INVESTOR PRESENTATION February 2012 www.britishland.com
INTRODUCTION
British Land At a Glance One of Europe s leading REITS with 15.7bn property under management High quality 10.3bn UK retail and Central London office portfolio Strong and secure rental income underpinned by long leases and quality occupiers Well positioned to deliver growth and value from existing portfolio Opportunities to create incremental value Strong financial position and access to debt finance One of Europe s Leading Real Estate Investment Trusts 3
Delivering Superior Total Returns 1. Sustainable and growing income 2. Assets which protect and grow capital value 3. Creating incremental value 4. Controlling costs 5. Exploiting our scale and financial strength Focus on Five Key Priorities 4
Portfolio Focus UK Retail and Central London Offices Portfolio Weighting by Value 31 December 2011 Reported Pro forma 1 Retail Warehouses 26.4% 24.3% Superstores 13.2% 12.2% Shopping Centres 14.8% 13.6% Department Stores 4.4% 4.0% Europe 2.6% 3.1% Retail 61.4% 57.2% City Offices 19.8% 22.3% West End Offices 13.2% 15.4% Provincial Offices 0.9% 0.9% Offices 33.9% 38.6% Exposure to high quality retail Development increases London offices from 34% to nearly 40% of portfolio Increasing long-term West End exposure Up from 5% in 2005 to 15% Taking advantage of shortage of Grade A space in the City Other 4.6% 4.3% 1 Pro forma reflecting committed developments at valuers estimated end values Increased Investment in London Offices 5
Secure Income Profile Cash flow security from British Land s prime property portfolio is unparalleled among its peers Lease lengths averaging 11.5 years (to first break) Occupancy at 98.0% Only 7.8% of income is subject to break over next three years, which is more than offset by contracted rental increases Over 1,000 occupiers including major international banks, food retailers, department stores and UK Government Quality Assets with Income Longevity from Strong Occupier Covenants 6
Delivering Superior Returns Growing Value Portfolio Valuation 2011/12 Q1 Q2 Q3 9Months Retail 0.4% 0.3% (0.4)% 0.4% Offices 3.7% 1.6% 1.1% 6.4% Total 1.5% 0.8% 0.1% 2.3% Portfolio Valuation up 2.3% to 10.3bn 7
Delivering Superior Total Returns Total Accounting Return 2011/12 Q1 Q2 Q3 9Months Growth in Net Asset Value 2.8% 1.4% 0.3% 4.6% Dividend of (6.5p per quarter) 1.2% 1.1% 1.1% 3.4% Total Return 4.0% 2.5% 1.4% 8.0% Total Accounting Returns of 8.0% for 9 months 2011/12 8
Delivering Superior Total Returns Capital Return vs IPD Total Property Return vs IPD 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% +150 bps 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% +120 bps 0.0% Q1 11/12 Q2 11/12 Q3 11/12 9Months 11/12 IPD British Land 0.0% Q1 11/12 Q2 11/12 Q3 11/12 9Months 11/12 IPD British Land Unlevered Returns Significantly Outperformed IPD 9
Delivering Superior Total Returns Portfolio Returns Relative to IPD Bps 300 250 200 +200bps +270bps +180bps +250bps +190bps 150 +130bps 100 50 0 12 Months 3yr 5yr Total Return Capital Return Consistently outperforming IPD 10
Significant Rental Value Outperformance 2011/12 ERV Growth Q1 Q2 Q3 9 months Retail British Land 0.4% 0.3% 0.3% 0.8% IPD (0.1)% (0.1)% (0.1)% (0.4)% Offices British Land 1.7% 1.3% 0.0% 3.0% IPD 1.3% 0.6% 0.7% 2.6% Outperforming IPD Rental Value Growth in Retail and Offices 11
Significant Rental Value Outperformance Portfolio ERV Growth Relative to IPD 1.5% +100bps 1.0% +50bps 0.5% +40bps +10bps 0.0% Q1 11/12 Q2 11/12 Q3 11/12 9 months 11/12 IPD British Land Outperforming IPD Rental Value Growth by 100bps YTD 12
Significant Rental Value Outperformance Portfolio ERV Growth Relative to IPD 200bps 150bps +160bps 100bps 50bps +60bps +80bps 0bps 12 months 3yr 5yr Consistently outperforming IPD 13
