Full Year Results Presentation

Transcription

1 Full Year Results Presentation Full Year ended 31 March 2017 #BLFY2017 $BLND

2 A successful year Chris Grigg Chief Executive

3 Key messages Good results Active execution of strategy Attracting demand from occupiers and investors 100 Liverpool Street Taking the business forward Opportunities already in the portfolio Positioned to exploit optionality 3

4 Results highlights Underlying profits up 7% to 390m (+ 27m) SouthGate, Bath Strong leasing activity Reducing finance and admin costs NAV down 0.4% to 915p Valuation fall of 1.4% 1.7m sq ft lettings and renewals across the business 8% ahead of ERV Further 1m sq ft under offer or in advanced negotiations Total sales of 1.5bn 9% ahead of March 2016 valuation 4

5 Offices Attracting occupier and investor demand Sale of The Leadenhall Building for 1.15bn (100%) 4 Kingdom Street 1m Sq ft lettings progressed 1m sq ft of office lettings progressed Evidence of 7 Clarges Street World class buildings Broadening our campus offer Progressing development optionality Yalding House 5

6 Offices Creating and delivering world class buildings The Leadenhall Building 1.15bn headline price (100%) 24% ahead of September 2016 valuation 25% IRR since 2010 Development of 7 Clarges Street 83% let; one floor to go Rents in line with pre-referendum ERVs 1m sq ft lettings progressed 279,000 sq ft of lettings, 1.4% ahead of ERV Over 700,000 sq ft under offer or in advanced negotiations The Leadenhall Building 6

7 Offices Broadening the offer Our research shows that 96% Value public transport links close to the office 98% Say communal working areas are important 92% Want food and beverage options nearby Paddington Central Survey of London Millennials 4 Kingdom Street Office space nearly 80% under offer within 1 week of PC 3% ahead of pre-referendum net effective ERVs 4 Kingdom Street >20% IRR >40% ahead of best Paddington Central rent on acquisition in

8 Offices Creating and exploiting optionality Creating Planning permission secured on 1.5m sq ft Arranging Short term leases New campus uses Exploiting 1 Triton Square 2&3 Finsbury Avenue Pergola, 5 Kingdom Street 1 Finsbury Avenue 2 Finsbury Avenue Blossom Street 8

9 Retail Strong occupier demand; continued outperformance Positioned to perform Mayflower, Basildon Reshaping the portfolio Enhancing environments Attracting a broader range of occupiers Glasgow Fort Ealing Broadway Meadowhall, Nespresso 9

10 Retail Reshaping the portfolio 881m of non-core retail disposals >50 % of portfolio turned over in last 5 years 3% above valuation 4.3% average yield Non-core multi-let assets Superstores 226m Department stores Westgate, Wakefield Tesco JV Debenhams, Oxford Street bn sales 1.5bn acquisitions 10

11 Retail Enhancing environments Tollgate, Colchester Ealing Broadway 6m spend ERV +14% Footfall +8% 12.5m refurb Over 30% re-let since acquisition ERV +6% Meadowhall Glasgow Fort 60m refurbishment 37 lettings 7.6% ahead of ERV 12m investment 15 lettings First out of town store for 4 retailers 11

12 Retail Capturing incremental demand Occupiers extending stores New formats and locations Multi-let portfolio lettings vs ERV % Lettings vs ERV % % 0.9m sq ft 1.0m sq ft

13 Retail Operational outperformance across the portfolio Year Ended March 2017 Total multi-let portfolio Regional Local Footfall 240bps Ahead of market +0.0% -1.9% +2.1% Retailer in-store Sales 220bps Ahead of market +0.0% +0.3% -0.7% ERV Growth 150bps Ahead of market +2.4% +2.3% +2.5% Source: Footfall benchmark ShopperTrak; Sales benchmark BRC-KPMG; ERV benchmark IPD 13

14 Continued polarisation in Retail ERV growth vs IPD and Retail sales, including online Index Mar-14 = % Rental growth on multi-let assets in FY Retail sales inc. online BL Multi-let IPD Prime % IPD Secondary Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Source: Oxford Economics, IPD 14

15 Sustainability sector leading performance Customer Orientation Wellbeing Targeting wellbeing to support productivity Helping occupiers attract and retain talent Targeting WELL standard at 100 Liverpool Street Right Places Community Sector leader for 3 consecutive years Young Readers Programme Connecting with communities and retailers Enlivening our places Capital Efficiency Future-proofing Office developments BREEAM Excellent as a minimum <1% incremental cost Better capital value Lower occupancy cost Expert People Skills and opportunity Connecting with occupiers and communities Securing skills our industry needs 44% reduction in carbon intensity 35% reduction in energy intensity vs 2009 } 2020 target: 55% reduction 15

16 Finance Review Lucinda Bell Chief Financial Officer

17 Highlights FY to 31 March Change % Underlying Profit ( m) Underlying Earnings per Share (p) Dividend per Share (p) Valuation Performance +6.7% -1.4% EPRA Net Asset Value per Share (p) (0.4) Loan to Value (LTV) 32.1% 29.9% Total Accounting Return 14.2% 2.7% 17

18 Net rental income m (23) 11 (8) Retail Offices Total 1.5% 4.2% Retail 2.3% Offices Total 1 2.0% 4.5% 2.9% 610 FY 2016 Capital activity Like for like rental growth Expiries on developments Development lettings FY Like for like rental growth is stated excluding the impact of surrender premia. 18

19 Financing Costs m 16 9 (5) 10 (1) (180) (151) FY 2016 Financing activity debt transactions Financing decisions lower rates Acquisitions Disposals Completion of developments FY

20 Underlying Profit up 27 million m 25 8 (18) FY 2016 Capital activity Like for like rental growth Developments Financing activity Administrative expenses FY

