 BL footfall performance vs benchmark +240bps Outperformance in H Mar-10 = Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 British Land UK Market (ShopperTrak) 32

33 ERV Growth Retailer in-store Sales Footfall Retail Operational outperformance across the portfolio 6 months to September 2016 Total multi-let portfolio Regional Local +0.1% Ahead of market by 240 bps -0.2% Ahead of market by 190 bps +1.3% Ahead of market by 80 bps -2.3% +2.0% +0.1% -1.2% +1.3% +1.3% Source: Footfall benchmark ShopperTrak; Sales benchmark BRC-KPMG; ERV benchmark IPD 33

34 Continued polarisation in Retail ERV growth vs IPD and Retail sales, including online Index Mar-13 = % Rental growth on multi-let assets in H Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Retail sales inc. online BL Multi-let IPD All Retail IPD Prime IPD Secondary Source: Oxford Economics, IPD 34

35 Online sales increasingly integrated with physical stores 89% of retail sales touch the store Retail sales by channel (UK, all sectors, 2015) Click & Collect sales Online sales browsed in store 5 bn 8 bn Online sales not browsed in store 18 bn Online pureplay sales 13 bn Mail order & TV shopping 4 bn Physical store sales 266 bn Boost +5% True Value of Stores 278 bn 89% of total retail sales in 2015 Total retail sales 313 bn Total online sales Online sales of store operators Online that touched the store Source: Verdict / British Land 35

36 Physical store openings significantly boost retailers online presence Postal area share of retailer website visits Indexed vs. store opening date % weeks Store Opening weeks Note: Based on a sample of 18 retailers opening at British Land centres between April 2014 and December 2015 Source: Hitwise 36

37 Meadowhall, Sheffield Proposed Meadowhall leisure extension On site with a 60m refurbishment Recent additions Attracting new occupiers Substantial leisure extension planned 37

38 Eden Walk, Kingston 250m mixed use redevelopment to include public spaces, leisure, retail and residential. 562,000 sq ft consented scheme 38

39 Office

40 London Assets 40

41 Focused on London campuses which we plan to enhance and grow Office-led, mixed-use environments in tune with modern lifestyles 74% Our 3 campuses as a % of office assets Regent s Place Broadgate Paddington Central 41

42 Campus-lite assets Small clusters alongside more opportunistic single site assets Marble Arch House Yalding House 10 Portman Square Clarges Mayfair The Leadenhall Building 42

43 Offices Sustained leasing activity 6 months to September ,000 sq ft of lettings 4.9% ahead of March ERVs 98% occupancy The Leadenhall Building Continued activity since referendum Let final floors at Leadenhall 33,000 sq ft under offer Clarges Mayfair and Yalding House 37% let or under offer Clarges Mayfair Yalding House 43

44 Offices Range of pre-let discussions In discussions on ten significant requirements totalling 1.4m sq ft Range of sectors tech, media, finance, professional services Across all four campuses 4 Kingdom Street 1 Triton Square 100 Liverpool Street 44

45 Creating a world class, mixed-use destination at Broadgate Excellent location, catchment and connectivity Further enhanced by Crossrail in 2018 Increase and diversify retail and leisure offer Flexible accommodation to attract a broader range of occupiers Vibrant environment enlivened with events 5 Broadgate & Broadgate Circle Exchange Square Broadgate Circle 100 Liverpool Street redevelopment 45

46 Broadgate sits at the heart of one of the most exciting parts of London with excellent transport links Crossrail Barbican Cultural hub 40,000 workers Old Street Tech City 20,000 workers BROADGATE 30,000 workers Liverpool St Station 150m annual footfall Shoreditch Creative sector 20,000 workers Spitalfields Contemporary market 35,000 workers Forecast to carry c.14m people per year, Crossrail will further improve Broadgate s connectivity A simple, direct connection from Liverpool Street to Heathrow and City airport The Crossrail station will sit directly outside 100 Liverpool Street The City Financial centre 120,000 workers Broadgate s location and connectivity are fundamental aspects in ensuring strong ongoing occupier demand for the campus 46

