Full Year Results Presentation Year ended 31 March 2019 - PowerPoint PPT Presentation

Full Year Results Presentation Year ended 31 March 2019 www.britishland.com @BritishLandPLC #BLFY2019 $BLND

Introduction Chris Grigg, CEO 2

We have delivered good operational and strategic progress • Clear strategy focused on 3 core areas – Our London campuses; – A smaller retail portfolio – Residential • Good progress across the business – £1.5bn dry or off-strategy assets sold – 2.7m sq ft leasing activity; occupancy of 97% – Developments 76% let or under offer – Creating future opportunities e.g. 1-2 Broadgate • Focusing on the customer – Rolling out Storey and Storey Club – Progressing our Smart places strategy • Managing our capital well – £125m further share buyback 1-2 Broadgate – Proposed increase to next year’s dividend of 3% 3

Finance Review Simon Carter, CFO 4

Well positioned in uncertain markets Loan to value 28% • Strong Balance Sheet • £1.4bn of new financing • Current schemes 76% pre-let or under offer Low speculative development risk Speculative exposure 2.3% • Future value • Near and medium term development opportunities accretive • £125m share buyback programme opportunities 5

Headlines Financial Year to 31 March 2018 2019 Change % Underlying earnings per share (p) 37.4 34.9 (6.7%) Underlying Profit (£m) 380 340 (10.5%) Dividend per share (p) 30.08 31.00 3.0% Valuation performance 2.2% (4.8%) EPRA net asset value per share (p) 967 905 (6.4%) Loan to value (LTV) 28.4% 28.1% Total accounting return 8.9% (3.3%) 6

Underlying earnings per share Pence Offices 4.9% Retail 0.8% (2.1p) Total 1 2.4% (1.7p) (1.4p) 1.5p 1.2p 37.4p 35.3p 34.9p 2018 Prior period 2018 excl. Impact of LfL rental Net divestment Share buyback 2019 surrender surrender CVAs and growth and premia Admins development 1 Like for like rental growth percentages are stated excluding the impact of surrender premia, CVAs and administrations 7

De-risked developments providing future returns 76% Completed & committed developments pre-let or under offer Pence £m per share ERV 4.5p annual EPS 5 accretion once fully let 70 60 4 50 3 40 30 Pre-let 2 or under offer 20 1 10 - 0 Committed Near Term FY20 FY21 FY22 FY23 8

Income statement Financial Year to 31 March 2018 2019 Change % Net rental income (£m) 576 532 (7.6%) Net finance costs (£m) (128) (121) (5.5%) Administrative expenses (£m) (83) (81) (2.4%) Fees & other income (£m) 15 10 (33.3%) Underlying Profit (£m) 380 340 (10.5%) Underlying earnings per share (p) 37.4 34.9 (6.7%) Dividend per share (p) 30.08 31.00 3.0% FY20 dividend proposed increase 3% 9

Valuation performance FY to March 2019 Valuation Movement Movement Yield ERV NEY Weighting £m £m % movement movement % % Bps % Offices 6,308 80 1.1 +2 1.4 4.4 51 Retail 5,577 (752) (11.1) +37 (3.8) 5.6 45 Residential 128 (6) (4.4) n/a n/a n/a 1 Canada Water 303 (2) (0.8) n/a n/a n/a 3 Total 12,316 (680) (4.8) +19 (1.6) 5.0 100 • Of which 11,309 (794) (6.0) +19 (1.6) 5.0 92 Standing Investments • Of which Development 1,007 114 10.8 n/a n/a n/a 8 10

Retail Valuation Movements March ’19 82% of rent lost through CVA/admin is at Valuations (£’m) assets seeing more than 10% valuation decline 1,500 1,000 500 - More than 0% 0% to -5% -5% to -10% -10% to -15% -15% to -20% More than -20% Local Multi-let Regional Multi-let Superstores Leisure Solus Department Stores % Valuation Movement in FY19 11

CVAs and Administrations over last 2 years Since 1 April 2017 Annualised contracted rent impact Contracted Number of % of by Quarter (£’m) rent reduction Stores CVAs £’m 7.0 Admins - stores closing Number of stores in CVAs - stores closing c.2,000 portfolio 6.0 CVAs - reduced rents Stores exposed to 132 5.0 CVA/admins Stores sold 0.9 5 4.0 Administrations 7.1 46 3.0 CVAs 81 2.0 Unaffected - 32 40% Reduced 1.0 5.1 34 42% Rents 0.0 Closures 3.8 15 18% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total Rent Impact 16.9 FY18 FY18 FY18 FY18 FY19 FY19 FY19 FY19 Rent on stores closing: £10.9m £6.5m rent is let or in negotiations 12