21 Income statement FY to 31 March Change % Net Rental Income ( m) (1.6) Fees & Other Income ( m) Administrative Expenses ( m) (94) (86) (8.5) Net Finance Costs ( m) (180) (151) (16.1) Underlying Profit ( m) Underlying Earnings per Share (p) Dividend per Share (p) Proposed FY18 dividend increase of 3% 21

22 Valuation performance FY to 31 March Valuation bn Movement m Movement % Yield Movement bps ERV Growth % NEY % Weighting % Retail 6.6 (133) (1.8) Offices & Residential 7.0 (37) (0.5) Canada Water 0.3 (33) (10.8) Total 13.9 (203) (1.4) Of which Standing Investments 13.3 (219) (1.6) - Of which Development

23 Valuation growth drivers Retail FY to March 2017 Valuation bn Movement m Movement % Yield Movement bps ERV Growth % H1 H2 FY H1 H2 FY H1 H2 FY Regional 3.0 (55) (2.8) 1.0 (1.8) 16 (4) Local 2.1 (108) (4.8) 0.4 (4.5) 29 (1) Multi-let 5.1 (163) (3.7) 0.7 (3.0) 22 (3) Other (3) 2 (0.3) (0.5) (0.7) Retail 6.6 (133) (2.4) 0.7 (1.8) 18 (3)

24 Valuation growth drivers Offices & Residential FY to March 2017 Valuation bn Movement m Movement % Yield Movement bps ERV Growth % H1 H2 FY H1 H2 FY H1 H2 FY West End 3.9 (25) (2.4) 1.7 (0.6) 16 (1) City 2.9 (23) (4.9) 4.4 (0.8) 27 (13) 15 (0.2) Offices 6.8 (48) (3.5) 2.8 (0.7) 21 (6) Residential Offices & Residential 7.0 (37) (3.3) 2.9 (0.5) 24

25 Reduction in diluted EPRA net asset value (39p) 19p 36p (27p) (4p) 11p 919p 915p Mar 16 H1 valuations H2 valuations Underlying Profit Dividends Liability management costs Reversal of 2012 convertible bond dilution & other Mar 17 25

26 Strength of debt metrics Proportionally Consolidated 31 Mar Mar 2017 Loan to Value (LTV) 32.1% 29.9% Weighted Average Interest Rate 3.3% 3.1% Interest Cover 3.0x 3.6x Average Maturity of Drawn Debt (years)

27 Development pipeline Committed speculative exposure below 4% - Costs to come matched by residential receipts Near term speculative exposure increases to 6% 64m ERV in total - 40% already pre-let or under offer m Costs to Come Speke Leisure Clarges Resi 100 Liverpool Street 64m ERV of Committed & Near Term Developments Plymouth Leisure 1 Finsbury Avenue 135 Bishopsgate 1 Triton Square Further opportunities in the medium term pipeline - Committed Near Term 4 Kingdom Street 27

28 Future income profile Annualised Gross Rents as at 31 March 2017 Cash Flow Basis m Current Passing Rent 611 Accounting Basis m Contracted Uplifts Total Contracted Rent 653 Sales and purchases completing after year end (22) (19) Letting of Completed Developments (of which 7m let or under offer) 11 9 Lease Expiries Near Term Developments (9) (7) Lease Expiries Medium Term Developments (8) (8) Letting of Committed Developments (of which 1m let or under offer) Letting of Near Term Developments (of which 25m let or under offer) RPI Linked Leases Reversion Potential Rent in 5 Years excl. Medium Term developments Letting of Medium Term Developments (excl. Canada Water) On a proportionally consolidated basis including Group s share of joint ventures and funds. Figures based on valuation rent and include assumptions on outstanding rent review settlements 1 Assumed at 3.0% per annum 2 Includes reversion on expiries and open market rent reviews within 5 years 28

29 Summary Good results Improved financial strength Modest speculative development 4 Kingdom Street 29

30 Looking forward Chris Grigg Chief Executive

31 Creating a resilient business Offices Increase in West End as a % of Offices 35% 61% Fall in banks 12% as a % of portfolio 7% March 2010 Current March 2010 Current Retail Increase in Multi-let as a % of retail 60% 78% Fall in superstores 15% as a % of portfolio 4% March 2010 Current March 2010 Current +57% Increase in underlying profit since 2010 Financial Fall in Loan to Value 47% 27% March 2010 Current All current figures pro forma for sale of 50% interest in The Leadenhall Building and RBS surrender at 135 Bishopsgate in June 17 31

32 Market Outlook Uncertainty created by Brexit Glasgow Fort Wide range of outcomes Feedback from our occupiers Taking longer to commit Continue to value London Meadowhall Demand for the best space remains Accelerating polarisation 7 Clarges Street 32

33 Office Opportunities 1 Triton Square 1 Finsbury Avenue 288,000 sq ft refurbishment Includes 45,000 sq ft retail Planning expected May million investment 135 Bishopsgate 310,000 sq ft office space 125,000 sq ft additional space Under offer for pre-let of entire office space Received resolution to grant planning 200m commitment 325,000 sq ft refurbishment Includes 43,000 sq ft retail RBS surrendering lease June m surrender premium (100%) 55 million investment Planning expected June

34 Retail Opportunities Meadowhall Leisure Retail extensions Includes: 48m consented leisure scheme at Drake Circus, Plymouth 322,000 sq ft leisure extension Planning decision expected summer 2017 Leisure extension at Serpentine Green, Peterborough, target planning submission autumn 2017 Eden Walk, Kingston 538,000 sq ft mixed use regeneration scheme Retail, residential, office, cinema, event space Planning granted March

35 Flexible workspace responding to changing customer needs Broadening our offer Incremental demand from SMEs Meeting needs of existing occupiers Launching flexible workspace offer across our campuses 80,000 sq ft being fitted out with first deal agreed on 25,000 sq ft Appold Studios, Broadgate 35

