Half Year Results Presentation 6 months to 30 September 2015 - - PowerPoint PPT Presentation

Half Year Results Presentation

6 months to 30 September 2015

@BritishLandPLC www.britishland.com #BLHY2015 $BLND

Results Overview

Chris Grigg Chief Executive

3

Highlights

• Strong set of results
• Strengthening ERV in London
• Positive momentum in Retail
• Driving income growth
• Positive leading indicators

4

Creating great environments Growing in London and the South East Investing around infrastructure Internet resilient retail

Focused investment activity

Profitable development Understanding

• ur customers

5

Gross investment

• 1,600
• 1,200
• 800
• 400

400 800 1,200

Broadly balanced investment activity

Investment Activity

£m

Disposals Acquisitions & Development (ex retail capex) Net Spend

£ 343m £ 395m (£ 19m ) £ 626m (£ 315m ) Net Spend

2011 2012 2013 2014 2015 YTD 2016

(£ 2m )

£860m

6

Financial highlights

HY to 30 September 2015 Change NAV per Share 891p +7.5% Valuation £14.4bn +4.7% Total Property Return 6.9% Underlying Profit Before Tax £171m +10.3% Dividend per Share 14.2p +2.5% Total Accounting Return 9.1%

6 months total accounting return

9%

7

Yield movement Development Asset management

Valuation performance

• Valuation ahead in both sectors

– +8.2% in Offices & Residential – +1.8% in Retail & Leisure

• Asset management and development

contributed nearly 40% of uplift

• Yield shift was an important driver
• Continuing to outperform market

– Total returns 10bps ahead Contribution to valuation uplift

Increase in valuation

4.7%

8

Driving rental growth

• Positive occupational markets
• Signing new space at attractive terms vs ERV
• Feeding through to rent reviews and underlying income
• LFL income growth strong in Offices (7.4%); positive in Retail (1.1%)

HY to 30 September 2015 Retail Offices Total Lettings/renewals (000 sq ft) 365 208 573 Lettings/renewals under offer (000 sq ft) 327 41 368 Investment lettings/renewals vs ERV 6.6% 5.0% 5.7% Rent reviews vs passing rent 4.0% 4.8% 4.3% Occupancy 98.6% 98.1% 98.4% ERV growth 0.9%* 4.5% 2.3% Investment lettings/ renewals vs ERV

5.7%

* 1.4% on the multi-let portfolio

9

48% 27% 9% 6% 10% Banks & Financial Services Business/Professional Services Food & Beverage Industrial Other

Lettings/ renewals ahead of ERV

Offices – leasing well

• Portfolio virtually full
• Over 200,000 sq ft of

lettings/renewals

• 160,000 sq ft at the Leadenhall

Building, breaking £90 psf

• 41,500 sq ft under offer, 12%

ahead of ERV

• Focus on driving rental growth
• 720,000 sq ft of rent reviews

in the next 18 months

5.0 %

10

• Stronger ERV performance
• Yield shift continuing to make a strong contribution
• Outperformed IPD capital returns by 110 bps

Offices & Residential valuation performance

Offices & Residential valuation growth

8.2%

HY to 30 September 2015 Valuation uplift ERV growth City 8.5% 5.1% West End 8.1% 4.1% Total (including Residential) 8.2% 4.5%

11

Transforming Broadgate into a world-class central London destination

Tech City Start-up Shoreditch Creative sector Spitalfields Modern markets The City Financial Centre Barbican Cultural hub

150 m

Footfall at Liverpool Street Average retail rent

• vs. nearly £600 psf

for Oxford Street

£121psf

1 5 2 3 4

BROADGATE

12

2-3 Finsbury Avenue

Advancing plans

1 Finsbury Avenue

Resolution to grant planning consent received

Broadgate development pipeline

10 0 Liverpool Street

Planning consent received

3

190,000 sq ft

(existing space)

1 2

300,000 sq ft 517,000 sq ft

13

Paddington Central – improving the public realm

Gam es room Library Woodland garden 1 Kingdom Street 2 Kingdom Street 4 Kingdom Street Kitchen garden

14

5 Kingdom Street

Paddington Central – progressing development

Progressing plans for 5 Kingdom Street 4 Kingdom Street Core at 4 Kingdom Street now complete

15

Regent’s Place – future opportunities

375,000 sq ft

£49 passing rent psf

10-20 Triton Street

115,000 sq ft

£41 passing rent psf

338 Euston Road

220,000 sq ft

£45 passing rent psf

1 Triton Square Rent reviews Refurbishm ent Refurbishm ent/ redevelopm ent

16

Retail operational metrics remain strong

Retailer same store sales

+3.3 %; to £5.6bn

Click & collect 50 %

ahead of national average

Source: British Land, Springboard Source: BL Consumer Surveys, CACI

Average rent to sales

less than 10 %

Occupancy remaining

high at 98 .6 %

Source: British Land Source: British Land Source: Springboard and Experian

Footfall +1.9 %

ahead of market by

30 0 bps

Source: Springboard and Experian

Footfall +5.5 %

across shopping parks

17

Retail – good demand from high quality occupiers

Lettings and renewals by sector by rent

Taking space out of town 31% 22% 16% 12% 9% 3% 7%

Fashion & Footwear Health and Beauty General Retail DIY Food & Beverage Electrical & Mobile Phone Other