Retail Operational Performance New Lettings & Renewals Rent Reviews Occupancy Floor Floor Net Vs Net Effective Vs Area (Sq Area (Sq Effective Previous Rent (£’m) ERV ft ‘000) ft ‘000) Rent (£’m) Rent Total Retail 1,587 25.8 +0.3% 1,795 38.2 +2.3% 96.7% Regional multi-let 720 13.1 +4.0% 358 10.2 4.7% 97.0% Local multi-let 670 11.8 -3.4% 641 14.6 2.0% 95.3% British Land FY19 (yoy) Outperformance vs Benchmark (bps) Footfall -0.9% +230 Retailer LFL Sales -1.5% +160 Retailer Total Sales -0.5% +160 13

EPRA net asset value (68p) (30p) 35p 10p (7p) (2p) 967p 905p Mar 18 Valuation Underlying Dividends Financing Share Other Mar 19 performance Profit activity buyback 14

Strength of debt metrics Proportionally Consolidated 31 Mar 2018 31 Mar 2019 Loan to value (LTV) 28.4% 28.1% Weighted Average Interest Rate 2.8% 2.9% Interest Cover 4.0x 3.8x Available Undrawn Facilities £1.2bn £1.5bn Weighted Average Drawn Debt Maturity 8.6 8.1 Senior unsecured credit rating (Fitch) A A £1.4bn of new finance since March 2018 15

Well positioned in uncertain markets Loan to value 28% • Strong Balance Sheet • £1.4bn of new financing • Current schemes 76% pre-let or under offer Low speculative development risk Speculative exposure 2.3% • Future value • Near and medium term development opportunities accretive • £125m share buyback programme opportunities 16

Update on Strategy Chris Grigg, CEO 18

Good progress against our clear strategy Mixed Use places to work, shop and live Offices Retail Residential • Focused on London campuses • Smaller more focused portfolio • Principally build to rent • 1FA completed and planning • £646m assets sold or under • Sales of 25 units completed at achieved on 1-2 Broadgate offer since April 2018 Clarges; exchanged or under offer on another 5; 4 remaining • Continued progress across • Investing in assets which fit • Opportunities across our developments now 76% pre-let our strategy London portfolio, including • Further roll out of Storey 3,000 homes at Canada Water including Storey Club Customer Focus + Operational Expertise 18

How mixed use delivers value • Taking market share 1 – Our activity accounts for 8% of the central London leasing market with 2.5% of the stock • Delivering higher rents 2 – Most recent lettings at £80psf at Broadgate – vs £71psf for City prime rents and £49psf at Broadgate in 2015 – Attracting a wider mix of occupier • Improving leasing velocity 3 – 100 Liverpool Street 63% let on the office space 11 months ahead of PC – 4 Kingdom Street 80% fully let within a week of PC in 2017 1.1m sq ft Office leasing 479,000 sq ft in negotiations 135 Bishopsgate, Broadgate 19

How our campuses deliver mixed use Vibrant Local Connectivity & Scale Right Mix of Uses Flexibility Neighbourhoods Located in some of London’s most Range of office space in terms of World class office space exciting areas size, specification and location Dining opportunities including Modern, divisible office space Complementary businesses restaurants, bars, cafés which can flex to occupier needs located nearby Old Street, > 100 acres across Central Balanced range of retail Spitalfields, London Shoreditch, City Space which promotes wellbeing Knowledge Quarter, including gyms, places to run, Fitzrovia, Regent’s Park cycle racks Entertainment, events & activities Regeneration which enliven space and provide ahead of Crossrail opportunities to socialise & network 20

Why mixed use? Occupiers Employees want space which is… want space which is… Attractive to skilled Flexible Affordable Well connected Located in vibrant Well connected Safe and promotes Sustainable and employees neighbourhoods wellbeing eco friendly Tech Close to Aligned to Supported by Has a range of workspace Close to retail, enabled complementary their brand excellent facilities including collaborative leisure and businesses and services and quiet dining options + World class, sustainable and smart buildings Attractive, vibrant and safe public space 21

The expertise to deliver 100 Liverpool Street • Thoughtful design – Large but divisible floorplates providing flexibility – 90,000 sq ft retail and dining – 20,000 sq ft outdoor terraces • Working with a range of stakeholders – City planners, TfL, local communities – Minimal disruption to campus occupiers • Excellent leasing results – Achieving rents 10%+ ahead of initial expectations – Only upper floors remaining with good demand • Sustainability integral to our plans – Saving 11,000 tonnes of embodied carbon by retaining half the original structure, using efficient design and low carbon materials 100 Liverpool Street 22