36 Canada Water Fourth public consultation underway ( Proposed mix of uses 3,500 new homes 2m sq ft Workspace 1m sq ft Retail & Leisure 36

37 Disciplined approach to capital allocation Forecasts and hurdle rates guide capital allocation The Leadenhall Building Assessed on a regular basis Flexibility to respond to changing market 37

38 Summary Good results in an uncertain environment 1 Triton Square Strong leasing Profitable disposals Progressing opportunities Our space fulfils customers changing needs Attractive to occupiers and investors Cautious optimism for our business High quality portfolio; robust finances Opportunities to create value and grow income 38

39 Appendices

40 Our Strategy British Land is a leading UK commercial property company focused on high quality retail and London offices Customer Orientation We use our insight into 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 design engaging, sustainable places which bring people together through the right mix of occupiers, services and activities Expert People We employ expert people and work with specialist partners to create insight, develop skills and build capability By managing our business to be resilient, sustainable and responsive, we create enduring demand for our properties and value for our stakeholders 40

41 Placemaking Framework applied across the business We Connect We Design We Enhance We Enliven Communication Digital connectivity, branding and marketing Form Efficient and effective buildings & spaces Segment mix Balance of different segments and uses Customer service On-site hospitality & customer service Accessibility Convenience & access Authenticity How our users feel and interact with the space Occupier mix Occupiers & campus community Events Bringing people together and attracting visitors Community Supporting communities for local people and occupiers Function Facilities & safety Occupier service Supporting occupiers and BL value add Memorable experience Creating lasting positive impressions 41

42 Portfolio evenly split between London Offices and high quality Retail Offices Retail & Leisure 6.3bn 6.6bn Further 0.3bn at Canada Water and 0.2bn of standalone Residential assets Figures shown on a proportionally consolidated basis including the group's share of properties in Joint Ventures & Funds, pro-forma for post year end transactions 42

43 Retail Multi-let Portfolio Our two core products each fulfil specific shopper missions Regional Attracting visitors from a wide catchment for a planned trip Missions include Leisure-dominated Trips, Family Day Out and The Big Ticket Shop Local Fitting into the daily life of local communities Missions include Local Neighbourhood Shopper, Convenient Leisure and Single Item Pick-Up Typically >30 occupiers Typically occupiers Footfall >10m, spend > 100m p.a. Footfall often <8m, 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 services and amenities Convenient leisure and F&B e.g. gym and coffee shops 43

44 Multi-let Retail assets Southgate, Bath Broughton, Chester 1 Fort Kinnaird, Edinburgh 1 Glasgow Fort 1 St. Stephen s, Hull Eden Walk, Kingston Giltbrook, Nottingham Serpentine Green, Peterborough Drake Circus, Plymouth Meadowhall, Sheffield New Mersey, Speke 1 Teesside, Stockton Regional Attracting visitors from a wide catchment for a planned trip 1 Assets held within Hercules Unit Trust or its subsidiaries Mayflower, Basildon Beaumont, Leicester Weston Lock, Bath Valentine, Lincoln 1 Cornerhouse, Barrow Mostyn Champneys, Llandudno 1 Hindpool, Barrow Forster Square, Bradford Woodfields, Bury Gallagher, Cheltenham 1 Tollgate, Colchester Prospect Place, Dartford 1 Crown Point, Denton St. Peter s, Mansfield Kingston Centre, Milton Keynes Studlands, Newmarket Harlech, Newport Elk Mill, Oldham Nugent, Orpington Botley Road, Oxford Wheatley, Doncaster Deepdale, Preston 1 Ealing Broadway Queens, Stafford 1 Whiteley, Fareham Orbital, Swindon Old Market, Hereford Crown Wharf, Walsall 1 Inverness 1 Westside, Leeds Local Fitting into the daily life of local communities Lion, Woking 44

45 Our portfolio is well positioned to meet both consumer and retailer demands Potential to reach 60% of the population BL local centres BL regional centres BL asset catchments Annual footfall of 312m Average rent to sales ratio 10% 85% of our car parking spaces are free Source: CACI Retail Footprint

46 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 29 retailers opening at British Land centres between April 2014 and December For retailers with fewer than 30 UK stores, there is a 75% boost to online presence Source: Hitwise 46

47 Online sales increasingly integrated with physical stores 89% of UK 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 265 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: GlobalData/ British Land 47

48 BL footfall performance vs benchmark +240bps Outperformance in FY17 Jan-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 Mar-17 British Land UK Market (ShopperTrak UK National Index) 48

49 Major property holdings At 31 March 2017 BL Share % Sq ft 000 s Rent Occupancy m pa 1 Rate % 2 Lease Length yrs 3 1 Broadgate 50 4, Regent's Place 100 1, Paddington Central Meadowhall, Sheffield 50 1, The Leadenhall Building Sainsbury's Superstores , Teesside, Stockton Drake Circus, Plymouth , Glasgow Fort Ealing Broadway Annualised EPRA contracted rent including 100% of Joint Ventures & Funds 2 Including accommodation under offer (including post year end transactions at 2 Finsbury Avenue and 4 Kingdom Street) or subject to asset management (incl. space being prepared for flexible working) or assets being readied for development in the near term (1 Finsbury Avenue) 3 Weighted average to first break 4 Sale exchanged in March 2017 with completion due post year end 5 Comprises standalone stores 6 Includes Teesside Leisure Park acquired in the year 7 Includes New George Street Estate, Plymouth acquired during the year 49

