INTERIM RESULTS November 2003

Transcription

1 INTERIM RESULTS November 2003

2 Agenda Property Review Bob Bowden Financial Review Graham Roberts REITs Nick Ritblat 2

3 PROPERTY REVIEW

4 Key Messages Portfolio valuation: up 0.2% Rent reviews and lettings improve income by 18m pa Sales: 11% above March valuation Purchases: competition still strong Development: on programme and on budget, planning gains Predictions for the City office market: on track 4

5 Portfolio 9,649m: Up 0.2% Stamp duty change: 120m % Change by sector All Retail Retail Development Shops Retail Warehouses Supermarkets Shopping Centres All Offices Office Development Business Parks & Provincial West End Offices City Offices Other See Appendix pages for detailed portfolio breakdown 5

6 Weighted Contribution by Sector % Change as a % of total portfolio 1.9 All Retail Retail Development Shops Retail Warehouses Supermarkets Shopping Centres All Offices Office Development Business Parks & Provincial West End Offices City Offices Other Total 6

7 Sales: 11% above March Valuation 2.5bn 1 of sales over the last 5 years: on average 3% above valuation Completed in six months to Sept 2003 Sales 1 m 192 Gain over Valuation 2 m 19 Completed / exchanged post Sept Total Group and 100% of JVs. Including our share of JVs 160m of sales completed in the six months (see Appendix page 59) 2 March 2003 valuation 7

8 Purchases: Competition Still Strong Six months to Sept 2003 Purchases of only 17m 1 including the head leasehold interest in Eastgate Centre, Basildon and 5 residential properties Post Sept 2003 Purchase of other 50% interest in BL Universal from GUS for 120m based on NNNAV (portfolio of 761m principally retail investments) Acquisition of remaining two interests in St Nicholas Centre, Aberdeen for 42.6m (115,000 sq ft Shopping Centre) 1 Group and 100% of JVs. Including our share of JVs purchases were 14m in the six months (see Appendix page 59) 8

9 BLU: Other 50% bought at NNNAV Since acquisition in 1997, the JV has repositioned its portfolio: 1997 Average Lot Size 0.9m (982 properties) 2003 Average Lot Size 7.5m (101 properties) Shops and Shopping Centre Retail Warehouse Parks Supermarkets Offices Total Number m Net annual income 50m: initial yield of 6.4% rising to a reversionary yield of 6.8% See Appendix page 60 for list of principal properties 9

10 Development: Steady Progress Projects under construction: on budget, on time Plantation Place (703,000 sq ft) and 10 Exchange Square (163,400sq ft) Planning gains 84% of development prospects have detailed/outline planning consent No new commitments New schemes being progressed Regent s Place and Canada Water See Appendix pages for detailed summaries of committed and prospective developments 10

11 Annualised Net Rents m At 31 March 2003 Rent reviews, lettings and other rent changes Effect of EBRD 1 Sales (19.0) (6.5) Purchases At 30 Sept EBRD: annualised net rents reduced by m due to rent free period until Nov

12 Growing Income Annualised net rents Reversions, within 5 years Committed developments Total Sept 2003 m Of which contracted m Development prospects EBRD: annualised net rents reduced and reversions increased by m due to rent free period until Nov 2006 See Appendix page 64 for detailed analysis of reversionary income 12

13 Broadgate 2,665m: down 4.6% Sept 2003 March 2003 Valuation - Change % Initial yield Estimated rental value psf - Change % Average passing rent psf Total passing rent Weighted average lease term to expiry Weighted average lease term to first break 2,665m (4.6)% 6.0% (12.7)% m yrs 13.5yrs 2,784m (6.0)% 5.9% (16.7%) m 15.2yrs 12.2yrs 1 For comparative purposes includes the EBRD rent of m pa which will recommence in Nov 2006 See Appendix page 68 for details of rent reviews 13

14 Broadgate Income Underpins Valuation Income m pa EBRD Year ending 31 March Like for like: excluding 1 Appold Street acquired in March

