Half Year Results Presentation

Transcription

1 Half Year Results Presentation 6 months to 30 September 2016 #BLHY2017 $BLND

2 Introduction Chris Grigg Chief Executive

3 Confident in our positioning Quality of the portfolio Reflected in our activity and these 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 3

4 Results highlights 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 4

5 Offices Sustained leasing activity 68,000 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 5

6 Offices Range of pre-let discussions In discussions on eight significant requirements (>30,000 sq ft) Range of sectors tech, media, finance, professional services, not-for-profit Across all four campuses 4 Kingdom Street 1 Triton Square 100 Liverpool Street 6

7 000 sq ft Retail Continued leasing momentum 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 Encouraging deal pipeline 290,000 sq ft under offer, ahead of ERV Multi-let portfolio lettings and renewals % vs ERV +12% vs ERV H H

8 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 8

9 Residential Further progress 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

10 Significant Retail sales on strategy 690m 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 10

11 Investment market Strong demand for long, secure income Falling values in secondary locations Few transactions on large lot sizes Investment volumes bn 16 bn % 12 8 Q3 Q2 Q1 8-54% Q3 Q2 Q 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 11

12 Positioning for the future Strategy Aligned to long term trends Resilience Secure income and robust finances Optionality Tactical decisions to respond to the changing environment 12

13 Our strategy British Land is a leading UK commercial property company focused on creating and operating great places for modern lifestyles 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 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 13

14 Placemaking applies across our 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 14

15 Resilience underpinned by secure income High quality, diverse occupier base No single occupier accounts for more than 6% of income No sector accounts for more than 17% 98% occupancy 9 years average lease length Occupier split by sector by rent DIY 7% Other 7% General Retail 16% TMT 7% Professional & Corporate 9% F&B and Leisure 10% Supermarket 11% 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 15

16 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 16

17 100 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 17

18 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 18

19 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 19

20 Financial Review Lucinda Bell Chief Financial Officer

21 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%) 21

22 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

23 Net rental income m (11) Retail Offices Total 1.5% 4.2% 2.3% Retail 1 Offices Total 1 1.7% 6.7% 3.4% 312 H Capital activity Like for like rental growth Developments H Like for like rental growth is stated excluding the impact of surrender premia. 23

24 Financing Costs Weighted average interest rate at 3.2% m 12 5 (96) (1) 3 (1) (78) H Financing activity debt transactions Financing activity lower rates Acquisitions Disposals Completion of developments H

25 Income statement HY to 30 September H H H1 Change % Net Rental Income ( m) Fees & Other Income 1 ( m) Administrative Expenses 1 ( m) (49) (43) Net Finance Costs ( m) (96) (78) Underlying Profit ( m) Underlying Earnings per Share (p) Dividend per Share (p) 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. 25

26 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) 26

27 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)

28 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) 28

29 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 29

30 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 30

31 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 Committed Under Construction Committed 100 Liverpool Street Near Term Speculative development commitment Pre-sold / pre-let 31

32 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 32

33 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 33

34 Summary Good results Operationally strong Modest development commitments Strong capital structure 4 Kingdom Street 34

35 Summary Chris Grigg Chief Executive

36 Delivering performance with our actions 769,000 sq ft of leasing, 11.6% ahead of ERV Low cost financing; reducing admin costs 690m of non-core Retail disposals Committed to 100 Liverpool Street Planning successes across the pipeline +16% underlying profit Meadowhall Leisure Hall 36

37 Resilience built in; positioned to capture future upside Quality of the portfolio High level of leasing activity and interest Resilience built into the business Secure income, robust finances and lean operating model Strategy aligned to long term trends Positions portfolio to capture greater share of demand Optionality to respond to changing environment Proceed with caution on developments and commit at the right time 37

38 Appendices

39 Portfolio evenly split between London Offices and high quality Retail Offices Retail & Leisure 6.6bn 6.8bn Total portfolio valuation 13.9bn at March 16 including 0.3bn at Canada Water and 0.2bn of Residential assets 39

40 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 40

41 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% 41

42 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 42

43 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 >30 occupiers Typically occupiers Footfall >5m, spend > 100m p.a. Footfall often <5m, spend < 100m p.a. Drive-time >15 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 43

44 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 1 Assets held within Hercules Unit Trust or its subsidiaries 2 Properties where sale exchanged in period, completing post period end 44