47 Broadgate our lease expiries give us the opportunity to add a wider range of uses and attract a broader range of occupiers 2 3 Finsbury Avenue 2 Finsbury Avenue lease expired in Dec Finsbury Avenue expected lease break in late 2018 Current size: 190k sq ft Potential size: 560k sq ft 1 Finsbury Avenue Lease expired in Dec 2016 Current size: 281k sq ft 135 Bishopsgate Leases expiring in 2019 Current size: 340k sq ft 100 Liverpool Street Lease expired in Dec 2016 Current size: 380k sq ft Redevelopment: 520k sq ft Broadgate Overview Current contracted rent m (BL Share) % Rent Ave lease term yrs Core income, including recent developments 84 75% 9.5 Committed (100 Liverpool Street) 9 8% n/a Near term pipeline (1 Finsbury Avenue) 7 6% 0.2 Medium term pipeline (2 3 Finsbury Avenue, 135 Bishopsgate) 12 11% 1.8 Total

48 100 Liverpool Street Major step in progressing plans at Broadgate Completes in 2019, benefitting from opening of Crossrail in 2018 Flexible space to appeal to range of occupiers Expect to more than double rental income 164m development spend (BL share) 520,000 sq ft redevelopment 140,000 sq ft additional space, including 90,000 sq ft retail and F&B 48

49 City development pipeline Q m sq ft Source: CBRE Completed Pipeline Pre-let Potential Speculative U/C Pre-let U/C Speculative 10 year rolling average new and under-construction take-up 10 year rolling average dev completions Note: Forecast reflects agent s estimate of earliest completions 49

50 Regent s Place Campus 50

51 Paddington Central Campus 51

52 Canada Water

53 Canada Water Encouraged by discussions with potential occupiers Continue to work on masterplan; targeting planning application in 2017 Hosting events at The Printworks to raise profile Mulberry: London Fashion Week Triumph motorcycle launch 53

54 Canada Water 46 acre site; 250m acquisition cost 5.5m sq ft of mixed-use space planned Roger Madelin appointed Feb Planning submission in 2017 Photo credit: John Sturrock

55 Canada Water 55

56 Developments

57 Development pipeline Committed and Near Term Speculative commitment is 660m including 100 Liverpool Street, 5% of the portfolio 700 m Current Value & Costs to Come 5% Speculative development commitment Residential 250m pre-sold, 230m to sell Costs to complete of 280m on the committed programme Near term includes 1 Finsbury Avenue and leisure extensions at Speke and Plymouth Residential pre-sold Residential & Retail Kingdom Street 0 Committed Under Construction Committed 100 Liverpool Street Near Term Speculative development commitment Pre-sold / pre-let 57

58 Optionality in our development pipeline Flexibility in timing of commitment; choices in approach Near term Medium term Income producing Canada Water Eden Walk, Kingston Combined NIY 2.8% Eden Walk 1 Finsbury Avenue 1 Finsbury Avenue Retail Leisure Extensions (Plymouth, Speke) Income producing upcoming breaks/expiries 2 Finsbury Avenue (Dec 16) 1 Triton Square (Feb 17) 3 Finsbury Avenue (Sep 18) 135 Bishopsgate (Mar 19) Non-income producing sites 5 Kingdom Street Blossom Street Meadowhall Leisure 1 Triton Square Blossom Street 58

59 Development programme Medium Term 320m income producing, yielding 2.8% Canada Water Eden Walk m Current Value 780m Value of medium term pipeline 330m with upcoming lease expiries 2-3 Finsbury Avenue 135 Bishopsgate 1 Triton Square 130m non-income producing sites, including 5 Kingdom Street Income producing Upcoming expiries Non-income producing sites 59

60 Residential sales Residential exposure of 230m, less than 2% of the portfolio Aldgate Place The Hempel Collection Clarges Mayfair PC June units sold in H1, 5% ahead of March values 40 units remaining, 16m (BL share) PC: Phase 1 November 2016, Phase 2 December units sold in H1, 8% below March values 14 units remaining, 53m 12 units remaining, 159m To be marketed at PC, late