15 Broadgate Committed Income % of income remaining at 5 yrs 10 yrs 15 yrs (to first break assuming no re-letting) 96% 72% 51% m pa As at 30 Sept Lease expiries / leases subject to first break - re-let 1 Current passing rent less lease expiries (to first break) 1 EBRD: annualised net rents reduced by m due to rent free period until Nov

16 Regent s Place 529m: up 4.4% Sept 2003 March 2003 Valuation Change % Equivalent yield Estimated rental value psf Average passing rent psf Total passing rent Weighted average lease term to expiry Weighted average lease term to first break 529m 4.4% 6.24% m 17.1yrs 14.4yrs 505m (1.0)% 6.22% m 16.9yrs 14.1yrs 16

17 Meadowhall 1,350m: up 3.4% Sept 2003 March 2003 Valuation Change Equivalent yield Total estimated rental value pa Total passing rent pa Weighted average lease term to expiry Weighted average lease term to first break 1,350m 3.4% 5.43% m 69.9m 18.6yrs 18.4yrs 1,300m 1.3% 5.44% 74.7m 68.0m 18.9yrs 18.6yrs 1 True equivalent yield is 5.61% on actual basis of rent quarterly in advance 17

18 Meadowhall: Uplifts to Passing Rent Tenant Vacating New Tenant Warner Bros Build a Bear Warner Bros Mama s & Papa s Ice Warner Bros Woolworths JJB Sports Massarella Blacks Cromwells O Neill / Evans Fox s Music Faith West One Bank Starbucks (3 units) Old Rent New Rent Increase New Lettings m 4.78m 42% 7 rent reviews 1.11m 1.34m 21% Total 4.48m 6.12m 37% 1 As above plus 3 other lettings, 4 extensions and 5 renewals 18

19 Refurbishment of Oasis Foodcourt 8.65m refurbishment 400 additional seats 1,400 total seating c.40% of customers use Oasis 19

20 Meadowhall Average Party Spend Up % + 9.5% + 4.9% % + 2.1% + 5.4% April May June July Aug Sept 2002 Survey 2003 Survey 20

21 Meadowhall Visitor Numbers: up 1.9% 2,250 2,025 1, % + 0.7% + 0.6% - 0.9% - 1.8% + 6.6% Vistor numbers '000 1,575 1,350 1, April May June July Aug Sept Annual Visitor Numbers to Sept 2003: 24.4m 21

22 Supermarkets 1,320m: up 4.7% Sept 2003 March 2003 Number of supermarkets Valuation Change Initial yield Estimated rental value psf Average rent psf Weighted average lease term to expiry Weighted average lease term to first break 89 1,320m 4.7% 6.0% yrs 22.0yrs 93 1,268m 11.0% 6.3% yrs 22.5yrs 22

23 Superstores: now 95% of total supermarkets value < 25,000 sq ft 1 > 25,000 sq ft 1 Total Number Valuation 59m 1,261m 1,320m Sq ft 0.3m 4.6m 4.9m Average capital value psf Average rent psf Highest ERV psf Average store size sq ft 15,020 69,553 55,460 1 Institute of Grocery Distribution (IGD) supermarket/superstore definition 23

24 Retail Warehouses 1,104m: up 3.5% Sept 2003 March 2003 Number of retail warehouses Valuation Change Initial yield Reversionary yield Average estimated rental value psf Average passing rent psf Weighted average lease term to expiry Weighted average lease term to first break 68 1,104m 3.5% 5.9% 6.6% yrs 17.2yrs 69 1,065m 11.7% 5.8% 6.8% yrs 17.7yrs 24