50 Top 20 occupiers & occupier split by industry As at 31 March 2017 % of Contracted Rent Tesco plc J Sainsbury plc 4.8 UBS AG 3.4 Debenhams 3.3 Kingfisher (B&Q) 2.8 HM Government 2.6 Next plc 2.4 Virgin Active 1.9 Facebook 1.8 Dentsu Aegis 1.7 Spirit Group 1.7 M&S plc 1.6 Wesfarmers 1.6 Alliance Boots 1.6 Visa Inc 1.5 Dixons Carphone 1.4 Arcadia Group 1.3 Herbert Smith 1.3 RBS 1.2 TK Maxx % pro-forma for post year end net disposal of 73m in property exchange transaction with Tesco TMT 7% Professional & Corporate 9% Grocery & Convenience 10% Occupier Split by Industry (%) DIY 7% Other 10% Food/Leisure 11% Fashion & Beauty 16% General Retail 15% Banks & Financial services 15% Expiries ahead of development 2% UBS 5 Broadgate 3% Other banks 3% Total banks 8% Asset Management & Other Financial 7% 50

51 London Assets 51

52 Broadgate development opportunities 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: 189k sq ft Potential size: 563k sq ft 1 Finsbury Avenue Lease expired in Dec 2016 Current size: 288k sq ft 135 Bishopsgate Leases surrender in June 2017 ahead of 2019 expiry Current size: 325k 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 WALL to FB yrs Core income, including recent developments Committed (100 Liverpool Street) n/a n/a n/a Near term pipeline (1 Finsbury Avenue, 135 Bishopsgate) Medium term pipeline (2&3 Finsbury Avenue, 1&2 Broadgate) Total

53 Paddington Central Campus 53

54 Regent s Place Campus 54

55 Canada Water 55

56 Capital Activity 2bn Gross investment activity in FY17 Net Spend m 52m 648m ( 267m) 31m ( 1,059m) 1,600 1, (400) (800) (1,200) (1,600) (2,000) Financial Year Disposals Capital Investment Acquisitions Net Spend Net Acquisitions/ Disposals includes transactions exchanged since 1 April

57 Capital Activity Since 1 April 2016 Retail m Offices m Residential m Canada Water m Total m Purchases Sales 1,2 (881) (609) (56) (1,546) Development Spend Capital Spend Net Investment (583) (459) (35) 18 (1,059) Gross Investment 1, ,033 On a proportionally consolidated basis including the Group s share of joint ventures and funds 1 Includes 43m acquisitions and 116m disposals that exchanged and completed post year end as part of a Tesco JV swap transaction resulting in a net 73m disposal of superstore assets; Includes a further 49m acquisition that exchanged and completed post year end 2 Of which 575m Offices sales and 19m Residential sales completing post year end 57

58 Acquisitions Since 1 April 2016 Sector Price (100%) m Completed Price (BL Share) m Annual Passing Rent m 4 New George Street Estate, Plymouth Retail The Broadway, Ealing 1 Retail Harlech, Newport Tesco exchange transaction 2 Retail Tesco, Brislington Tesco exchange transaction 2 Retail Hercules Unit Trust units 3 Retail Teesside Leisure Park Retail Dock Offices, Canada Water Canada Water 8 8 Total Property acquisition exchanged and completed post year end 2 Property acquisitions exchanged and completed post year end as part of a Tesco JV swap transaction resulting in a net 73m disposal of superstore assets 3 Units purchased over the course of the year. 18m represents purchased GAV 4 BL share of annualised rent topped up for rent frees 58

59 Disposals Since 1 April 2016 Sector Price (100%) m Completed Price (BL Share) m Annual Passing Rent m 3 Debenhams, Oxford Street Retail Superstores 1 Retail Portfolio of retail assets (Debenhams Manchester, York Clifton Moor, Wakefield Westgate) Retail Ebury Gate Offices Dumfries Cuckoo Bridge Retail Putney High Street Retail Lisnagelvin, Londonderry Retail Luton Power Court Retail 9 9 The Hempel Collection Residential Aldgate Place Residential Exchanged 2 The Leadenhall Building Offices 1, Clarges, Mayfair Residential Total 2,328 1, Of which 116m exchanged and completed post year end as part of a Tesco JV swap transaction resulting in a net 73m disposal of superstore assets 2 Sales completing post year end 3 BL share of annualised rent topped up for rent frees 59

60 FY18 income statement guidance Gross Rents Annualised accounting gross rent of 602m as at 31 March 2017 Transactions completing after 31 March are expected to reduce annualised rents by 19m (FY18 impact 18m) Annualised rent relating to properties in the development pipeline of 7m is expected to run off in FY18, up to 6m impact in the year. This includes the impact of RBS early surrender at 135 Bishopsgate for which we will recognise a 15m surrender premium receipt in H1 FY18 Rental income growth will be driven by like-for-like growth and development lettings Financing Weighted average interest rate now 3.14% on gross debt of 4.5bn Transactions completing after 31 March are expected to reduce the interest charge by 7m Operating costs Expected to be broadly in line with FY17 levels. This includes the investment in flexible workspace which is expected to be profit neutral in FY18 Dividend The dividend for the year ending 31 March 2018 is increased by 3% to pence per share (quarterly dividend of 7.52 pence per share) Other 2012 convertible bond matures on 10 th September 2017 with a current conversion price of 693p Capital activity has the potential to significantly impact profits. For example, selling/acquiring 100m of assets would reduce/increase profits by c. 3.5m and LTV by c.0.5%. This is based on an average portfolio topped up NIY of 4.6% and marginal cost of debt of 1.1% 1 Including sale of The Leadenhall Building for 575m (50% interest), Tesco JV swap transaction resulting in net 73m disposal of superstore assets and acquisition of The Broadway, Ealing for 49m. 60