18

Lettings/ renew als ahead of ERV

Retail – leasing at attractive rates

Gla sgow Fort

£83

per sq ft

Stockton Ea ling Broa d w a y

£50 A3

per sq ft

6.6%

£60

per sq ft

Peak rent Recent signings

1,200 sq ft 2,000 sq ft 3,000 sq ft

19

Continued ERV growth in Retail

Rental growth on multi-let assets

Portfolio rental growth vs IPD

1.4%

Source: IPD, 2015; BL Portfolio data

80 85 90 95 100 105 110 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Index Mar-10 =100 BL ERV (All Retail) IPD ERV (All Retail) IPD ERV (Secondary Retail)

20

Retail & Leisure valuation performance

2.2%

Uplift on multi-let assets

• Performance driven by multi-let portfolio
• Capital returns in line with IPD
• Multi-let portfolio capital returns 30 bps ahead of IPD

HY to 30 September 2015 Valuation uplift ERV growth Multi-let 2.2% 1.4% Superstores (1.6)% (0.9)% Other 2.4% 0.2% Total 1.8% 0.9%

21

• Oldham
• Swindon
• Broughton Chester
• Tollgate Colchester
• Glasgow Fort
• Whiteley Leisure

Extensions & developments

£10 million

Investing in HUT

£95 million (Taking share to 75%)

Small scale capex

£40 million

£260 million asset disposals

Superstores Non-strategic retail parks

£145 million investment

Continued evolution of the Retail portfolio

• £1.5bn shopping park portfolio

22

Driving preference at New Mersey Shopping Park, Speke

36%

Visitors use click & collect

10 m

Annual footfall

11 m in

Average drive time

Proposed leisure extension New Mersey Shopping Park today

3rd

Largest shopping park in the UK

Park Lane

Refurbishment helped convert target retailers

Investment driving performance – Meadowhall

Refurbishment

On site with a £55m refurbishment Attracting new occupiers

New additions

Investment driving performance – Meadowhall

25

Growing our London campuses through development

1 million sq ft 390,000 sq ft 220,000 sq ft

• c. 5.5 million sq ft

Broadgate Paddington Central Regent’s Place Canada Water

• 100 Liverpool Street
• 1 Finsbury Avenue
• 2-3 Finsbury Avenue
• 4 Kingdom Street
• 5 Kingdom Street
• 338 Euston Road
• 1 Triton Square
• Mixed use, including retail,
• ffices and residential

26

Leisure extensions 230,000 sq ft

Retail development

Eden Walk 560,000 sq ft

(inc. residential)

Meadowhall 330,000 sq ft

New Mersey, Speke

Canada Water

46 acre development

• pportunity in zone 2

Canada Water

Financial Review

Lucind a Bell Chief Financial Officer

29

Highlights

Period to H1 2015 H1 2016 Change Underlying Profit before Tax (£m) 155 171 10.3% Underlying Earnings per Share (p) 15.3 16.0 4.6% Dividend per Share (p) 13.84 14.18 2.5% As at H2 2015 H1 2016 Change Valuation Performance 5.2% 4.7% EPRA Net Asset Value per Share (p) 829 891 7.5% LTV 35% 34% H1 Total Accounting Return 13.7% 9.1%

30

Underlying profit bridge

155 11 8 6 (6) (3)

H1 2015 Financing activities Development Like-for-Like rental growth Administration expenses Other H1 2016

171

£m

31

292 12 6 22 (23)

H1 2015 Developments Like-for-Like rental growth Acquisitions Disposals H1 2016

309

Net rental income movement

1.1% 7.4% 3.3% Retail Offices Total

£m

32

Reducing financing costs

(103) 11 (5) 5 (4)

H1 2015 Financing activities Acquisitions Disposals Developments H1 2016

(96)

£m

33

Income statement

HY to 30 September H1 2015 H1 2016 Change Net Rental Income (£m) 292 309 5.8% Fees & Other Income (£m) 7 5 Administrative Expenses (£m) (41) (47) Net Finance Costs (£m) (103) (96) Underlying PBT (£m) 155 171 10.3% Underlying Earnings per Share (p) 15.3 16.0 4.6%

34

Continued valuation performance

HY to September 2015 Valuation £bn Uplift £m Uplift % Yield Compression bps ERV Growth % NEY % Weighting % London/SE Weighting % Retail & Leisure 7.6 139 1.8 8 0.9 5.0 51 Offices & Residential 6.8 523 8.2 49 – Of which Offices 6.5 506 8.3 20 4.5 4.4 46 Total 14.4 662 4.7 13 2.3 4.7 100 65 – Of which Standing Investments 13.7 602 4.5 – Of which Development 0.7 60 8.5

35

Valuation growth drivers – Retail & Leisure

HY to September 2015 Valuation £bn Uplift £m Uplift % Yield Compression bps ERV Growth % Shopping parks 3.3 36 1.1 5 0.9 Shopping centres 2.3 86 3.9 14 1.9 Superstores 0.9 (15) (1.6) (5) (0.9) Department stores 0.6 17 2.9 12

• Leisure

0.5 15 2.8 22 0.3 Retail & Leisure 7.6 139 1.8 8 0.9 Of which Multi-let 5.4 121 2.2 9 1.4