Income: Growing Through Leasing Activity 0.5m sq ft of Lettings/Pre-lets at 7.7% Ahead of ERV in Q3 2011 1.4m sq ft of Lettings/Pre-lets at 5.3% Ahead of ERV 9 months 2011/12 Retail Offices Occupancy 98.0% 97.8% Lettings/Pre-lets 838,000 sq ft 572,000 sq ft Lettings vs ERV +6.1% +3.2% Total Activity Increase in Rent 2,830,000 sq ft 8.3m 935,000 sq ft 13.4m Leasing Activity Extends Rental Income 14
Securing Income Through Development Leadenhall Pre-let signed with Aon for 191,000 sq ft Rent of 56.60psf Option on 85,000 sq ft Regent s Place-NEQ Pre-let 145,000 sq ft to Debenhams Rent of 50psf rising to 53.50psf 70% of residential pre-sold Broadgate Fully let to UBS 700,000 sq ft Rent of 54.50psf Pre-lets Secure Annual Income of 32m: 20 Year Average Term 15
Adding Income Through Acquisitions Virgin Active Racquet Clubs Net equivalent yield 8.4% Annual rental income 13m Let to Virgin Active on 25 yr leases Grenfell Island, Maidenhead 113,000 sq ft of high quality office space Net Initial yield 7.5% Major beneficiary of Crossrail Wardrobe Court, EC4 92 serviced apartments Capital value 800psf Excellent City of London location Acquisitions Add 21m to Our Annual Rent Roll 16
Cost Control: A Competitive Advantage Net Operating Costs 15% of Gross Rental Income (UK peers c. 25%) Benefits of full occupancy Asset selection favouring low maintenance and landlord costs Scale economies across all sectors Well developed outsourcing model Efficient and Highly Skilled Property and Finance Team 17
Benefits of Scale and Financial Strength 1.2bn of unsecured and secured refinancing 560m unsecured bank facility $480m ( 300m) US Private Placement 350m secured bank debt for related JVs and Funds Taking advantage of our size and strength Delivering Superior Total Returns 18
FINANCIAL REVIEW
Results Highlights m Q3 10/11 Q3 11/12 9 months 10/11 9 months 11/12 NAV per share 548p 593p 548p 593p LTV 45.1% 45.6% 45.1% 45.6% Underlying PBT 64m 68m 191m 200m Underlying EPS 7.0p 7.5p 21.2p 22.1p Dividend 6.5p 6.5p 19.5p 19.5p 9Month Total Accounting Return of 8.0% (12 Months +13.0%) 20
Income Statement m Q3 10/11 Q3 11/12 9 months 10/11 9 months 11/12 Net rental income 132 139 387 408 Fees & other income 3 3 12 11 Admin expenses (16) (19) (48) (57) Net finance costs (55) (55) (160) (162) Underlying PBT 64 68 191 200 Underlying EPS 7.0p 7.5p 21.2p 22.1p Net Rents Up 5.4% to 408m 21
Sound Financing Principles Manage refinancing risk maturities Diversified sources of finance Maintain liquidity Optimise flexibility Ensure good access to the debt markets Our Scale and Quality Provides Access to Range of Debt Markets 22
Well Timed Financings Average REIT Unsecured Bond Spreads % 10 8 6 4 560m unsecured 5-Year Bank Syndicate LIBOR plus 125bps $480m ( 300m) unsecured USPP 11.2 years LIBOR plus 146bps 350m secured 5-Year HUT Facility All-in rate of 4%pa 2 0 2009 2010 2011 Source: Bloomberg 1.2bn of Financings Arranged at Competitive Margins 23
Strong Balance Sheet Metrics Inc. Share of JVs & Funds Dec 2010 Mar 2011 Dec 2011 Net debt 4,223m 4,317m 4,691m Loan to Value (LTV) 45.1% 44.7% 45.6% Loan to Value (LTV) Group 23.4% 24.3% 28.9% Interest cover 2.2x 2.2x 2.2x Interest cover Group 2.9x 3.0x 3.1x Average interest rate 5.1% 4.9% 4.7% Average debt maturity 10.6 years 10.1 years 9.6 years Maintained LTV and Reduced Interest Rate 24
Refinancing Debt Maturity (at 30 September 2011) Group m JVs & Funds 1 m H2 2011/12 85 120 H1 2012/13 21 125 H2 2012/13 11 119 H1 2013/14 1 23 H2 2013/14 258 22 525m development spend (net of sales) 255m of Group cash and liquid investments 2.5bn of total Group facilities Of which 1.5bn has a maturity of over 2.5 years 1 BL Share (pro forma for 350m HUT Facility) Maintained Liquidity to Manage Maturities Over Next 2.5 Years 25
Office Development Managing Letting Risk Office Estimated Rental Value (ERV) 50m 40m 30m 17m Speculative 20m 24m Binding Pre-lets 10m 0m 25m City 8m West End Development Programme 10% of Gross Assets 26