61 Future income profile breakdown (cash basis) For the year to 31 March Total At 31 March 2017 m m m m m m Contracted rent 653 Sales and purchases completing post year end (22) (22) Letting of completed developments (of which 7m let or under offer) Lease Expiries Near Term Developments (9) (9) Lease Expiries Medium Term Developments (8) (8) Letting of Committed Developments (of which 1m let or under offer) Letting of Near Term Developments (of which 25m let or under offer) RPI Linked Leases Reversion Vacancies 12 Potential Rent in 5 Years excl. Medium Term developments 722 Letting of Medium Term Developments (excl. Canada Water) 107 On a proportionally consolidated basis including the Group s share of joint ventures and funds. Figures based on valuation rent and include assumptions on outstanding rent review settlements 1 Assumed lettings contracted at practical completion 2 Assumed at 3.0% per annum 3 Includes reversion on expiries and open market rent reviews within 5 years 61

62 Gross rental income 1 Accounting Basis m 12 months to 31 March 2017 Annualised as at 31 March 2017 Group JVs & Total Group JVs & Funds Funds Regional Local Multi-let Department Stores & Leisure Total Superstores Solus and Other Retail West End City Offices Residential Offices and Residential Canada Water Total On a proportionally consolidated basis including the group's share of joint ventures and funds 1 Gross rental income differs from annualised rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives 2 Standalone residential 62

63 Administrative Expenses Financial Year to 31 March 2016 m 2017 m Personnel Costs Share Scheme Costs 10 4 Other Administrative Expenses Total British Land Broadgate Estates 5 5 Total Group Capitalised Costs (4) (5) Total Administrative Expenses On a proportionally consolidated basis including the group's share of joint ventures and funds and excluding non-controlling interests in the Group's subsidiaries. 63

64 Operating costs metric Financial Year to 31 March 2016 m 2017 m Property operating expenses Administrative expenses Net fees and other income (17) (17) Ground rent costs (3) (2) EPRA Costs (including direct vacancy costs) Gross rental income Ground rent costs (3) (2) Gross Rental Income (EPRA basis) EPRA Cost Ratio (including direct vacancy costs) 16.6% 15.6% On a proportionally consolidated basis including the group's share of joint ventures and funds and excluding non-controlling interests in the Group's subsidiaries. 64

65 Reconciliation of Underlying Profit FY to 31 March ( m) IFRS profit before tax 1, Net valuation (profit)/loss (849) 225 Profit on disposal of investment and trading properties (69) (20) Deferred and current taxation of joint ventures & funds 1 (1) Capital financing income (33) (6) Non-controlling interests (18) (3) Underlying Profit Dilution adjustments EPRA Earnings Before Tax On a proportionally consolidated basis including the group's share of joint ventures and funds and excluding non-controlling interests in the Group's subsidiaries adjustment relates to the 1.5% convertible bond. No dilution required in 2017 as share price was below the conversion price of 693p at the year end 65

66 Number of shares Number of shares (m) IFRS Basic As at 31 March 16 As at 31 March 17 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 Year End 4 1,096 1,038 1 For use in IFRS basic earnings per share 2 For use in IFRS diluted earnings per share, includes dilution for the 1.5% convertible bond 3 For use in Underlying/EPRA diluted earnings per share. Movement since March 2016 reflects the 1.5% convertible no longer being treated as dilutive 4 For use in EPRA NAV per share and EPRA NNNAV per share. Movement since March 2016 reflects the 1.5% convertible no longer being treated as dilutive 66

67 EPRA balance sheet m 31 March 16 Group JVs & Funds 31 March 17 Total properties 14,648 9,210 4,730 13,940 Adjusted net debt (4,765) (2,990) (1,233) (4,223) Other net liabilities (209) (148) (71) (219) EPRA Net Assets (undiluted) 9,674 6,072 3,426 9,498 Dilution impact of 1.5% convertible bond 400 EPRA Net Assets (diluted) 10,074 6,072 3,426 9,498 Loan to Value (LTV) % 22.6% 29.9% Weighted average interest rate 3.3% 2.4% 3.1% Interest cover 3.0x 4.5x 3.6x Average maturity of drawn debt (years) Group LTV based on Group Properties and net investment in JV & Funds, and Group net debt 67

68 Reconciliation of EPRA NAV & NNNAV 31 March March 17 m pence m pence IFRS Net Assets 9, , Deferred tax arising on revaluation movements 5 3 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 1.5% convertible bond Surplus on trading properties Non-controlling interests (277) (255) EPRA NAV 10, , Deferred tax arising on revaluation movements (24) (19) Mark to market of debt and derivatives (410) (541) EPRA NNNAV 9, , Includes mark to market adjustment on the 1.5% convertible bond (2015/16: 29m, 2016/17: (13)m). 68

69 Gross and net debt reconciliation At 31 March 2017 Group m JVs & Funds m Less noncontrolling interests m Gross Debt (principal value) 3,069 1,579 (128) 4,520 Total m IFRS adjustments: Issue costs and premia (12) (3) - (15) Fair value hedges Other Items (13) - - (13) IFRS gross debt 3,281 1,576 (128) 4,729 Market value of derivatives (73) 37 (3) (39) Cash (114) (210) 12 (312) IFRS net debt 3,094 1,403 (119) 4,378 Adjustments: Remove market value of derivatives 38 Remove fair value hedges (206) Other adjustments 13 Adjusted net debt 4,223 69

70 Loan to value (LTV) Total properties Other investments As at 31 March 2016 m Valuation movement Acquisitions Capital Spend Disposals Other As at 31 March 2017 m Proforma for Leadenhall sale 14,648 (204) (843) (27) 13,940 13, LTV Assets 14,786 (204) (843) (14) 14,091 13,554 Adjusted net debt 4, (853) (55) 4,223 3,653 Other (20) (16) (12) LTV Liabilities 4, (853) (51) 4,207 3,641 LTV 32.1% 0.3% 0.5% 1.2% (4.2%) % 26.9% On a proportionally consolidated basis including the group's share of joint ventures and funds and excluding non-controlling interests in the Group's subsidiaries. 70