61 Appendices H Results

62 Highlights Period to H H Change % Underlying Profit ( m) Underlying Earnings per Share (p) Dividend per Share (p) As at H H Change % Valuation Performance 2.0% (2.8%) EPRA Net Asset Value per Share (p) (3.0) LTV 32.1% 31.6% H1 Total Accounting Return 9.1% (1.5%) 62

63 Underlying Profit up 28 million m 17 7 (9) H Capital activity Like for like rental growth Developments Financing activities Administrative expenses and Fee income H

64 Gross rental income 1,2 Accounting Basis m 6 months to 30 September 2016 Annualised as at 30 September 2016 Group JVs & Funds 3 Total Group JVs & Funds 3 Total Regional Local Multi-let Department Stores & Leisure Superstores Solus & Other Retail and Leisure West End City Offices Residential Offices and Residential Canada Water Total Excluding developments under construction and assets held for development 2 Gross rental income will differ from annualised rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives 3 Group s share of properties in joint ventures and funds including HUT at share 4 Stand-alone residential 64

65 Operating costs metric HY to 30 September ( m) H H Property operating expenses Administrative expenses Net fees and other income 1 (7) (8) Ground rent costs (1) (1) EPRA Costs (including direct vacancy costs) Gross rental income Ground rent costs (1) (1) Gross Rental Income (EPRA basis) EPRA Cost Ratio (including direct vacancy costs) 17.8% 15.0% Table shows figures on a proportionately consolidated basis which includes the Group's share of joint ventures and funds and excludes non-controlling interests in the Group's subsidiaries. 1 Net fees & other income and administrative expenses have been restated by 2m to reflect the change in presentation of the results of Broadgate Estates, a wholly owned subsidiary of the Group. This restatement has had no impact on Underlying Profit. 65

66 Administrative Expenses HY to 30 September ( m) H H Personnel Costs Share Scheme Costs 8 3 Other Administrative Expenses Total British Land Broadgate Estates 2 2 Total Group Capitalised Costs (2) (2) Total Administrative Expenses Table includes the Group's share of joint ventures and funds and excludes non-controlling interests in the Group's subsidiaries. 66

67 Reduction in diluted EPRA net asset value (22p) (17p) 18p (13p) (4p) 10p 919p 891p Mar 16 Offices & Residential Retail & Leisure Underlying Profit Dividends Debt transaction costs & other Reversal of 2012 convertible bond dilution Sep 16 67

68 Strength of debt metrics Proportionally Consolidated 31 Mar Sep 2016 Loan to Value (LTV) 32.1% 31.6% Weighted Average Interest Rate 3.3% 3.2% Interest Cover 3.0x 3.5x Average Maturity of Drawn Debt (years) Group 31 Mar Sep 2016 Loan to Value (LTV) 25.2% 24.6% Available undrawn facilities 1.2bn 1.0bn Weighted Average Interest Rate 2.6% 2.5% Interest Cover 3.3x 4.4x Fitch Senior Unsecured rating A- A- 68

69 Adjusted net debt proportionally consolidated ( bn) LTV 32.1% LTV 31.6% (0.5) 4.5 Mar 16 Net Debt Acquisitions Development & Capex Disposals Sep 16 Net Debt 69

70 Debt maturity ( m) Year to March Convertible Bond (Unsecured) Bank RCF Drawn (Unsecured) Debenture & loan notes (Secured) JVs Securitisations Bank RCF Undrawn (Unsecured) Funds Bank undrawn US Private Placements (Unsecured) JVs & Funds Bank drawn 70