Development - Managing Letting Risk BL Total ERV Resetting to Market vs IPD Next 3 Years (at 30 September 2011) 30% 25% 20% 15% 10% 7% 27% Developments (Speculative) Vacant & Income Expiring 5% 9% 0% British Land IPD (exc. development) Pro forma for 755,000 sq ft of extensions on existing UBS leases as part of 5 Broadgate pre-let 9% of Rent Resetting to Market Over Next 3 Years (IPD: 27%) 27
Sustainable and Growing Rental Profile Portfolio Reversion (at 30 September 2011) Next 5 Years (excluding developments) 67m 15m (3)m (42)m 570m 528m 607m 607m Annualised Gross Rental Income Spreading of Rent Frees & Fixed Uplifts Annualised Rents (cash basis) Expiry of Rent Frees & Fixed Uplifts Letting of Vacant Space Net Reversions Reversionary Rent (next 5 years) 89m of Total Contracted Uplifts; 67m Over the Next 5 Years 28
Loan to Value Target loan to value range of 40-50% Average lease length of 11.5 years 98.0% occupancy Only 7.8% of rent expiring in the next 3 years Tenants in administration 0.7% and temporary lettings 0.3% of rent 24% of rent subject to annual RPI or fixed contracted uplifts 94% of rent collected within 7 days (97% within 14 days) Quality Income Portfolio 29
BUSINESS REVIEW
Key Messages Clear portfolio strategy Flight to quality benefiting British Land Well positioned going forward Clear strategic focus High quality, defensive portfolio Attractive opportunities for growth Strong Platform to Generate Superior Total Returns 31
Continued Portfolio Outperformance Outperformance driven by portfolio structure and our activity British Land Returns vs IPD 9 months 2011/12 British Land IPD Income Returns 3.8% 4.3% Capital Return 2.6% 1.1% + 150 bps - ERV Growth 1.5% 0.5% + 100 bps - Yield Movement 3 bps 6 bps Total Returns 6.6% 5.4% +120 bps Outperformed IPD on All Key Metrics 32
Driven by Management Actions Contribution to First Half Valuation Uplift Expiry of Rent Frees First Half Portfolio value up 2.2% to 10.2bn Uplift driven by our actions Asset management initiatives Increased profits from London development programme Expiry of rent frees Uplift driven by market Yield compression in offices Two-thirds of Valuation Uplift Driven by Our Actions 33
Retail Investment Yields Starting to Diverge 75 bps increase in prime/secondary shopping centre yield gap Equivalent Yields % August Sept Oct Nov Dec Prime Open A1 Retail Parks 5.0 5.0 5.0 5.0 5.0 Prime Shopping Centres 5.5 5.5 5.5 5.5 5.5 Secondary Shopping Centres 8.0 8.25 8.25 8.5 8.75 Source: CBRE Pricing for Secondary Assets Starting to Slip 34
Retail Investment Yields Starting to Diverge Continued demand for limited prime stock at yields sub 5.5% Large volumes of secondary shopping centres on offer at reduced prices or failing to sell Shopping Centre and Retail Park Investment Activity since July Completed Under Offer Available Total m Prime Secondary Prime Secondary Prime Secondary Overall Retail Parks (> 15m) 88 228 0 106 0 238 660 Shopping Centres (> 20m) 53 764 0 352 0 927 2096 Totals 141 992 0 458 0 1,165 2,756 Source: CBRE, British Land Pricing for Secondary Assets Expected to Slip Further 35
Retailers Continue to Migrate to the Best Locations Shopping Centre Vacancy Rates 19% 17% 15% 13% 11% 9% 7% 5% 2009 2010 2011 Big Shopping Centres Smaller Prime Shopping Centres Secondary Shopping Centres Source: PMA (Promis) Increasing Divergence Between Prime and Secondary 36
Polarising Retail Rental Value Performance Retail Rental Value Performance March 2007 = 100 105 Prime 100 95 90 85 80 Secondary Mar 07 Sep 07 Mar 08 Sep 08 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11 Source: IPD Increasing Divergence Between Prime and Secondary 37
Continued Retail Leasing Success Lettings/Renewals in YTD 2011/12 Lettings/Renewals vs ERV 2011/12 Q1 Q2 Q3 Total Number 85 87 102 274 Sq ft 000 262 265 211 838 Annual Rent 4.7m 4.8m 6.4 15.9m vs ERV 4.6% 6.1% 7.5% 6.1% 53% 23% 24% 76% of Lettings/Renewals YTD in Line or Ahead of Rental Value 38
Leasing Activity in the Pipeline Lettings Under Offer By Retailer Type 26% Over 400,000 sq ft completed/ under offer since December 39% 7% 7% Includes 100,000 sq ft of pre-lets Overall in line or ahead of ERV 3% Other 11% Food & Beverage Over 400,000 sq ft of Lettings Completed/Under Offer 39