71 Strength of debt metrics Proportionally Consolidated 31 Mar Mar 2017 Loan to Value (LTV) 32.1% 29.9% Weighted Average Interest Rate 3.3% 3.1% Interest Cover 3.0x 3.6x Average Maturity of Drawn Debt (years) Group 31 Mar Mar 2017 Loan to Value (LTV) 25.2% 22.6% Available undrawn facilities 1.2bn 1.3bn Weighted Average Interest Rate 2.6% 2.4% Interest Cover 3.3x 4.5x 71

72 Debt maturity ( m) m 1,800 1,600 1,400 1,200 1, Convertible Bond (Unsecured) US Private Placements (Unsecured) Debenture & loan notes (Secured) Year to March JVs Securitisations Funds Bank drawn (Secured) Bank RCF Undrawn (Unsecured) Funds Bank Undrawn (Secured) On a proportionally consolidated basis including the group's share of joint ventures and funds and excluding non-controlling interests in the Group's subsidiaries. Graph shows position as at 31 March 2017 pro-forma for completion of the sale of our 50% interest in The Leadenhall Building and the Tesco JV property swap transaction 72

73 Debt financing diverse profile Extended 1.4bn of unsecured revolving bank facilities Average drawn debt term 7.7 years The Group has no requirement to refinance until early 2021 On completion of sale of 50% interest in The Leadenhall Building: 1.8bn of revolving credit facilities undrawn in British Land 4.5bn Drawn Debt Profile 1 (31 March 2017) 0.5bn 0.5bn 0.6bn 1.3bn 0.8bn Proportion of projected debt at fixed rate 60% average over next 5 years (78% on spot basis) Weighted Average Interest Rate 3.4% (March-17: 3.1%) Bank RCFs Drawn (Unsecured) 0.8bn US Private Placements (Unsecured) Convertible Bonds (Unsecured) Debentures & loan notes (Secured) JVs Securitisations JV & Funds bank loans (Secured) 2 1 Proportionally consolidated 2 HUT s debt shown at our share ( 0.3 billion) within JV & Funds 73

74 Portfolio valuation by sector At 31 March 2017 Group JVs & Funds Total Movement % 1 m m m H1 H2 FY Regional 1,120 1,834 2,954 (2.8) 1.0 (1.8) Local 1, ,148 (4.8) 0.4 (4.5) Multi-let 2,791 2,311 5,102 (3.7) 0.7 (3.0) Department Stores and Leisure Superstores (3.0) (2.5) (5.2) Solus and Other Retail 3,816 2,838 6,654 (2.4) 0.7 (1.8) West End 3,960 3,960 (2.4) 1.7 (0.6) City 108 2,776 2,884 (4.9) 4.4 (0.8) Offices 4,068 2,776 6,844 (3.5) 2.8 (0.7) Residential Offices and Residential 4,224 2,791 7,015 (3.3) 2.9 (0.5) Canada Water (2.1) (9.0) (10.8) Total 8,311 5,629 13,940 (2.8) 1.6 (1.4) Standing Investments 7,821 5,487 13,308 (2.8) 1.3 (1.6) Developments (3.0) On a proportionally consolidated basis including the group's share of joint ventures and funds 1 Valuation movement during the year (after taking account of capital expenditure) of properties held at the balance sheet date, including developments (classified by end use), purchases and sales 2 Standalone residential 74

75 Portfolio weighting At 31 March 2016 % 2017 (current) % 2017 (current) m 2017 (proforma 1 ) % Regional , Local , Multi-let , Department Stores and Leisure Superstores Solus and Other Retail , West End , City , Offices , Residential Offices and Residential , Canada Water Total , Of which London , On a proportionally consolidated basis including the group's share of joint ventures and funds 1 Pro forma for developments under construction and committed developments at estimated end value (as determined by the Group s external valuers) and post year end transactions including the sale completion of our 50% interest in The Leadenhall Building and the Tesco JV property exchange 2 Standalone residential 75

76 Lease length and occupancy At 31 March 2017 Average Lease Length (yrs) Occupancy Rate (%) To Expiry To Break EPRA Occupancy Occupancy 1 Regional Local Multi-let Department Stores and Leisure Superstores Solus and Other Retail West End City Offices Canada Water Total On a proportionally consolidated basis including the group's share of joint ventures and funds 1 Including accommodation under offer (including post year transactions at 2 Finsbury Avenue and 4 Kingdom Street) or subject to asset management (incl. space being prepared for flexible working) or assets being readied for development in the near term (1 Finsbury Avenue) 2 City average lease length to break is 8.2 yrs pro-forma for sale completion of our 50% interest in The Leadenhall Building which exchanged in the year 76

77 Portfolio net yields 1,2 At 31 March 2017 EPRA net initial yield % EPRA topped up net initial yield % 3 Overall topped up net initial yield % 4 Net equivalent yield % Net reversionary yield % Regional Local Multi-let Department Stores and Leisure Superstores Solus and Other Retail West End City Offices Canada Water Total On a proportionally consolidated basis including the group's share of joint ventures and funds 1 Including notional purchaser's costs 2 Excluding committed developments 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 City net equivalent yield is 4.6% and EPRA net initial yield is 4.2% pro-forma for sale completion of our 50% interest in The Leadenhall Building which exchanged in the year 77