36

Valuation growth drivers – Offices & Residential

HY to September 2015 Valuation £bn Uplift £m Uplift % Yield Compression bps ERV Growth % West End 3.7 285 8.1 24 4.1 City 2.8 221 8.5 16 5.1 Offices 6.5 506 8.3 20 4.5 Residential 0.3 17 6.5 Offices & Residential 6.8 523 8.2

37

829p 47p 13p 16p (13p) (1p)

Mar 15 Offices & Residential Retail & Leisure Underlying Profit Dividends Other Sep 15

Growth in diluted EPRA net asset value

NAV per share (p)

891p

38

Strength of debt metrics

Proportionally Consolidated 31 Mar 2015 30 Sep 2015 Loan to Value (LTV) 35% 34% Loan to Value pro-forma for 2012 bond conversion 32% 31% Weighted Average Interest Rate 3.8% 3.6% Interest Cover 2.6x 2.8x Average Maturity of Drawn Debt (years) 8.7 8.2 Group 31 Mar 2015 30 Sep 2015 Loan to Value (LTV) 28% 26% Available undrawn facilities £1.2bn £1.4bn Weighted Average Interest Rate 3.3% 3.1% Interest Cover 3.0x 3.0x

39

Offices To Let Residential To Sell Pre sold/ Pre let Offices Residential Retail 200 400 600 800 1000 1200 1400 1600

Development programme

Committed & Near-Term

£m

• Current speculative commitment

£0.6bn, 100% of costs fixed

• Near-term pipeline 2.0m sq ft,

1 Triton Square & 1 Finsbury Avenue added

• Near-term includes 1.8m sq ft

in London

• Development commitment limit

10% on a speculative basis

• Medium-term opportunity at

Canada Water

Committed Near-Term Pipeline

40

Future income growth

Annualised Gross Rents Cash Flow Basis £m Accounting Basis £m Current Passing Rent1 598 634 Expiry of Rent-free Periods 76 Fixed, Minimum Uplifts 12 Total Contracted 686 634 Developments – Under Construction 17 14 Investments – Reversions2 12 12 Investments – Letting of Expiries and Vacancies 22 17 Developments – Near-term to let 63 49 Potential Rent in 5 Years 800 726 Increase 34% 15%

1 Valuation rent, includes assumptions on outstanding rent review settlements 2 RPI-linked leases assumed at 2.5% per annum and uplift at rent review based on ERVs determined by the Group’s valuers

Outlook

Chris Grigg Chief Executive

42

Outlook

• Outlook for occupational markets positive
• UK economy continuing to perform well
• Occupiers generally more confident
• But capital markets more volatile
• We continue to focus on our strategic themes

43

Creating great environments Growing in London and the South East Investing around infrastructure Internet resilient retail

Focused investment activity

Profitable development Understanding

• ur customers

Appendices

46

Gross investment

• 1,600
• 1,200
• 800
• 400

400 800 1,200

Broadly balanced investment activity

Investment Activity

£m

Disposals Acquisitions & Development (ex retail capex) Net Spend

£ 343m £ 395m (£ 19m ) £ 626m (£ 315m ) Net Spend

2011 2012 2013 2014 2015 YTD 2016

(£ 2m )

£860m

Note: £210 million acquisition of One Sheldon Square was accounted for in 2015 in the full year results presentation, when the net investment activity amount was (£105m)

47

BL property outperformance vs IPD – 5 years

120 470 250 130 350 190

50 100 150 200 250 300 350 400 450 500 Retail Offices Total 5 years ended 30 September 2015

Outperformance bps pa

Capital Returns Total Returns

48

BL property outperformance vs IPD – 3 years

70 370 180 80 240 110

50 100 150 200 250 300 350 400 Retail Offices Total 3 years ended 30 September 2015

Outperformance bps pa

Capital Returns Total Returns

49

80 85 90 95 100 105 110 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15

Strong operational performance

Outperformance

BL footfall performance vs Experian benchmark Mar-10 = 100

+300 bps

UK Market (Experian Index) British Land

50

Adjusted net debt – proportionally consolidated (£bn)

4.9 4.9 0.3 0.2 (0.4) (0.1) Mar 15 Net Debt Acquisitions Development & Capex Disposals Other Sep 15 Net Debt LTV 35% LTV 34%

51

Reconciliation of underlying profit before tax

HY to 30 Sep (£m) H1 2015 H1 2016 IFRS Profit before tax attributable to shareholders of the Company 1,000 809 Net valuation movement (849) (614) Profit on disposal of investment and trading properties (12) (36) Deferred and current taxation of joint ventures & funds 1

• Capital financing costs

(20) 6 Add non-controlling interests in capital & other 35 6 Underlying Profit Before Tax 155 171 Dilution adjustment 3 3 EPRA Earnings Before Tax 158 174

52

Gross rental income1

Accounting Basis £m 6 mths to 30 September 2015 Annualised as at 30 September 2015 Group JVs & Funds2 Total Group JVs & Funds2 Total Shopping parks 59 31 90 114 55 169 Shopping centres 34 27 61 63 51 114 Superstores 6 19 25 12 38 50 Department stores 14

• 14

29

• 29

Leisure 16

• 16

31

• 31

Retail & Leisure 129 77 206 249 144 393 Of which Multi-let 83 57 140 158 107 265 West End 60

• 60

117

• 117

City 2 54 56 4 113 117 Offices 62 54 116 121 113 234 Residential3 3

• 3

3

• 3

Offices & Residential 65 54 119 124 113 237 Total 194 131 325 373 257 630

Table shows UK total, and includes completed developments.