71 Debt Financing Diverse profile Weighted Average Interest Rate reduced by 10 bps to 3.2% Average debt term 8.0 years Diverse Debt Profile 1 (30 September 2016) 0.5bn 0.7bn 1.7bn of revolving credit facilities available within British Land Proportion of debt at fixed rate 52% average over the next 5 years The Group has no requirement to refinance until bn 0.6bn 0.8bn Fitch Senior Unsecured rating A- 0.8bn Bank RCFs Drawn (Unsecured) US Private Placements (Unsecured) Debentures & loan notes (Secured) Convertible Bonds (Unsecured) JVs Securitisations JV & Funds Term Loans (Secured) 2 1 Proportionally Consolidated 2 HUT s debt shown at our share ( 0.4 billion) within JV & Funds 71

72 Number of shares Number of shares (m) 31 Mar Sep 16 IFRS Basic Weighted Average 1 1,025 1,029 IFRS Diluted Weighted Average 2 1,089 1,091 Underlying/EPRA Diluted Weighted Average 3 1,089 1,033 Period End 4 1,096 1,039 1 For use in IFRS basic earnings per share 2 For use in IFRS diluted earnings per share, includes dilution for % convertible bond 3 For use in Underlying/EPRA diluted earnings per share. Movement since March 2016 reflects % convertible no longer being treated as dilutive 4 For use in EPRA net asset value per share and EPRA triple net asset value per share. Movement since March 2016 reflects % convertible no longer being treated as dilutive 72

73 Valuation performance 6 months to September 2016 Valuation bn Movement m Movement % Yield Expansion bps ERV Growth % NEY % Weighting % Retail & Leisure 6.8 (178) (2.4) Offices & Residential 6.8 (238) (3.3) Canada Water 0.3 (6) (2.1) Total 13.9 (422) (2.8) Of which Standing Investments Of which Development 13.1 (395) (2.8) 0.8 (27) (3.0) 73

74 Valuation growth drivers Retail & Leisure 6 months to September 2016 Valuation bn Movement m Movement % Yield Expansion bps ERV Growth % H1 H1 H1 Regional 2.9 (83) (2.8) Local 2.2 (116) (4.8) Multi-let 5.1 (199) (3.7) Dept St + Leisure Superstores 0.7 (24) (3.0) 8 (3.0) Solus/Other Retail & Leisure 6.8 (178) (2.4)

75 Valuation growth drivers Offices & Residential 6 months to September 2016 Valuation bn Movement m Movement % Yield Expansion bps ERV Growth % H1 H1 H1 West End 3.9 (95) (2.4) City 2.7 (143) (4.9) 27 (0.2) Offices 6.6 (238) (3.5) Residential 0.2 Offices & Residential 6.8 (238) (3.3) 75

76 Investment Activity 6 months to 30 September 2016 Retail m Offices m Residential m Canada Water m Total m Purchases Sales 1 (690) (20) (710) Net Purchases/Sales (608) (20) 8 (620) Development Spend Capital Spend Net Investment (549) 74 (7) 13 (469) Gross Investment Of which 191m Retail sales and 9m Residential sales completed in January 2017, post period end 76

77 Acquisitions 6 months to 30 September 2016 Sector Region Price (Gross) m Completed Price (BL Share) m Annual Passing Rent m 2 New George Street Estate, Plymouth Retail South Hercules Unit Trust unit purchase 1 Retail Various Dock Offices Canada Water London 8 8 Total Units purchased over the course of the period. 18m represents purchased GAV 2 BL share of annualised rent topped up for rent frees 77

78 Disposals 6 months to 30 September 2016 Sector Region Price (Gross) m Completed Price (BL Share) m Annual Passing Rent m 1 Debenhams, Oxford Street Retail London Superstores Retail Various Dumfries Cuckoo Bridge Retail Scotland The Hempel Collection Residential London 5 5 Aldgate Place Residential London 13 6 Exchanged 2 Portfolio of retail assets (Debenhams Manchester, York Clifton Moor, Wakefield Westgate) Retail North The Hempel Collection Residential London 8 8 Aldgate Place Residential London 1 1 Total BL share of annualised rent topped up for rent frees 2 Sales completed in January post period end 78