45 Our portfolio is well positioned to meet both consumer and retailer demands Potential to reach 60% of the population Annual footfall of 330m 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

46 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) 46

47 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 47

48 London Assets 48

49 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 break in Dec Finsbury Avenue expected lease break in late 2018 Current size: 190k sq ft Potential size: 560k sq ft 1 Finsbury Avenue Lease break in Dec 2016 Current size: 281k sq ft 135 Bishopsgate Leases expiring in 2019 Current size: 340k sq ft 100 Liverpool Street Lease break 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

50 Regent s Place Campus 50

51 Paddington Central Campus 51

52 Canada Water 52

53 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 Note: 2016 restated to exclude post period end disposal of Sainsburys Newquay for 10m, which is now included in H Net Spend Net Acquisitions/ Disposals 53

54 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 completing post period end 54

55 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 55

56 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 will complete post period end 56

57 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 57

58 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. 58

59 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. 59

60 H2 17 income statement guidance Rental Income Virtually fully let portfolio with contracted accounting gross rent of 631m as at 30 September 2016 Retail sales exchanged but not completed are expected to reduce rents by 3m in H2 post completion Annual rent relating to the development pipeline of 23m is expected to run off in H2 FY17, up to 6m impact in period Property outgoings likely to be similar to H1 as a percentage of gross rents Administrative costs and fee income Expected to be broadly in line with H1 levels Financing Weighted average interest rate now 3.24% on gross debt of 4.8bn Indicative capitalised interest is 4m based on current development commitments 2012 Convertible Bond Dilution of convertible bond will depend on share price at the end of the reporting period. If share price is at or above conversion price of 693p then Underlying EPS and EPRA NAV are diluted for the 2012 convertible bond For earnings calculations, the interest payable on the 2012 convertible bond of 6m should be added back and the number of shares increased by 57.8m For NAV calculation, debt is reduced by 400m and number of shares increased by 57.8m Dividend As announced in May 2016, the dividend for the year ending 31 March 2017 is increased by 3% to 29.2 pence per share (quarterly dividend of 7.3 pence per share) Other Capital activity has the potential to significantly impact profits. For example, selling 100m of assets would reduce profits by c. 4m, based on an average portfolio topped up NIY of 4.8%, and LTV by c.0.5% 60

61 Reconciliation of Underlying Profit HY to 30 September ( m) H H IFRS profit / (loss) before tax 823 (205) Net valuation (profit)/loss (614) 462 Profit on disposal of investment and trading properties (36) (42) Capital financing costs/(income) 6 (9) Non-controlling interests (8) (7) Underlying Profit Dilution adjustments 3 EPRA Earnings Before Tax On a proportionately consolidated basis 61

62 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 62

63 Reconciliation of EPRA NAV & NNNAV 31 March September 16 m pence m pence Balance Sheet (IFRS) Net Assets 9, , Deferred tax arising on revaluation movements 5 2 Mark to market on effective cash flow hedges and related debt adjustments Adjust to fully diluted on exercise of share options Adjust to dilute for 2012 convertible bond 400 Surplus on trading properties Non-controlling interests (277) (249) EPRA NAV 10, , Deferred tax arising on revaluation movements (24) (15) Mark to market of debt and derivatives (410) (616) EPRA NNNAV 9, ,

64 Gross and net debt reconciliation As at 30 September 2016 Group m JVs & Funds m Less non-controlling interests m Gross Debt (principal value) 3,297 1,631 (124) 4,804 m IFRS adjustments: Issue costs and premia (13) (3) 1 (15) Fair value hedges Other Items (3) (3) IFRS gross debt 3,562 1,628 (123) 5,067 Market value of derivatives (83) 49 (4) (38) Cash (107) (261) 7 (361) IFRS net debt 3,372 1,416 (120) 4,668 Adjustments: Remove market value of derivatives 38 Remove fair value hedges (246) Other adjustments 3 Adjusted net debt 4,463 64

65 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 65

66 Debt maturity group ( m) 1, Year to March Bank RCF Drawn (Unsecured) Convertible Bond (Unsecured) US Private Placements (Unsecured) Debenture & loan notes (Secured) Bank RCF Undrawn (Unsecured) 66

67 Debt maturity joint ventures and funds 1 ( m) 1, Year to March JVs Securitisations JVs & Funds Bank drawn Funds Bank undrawn 1 At British Land share (including share of HUT) 67