1 Gross rental income will differ from annualised rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives 2 Group’s share of properties in joint ventures and funds including HUT at share 3 Stand-alone residential

53

Operating costs metric

HY to 30 Sep (£m) H1 2015 H1 2016 Property outgoings 17 17 Administrative expenses 41 47 Fees and other income (7) (5) Ground rent costs (2) (1) EPRA Costs (including direct vacancy costs) 49 58 Gross rental income 309 326 Ground rent costs (2) (1) Gross Rental Income (EPRA basis) 307 325 EPRA Cost Ratio (including direct vacancy costs) 16.0% 17.8%

Table shows figures on a proportionately consolidated basis which includes the Group's share

• f joint ventures and funds and excludes non-controlling interests in the Group's subsidiaries.

54

Reconciliation of EPRA NAV & NNNAV

31 Mar 15 30 Sep 15 £m pence £m pence Balance Sheet (IFRS) Net Assets 8,565 830 9,253 845 Deferred tax arising on revaluation movements 13 12 Mark to market on effective cash flow hedges and related debt adjustments 257 234 Adjust to fully diluted on exercise of share options 37 43 Adjust to dilute for 2012 convertible bond 400 400 Surplus on trading properties 96 97 Less non-controlling interests (333) (284) EPRA NAV 9,035 829 9,755 891 Deferred tax arising on revaluation movements (13) (12) Mark to market of debt and derivatives (663) (523) EPRA NNNAV 8,359 767 9,220 842

55

EPRA balance sheet (proportional consolidation)

£m 31 March 15 Group JVs & Funds 30 Sep 15 Total properties 13,677 9,569 4,858 14,427 Adjusted net debt (4,918) (3,450) (1,458) (4,908) Other net liabilities (124) (45) (119) (164) EPRA Net Assets (undiluted) 8,635 6,074 3,281 9,355 Dilution impact of 2012 convertible bond 400 400

• 400

EPRA Net Assets (diluted) 9,035 6,474 3,281 9,755 Loan to Value (LTV)1 35% 26% 34% Average interest rate 3.8% 3.1% 3.6% Interest cover 2.6x 3.0x 2.8x Average maturity of drawn debt (years) 8.7 7.3 8.2

1 Group LTV based on Group Properties and net investment in JV & Funds, and Group net debt

56

Debt maturity – group (£m)

Debenture & loan notes (Secured) Bank Term Loan (Secured) US Private Placements (Unsecured) Convertible Bond (Unsecured) Bank RCF Drawn (Unsecured) Bank RCF Undrawn (Unsecured)

200 400 600 800 1,000 1,200 1,400

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

Year to March

57

200 400 600 800 1,000 1,200 1,400

2016 2017 2018 2019 2020 2021 - 2025 2026-2036

Debt maturity – joint ventures and funds1 (£m)

1 At British Land share (including share of HUT)

JVs – Securitisations Funds – Bank drawn Funds – Bank undrawn JVs – Bank undrawn JVs – Bank drawn

Year to March

58

Debt Financing – Diverse profile

Debentures & loan notes (Secured) Bank RCFs Drawn (Unsecured) US Private Placements (Unsecured) Bank Term Loan (Secured) JVs Securitisations JV & Funds Term Loans (Secured)2

1 Proportionally Consolidated 2 HUT’s debt shown at our share (£0.4 billion) within JV & Funds

Convertible Bonds (Unsecured)

Diverse Debt Profile1 (30 September 15)

£0.7bn £0.8bn £0.3bn £0.9bn £0.5bn £1.5bn £0.5bn

• Over £650 million of debt finance

rearranged since 31 March 2015

• WAIR improved in H1 to 3.6%

from 3.8% British Land

• £350m 0% unsecured convertible

bonds due 2020 (issued June 2015)

– Flexible settlement options – Competitive terms, further diversifying sources of financing

• Extended and reduced pricing on a

bilateral bank RCF JV & Funds

• Extended and reduced pricing
• n Gibraltar debt
• Raised £50m additional short term

HUT RCF

59

At 30 September 2015 Group £m JVs & Funds £m Less NCI £m £m Gross Debt (principal value) 3,710 1,688 (144) 5,254 IFRS adjustments: Issue costs and premia (20) (3) 1 (22) Fair value hedges 145

• 145

Other Items 93

• 93

IFRS gross debt 3,928 1,685 (143) 5,470 Market value of derivatives

• 43

(2) 41 Cash (188) (213) 32 (369) IFRS net debt 3,740 1,515 (113) 5,142 Adjustments: Remove market value of derivatives (41) Remove fair value hedges (145) Other adjustments (48) Adjusted net debt 4,908

Gross and net debt reconciliation

60

Number of shares

Number of shares (m) 31 Mar 15 30 Sep 15

IFRS Basic Weighted Average 1,016 1,022 Underlying and IFRS Diluted Weighted Average 1,022 1,086 EPRA Diluted1 Weighted Average 1,080 1,086 Period End 1,090 1,095

1 Including convertible dilution

61

Superstores

Stand-alone Superstores1 In Shopping Centres & Shopping Parks2 Total Exposure1,2,3