A Strong and Defensive Retail Portfolio Locally and regionally dominant assets Depth and quality of occupier line-up Low vacancy rate 1.6% At 31 Dec 2011 UK IPD Occupancy rate 98.4% 96.4% Lease length 12.2yrs 11.5 yrs Income expiring (next 3 years) 7.8% 16.1% Occupiers in admin 0.7% n/a Temporary lets 0.3% n/a Defensively Positioned Today 40
Well Positioned For Future Growth Net initial yield just 43 bps premium to IPD Retail Rent Review Profile At 31 Dec 2011 BL IPD Average contracted rent 22psf 16psf 76% Average ERV 22psf 17psf EPRA Net Initial Yield 5.4% 5.8% 11% Net Equivalent Yield 5.7% 6.2% 2 11% Other Medium Term Outlook for Retail Portfolio is Positive 41
West End Offices Continuing robust occupational demand and constrained supply Very limited supply of investment stock, growing number of purchasers Rents ahead 9% in 2011, yields firm West End Grade A & B Availability m sq ft 8 6 4 2 Grade A Availability Grade B Availability 0 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Source: CBRE West End Market Remains Strong 42
Increasing Polarisation in City Offices Current Market Availability bn Prime Secondary Total Available 0.3 1.5 1.8 Under offer 1.2 0.9 2.1 Total 1.5 2.4 3.9 c. 4bn of City investment stock availability Demand for prime strong 1.2bn prime under offer at yields of 5-5.5% Signs of weakness in poorly located secondary stock Source: CBRE, British Land Expect Greater Divergence in Pricing Between Prime and Secondary 43
City Offices Grade A Supply and Demand Significant Active Requirements Sq ft ICAP 250,000 Jardine Lloyd Thomson 200,000 ING 175,000 Royal Sun Alliance 125,000 Prudential Reg. Auth. 120,000 Brit Insurance 100,000 Wells Fargo 80,000 Old Mutual 80,000 City Take-Up and Demand m Sq ft 3.0 2.5 2.0 1.5 1.0 0.5 - Take-Up Active Demand (RHS) 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 - Source: Jones Lang Lasalle Medium Term Demand Encouraging Driven by Structural Factors 44
City Grade A Supply Being Pushed Out Change in City Grade A Development Pipeline m sq ft 5 4 4.9m long term average take up 3 2 1 0 Mar 11 Sep 11 Mar 11 Sep 11 Mar 11 Sep 11 Mar 11 Sep 11 2011 2012 2013 2014 Source: CBRE Insufficient Supply to Satisfy Even Low Demand 45
British Land Office Asset Management Activity 2.3m sq ft of letting/renewals since Dec 09 securing 68m of rent Including 572,000 sq ft since March British Land accounts for c.20% of central London take-up since Dec 09 Letting on average for a term of 16.6 years 000 Sq ft City West End Total New lettings (inc. pre-lets) 1,435 527 1,962 Lease Renewals 248 138 387 Total 1,684 665 2,349 Occupier Demand for Best Quality Buildings 46
Existing Office Portfolio Well Positioned Virtually fully occupied 98% At 30 Sept 2011 Long-term Income (over 10 yrs) Medium-term Income (5-10 yrs) Short-term Income (under 5 yrs) % of investments Toppedup NIY % Average ERV psf Capital Value psf Lease Length yrs Income Expiring (next 3 yrs) % 53 5.9 43 737 12.6 0.3 30 6.2 42 703 7.5 4.7 17 7.2 41 518 3.5 17.9 Total 100 6.1 42 662 9.2 4.9 Defensively Positioned Today and Confident About Future 47
London Office Development Programme Delivering the Right Type of High Quality Product 48
Profitable Offices Development Programme Development Returns (at 31 December 11) Construction Costs Current Site Value 499m Cost to Complete 539m Notional Interest 73m Residential Sales Values 143m ERV 73m Development profit realised 160m Development profit to come 184m Development Yield 7.7% Cash on Cash return (ex. incentives & notional finance cost) 10.0% 71% 13% 16% Further Upside to Come from Committed Developments 49
Growing Income and Value Through Acquisitions 806m of acquisitions in 18 months; 265m of disposals Acquisitions over last 18 months Price m Rent m NIY % 1 Retail 400 24.1 6.5 Offices 227 9.2 6.3 Leisure/Other 179 13.1 7.3 Total 806 46.4 6.7 1 Based on 700m income producing assets Acquisitions Add 46m of Annual Income 50