25 PROPERTY MARKET OUTLOOK

26 City Market Forecast Year 2003 Start New completions 2003 Estimated 2 nd hand releases Total vacancy 2003 Year 2004 Start New completions Estimated 2 nd hand releases Total vacancy 2004 Year 2005 Start New completions Estimated 2 nd hand releases Total vacancy 2005 Year 2006 Start New completions Estimated 2 nd hand releases Total vacancy 2006 Total Supply sq ft 9.0m 3.1m 2.9m 15.0m 12.2m 1.4m 0.9m 14.5m 11.5m 0.1m 0.25m 11.85m 8.85m 0.0m 0.25m 9.1m Take Up sq ft 2.8m 3.0m 3.0m 3.0m Average take up of 5.3m sq ft pa for last ten years See Appendix pages for detailed summaries of supply, development and take up End of Year Vacancy Rate Forecast (Sept 2003) Forecast (March 2003) 14.3% 12.6% 13.4% 12.2% 10.3% 9.8% 7.1% 6.6% Stability occurs when vacancy between 6-8% 26

27 City Market: Nominal Prime Rent vs Vacancy Rate % Vacancy BL Forecast Prime Rent per Sq Ft E 2004 E 2005 E 2006 E Vacancy Rate (left-hand axis) Nominal Prime Rent (right-hand axis) Source: Jones Lang LaSalle and British Land Forecast 27

28 City Market: Increase in Q3 Active Demand Demand sq ft Increase in Q3 vs Q2 Active 1.0m Potential 0.8m Total 1.8m % Increase 30% 39% 33% 5 4 m Sq ft Source: Jones Lang LaSalle See Appendix page 56 for detailed list of major named active requirements Q1 Q2 Q3 Active Potential 28

29 City Market: Weekly Viewings Up Number of Weekly Viewings Trendline Mar 14-Mar 21-Mar 28-Mar 04-Apr 11-Apr 18-Apr 25-Apr 02-May 09-May 16-May 23-May 30-May 06-Jun 13-Jun 20-Jun 27-Jun 04-Jul 11-Jul 18-Jul 25-Jul 01-Aug 08-Aug 15-Aug 22-Aug 29-Aug 05-Sep 12-Sep 19-Sep 26-Sep Week Ending Source: ATIS Weatheralls 29

30 City Market: Employment Projected to Rise Trendline 310 Number of City Jobs ('000) E 2004 E 2005 E 2006 E 2007 E Source: centre for economics and business research (cebr) 2003 (Actual and Forecast ) 30

31 Central London: Strong Investment Market 2003 Q1 Q bn 6.9bn 7.9bn 7.9bn 1.6bn of sales completed/under offer since Q3 Average turnover last ten years: 4.9bn Source: Jones Lang LaSalle 31

32 Central London: Broad Investor Base Q1 Q UK Overseas Total 2.0bn 2.4bn 4.4bn Owner- Occupiers & Others 13% Property Companies 32% Private Investors 29% Institutions 26% Source: Jones Lang LaSalle 32

33 Central London: Acquisition Yields since March Property Purchaser Lease expiry Price Yield Tower Place, Tower Hill DB Real Estate 25 yrs 225m 5.60% New Bond Street Private Irish Multi-let 33m 5.60% 22 Hanover Square SWIP 5 yrs 54m 5.67% 27/30 Finsbury Square DEGI 19 yrs 97m 5.80% 42/49 High Holborn Topland 8 yrs 58m 6.20% 70 Gracechurch Street Active Investment Management 25 yrs 140m 6.25% Ashdown House, Victoria Street Golfrate Properties 14 yrs 133m 6.30% Northcliffe House, Tudor Street DB Real Estate 18 yrs 100m 6.30% Henrietta House, Henrietta Place Lazari Investments 18 yrs 70m 6.30% 16 Great Marlborough Street Lazari Investments 11 yrs 59m 6.34% Alban Gate, London Wall Matrix Securities 22 yrs 240m 6.50% EMI House, Brook Green IVG Asticus 16 yrs 35m 6.63% Salisbury House, Salisbury Square DEKA 12 yrs 63m 6.75% Buchanan House, 3 St James s Square Private Investor 10 yrs 36m 6.75% Grand Buildings, 1 Trafalgar Square Middle East Consortium 12 yrs 140m 6.80% 1 Carter Lane DEGI 10 yrs 67m 6.94% 60 London Wall Private Investor 13 yrs 160m 7.00% Alder Castle, 1 Noble Street DEGI 13 yrs 59m 7.00% 16 Old Bailey CGI 13 yrs 51m 7.00% Principal transactions > 30m 33