Store Size ‘000 sq ft Number

• f

Stores Valuation (BL share) Capital Value psf WALL to FB yrs Number

• f

Stores Valuation (BL share) Capital Value psf WALL to FB yrs Number

• f

Stores Valuation (BL share) Capital Value psf WALL to FB yrs £m £m £m >100 8 179 345 12.9 5 367 552 13.5 13 546 461 13.3 75-100 14 286 457 18.2 1 41 483 12.4 15 327 460 17.5 50-75 17 294 440 12.7 1 13 198 11.6 18 307 419 12.7 25-50 9 63 239 8.9 3 31 433 15.0 12 94 280 10.8 0-25 4 13 190 10.7 17 78 418 11.4 21 91 356 11.3 Sept 2015 52 835 389 14.2 27 530 494 13.1 79 1,365 424 13.8 March 2015 57 924 395 14.5 29 529 491 13.9 86 1,453 426 14.4

Geographical Spread Annualised gross rent (BL Share) Lease Structure London & South

58%

Tesco

£37m RPI and Fixed 7%

Rest of UK

42%

Sainsbury’s

£32m OMRR 93%

Other

£6m

1 Excludes £12m non-foodstore occupiers in superstore led assets, and Tesco Bursledon, sold post period end 2 Excludes non food-format stores e.g. Asda Living 3 Excludes £102m of investments held for trading comprising freehold reversions in a pool of Sainsbury’s Superstores

62

Major property holdings

At 30 September 2015 (excl. developments under construction) BL Share % Sq ft 000’s Rent £m pa1 Occupancy Rate %2 Lease Length yrs3 1 Broadgate, London EC2 50 4,721 225 99.3 8.3 2 Regent's Place, London NW1 100 1,590 73 98.8 8.2 3 Meadowhall Shopping Centre, Sheffield 50 1,393 82 97.2 7.2 4 Paddington Central 100 808 33 99.8 8.2 5 Sainsbury's Superstores4 50 2,526 59 100.0 14.2 6 The Leadenhall Building5 50 602 35 86.7 12.0 7 Debenhams, Oxford Street 100 363 11 100.0 23.5 8 Tesco Superstores4 65 1,243 27 100.0 14.3 9 Teeside Shopping Park, Stockton-on-Tees 100 478 15 95.7 6.5 10 Drake Circus Shopping Centre, Plymouth 100 412 16 99.6 5.9

1 Annualised EPRA contracted rent including 100% of Joint Ventures & Funds 2 Includes accommodation under offer or subject to asset management at 30 September 2015 3 Weighted average to first break 4 Comprises stand-alone assets/properties 5 90.8% occupancy rate including post period end activity

63

Top 20 customers & customer split by industry

At 30 September 2015 % of Contracted Rent

Tesco plc 6.1% UBS AG1 5.7% Debenhams 5.4% J Sainsbury plc 4.8% Kingfisher (B&Q) 2.6% Home Retail Group 2.4% Next plc 2.3% HM Government 2.2% Virgin Active 1.8% Spirit Group 1.6% Alliance Boots 1.5% Dixons Carphone 1.4% Visa Inc 1.4% Marks & Spencer plc 1.4% Arcadia Group 1.3% Aegis Group 1.3% Herbert Smith 1.2% Royal Bank of Scotland 1.1% TJX Cos Inc (TK Maxx) 0.9% Facebook 0.9%

Customer Split by Industry (%)

General Retail 16% Fashion & Beauty 16% Banks & Financial services 17%1 Supermarket 12% Professional & Corporate 9% Food/Leisure 10% DIY 7% Government 2% TMT 8% Manufacturing 2% Other Business 1%

1 Rent contracted on both 5 Broadgate and run off on 1-3 Finsbury Avenue/

100 Liverpool Street lease run off whilst UBS move

64

Portfolio weighting

At 30 September 2014 % 2015 (current) % 2015 (current) £m 2015 (pro-forma1) % Shopping parks 23.4 23.0 3,315 22.4 Shopping centres 15.5 15.9 2,282 15.4 Superstores 10.1 6.3 906 5.7 Department stores 4.7 4.2 610 4.1 Leisure 2.8 3.7 530 3.6

Retail & Leisure

56.5 53.1 7,643 51.2

Of which Multi-let

36.0 37.2 5,355 36.0

West End

23.1 25.5 3,669 27.2

City

17.8 19.6 2,813 19.0

Provincial

0.7

• 3
• All Offices

41.6 45.1 6,485 46.2

Residential

1.9 1.8 256 2.6

All Offices & Residential

43.5 46.9 6,741 48.8

Total

100.0 100.0 14,384 100.0

Table shows UK total, excluding assets held in Europe.

1 Pro forma for developments under construction at estimated end value (as determined by the Group’s external valuers) and post period end transactions 2 Stand-alone residential

65

Portfolio valuation by sector

At 30 September 2015 Group JVs & Funds1 Total1 Change %2 £m £m £m % £m

Shopping parks 2,213 1,102 3,315 1.1 36 Shopping centres 1,157 1,125 2,282 3.9 86 Superstores 221 685 906 (1.6) (15) Department stores 609 1 610 2.9 17 Leisure 527 3 530 2.8 15 Retail & Leisure3 4,727 2,916 7,643 1.8 139 Of which Multi-let 3,119 2,236 5,355 2.2 121 West End 3,669

• 3,669

8.1 285 City 104 2,709 2,813 8.5 221 Provincial 3

• 3

2.6

• All Offices

3,776 2,709 6,485 8.3 506 Residential4 210 46 256 6.5 17 All Offices & Residential3 3,986 2,755 6,741 8.2 523 Total 8,713 5,671 14,384 4.7 662 Standing Investments 8,050 5,618 13,668 4.5 602 Developments 663 53 716 8.5 60

Table shows UK total, excluding assets held in Europe. Total portfolio valuation including Europe of £14.4bn at year end, +4.7% valuation movement.