79 Total Property Return (as calculated by IPD) 6 months to 30 September 2016 Retail Offices Total % British Land IPD British Land IPD British Land IPD Capital Return (2.4) (3.0) (3.4) (2.9) (2.8) (2.1) - ERV Growth Yield Expansion 1 18 bps 20 bps 21 bps 21 bps 19 bps 15 bps Income Return Total Property Return 0.1 (0.5) (1.8) (1.1) (0.8) Net equivalent yield movement 79

80 BL property outperformance vs IPD 5 years 5 years ended 30 September 2016 Outperformance bps pa Retail Offices Total Capital Returns Total Returns 80

81 BL property outperformance vs IPD 3 years 3 years ended 30 September 2016 Outperformance bps pa Retail Offices Total 10 Capital Returns Total Returns 81

82 Appendices Portfolio

83 High quality, diverse occupier base As at 30 September 2016 % of Contracted Rent UBS AG 1 5.8% Tesco plc 5.7% J Sainsbury plc 4.7% Debenhams 3.8% Kingfisher (B&Q) 2.6% Next plc 2.3% HM Government 2.2% Virgin Active 2.0% Facebook 1.7% Wesfarmers (Homebase/Bunnings) 1.6% Spirit Group 1.6% M&S Plc 1.5% Alliance Boots 1.5% Visa Inc 1.4% Dixons Carphone 1.4% Dentsu Aegis 1.4% Arcadia Group 1.3% Herbert Smith 1.2% RBS 1.1% TJX Cos Inc (TK Maxx) 1.0% 1 Rent contracted on 5 Broadgate, 1-3 Finsbury Avenue and 100 Liverpool Street. 3.0% pro-forma for run off of rent at 1-3 Finsbury Avenue and 100 Liverpool Street. 2 Includes lease expiries on committed, near term and medium term developments Occupier split by sector by rent TMT 7% Professional & Corporate 9% DIY 7% Food/Leisure 10% Other 7% Supermarket 11% Upcoming expiries 2 5% UBS 5 Broadgate 3% Other banks 4% Total banks 12% Asset Management & Other Financial 5% General Retail 16% Fashion & Beauty 16% Banks & Financial Services 17% 83

84 Portfolio valuation by sector At 30 September 2016 Group JVs & Funds 1 Total H1 Change 2 m m m % m Regional 1,087 1,791 2,878 (2.8) (83) Local 1, ,267 (4.8) (116) Multi-let 2,883 2,262 5,145 (3.7) (199) Department Stores and Leisure Superstores (3.0) (24) Solus and Other Retail and Leisure 4,006 2,805 6,811 (2.4) (178) West End 3,868 3,868 (2.4) (95) City 103 2,653 2,756 (4.9) (143) Offices 3,971 2,653 6,624 (3.5) (238) Residential Offices and Residential 4,144 2,675 6,819 (3.3) (238) Canada Water (2.1) (6) Total 8,439 5,480 13,919 (2.8) (422) Standing Investments 7,810 5,287 13,097 (2.8) (395) Developments (3.0) (27) 1 Group s share of properties in joint ventures and funds including HUT at ownership share 2 Valuation movement during the period (after taking account of capital expenditure) of properties held at the balance sheet date, including developments (classified by end use), purchases and sales 3 Stand-alone residential 84

85 Portfolio yields & ERV movements 1,2 At 30 September 2016 EPRA net initial yield % EPRA topped up net initial yield % 3 Overall topped up net initial yield % 4 Net equivalent yield % Net equivalent yield expansion bps 5 Net reversionary yield % ERV Growth % 5,6 Regional % Local % Multi-let % Department Stores and Leisure % Superstores (3.0%) Solus & Other % Retail and Leisure % West End % City (0.2%) Offices % Canada Water % Total % 1 Including notional purchaser's costs 2 On a proportionately consolidated basis. Excluding developments under construction, committed developments, assets held for development and residential assets 3 Including rent contracted from expiry of rent-free periods and fixed uplifts not in lieu of rental growth 4 Including fixed/minimum uplifts (excluded from EPRA definition) 5 6 months to 30 September As calculated by IPD 85