34 Retail Sales Remain Robust Retail sales have continued to grow but at a slower rate: Unemployment in the UK remains low Historically low interest rates 3 months to Oct % +4.2% Out of town retail sales projected to grow by 6% pa , taking an increasing share of total retail spend 1 Verdict 34

35 Well Positioned Projected Income Growth Long Leases Low Vacancy Balance Strong tenantbase + 100m pa 1 16 yrs to first break 2.4% 49% Retail: 46% Offices 92%Negligible, Low and Low / Medium Risk 2 Development - can be fast-tracked 1 Further income from reversions of 59m pa and committed developments of 41m pa 2 Income rated by IPD based on Dun & Bradstreet Stress Score See Appendix pages for detailed summaries of lease profile, vacancy rate and list of top 30 tenants 35

36 FINANCIAL REVIEW

37 Key Messages Underlying profits up 5% Pre-tax profits increased 33% driven by asset sales Strong operating cash flow Progressive dividend growth: up 8% New financings 37

38 Strong Earnings Growth Sept 2003 Sept 2002 Profit before tax 87.1m 65.3m % Underlying profit before tax m 62.2m + 4.8% Earnings per share p 10.5p % Dividend per share 4.43p 4.10p + 8.0% 1 Before asset disposals 2 Adjusted, diluted 38

39 Underlying Profits: Up 4.8% Sept 2003 Sept 2002 Profit before tax % Less: Profit on property trading Less: Disposal of fixed assets Underlying profit before tax % Weighted contribution to underlying profit growth: Net rental income Net interest payable Other Total + 2.9% + 1.8% + 0.1% + 4.8% 39

40 Net Rental Income: up 1.8m Rent reviews & new lettings 12.1m Lease incentives 1-5.3m Purchases 10.4m Sales and other m Total 1.8m 1 In accordance with UITF 28, including EBRD 40

41 Low Tax Rate: 13.2% Tax on profit for the period at 30% Losses (revenue and capital) Capital allowances Other (including prior year items) Corporation tax charge Deferred tax charge Gross m 87.1 Tax m 26.1 (10.4) (2.3) (2.4) Tax charge % 41

42 Strong Operating Cash Flow Sept 2003 m Net cash inflow from operating activities Dividends received Net Interest Taxation paid Net cash inflow from operating activities after interest and taxation (141.1) (1.0) 65.9 Operating cash flow per share 13.5p Operating cash flow per share year ended March p 42

43 Interim Dividend 4.43p: up 8% Dividend growth supported by: Strong underlying income 31.9m of contracted further income from investment portfolio Security of income 91% 1 remaining in 5 years 71% 1 remaining in 10 years pence per share years of consistent dividend growth 1 Assumes no re-letting after first break or expiry Year ended 31 March Interim Final 43

44 Proforma Gearing: BLU Acquisition Group properties 1 Share of JV properties 1 Total properties Group net debt Share of JV net debt Total net debt Net assets Sept 2003 m 8,279 1,370 9,649 (4,344) (635) (4,979) 4,362 Proforma for BLU m 9, ,030 (4,848) (465) (5,313) 4,362 Operational Gearing Including share of JVs Gearing Group Gearing Group (diluted) Mortgage ratio Group 2 114% 100% 93% 49% 122% 111% 104% 51% 1 Pre UITF 28 lease incentive adjustments 2 Group net debt / property & investments 44

45 Reconciliation of Net Asset Value m 1 Pence per Share 1 At 31 March , Revaluation surpluses, net of UITF Retained profit Shares (5) 1 Other (10) (2) At 30 Sept , % 1 Adjusted, diluted 45

46 Disciplined Financial Management Long-term Cash Flows Flexibility Hedging Headroom 46

47 Debt: Long and Cheap Weighted average debt maturity 18 years Weighted average interest cost 6.3% % of debt at fixed or capped rates 83% Cash and undrawn bank facilities 872m Repayable Within 5 years (net of cash and deposits) Over 5 years (including Irredeemable Convertible Bond) Group net debt Sept ,107m 3,237m 4,344m 25% 75% See Appendix page 69 for graph of debt maturity 47