78 Portfolio yield & ERV movements 1 At 31 March 2017 NEY 3 ERV Growth % 2 NEY Yield Movement 3 bps % H1 H2 FY H1 H2 FY Regional % 1.0% 2.3% 16 (4) 12 Local % 1.2% 2.5% 29 (1) 27 Multi-let % 1.1% 2.4% 22 (3) 18 Department Stores and Leisure % (0.1%) 0.4% 4 (18) (15) Superstores 5.5 (3.0%) (1.0%) (4.0%) Solus and Other % 0.0% 4.8% 9 (9) (4) Retail % 0.7% 1.6% 18 (3) 14 West End % 0.4% 0.7% 16 (1) 15 City (0.2%) 0.4% 0.2% 27 (13) 15 Offices % 0.4% 0.5% 21 (6) 15 Canada Water % (0.1%) 0.9% Total % 0.6% 1.1% 19 (5) 15 On a proportionally consolidated basis including the group's share of joint ventures and funds 1 Excluding developments under construction, assets held for development and residential assets 2 As calculated by IPD 3 Including notional purchaser s costs 4 City NEY is 4.6% pro-forma for sale completion of our 50% interest in The Leadenhall Building which exchanged in the year 78

79 Annualised rent & estimated rental value (ERV) At 31 March 2017 Annualised Rents (Valuation Basis) m 1 ERV m Average Rent ( psf) Group JVs & Funds Total Total Contracted 2 ERV Regional Local Multi-let Department Stores and Leisure Superstores Solus and Other Retail West End City 3, Offices Residential Offices and Residential Canada Water Total On a proportionally consolidated basis including the group's share of joint ventures and funds 1 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 2 Annualised rent, plus rent subject to rent free 3 psf metrics shown for office space only 4 City average rent psf on a contracted basis is 50.1 and on an ERV basis is 57.4 pro-forma for sale completion of our 50% interest in The Leadenhall Building which exchanged in the year. 5 Standalone residential 79

80 Rent subject to open market rent review For the year to 31 March At 31 March 2017 m m m m m m m Regional Local Multi-let Department Stores and Leisure Superstores Solus and Other Retail West End City Offices Canada Water Total On a proportionally consolidated basis including the group's share of joint ventures and funds 1 Of which 17m relates to The Leadenhall Building 80

81 Rent subject to lease break or expiry For the year to 31 March At 31 March 2017 m m m m m m m Regional Local Multi-let Department Stores and Leisure Superstores Solus and Other Retail West End City Offices Canada Water Total % of contracted rent 6.3% 6.3% 6.0% 7.1% 7.7% 18.6% 33.4% On a proportionally consolidated basis including the group's share of joint ventures and funds 81

82 Rent subject to lease break or expiry Office expiries detail For year to 31 March At 31 March 2017 m m m m m m 135 Bishopsgate Triton Square 2 2 Near Term developments 9 9 2&3 Finsbury Avenue 2 2 1&2 Broadgate 6 6 Medium Term developments 8 8 Other West End expiries Other City expiries Office expiries On a proportionally consolidated basis including the group's share of joint ventures and funds 82

83 Contracted rental increases (cash flow basis) For the year to 31 March At 31 March 2017 m m m m m m m Expiry of rent free periods Fixed uplifts (EPRA basis) Fixed & minimum uplifts Total On a proportionally consolidated basis including the group's share of joint ventures and funds# 1 Of which 12m relates to The Leadenhall Building 83

84 Total Property Return (as calculated by IPD) Full Year to 31 March 2017 Retail Offices Total % British Land IPD British Land IPD British Land IPD Capital Return (1.7) (2.3) (0.6) (1.0) (1.2) (0.1) - ERV Growth Yield Expansion 1 14 bps 12 bps 15 bps 13 bps 15 bps 4 bps Income Return Total Property Return Net equivalent yield movement 84

85 BL property performance vs IPD 1 year Year ended 31 March 2017 Relative performance bps Retail Offices Total Capital Returns Total Returns 85

86 BL property performance vs IPD 5 years 5 years ended 31 March 2017 Relative performance bps p.a Retail Offices Total Capital Returns Total Returns 86

87 Superstores Store Size 000 sq ft Standalone Superstores 1 In Multi-let assets 2 Total Exposure 1,2,3 Number of stores Valuation (BL share) m Capital Value psf Lease length 4 Number of stores Valuation (BL share) m Capital Value psf Lease length 4 Number of stores Valuation (BL share) m Capital Value psf Lease length 4 > March , March , Geographical Spread Gross Rent (BL Share) Lease Structure London & South 58% Tesco 29m RPI and Fixed 10% Rest of UK 42% Sainsbury s 26m OMRR 90% Other 5m Table includes 43m acquisitions and 116m disposals that exchanged and completed post year end as part of a Tesco JV swap transaction resulting in a net 73m disposal of superstore assets 1 Excludes 13m 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 4 Weighted average lease length to first break 87

88 Recently completed & committed developments At 31 March 2017 Sector BL Share Sq ft PC Calendar Year Current Value Cost to Come ERV Let & Under Offer % '000 m 1 m 2 m 3 m 4 Kingdom Street Office Q Clarges Mayfair - Offices Office Q Glasgow Fort Leisure Quarter Retail Q The Hempel Phase 1 Residential Q The Hempel Phase 2 Residential Q Aldgate Place Phase 1 Residential Q Total Completed in Year Liverpool Street Office Q Speke (Leisure) Retail Q Clarges Mayfair - Retail and Residential 4 Mixed Use Q Total Committed Retail Capital Expenditure On a proportionally consolidated basis including the group's share of joint ventures and funds (except area which is shown at 100%) 1 Excludes completed Residential sales of 120m 2 From 1 April Cost to come 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 Current value includes units exchanged and not completed of 278m 5 Capex committed and underway within our investment portfolio relating to leasing and asset management 88