86 Lease length and occupancy 1 At 30 September 2016 Average Lease Length (yrs) Occupancy Rate (%) To Expiry To Break Occupancy Occupancy (underlying) 2 Regional Local Multi-let Department Stores and Leisure Superstores Solus & Other Retail and Leisure West End City Offices Canada Water Total On a proportionately consolidated basis. Excluding developments under construction, committed developments, assets held for development and residential assets 2 Including accommodation under offer or subject to asset management and owner-occupied space 86

87 Annualised rent & estimated rental value (ERV) 1 At 30 September 2016 Annualised Rents (Valuation Basis) m 2 ERV m Average Rent ( psf) Group JVs & Funds 3 Total Total Contracted 4 ERV Regional Local Multi-let Department Stores and Leisure Superstores Solus & Other Retail and Leisure West End City Offices Residential Offices and Residential Canada Water Total Excluding developments under construction, committed developments (100 Liverpool Street with annualised rents 9m and ERV 13m) and assets held for development 2 Gross rents plus, where rent reviews are outstanding, any increases to ERV (as determined by the Group s external valuers), less any ground rents payable under head leases, excludes contracted rent subject to rent free and future uplift 3 Group s share of properties in joint ventures and funds including HUT at share 4 Annualised rent, plus rent subject to rent free 5 Stand-alone residential 87

88 Rent subject to open market rent review 1 For period to 31 March At 30 September 2016 m m m m m m m Regional Local Multi-let Department Stores and Leisure Superstores Solus & Other Retail and Leisure West End City Offices Canada Water Total Potential uplift at current ERV On a proportionately consolidated basis. Excluding developments under construction, committed developments and assets held for development 2 As determined by the Group s valuers, excluding near term developments 88

89 Rent subject to lease break or expiry 1 For period to 31 March At 30 September 2016 m m m m m m m Regional Local Multi-let Department Stores and Leisure Superstores Solus and Other Retail and Leisure West End City Offices Canada Water Total % of contracted rent 4.3% 4.7% 6.9% 6.0% 6.7% 15.9% 28.6% Potential uplift at current ERV (excl. Near and Medium Term developments) On a proportionately consolidated basis. Excluding developments under construction, committed developments and assets held for development 2 For further detail, see following slide 89

90 Rent resetting to market For period to 31 March At 30 September 2016 m m m m m m m Rent expiring existing portfolio (per slide 76) Developments committed & under Construction Total Rent Resetting to Market excluding Near Term Developments Near term developments expiries (7) (7) (7) Near term developments completions Total Rent Resetting to Market including Near Term Developments ERV of current vacancies 1, Vacant & Income Expiring Including space under offer of 4m and space subject to asset management of 1m 2 Including 7m of vacant space at recently completed developments 90

91 Contracted rental increases (cash flow basis) For period to 31 March At 30 September 2016 m m m m m m m Expiry of rent free periods Fixed uplifts (EPRA basis) Fixed & minimum uplifts in lieu of rental growth Total

92 Superstores Stand-alone Superstores 1 In Multi-let assets 2 Total Exposure 1,2,3 Store Size 000 sq ft Number of stores Valuation (BL share) m Capital Value psf WALL to FB yrs Number of stores Valuation (BL share) m Capital Value psf WALL to FB yrs Number of stores Valuation (BL share) m Capital Value psf WALL to FB yrs > September , March , Geographical Spread Gross Rent (BL Share) Lease Structure London & South 54% Tesco 38m RPI and Fixed 9% Rest of UK 46% Sainsbury s 26m OMRR 91% Other 5m 1 Excludes 9m non-foodstore occupiers in superstore led assets 2 Excludes non food-format stores e.g. Asda Living 3 Excludes 93m of investments held for trading comprising freehold reversions in a pool of Sainsbury s Superstores 92