48 Accessing a Flexible Pool of Finance 6.2bn Gross Finance Availability 0.8bn Undrawn Securitisations - Group Convertible Bond - Group US Private Placements - Group Debentures - Group Debentures - JVs Drawn Bank Facilities - Group Undrawn Bank Facilities - Group Drawn Bank Facilities - JVs As at 30 Sept 2003 (Proforma for $154m US Private Placement, 84m Supermarkets tap issue and BLU purchase post half year) 48

49 Long-Term Income Profile As at 30 Sept Assuming no rental value growth m Annualised net rents less lease expiries (to first break) Lease expiries / leases subject to first break - re-let Reversionary income Development programme Current interest cost The graph is not a forecast: see Appendix page 70 for key assumptions as at 30 Sept

50 REITS

51 UK REIT s We believe the introduction of tax transparent listable property vehicles will release pent-up demand for property Two Stage Process? What s the impact on British Land? 51

52 APPENDIX

53 City Market: Supply Grade A Sq ft Grade B and C Sq ft Total Sq ft Grade A Vacancy Total Vacancy Q m 5.4m 9.0m 4.3% 10.8% Q m 5.8m 10.5m 5.6% 12.6% Q m 5.7m 11.8m 7.2% 13.9% Highest vacancy rate March 1993: Average vacancy rate over last ten years 18.7% 8.8% Source: Jones Lang LaSalle 53

54 City Market: Development Speculative development (Under Construction) Q m sq ft Q m sq ft Completion due Total Total sq ft 0.9m 1.4m 0.1m 2.4m Total sq ft 3.1m 1.0m - 4.1m Source: Jones Lang LaSalle 54

55 City Market: Take Up Total sq ft Grade A sq ft Grade A as % of Total Q m 0.91m 79% Q m 0.43m 49% Q m 0.57m 70% Q m 0.50m 78% Year to Q m 2.41m 69% Year to Q m 1.50m 56% Year to Q m 5.29m 68% Year to Q m 5.20m 63% Average total take up pa over last 10 years: 5.3m sq ft Source: Jones Lang LaSalle 55

56 Active Demand: Major Named Requirements Q Tenant Business Sector IPC Media Software Houses & Data Processing Norton Rose Legal S J Berwin Legal Amgen Other Manufacturing Lawrence Graham Legal BP Amoco (Under Offer) Extraction & Energy Royal Falcon Group Foreign Financial Services Latham & Watkins Legal Albion Trust Group Institutions, Charities & Quangos London Qualifications (Under Offer) Associations Sidley Austin Brown & Wood (Completed) Legal Havas Advertising & PR Decherts Legal EMAP Printing, Publishing & Recording The Arts Council Associations IBM Computers & Electronics Planet Events Other Services Total named active requirements > 50,000 sq ft Max Sq ft 350, , , , , , ,000 90,000 90,000 80,000 75,000 65,000 55,000 50,000 50,000 50,000 50,000 2,115,000 Source: Jones Lang LaSalle (requirements > 50,000 sq ft) 56

57 Portfolio Valuation m % Change % 1 Offices: City 3,058.5 (4.8) West End Business parks and Provincial Development (8.5) All Offices 4, (3.9) Retail: Shopping Centres 1, Supermarkets 1, Retail Warehouses 1, Shops Development All Retail 4, Other: Residential, Industrial and Distribution 2, Leisure Total 9, On a like for like basis (after adjustment for purchases, sales and capital expenditure) 2 Includes development with a value of 9.1m 57

58 Portfolio Analysis 49% : Retail 46% : Offices 80% : Out of Town 95% : Central London Supermarkets 14% Shopping Centres 20% (Meadowhall 14%) West End Offices 7% City Offices 32% (Broadgate 28%) Retail Warehouses 11% Shops Other 4% 5% Office Developments 5% Business Parks and Provincial Offices 2% 58