89 Near term development pipeline At 31 March 2017 Sector BL Share Near term Pipeline Sq ft Expected Start on Site Current Value Cost to Come % '000 m m 1 m 2 ERV Planning Status 135 Bishopsgate Office Submitted 1 Triton Square Office Resolution to grant 1 Finsbury Avenue Office Submitted Plymouth (Leisure) Retail Consented Total Near Term 1, Retail Capital Expenditure 3 75 On a proportionally consolidated basis including the group's share of joint ventures and funds (except area which is shown at 100%) 1 From 1 April Cost to complete excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 2 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives) 3 Forecast capital commitments within our investment portfolio over the next 12 months relating to leasing and asset enhancement 89

90 Medium term development pipeline At 31 March 2017 Sector BL Share Medium term Pipeline % '000 Sq ft Planning status 2&3 Finsbury Avenue Office Consented 1&2 Broadgate Office Pre-submission Blossom Street Office Consented 5 Kingdom Street 1 Office Consented Gateway Building Office Pre-submission Meadowhall (Leisure) Retail Submitted Peterborough (Leisure) Retail Pre-submission Teesside (Leisure) Retail Pre-submission Bradford (Leisure) Retail Pre-submission Aldgate Place Phase 2 Residential Consented Eden Walk Retail & Residential Mixed Use Consented Total Medium Term excl. Canada Water 3,031 Canada Water 2 Mixed Use 100 5,500 Pre-submission 1 Planning consent for previous 240,000 sq ft scheme 2 Assumed net area based on gross area of up to 7m sq ft 90

91 Residential development programme At 31 March 2017 BL Share Sq Ft Total No. Units No. Units to sell PC Date Current Value 1 Cost to Come 2 Sales Exchanged & not Completed 1,3 Value to sell % '000 m m m m Clarges, Mayfair Q The Hempel Phase Q The Hempel Phase Q Aldgate Place Phase Q Total Residential On a proportionally consolidated basis including the group's share of joint ventures and funds (except area which is shown at 100%) 1 Excludes completed sales of 120m 2 From 1 April Cost to come excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 3 At agreed sales price 91

92 Estimated future development spend and capitalised interest At 31 March 2017 PC Calendar Year Cost to Come m (excluding notional interest) 6 mths breakdown Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar Liverpool Street Q Speke (Leisure) Q Clarges Mayfair - Retail and Residential Q Total Committed Bishopsgate Triton Square Finsbury Avenue Plymouth (Leisure) Total Near Term Indicative Interest Capitalised on above at attributable rates Contracted Residential receipts to come Financing costs are capitalised at 4% on qualifying expenditure for developments 92

93 Central London development pipeline Q m sq ft Source: CBRE Completed Pipeline Pre-let Potential Speculative U/C Pre-let U/C Speculative 10 year average new and under-construction take-up 10 year average development completions Note: Forecast reflects agent s estimate of earliest completions. Central London comprises the City, Docklands, Midtown, Southbank and West End areas. 93

94 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 average new and under-construction take-up 10 year average development completions Note: Forecast reflects agent s estimate of earliest completions 94

95 City development pipeline Q m sq ft Source: CBRE Completed Pipeline Pre-let Potential Speculative U/C Pre-let U/C Speculative 10 year average new and under-construction take-up 10 year average development completions Note: Forecast reflects agent s estimate of earliest completions 95

96 Property Yields and interest rate yield gap Retail and London Office Yields All Retail Central London Offices % NIY % Source: IPD Property Yield vs 10 Year Gilt Yields Yield Gap UK 10 Year Gilt Yield IPD All Property Net Initial Yield (2) Q Source: IPD/Bloomberg 96

97 London office market rental outlook Prime London Office Rents psf Actual Forecast West End City Source: CBRE (historic) and Average Agents' Consensus (including PMA Spring 17) for forecasts 97

98 Vacancy Central London West End & City Vacancy Rates % 3.9% Q West End City Source: CBRE (historic) 98

99 Retail Portfolio Valuation previous classification At 31 March 2017 Shopping parks Shopping centres Valuation Change % 1 ERV Growth % 2 NEY Yield Movement bps m H1 H2 FY H1 H2 FY H1 H2 FY 3,167 (4.1) 0.7 (3.3) 1.6% 0.8% 2.4% 26 (4) 20 2,276 (2.1) 0.8 (1.3) 1.3% 1.3% 2.6% 14 (3) 12 Superstores 632 (3.0) (2.5) (5.2) (3.0%) (1.0%) (4.0%) Department stores % 0.3% 0.7% 3 (10) (8) Leisure 413 (0.5) % (0.2%) 0.2% 4 (21) (17) Retail 6,654 (2.4) 0.7 (1.8) 0.9% 0.7% 1.6% 18 (3) 14 On a proportionally consolidated basis including the group's share of joint ventures and funds 1 Valuation movement during the year (after taking account of capital expenditure) of properties held at the balance sheet date, including developments (classified by end use), purchases and sales 2 As calculated by IPD 99

100 Retail portfolio net yields 1,2 previous classification At 31 March 2017 EPRA net initial yield % EPRA topped up net initial yield % 3 Overall topped up net initial yield % 4 Net equivalent yield % Net reversionary yield % Shopping parks Shopping centres Superstores Department stores Leisure Retail On a proportionally consolidated basis including the group's share of joint ventures and funds 1 Including notional purchaser's costs 2 Excluding committed developments 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) 100

101 Operational Performance previous classification Year Ended March 2017 Total multi-let portfolio Shopping Parks Shopping Centres Footfall 240bps Ahead of market +0.0% +0.4% -0.4% Retailer in-store Sales 220bps Ahead of market +0.0% +0.3% -0.4% ERV Growth 150bps Ahead of market +2.4% +2.4% +2.6% Source: Footfall benchmark ShopperTrak UK National Index; Sales benchmark BRC-KPMG in-store like-for-like non-food sales; ERV benchmark IPD 101