93 Appendices Developments

94 Recently completed & committed developments At 30 September 2016 Sector BL Share Sq ft PC Calendar Year Current Value Cost to Complete ERV Let & Under Offer Resi Sales Exchanged & not Completed % '000 m 1 m 2 m 3 m m 4 Aldgate Place, Phase 1 Residential Completed 7 9 n/a Clarges Mayfair Offices Offices Completed n/a Glasgow Fort Leisure Quarter Retail Completed n/a Total Completed in Period Kingdom Street Offices Q n/a Clarges Mayfair Retail and Residential Residential Q The Hempel Phase 1 Residential Q n/a n/a 13 The Hempel Phase 2 Residential Q n/a n/a Liverpool Street Offices Q Total Under Construction & Committed Retail Capital Expenditure Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 Excludes completed sales of 93m 2 From 1 October Cost to complete excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 3 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives) 4 At agreed sales price 5 Capex committed and underway within our investment portfolio relating to leasing and asset management 94

95 Development pipeline At 30 September 2016 Sector BL Share % Near term Pipeline Sq ft '000 Start On Site 1 Finsbury Avenue Offices Consented Speke (Leisure) Retail Consented Plymouth (Leisure) Retail Consented Total Cost 1 Total Near Term Retail Capital Expenditure Medium term Pipeline 2-3 Finsbury Avenue Offices Resolution to grant 135 Bishopsgate Offices Pre-submission Blossom Street Offices Consented 1 Triton Square Offices Submitted 5 Kingdom Street Offices Consented Gateway Building Offices Pre-submission Aldgate Phase 2 Residential Consented Canada Water Phase 1 3 Mixed Use 100 5,500 Pre-submission Bradford (Retail & Leisure) Retail Consented Meadowhall Leisure Retail Submitted Eden Walk Retail & Residential Mixed Use Resolution to grant Total Medium Term 8,502 Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 Total cost including site value. Excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 2 Forecast capital commitments within our investment portfolio over the next 12 months relating to leasing & asset enhancement 3 Assumed net area based on gross area of up to 7m sq ft m Status 95

96 Residential development programme At 30 September 2016 Sq Ft No. Market Units PC Date/ Status BL Share Current Value 1 Cost to come 2 Sales Exchanged & not Completed 1,3 '000 % m m m Clarges Mayfair Q Mixed use The Hempel Phase Q The Hempel Phase Q Aldgate Place Phase Completed Residential-led Total Committed Residential Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 Excludes completed sales of 93m 2 From 1 October Cost to complete excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 3 At agreed sales price 4 Includes 9,500 sq ft of affordable housing (11 units) 96

97 Estimated future development spend and capitalised interest At 30 September 2016 PC Calendar Year Cost to complete m (excluding notional interest) 6 mths Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Total 4 Kingdom Street Clarges Mayfair The Hempel Phase The Hempel Phase Liverpool Street Total Committed & Under Construction Total Near Term Indicative Interest Capitalised on above at attributable rates Contracted Residential receipts Financing costs are capitalised at 4% on qualifying expenditure for developments 97

98 Estimated future development rental income (accounting basis) At 30 September 2016 PC Calendar Year Gross Rental Income (Accounting basis) m Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Under Construction & Committed developments Clarges Retail Q Non-contracted Kingdom Street Q Non-contracted Liverpool Street Q Non-contracted 3 15 Non-contracted

99 Appendices Market

100 Investment market Strong demand for long, secure income Falling values in secondary locations Investment volumes bn bn % % Q1 Q2 Q3 Q4 Long term average Q1 Q2 Q3 Q4 Long term average Central London Office Retail Source: Shopping centres and OOT CBRE; Supermarkets Morgan Williams; Central London offices Knight Frank. Retail data includes: Shopping centres, out of town ( 15m+ parks, 3+ tenants) and supermarkets 100

101 % NIY % Property Yields and interest rate yield gap Retail and London Office Yields All Retail Central London Offices Source: IPD Property Yield vs 10 Year Gilt Yields Yield Gap UK 10 Year Gilt Yield IPD All Property Net Initial Yield (2.00) Source: IPD/Bloomberg