59 Investment Activity Six months ended 30 Sept 2003 Total m BL Share m Number 1 Sales Purchases Excluding residential units 59

60 BL Universal: Principal Properties Retail Warehouse Parks ( 238m, 9 holdings) The Beehive Centre, Cambridge Westgate Retail Park, Wakefield Castle Vale Retail Park, Birmingham Westside Retail Park, Guiseley, Leeds Shops / Shopping Centre ( 330m, 82 holdings) St. Nicholas Centre, Aberdeen Newcastle Upon Tyne, Northumberland Street (BHS, Primark & Next) Liverpool, Church Street (Miss Selfridge, Envy, Ravel & Dolcis) Glasgow, Argyle Street (JJB Sports, WH Smith & All Sports) Glasgow, Buchanan Street (Laura Ashley & others) Sheffield, Fargate (Miss Selfridge) Kingston Upon Thames, Clarence Street (FCUK, Etam & Signet) Edinburgh, Princes Street (Marks & Spencer) Manchester, Market Street (Schuh & Shelleys) Southampton, Above Bar Street (River Island, Bhs & Birthdays) Belfast, Donegall Street (Easons) Offices ( 126m, 5 holdings) 133 Houndsditch, London Microsoft Campus, Thames Valley Park, Reading (50% share) Time Out, Tottenham Court Rd, London Supermarkets ( 67m, 5 holdings) Sainsburys, New Cross Gate, London Tesco, Wragby Road, Lincoln Safeway: Leek, Malton and Kidderminster 60

61 Development Programme Summary Net Area Sq ft Construction Cost m Cost to complete m Rent 1 m Completed projects Total 0.1m 5-1 BL Share 5-1 Committed projects Total 0.9m BL Share Development prospects Total 3.9m BL Share Total 4.8m 1, BL Share 1, Estimated headline rent pa 61

62 Committed Developments All progressing within budget and on-time - expected to complete Q Projects Date 1 Sq ft Construction cost Rent 2 Pre-let 1 Plantation Place Apr , m 26.5m 19.4m 2 Plantation Place Jun , m 7.2m - 10 Exchange Square Apr , m 7.3m - Total 866, m 41.0m 19.4m Costs to complete 109.3m 1 Anticipated practical completion of construction 2 Estimated headline rent pa 62

63 Development Prospects Major Projects Planning Sector Sq ft 201 Bishopsgate, EC2 Detailed City office 746, Lime Street, EC3 Detailed City office 534,100 Ludgate West, EC4 Detailed City office 126,000 Regent s Place, NW1 North East Quadrant - West End office 368,600 York House, W1 Detailed West End office 138,100 Blythe Valley Park, Solihull (BVP Developments) Outline Business Park 819,200 Lakeside, Theale Detailed Business Park 125,800 Redditch (BL Gazeley) Outline Distribution 517,500 Thatcham (BL Gazeley) Detailed Distribution 255,000 Teesside, Stockton-on-Tees - Retail 178,800 63

64 Reversionary Income Investment portfolio is reversionary by 11% (excluding developments) Annualised net rents m Reversion 1 m Reversionary net yield 1 Offices: City % West End % Business parks and Provincial % All Offices % Retail: Shopping Centres % Supermarkets % Retail Warehouses % Shops % All Retail % Other % Total % 1 Within 5 years m is already committed from expiry of rent free periods and minimum rental uplifts 64

65 Long Lease Profile Weighted average lease term, years 1 To expiry To first break (Mean) (Mean) To first break (Median) Total Portfolio Offices: City West End Business parks and Provincial All Offices Retail: Shopping Centres Supermarkets Retail Warehouses Shops All Retail Other: Excluding developments and residential as predominately let on short leases 65