1 Group’s share of properties in joint ventures and funds including HUT at ownership share 2 Valuation movement during the period (after taking account of capital expenditure) of properties held at the balance sheet date, including developments

(classified by end use), purchases and sales

3 Including committed developments 4 Stand-alone residential

66

Portfolio yield & ERV movements1,2

At 30 September 2015 EPRA net initial yield % EPRA topped up net initial yield %

3

Overall topped up net initial yield %

4

Net equivalent yield % Net equivalent yield compression

5

Net reversionary yield % ERV Growth %

5,6

Shopping parks 4.7 5.0 5.1 5.1 5 5.1 0.9 Shopping centres 4.5 4.7 4.8 4.9 14 5.0 1.9 Superstores 5.3 5.3 5.3 5.2 (5) 5.2 (0.9) Department stores 4.0 4.0 5.9 4.4 12 3.7 0.0 Leisure 4.9 4.9 6.1 5.3 22 4.0 0.3 Retail & Leisure 4.7 4.9 5.1 5.0 8 4.9 0.9 Of which Multi-let 4.5 4.8 4.8 4.9 9 5.0 1.4 West End 3.3 4.0 4.0 4.4 24 4.6 4.1 City 3.2 4.5 4.5 4.4 16 5.2 5.1 Offices 3.3 4.2 4.3 4.4 20 4.9 4.5 Total 4.1 4.6 4.8 4.7 13 4.9 2.3

Table shows UK total, excluding assets held in Europe.

1 Including notional purchaser’s costs 2 Excluding developments under construction and assets held for development 3 Including rent contracted from expiry of rent-free periods and contracted uplifts not in lieu of growth 4 Including fixed/minimum uplifts (excluded from EPRA definition) 5 6 months to 30 September 2015 6 As calculated by IPD

67

Lease length and occupancy1

At 30 September 2015 Average Lease Length (yrs) Occupancy Rate (%) To Expiry To Break Occupancy Occupancy (underlying)2 Shopping parks 8.7 7.7 97.3 98.1 Shopping centres 8.7 7.7 96.9 98.2 Superstores 14.3 14.0 100.0 100.0 Department stores 21.0 20.9 100.0 100.0 Leisure 18.3 18.3 100.0 100.0 Retail & Leisure 10.9 10.1 97.8 98.6 Of which Multi-let 8.6 7.5 97.0 98.1 West End 10.0 8.2 96.1 98.5 City 10.6 8.8 97.7 97.7 Offices 10.3 8.5 96.9 98.1 Total 10.6 9.4 97.4 98.4

Table shows UK total, excluding assets held in Europe.

1 Excluding developments under construction and assets held for development 2 Including accommodation under offer or subject to asset management

68

Annualised rent & estimated rental value (ERV)1

At 30 September 2015 Annualised Rents (Valuation Basis) £m2 ERV £m Average Rent (£psf) Group JVs & Funds Total Total Contracted3, 4 ERV3

Shopping parks 115 54 169 181 25.5 25.9 Shopping centres 64 52 116 128 29.5 31.4 Superstores 12 38 50 49 21.6 21.2 Department stores 25

• 25

24 15.1 14.0 Leisure 27

• 27

23 14.4 11.9 Retail & Leisure 243 144 387 405 23.7 23.8 Of which Multi-let 158 108 266 293 27.6 28.8 West End 113

• 113

155 50.9 57.0 City 4 90 94 155 50.5 57.7 Offices 117 90 207 310 50.6 57.2 Residential5 4

• 4

3 Offices & Residential 121 90 211 313 Total 364 234 598 718 29.2 31.2

Table shows UK total, excluding assets held in Europe.

1 Excluding developments under construction and assets held for development 2 Gross rents plus, where rent reviews are outstanding, any increases to ERV (as determined by the Group’s external valuers), less any ground rents payable under

head leases, excludes contracted rent subject to rent free and future uplift

3 Office average rent & ERV £psf is based on office space only 4 Annualised rent, plus rent subject to rent free 5 Stand-alone residential

69

Rent subject to open market rent review1

Table shows UK total, excluding assets held in Europe.

1 Excluding developments under construction and assets held for development

At 30 September 2015 2016 2017 2018 2019 2020 2016-18 2016-20 For period to 31 March £m £m £m £m £m £m £m Shopping parks 12 14 22 24 16 48 88 Shopping centres 4 12 15 14 8 31 53 Superstores 7 5 4 9 15 16 40 Department stores

• Leisure
• 2
• 2

2 Retail & Leisure 23 31 43 47 39 97 183

Of which Multi-let

11 26 38 38 23 75 136 West End 3 8 19 20 14 30 64 City 11 1 6 14 14 18 46 Offices 14 9 25 34 28 48 110 Total 37 40 68 81 67 145 293 Potential uplift at current ERV 1

• 1

3 1 2 6

70

Rent subject to lease break or expiry1

Table shows UK total, excluding assets held in Europe.