102 Central London take up Q m sq ft Source: CBRE Completed Pipeline Pre-let 10 year rolling average new and under-construction take-up 102

103 Central London development pipeline Q m sq ft Source: CBRE, British Land Completed Pipeline Pre-let Potential Speculative U/C Pre-let U/C Speculative 10 year rolling average new and under-construction take-up 10 year rolling average dev completions Note: Forecast reflects agent s estimate of earliest completions. 103

104 West End development pipeline Q m sq ft Source: CBRE Completed Pipeline Pre-let Potential Speculative U/C Pre-let U/C Speculative 10 year rolling average new and under-construction take-up 10 year rolling average dev completions Note: Forecast reflects agent s estimate of earliest completions 104

105 City development pipeline Q m sq ft Source: CBRE Completed Pipeline Pre-let Potential Speculative U/C Pre-let U/C Speculative 10 year rolling average new and under-construction take-up 10 year rolling average dev completions Note: Forecast reflects agent s estimate of earliest completions 105

106 Vacancy Central London West End & City Vacancy Rates Q Source: CBRE (historic) West End Void Rate (Period end) 10 year rolling average West End City Void Rate (Period end) 10 year rolling average - City 106

107 London office market rental outlook Prime London Office Rents psf Actual Forecast Source: CBRE (historic) and Average Agents' Consensus (including PMA, November 16) for forecasts West End City 107

108 Disclaimer The information contained in this presentation has been extracted largely from the Half Year Results Announcement for the period ended 30 September 2016 and is provided solely for information purposes. It 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. The distribution of this presentation in jurisdictions other than the UK may be restricted by applicable law and regulation, and therefore any persons who are subject to the laws of any jurisdiction other than the UK should inform themselves of, and observe, any applicable requirements. Information contained in this presentation relating to British Land or its share price or the yield on its shares are not guarantees of, and should not be relied upon as an indicator of, future performance. Nothing in this presentation should be construed as a profit forecast or profit estimate. This presentation may contain certain forward-looking statements. Such statements reflect current views on, among other things, our markets, activities, projections, objectives and prospects. Such forward-looking statements can sometimes, but not always, be identified by their reference to a date or point in the future or the use of forward-looking terminology, including terms such as believes, estimates, anticipates, expects, forecasts, intends, due, plans, projects, goal, outlook, schedule, target, aim, may, likely to, will, would, could, should or similar expressions or in each case their negative or other variations or comparable terminology. By their nature, forward-looking statements involve inherent risks, assumptions and uncertainties because they relate to future events and depend on circumstances which may or may not occur and may be beyond our ability to control or predict. Forward-looking statements should be regarded with caution as actual results may differ materially from those expressed in or implied by such statements. Important factors that could cause actual results, performance or achievements of British Land to differ materially from any outcomes or results expressed or implied by such forward-looking statements are set out in the section headed forward-looking statements in the Half-Year Results Announcement. Forward-looking statements in this presentation which are attributable to British Land or persons acting on its behalf should therefore be construed in light of all such factors. Any forward-looking statements made by or on behalf of British Land speak only as of the date they are made. Such forward-looking statements are expressly qualified in their entirety by the factors referred to above and no representation, assurance, guarantee or warranty is given in relation to them (whether by British Land or any of its associates, directors, officers, employees or advisers), including as to their completeness, accuracy or the basis on which they were prepared. Other than in accordance with our legal and regulatory obligations (including under the UK Financial Conduct Authority s Listing Rules, the Disclosure Rules and Transparency Rules and the Market Abuse Regulation), British Land does not intend or undertake to update or revise forward-looking statements to reflect any changes in British Land s expectations with regard thereto or any changes in information, events, conditions or circumstances on which any such statement is based. This presentation shall not, under any circumstances, create any implication that there has been no change in the business or affairs of British Land since the date of this document or that the information contained herein is correct as at any time subsequent to this date. 108