66 Low Vacancy Vacancy rate 1 As a % of total portfolio ERV Offices: City 2.2% 0.7% West End 9.4% 0.7% Business parks and Provincial 3.0% 0.1% All Offices 3.6% 1.5% Retail: Shopping Centres 3.0% 0.6% Supermarkets - - Retail Warehouses 0.7% 0.1% Shops 0.9% 0.1% All Retail 1.5% 0.8% Other: 4.0% 0.1% Total 2.4% 2.4% 1 Excluding developments and residential as predominately let on short leases 2 Effective vacancy rate: 2.2% (0.1% under offer and 0.1% taken back under asset management) 66

67 Strong Tenant Base Top 30 tenants represent c.60% of total rental income Top 30 tenants by rental income (as at 30 Sept 2003) 1 1. J Sainsbury 2. U B S 3. Tesco 4. EBRD 5. Lehman Brothers 6. Great Universal Stores 7. House of Fraser 8. Deutsche Bank 9. Royal Bank of Scotland 10. Herbert Smith 11. Government 12. A M P 13. Credit Lyonnais/Credit Agricole 14. Bhs/Arcadia Group 15. Somerfield 16. Abbey National 17. Baker & McKenzie 18. Dixons 19. Next 20. ING 21. ABN Amro 22. Denton Wilde Sapte 23. Bank One 24. Allders 25. Tokyo Mitsubishi 26. Ashurst Morris Crisp 27. Legal & General 28. JJB Sports 29. W H Smith 30. Boots 1 Group and 100% of JVs 67

68 Broadgate Rent Reviews 4 rent reviews settled on 450,200 sq ft: overall increase in income of 1.1m Building Tenant Sq ft New Rent psf Old Rent psf 1 Finsbury Avenue UBS 262, Finsbury Avenue UBS 100, Finsbury Avenue Henderson 73, Bishopsgate HQ Offices 14, , rent reviews outstanding on 101,580 sq ft: average passing rent of psf Building Tenant Sq ft Rent Date Exchange House Foreign & Colonial 13, July Broadgate Lehman Brothers 28, Sept Broadgate Lehman Brothers 59, Sept ,

69 Long Term Debt Maturity Profile: 18 years m Year ending 30 Sept Irredeemable Securitised debt Debentures Convertible bonds US Private Placements Bank debt Group debt as at 30 Sept 2003 (Proforma for $154m US Private Placement and 84m Supermarkets tap issue in Oct 2003) 69

70 Long Term Income Profile Annualised net rents of million at 30 Sept 2003 are shown to decrease on the first to occur of lease expiry or tenant s break. Annualised net rents have been reduced by m pa to reflect the cash flow effect of EBRD s 3 years and 5 months nil rent period until Nov Lease expiries/leases subject to break are assumed to renew on the date of expiry/break at the present annualised net rent.* Reversionary income of 59.2 million is based upon estimated rental values (ERV) by our external valuers at 30 Sept Reversions have been reduced by m pa from Nov 2006 as the EBRD rent recommences* Development programme (committed and prospective) when completed and let has an estimated rent at 30 Sept 2003 of million*, assumed to be realised evenly over the next 7 years. * No rental value growth is assumed. The graph provides a snapshot of committed income and estimated income based on ERV at 30 Sept 2003, including our share of joint ventures. Upward only rent reviews across the portfolio protect rental income from falling below passing rent (prior to expiry/break). In addition, no account is taken of future acquisitions, disposals, expenditures or other events. Rental income will be affected by such transactions and future opportunities; the graph is not a forecast. Annualised net rents are gross rents plus, where rent reviews are outstanding, any increases to estimated rental value (as determined by the Group s external valuers), less any ground rents payable under head leases. 70

71 Source The information has been extracted largely from the Interim Announcement for the half year ended 30 September General property market data has been extracted from Jones Lang LaSalle and other agents reports. Figures include our share of joint ventures, unless otherwise stated. Adjusted, diluted net asset value includes the external valuation surplus on development and trading properties and excludes the capital allowances effects of FRS 19. Adjusted, diluted earnings per share similarly excludes the capital allowances effects of FRS 19. Certain statements are forward looking which are based on current expectations, forecasts and assumptions that involve risk and uncertainties that could cause actual outcomes and results to differ materially from those projected. 71