APPENDICES
Secure Long-term Income Long Leases & High Occupancy At 31 December 2011 Excluding Developments Overall Topped Up Net Initial Yield % 2 Net Equivalent Yield Average Lease Length (yrs) Occupancy Rate (%) 2 Retail Warehouses 5.7 5.7 9.8 98.4 Superstores 5.0 5.1 16.0 100.0 Shopping Centres 5.8 5.8 9.3 97.1 Department Stores 8.9 6.5 25.4 99.7 Europe 7.1 8.0 5.2 90.2 All Retail 5.9 5.8 11.8 98.0 City 6.2 5.7 9.1 97.3 West End 5.8 5.6 8.5 98.6 Provincial 7.1 6.4 10.7 100.0 All Offices 6.1 5.7 8.9 97.8 Other 9.7 8.5 22.4 99.1 Total 6.1 5.8 11.5 98.0 1 Including fixed/minimum uplifts (excluded from EPRA definition) 2 Including accommodation subject to asset management and under offer Only 8% of Rent Expiring in the Next 3 Years 52
Growth in Underlying PBT Reconciliation of Underlying PBT 21m 8m (7)m (9)m (1)m (3)m 191m 212 213 204 203 200 200m 9Months 10/11 Acquisitions & Disposals Development Lettings Properties Held for Development Admin Expenses Fees & Finance Costs Other Income & Other 9Months 11/12 Acquisitions and Development Lettings Driving Income Growth 53
Growth in Net Asset Value 21p 12p 2p 10p (19)p 567p 593p Mar 11 Office revaluation Retail revaluation Development revaluation Underlying Profit Dividends Dec 11 Reconciliation of Net Asset Value per Share 54
Net Rental Income Growth m H1 2010 H1 2011 Change Retail 151 152 +0.7% Offices 67 69 +1.8% Other 14 14 +2.1% Properties owned throughout 232 235 +1.1% Development 13 14 Acquisitions 1 17 Disposals 2 - Guaranteed rental increases & other 7 3 Total 255 269 +5.5% 1.1% Growth in Like for Like Net Rent Income 55
Reconciliation of Underlying Profit Before Tax 9Months to 31 December 2010 m 2011 m IFRS Profit/(Loss) before tax 591 398 Net valuation movement (includes disposals) (418) (206) Deferred and current taxation of joint ventures & funds 4 2 Amortisation of intangible asset 10 - Other non-recurring items 4 6 Underlying profit before tax 191 200 56
Gross (Accounting) Rental Income Sectoral Analysis Gross Rental Income ( m pa) 9 months to 31 December 2011 1 Annualised as at 31 December 2011 Group JVs & Funds Total Group JVs & Funds Total Retail Warehouses 79 32 111 107 44 151 Superstores 6 47 53 8 64 72 Shopping Centres 27 45 72 35 61 96 Department Stores 25-25 33-33 UK Retail 137 124 261 183 169 352 Europe - 19 19-16 16 All Retail 137 143 280 183 185 368 City Offices 19 62 81 25 82 107 West End Offices 42-42 53-53 Provincial 3-3 6-6 All Offices 64 62 126 84 82 166 Other 22-22 36-36 Total 223 205 428 303 267 570 1 Gross rental income will differ from annualised rents due to accounting adjustments for fixed and minimum contracted rental uplifts and lease incentives. 57
Net Operating Costs Ratio 9Months to 31 December 2010 m 2011 m Property Outgoings 16 20 Admin Expenses 48 57 Fees & Other Income (12) (11) Net Operating Costs 52 66 Gross Rental Income 403 428 Costs as % of Gross Rent 13% 15% 58
EPRA Balance Sheet (Proportional Consolidation) m Group JVs & Funds Dec 2011 Dec 2010 Total properties 5,398 4,882 10,280 9,274 Net debt (2,199) (2,492) (4,691) (4,223) Other net liabilities (143) (81) (224) (139) EPRA Net Assets 3,056 2,309 5,365 4,912 EPRA Diluted NAV per share 593p 548p Loan to Value inc. share of JVs & Funds 45.6% 45.1% Loan to Value ratio Group 28.9% 23.4% 59
Net Debt As at 31 December 2011 Group m JVs & Funds m Total m Gross debt 2,537 2,659 5,196 Market value of derivatives 9 131 140 Cash & liquid investments (255) (174) (429) EPRA adjustments 1 (92) (124) (216) Net debt (EPRA basis) 2,199 2,492 4,691 Average interest rate 4.3% 5.0% 4.7% Interest cover 2 3.1x 1.8x 2.2x 1 Excludes mark to market on effective cash flow hedges and related debt adjustments 2 Underlying profit before interest and tax (UPBIT)/net interest 60
Diverse Funding Profile 5bn 4bn 3bn 0.7bn 1.9bn Other JV & Funds debt Securitisations Debentures & loan notes 2bn 1bn 0bn 1.0bn 1.0bn 0.5bn 0.5bn 0.9bn 0.9bn Group (LTV: 28.9%) Prop. Consol. (LTV: 45.6%) USPPs Unsecured debt 61