1 Excluding developments under construction 2 Based on office space only 3 As determined by the Group’s valuers

At 30 September 2015 2016 2017 2018 2019 2020 2016-18 2016-20 For period to 31 March £m £m £m £m £m £m £m Shopping parks 8 6 10 12 15 24 51 Shopping centres 7 9 9 6 10 25 41 Superstores

• Department stores
• 1
• 1

1 Leisure

• Retail & Leisure

15 15 20 18 25 50 93 Of which Multi-let 14 15 19 17 25 48 90 West End 1 8 9 10 4 18 32 City

• 19
• 17

13 19 49 Offices2 1 27 9 27 17 37 81 Total 16 42 29 45 42 87 174 % of contracted rent 2.4% 6.1% 4.1% 6.6% 6.2% 12.6% 25.4% Potential uplift at current ERV3 1 9 1 7 3 11 21

71

ERV resetting to market

At 30 September 2015 2016 2017 2018 2019 2020 2016-18 2016-20 For period to 31 March £m £m £m £m £m £m £m ERV expiring – existing portfolio1 18 24 29 52 46 71 169 Under construction developments – Offices 2 6 9

• 17

17 Under construction developments – Retail

• Near Term developments
• 1

2 34 50 3 87 Total Rent Resetting to Market 20 31 40 86 96 91 273 ERV of current vacancies2,3 18 18 Vacant & Income Expiring 109 291

1 Rent is based on ERV, reflecting current valuation, expiries to first break, excludes developments under construction and assets held for development 2 Including space under offer of £5m and space subject to asset management of £2m 3 Including £5m of vacant space at recently completed developments

72

Contracted rental increases (cash flow basis)

At 30 September 2015 2016 2017 2018 2019 2020 2016-18 2016-20 For period to 31 March £m £m £m £m £m £m £m Expiry of rent free periods 23 40 9 3

• 72

75 Fixed uplifts (EPRA basis)

• 1

1

• 1

2 Fixed & minimum uplifts in lieu of rental growth 1 5 1 1 1 8 10 Total 24 45 11 5 1 81 87

73

Acquisitions

From 1 April 2015 Price (Gross) Price (BL Share) Annual Passing Rent Area £m £m £m2 Completed 1 Sheldon Square Offices London 210 210 10 Hercules Unit Trust unit purchase1 Retail Various 95 95 5 19-33 Liverpool Street Offices London 22 22 1 Teesside Leisure Park Retail North East 2 2

• Total

329 329 16

1 Units purchased over the course of the period. £95m represents purchased GAV 2 BL share of net rent topped up for rent frees

74

Disposals

From 1 April 2015 Price (Gross) Price (BL Share) Annual Passing Rent Area £m £m £m1 Completed Parkgate Shopping Park, Rotherham Retail Yorkshire 170 120 6 39 Victoria Street Offices London 139 139 5 Birstall Shopping Park, Leeds Retail Yorkshire 107 31 2 Hatters Way, Luton & Hylton Riverside, Sunderland Retail Various 44 33 2 The Hempel Collection Residential London 16 16

• Superstore disposals

Retail Various 14 14 1 Bedford Street Residential London 4 4

• Exchanged

Tesco, Bursledon Retail South 60 60 3 Aldgate Place Residential London 16 8

• The Hempel Collection

Residential London 6 6

• Total

576 431 19

1 BL share of net rent topped up for rent frees

75

Under Construction/ completed in period developments

At 30 September 2015 Sector BL Share Sq ft PC Calendar Year Current Value Cost to Complete ERV Let & Under Offer Resi End Value % '000 £m £m1 £m2 £m £m3 5 Broadgate Offices 50 710 Completed 453 16 19.2 19.2

• Whiteley Leisure, Fareham

Retail 50 58 Completed 12 1 0.6 0.6

• Glasgow Fort, M&S & Retail Terrace

Retail 75 112 Completed 33 3 1.9 1.7

• Total Completed in Period

880 498 20 21.7 21.5

• Yalding House

Offices 100 29 Q4 2015 32 3 1.7

• 4 Kingdom Street

Offices 100 147 Q2 2017 57 76 8.9

• Clarges Mayfair

Mixed Use 100 192 Q3 2017 360 138 6.0

• 463

Glasgow Fort (MSCP & Additional retail/leisure units) Retail 75 12 Q3 2016 1 7 0.4

• The Hempel Phase 1

Residential 100 25 Q1 2016 32 1

• 51

The Hempel Phase 24 Residential 100 32 Q2 2016 48 13

• 74

Aldgate Place, Phase 15 Residential 50 221 Q2 2016 30 27

• 81

Total Under Construction 658 560 265 17.0

• 669

Retail Capex6 80

Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%)

1 From 1 October 2015 2 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives) 3 Residential development of which £332m completed or exchanged and a further £10m under offer 4 Now excludes 17 Craven Hill Garden – sold separately 5 End value excludes sale of hotel site, receipts of £6m (BL Share). Sale now completed 6 Capex committed and underway within our investment portfolio relating to leasing & asset enhancement