68 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 Extended 0.9bn of unsecured revolving bank facilities Repaid 0.3bn of secured debt 1.4bn 0.6bn 0.8bn Proportion of debt at fixed rate 52% average over the next 5 years The Group has no requirement to refinance until bn 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 68

69 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 69

70 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 70

71 Portfolio weighting At 30 September 2015 % 2016 (current) % 2016 (current) m 2016 (pro-forma 1 ) % Regional 19.5% 20.7% 2, % Local 16.3% 16.3% 2, % Multi-let 35.8% 37.0% 5, % Department Stores and Leisure 7.0% 4.6% % Superstores 6.0% 4.9% % Solus and Other 2.6% 2.5% % Retail and Leisure 51.4% 49.0% 6, % West End 25.5% 27.8% 3, % City 19.6% 19.8% 2, % Offices 45.1% 47.6% 6, % Residential 2 1.5% 1.4% % Offices and Residential 46.6% 49.0% 6, % Canada Water 2.0% 2.0% % Total % 100.0% 13, % 1 Pro forma for developments under construction and committed developments at estimated end value (as determined by the Group s external valuers) and post period end transactions 2 Stand-alone residential 3 On a proportionately consolidated basis 71

72 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 72

73 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 73

74 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 74

75 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 75

76 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 76

77 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)

78 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 78

79 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

80 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 80

81 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 81

82 BL property outperformance vs IPD 5 years 5 years ended 30 September 2016 Outperformance bps pa Retail Offices Total Capital Returns Total Returns 82

83 BL property outperformance vs IPD 3 years 3 years ended 30 September 2016 Outperformance bps pa Retail Offices Total 10 Capital Returns Total Returns 83

84 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 84

85 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 85

86 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) 86

87 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 87

88 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

89 Gap as multiple of gilt yield 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 Source: IPD/Bloomberg

90 Central London development pipeline Q m sq ft 12.0 c. 7.3m sq ft in pipeline delayed since Brexit 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 90

91 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 91

92 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 92

93 Vacancy Central London West End & City Vacancy Rates Q Source: CBRE (historic) West End Void Rate (Period end) City Void Rate (Period end) 93

94 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 94

95 Additional Disclosures Previous Retail Classification Basis 95

96 Retail Portfolio Valuation previous classification At 30 September 2016 Group JVs & Funds 1 Total H1 Change 2 m m m % m Shopping parks 2,104 1,137 3,241 (4.1) (139) Shopping centres 1,125 1,121 2,246 (2.1) (47) Superstores (3.0) (24) Department stores Leisure (0.5) (2) Retail and Leisure 4,006 2,805 6,811 (2.4) (178) 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 96

97 Retail portfolio net yields 1,2 previous classification 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 5 Net reversionary yield % ERV Growth % 5,6 Shopping parks % Shopping centres % Superstores (3.0%) Department stores % Leisure % Retail and Leisure % 1 Including notional purchaser's costs 2 Excluding developments under construction and assets held for development 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 97

98 Retail gross rental income 1,2 previous classification 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 Shopping parks Shopping centres Superstores Department stores Leisure Retail & Leisure 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 98

99 Retail portfolio weighting previous classification At 30 September 2015 % 2016 (current) % 2016 (current) m 2016 (pro-forma 1 ) % Shopping parks , Shopping centres , Superstores Department stores Leisure Retail & Leisure , Pro forma for developments under construction at estimated end value (as determined by the Group s external valuers) and transactions exchanged in the period but completing after the period end 99

100 Retail portfolio lease length and occupancy 1 previous classification At 30 September 2016 Average Lease Length (yrs) Occupancy Rate (%) To Expiry To Break Occupancy Occupancy (underlying) 2 Shopping parks Shopping centres Superstores Department stores Leisure Retail & Leisure Excluding developments under construction and assets held for development 2 Including accommodation under offer or subject to asset management 100

101 Retail portfolio annualised rent & estimated rental value (ERV) 1 previous classification At 30 September 2016 Annualised Rents (Valuation Basis) m 2 ERV m Average Rent ( psf) Group JVs & Funds 4 Total Total Contracted 3 ERV 3 Shopping parks Shopping centres Superstores Department stores Leisure Retail & Leisure Excluding developments under construction 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 Annualised rent, plus rent subject to rent free 4 Group s share of properties in joint ventures and funds including HUT at share 101