Top 10 Properties As at 31 December 2011 excluding developments Sq ft 000 BL Share % Rent Occupancy m pa 1 rate % 2 Lease length yrs 3 1 Broadgate, EC2 4,009 50 173 97.3 7.5 2 Regent s Place, NW1 1,210 100 49 98.3 9.0 3 Meadowhall Shopping Centre 1,374 50 83 98.6 10.0 4 Ropemaker Place, EC2 594 100 27 99.3 14.5 5 Teesside Shopping Park 460 100 14 100.0 8.8 6 Drake Circus Shopping Centre 560 100 16 97.8 7.5 7 Debenhams, Oxford Street 367 100 16 100.0 27.2 8 York House, Seymour Street 132 100 5 100.0 5.9 9 Glasgow Fort 393 41 17 98.7 7.1 10 St Stephen s Shopping Centre 410 100 8 97.8 8.6 1 annualised contracted rent including 100% of Joint Ventures & Funds 2 includes accommodation under offer or subject to asset management 3 to first break 62
Top 20 Customers As at 31 December 2011 % of total rent Tesco 7.2 Sainsbury s 6.1 Debenhams 4.2 UBS AG 3.6 Home Retail Group 3.0 Virgin Active 2.4 Kingfisher (B&Q) 2.2 HM Government 2.1 Next plc (inc. Next at Home) 1.9 Arcadia Group 1.9 As at 31 December 2011 % of total rent Spirit Group 1.7 Bank of Tokyo-Mitsubishi UFJ 1.6 Macquarie Group 1.5 DSG International 1.4 Herbert Smith 1.4 Alliance Boots 1.3 Asda (inc. Asda Living) 1.3 RBS 1.2 Marks & Spencer 1.1 Hutchison 3G 1.1 63
Portfolio Valuation by Sector As at 31 December 2011 Funds & JVs Group & Funds 1 Total Portfolio Change 2 m m m % 3 mths % 1 9 mths % 1 12 mths % 1 Retail Warehouses 1,874 841 2,715 26.4 (0.6) 0.3 2.9 Superstores 143 1,216 1,359 13.2 0.2 1.4 1.9 Shopping Centres 491 1,028 1,519 14.8 (0.3) 0.3 0.6 Department Stores 448-448 4.4-0.1 3.0 UK Retail 2,956 3,085 6,041 58.8 (0.3) 0.5 2.1 Europe - 272 272 2.6 (1.8) (3.7) (2.7) All Retail 3 2,956 3,357 6,313 61.4 (0.4) 0.4 1.9 City 520 1,512 2,032 19.8 0.8 5.8 8.3 West End 1,361-1,361 13.2 1.6 7.9 13.9 Provincial 90 7 97 0.9 (1.2) (3.1) (2.9) All Offices 4 1,971 1,519 3,490 33.9 1.1 6.4 10.1 Other 471 6 477 4.6 (0.5) 0.8 1.4 Total 5,398 4,882 10,280 100.0 0.1 2.3 4.5 1 Group s share of properties in Joint Ventures & Funds 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 Including committed and prospective developments of 85 million, down 3.5% in the 3 months to December 2011 4 Including committed and prospective developments of 563 million, up 4.4% in the 3 months to December 2011 64
Yield Profile As at 31 December 2011 Excluding developments EPRA Net Initial Yield 1 EPRA Topped-up Net Overall Topped-up Net Initial Yield 1 Initial Yield 2 Net Reversionary Yield Net Equivalent Yield Retail Warehouses 5.5% 5.6% 5.7% 5.7% 5.7% Superstores 5.0% 5.0% 5.0% 5.0% 5.1% Shopping Centres 5.6% 5.8% 5.8% 6.0% 5.8% Department Stores 5.7% 5.8% 8.9% 4.6% 6.5% UK Retail 5.4% 5.5% 5.8% 5.5% 5.7% Europe Retail 7.1% 7.1% 7.1% 7.4% 8.0% All Retail 5.5% 5.6% 5.9% 5.6% 5.8% City 4.6% 6.2% 6.2% 6.0% 5.7% West End 3.5% 5.5% 5.8% 5.8% 5.6% Provincial 7.1% 7.1% 7.1% 5.8% 6.4% All Offices 4.3% 6.0% 6.1% 5.9% 5.7% Other 7.6% 7.6% 9.7% 6.2% 8.5% Total 5.2% 5.8% 6.1% 5.7% 5.8% 1 Including rent contracted from expiry of rent free periods and fixed uplifts not in lieu of growth 2 Including fixed/minimum uplifts (excluded from EPRA definition) 65
Lease Length & Occupancy As at 31 December 2011 Excluding developments Average Lease Length (yrs) Occupancy Rate (%) To Expiry To First Break Occupancy Occupancy (Overall) 1 Retail Warehouses 10.8 9.8 97.7 98.4 Superstores 16.1 16.0 100.0 100.0 Shopping Centres 10.1 9.3 96.4 97.1 Department Stores 28.9 25.4 99.7 99.7 UK Retail 13.1 12.2 98.0 98.4 Europe Retail 11.7 5.2 90.2 90.2 All Retail 13.0 11.8 97.6 98.0 City 11.1 9.1 97.2 97.3 West End 10.8 8.5 98.6 98.6 Provincial 11.0 10.7 100.0 100.0 Offices 11.0 8.9 97.7 97.8 Other 22.8 22.4 99.1 99.1 Total 12.9 11.5 97.7 98.0 1 Including accommodation subject to asset management and under offer 66
Annualised Rents and Average Rent psf As at 31 December 2011 Excluding developments Annualised Rents ( m pa) 1 ERV Average Rent ( psf) Group JVs & Funds Total Total Contracted ERV Retail Warehouses 109 46 155 162 23 23 Superstores 8 64 72 72 21 21 Shopping Centres 35 58 93 99 28 29 Department Stores 27-27 22 12 9 UK Retail 179 168 347 355 22 22 Europe - 17 17 19 8 10 All Retail 179 185 364 374 20 21 City 5 83 88 114 46 44 West End 39-39 64 42 43 Provincial 6-6 5 21 17 Offices 50 83 133 183 43 42 Other 31-31 24 12 10 Total 260 268 528 581 23 23 1 Gross rental plus, where rent reviews are outstanding, any increase to ERV (as determined by the Group s external valuers), less any grounds rents payable under head leases, excluding contracted rent subject to rent free and future uplift. 67
Contracted Rental Increases (Cash Flow Basis) Year to 30 September ( m pa) Excluding developments 2012 2013 2014 2015 2016 2012-14 2012-16 Expiry of rent free periods 21 21 9 - - 51 51 Guaranteed fixed & minimum rental uplifts 4 3 2 4 3 9 16 Total 25 24 11 4 3 60 67 68
Rent Subject to Open Market Rent Review Year to 31 December ( m pa) Excluding developments 2012 2013 2014 2015 2016 2012-14 2012-16 Retail Warehouses 22 26 22 21 22 70 113 Superstores 4 2 17 18 14 23 55 Shopping Centres 17 11 7 16 13 35 64 Department Stores - - - - 5 1 5 UK Retail 43 40 46 55 54 128 237 Europe - - - - - - - All Retail 43 40 46 55 54 128 237 City 13 24 33 28 2 70 100 West End 11 4 1 12 4 16 32 Provincial - - - 6 - - 6 All Offices 24 28 34 46 6 86 138 Other - - - 1 1-2 Total 67 67 80 102 61 214 377 Potential Uplift at Current ERV 3 3 2 4 2 8 14 69
Rent Subject to Lease Break or Expiry Year to 31 December ( m pa) Excluding developments 2012 2013 2014 2015 2016 2012-14 2012-16 Retail Warehouses 4 4 5 9 7 13 29 Superstores - - - - - - - Shopping Centres 6 6 3 5 8 15 28 Department Stores - - - - - - - UK Retail 10 10 8 14 15 28 57 Europe 2 3 3 2 1 8 11 All Retail 12 13 11 16 16 36 68 City 1 1 3 1 1 19 5 25 West End 2 2 2 3-6 9 Provincial - - - - - - - All Offices 1 3 5 3 4 19 11 34 Other 1 1 - - - 2 2 Total 1 15 19 15 20 35 49 104 % of Contracted Rent 2.4% 3.1% 2.4% 3.3% 5.8% 7.8% 16.9% Potential uplift at current ERV 1 1 - - - 2 2 1 Pro forma for 755,000 sq ft of extensions on existing UBS leases 70
Rent Resetting to Market Year to 30 September ( m pa) Excluding developments 2012 2013 2014 2015 2016 2012-14 2012-16 Income expiring existing portfolio 1 15 19 11 20 36 45 101 Speculative developments City - - 17 - - 17 - Speculative developments West End - 24 - - - 24 - Speculative developments Retail 5 - - - - 5 - Total 20 43 28 20 36 91 101 1 Pro forma for 755,000 sq ft of extensions on existing UBS leases by an average of a least 18 months as part of 5 Broadgate pre-let 71
Committed Developments As at 31 December 2011 BL Share Sq ft 000 PC Calendar Year Current Value m Cost to Complete m Notional Interest m 1 ERV m 2 Pre-let m Residential End Value m 3 5 Broadgate, EC2 50% 700 Q4 2014 107 149 27 19.1 19.1 - The Leadenhall Building, EC3 4 50% 610 Q2 2014 77 146 20 18.6 5.6-199 Bishopsgate, EC2 50% 142 Q4 2012 31 13 1 3.5 - - NEQ, Regent s Place, NW1 5 100% 500 Q2 2013 180 151 16 19.0 7.7 113 10 Portman Square, W1 6 100% 159 Q2 2013 79 48 5 8.4-17 Marble Arch House, W1 7 100% 86 Q4 2013 25 32 4 3.9-13 Total Offices 2,197 499 539 73 72.5 32.4 143 Puerto Venecia, Zaragoza 50% 1,360 Q4 2012 46 43 8 8.0 3.8 - Whitely Village, Fareham 50% 302 Q2 2013 8 22 2 2.4 0.9 - Glasgow Fort (Cinema) 41% 45 Q1 2013-5 - 0.5 0.2 - Superstore extensions 50% 34 2013-10 - 0.3 0.3 - Total Retail 1,741 54 80 10 11.2 5.2 - Total Committed 3,938 553 619 83 83.7 37.6 143 Data includes Group s share of properties in Joint Venture & Funds (except area which is shown at 100% 1 from 1 January 2012 to practical completion (PC) based on a notional cost of finance of 6% 2 estimated headline rental value net of rent payable under head leases (excluding tenant incentives) 3 parts of residential development expected to be sold, no rent allocated of which 94 million exchanged 4 Aon have an option to take a further 85,000 sq ft 5 includes 120,000 sq ft of residential 6 includes 25,000 sq ft of off-site residential and retail (95-99 Baker Street) 7 includes 10,000 sq ft of residential 72
Prospective Developments As at 31 December 2011 BL Share % Sq ft 000 39 Victoria Street, SW1 100% 90 Pending 6-9 Eldon Street, EC2 100% 33 Pre-Submission Colmore Row, Birmingham 100% 280 Detailed Meadowhall Metropolitan 1, Sheffield 100% 2,200 Outline New Century Park 2, Coventry 50% 1,000 Outline Total Offices 3,603 Fort Kinnaird, Edinburgh 21% 93 Planning pending Glasgow Fort Shopping Park 41% 185 Detailed planning consent Kingston Centre, Milton Keynes 50% 21 Detailed planning consent Broughton Park, Chester 41% 54 Planning pending Surrey Quays Shopping Centre 50% 100 Planning pending Power Court Luton 100% 200 Planning pending Superstore extensions 50% 99 Board Commitment to Fund Deepdale Retail Park, Preston 21% 76 Planning pending Meadowhall Surrounding Land 50% 142 Planning pending Total Retail 907 Total Prospective 4,573 73
Estimated Future Development Spend Costs to complete (excluding land notional interest and residential pre-sales) 350m 300m 250m 200m 150m 100m 50m 0m 293m 255m Retail Offices 73m 27m 2012 2013 2014 2015 12 mths to 30 September 1 To PC (based on notional cost of finance of 6%) 74
Illustrative Unrealised Office Development Profits Unrealised profit illustration 1 Average Valuation Yield (pence per share) +75bps +50bps +25bps 5.4% (25bps) (50bps) (75bps) (10%) (2) 3 8 14 21 28 36 (5%) 1 6 11 17 24 32 40 Estimated Rental Value 2 58 4 9 14 20 27 35 43 +5% 7 13 18 25 32 40 49 +10% 10 15 21 28 35 43 52 +15% 12 18 24 31 38 46 56 1 Estimated remaining valuation surpluses on committed office developments, based on external valuers December 2011 assumptions (sensitised for movements in yields and headline rents) excluding valuation surplus of 18 pence realised to date 2 Headline (excluding tenant incentives) 75
Disclaimer This presentation may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of British Land speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. British Land does not undertake to update forward-looking statements to reflect any changes in British Land s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. This presentation is made only to investment professionals as defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 ('the FP Order'). The content of this presentation has not been approved by a person authorised under the Financial Services and Markets Act 2000 ( FSMA ). Accordingly, this presentation may only be communicated in the UK with the benefit of an exemption set out in the FP Order. An investment professional includes: (i) (ii) a person who is authorised or exempt under FSMA; and a person who invests, or can reasonably be expected to invest, on a professional basis for the purposes of a business carried on by him; and (iii) a government, local authority (whether in the United Kingdom or elsewhere) or an international organisation; and (iv) any director, officer, executive or employee of any such person when acting in that capacity. This presentation is published solely for information purposes. This presentation does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any security, nor a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the securities referred to in this presentation in any jurisdiction in contravention of applicable law. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. The distribution of this presentation in jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the UK should inform themselves about, and observe, any applicable requirements. This presentation has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this presentation had been prepared in accordance with the laws of jurisdictions outside the UK. All opinions expressed in this presentation are subject to change without notice and may differ from opinions expressed elsewhere. 76