Near-term and medium-term developments

At 30 September 2015 Sector BL Share Sq ft Start On Site Total Cost

1

Status % '000 £m Near-term Pipeline 5 Kingdom Street2 Offices 100 240 2016 209 Consented 100 Liverpool Street3 Offices 50 509 2017 260 Consented 1 Finsbury Avenue Offices 50 303 2017 150 Consented4 1 Triton Square Offices 100 217 2017 340 Pre-submission Blossom Street, Shoreditch Mixed Use 100 347 2016 242 Submitted Plymouth Leisure Retail 100 102 2016 39 Consented New Mersey Shopping Park, Speke - Leisure Retail 65 66 2016 17 Consented Forster Retail Park, Bradford, Phase 3 Retail 100 63 2016 18 Pre-submission Aldgate Place, Phase 2 Residential 50 145 2016 58 Consented 54 The Broadway, Ealing Residential 100 34 2016 18 Consented Total Near-Term 2,026 1,351 Retail Capex5 110 Medium-term Pipeline Eden Walk Shopping Centre, Kingston Mixed Use 50 562 Submitted Canada Water Masterplan6 Mixed Use 100 5,500 Pre-submission 2 - 3 Finsbury Avenue7 Offices 50 189 Pre-submission Meadowhall Leisure Retail 50 330 Pre-submission Putney High Street Mixed Use 100 110 Consented Total Medium-Term 6,691

1 Total cost including site value. Excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 2 210,000 sq ft of which is consented 3 Planning granted for 517,000 sq ft, but currently considering options to enhance design and mix 4 Resolution to grant planning consent 5 Forecast capital commitments within our investment portfolio over the next 2 years relating to leasing & asset enhancement 6 Assumed net area based on gross area of up to 7m sq ft 7 Existing net areas, scheme in early design stages

76

77

Residential development programme

At 30 September 2015 Sq Ft No. Market Units PC Date /Status BL Share Current Value1 Cost To complete2 End Value Sales Exchanged & Completed3 '000 % £m £m £m £m Clarges Mayfair4 103 34 Q3 2017 100 265 107 463 259 Mixed use 103 34 265 107 463 259 The Hempel Phase 1 25 15 Q1 2016 100 32 1 51 26 The Hempel Phase 2 32 19 Q2 2016 100 48 13 74

• Aldgate Place Phase 1

221 154 Q2 2016 50 30 27 81 47 Residential-led 278 188 110 41 206 73 Aldgate Place Phase 2 145 Consented 50 Ealing, Crystal House 34 Submitted 100 Near Term prospective 179 Total Committed Residential 381 222 375 148 669 332

Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%)

1 Excluding completed sales 2 From 1 October 2015. Cost to complete excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 3 Of which £16m completed at The Hempel Phase 1. Excludes completed sale of hotel site at Aldgate Place for £6m (BL Share) 4 Includes 9,500 sq ft of affordable housing (11 units)

78

1 Financing costs are capitalised on qualifying expenditure for committed and near term developments at 4%

Estimated future development spend and capitalised interest

At 30 September 2015 PC Pre-let ERV Cost to complete £m (excluding notional interest)

• 6 mths

Calendar Year £m Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Yalding House Q4 2015

• 3

4 Kingdom Street Q2 2017

• 28

25 14 3 4 1 Clarges Mayfair Q3 2017

• 58

37 25 10 3 3 Glasgow Fort (MSCP & Additional retail/leisure units) Q3 2016

• 6

The Hempel Phase 1 Q1 2016

• 1

The Hempel Phase 2 Q2 2016

• 10

1 1 1 Aldgate Place, Phase 1 Q2 2016

• 8

11 4 1 3 Total

• 113

75 44 15 7 7 Total Near-Term 25 51 132 152 184 152 Indicative Interest Capitalised on above at attributable rates1 6 9 13 12 10 14

79

Estimated future development rental income (accounting basis)

At 30 September 2015 PC Gross Rental Income (Accounting basis) £m For period to 31 March Calendar Year 2016 2017 2018 2019 2020 Yalding House Q4 2015 Non-contracted

• 1

2 2 2 4 Kingdom Street Q2 2017 Non-contracted

• 7

7 Clarges Estate Q3 2017 Non-contracted

• 5

5 5 Total Offices Contracted

• Non-contracted
• 1

7 14 14 Other Retail Developments Contracted

• 1

1 1 1 Non-contracted

• Total Retail

Contracted

• 1

1 1 1 Non-contracted

• Total Committed

Contracted

• 1

1 1 1 Non-contracted

• 1

7 14 14

80

0.0 2.0 4.0 6.0 8.0 10.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Central London pipeline

m sq ft

Q3 2015

Completed Pipeline Pre-let Potential Speculative U/C Pre-let U/C - Speculative 10 year average new/refurb take-up 10 year average dev completions Source: Knight Frank, British Land

81

West End development pipeline

m sq ft

Q3 2015 0.0 0.5 1.0 1.5 2.0 2.5

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Completed Pipeline Pre-let Potential Speculative U/C Pre-let U/C - Speculative 10 year average new/refurb take-up 10 year average dev completions Source: Knight Frank, British Land

82

City development pipeline

m sq ft

Q3 2015 0.0 1.0 2.0 3.0 4.0 5.0 6.0

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Completed Pipeline Pre-let Potential Speculative U/C Pre-let U/C - Speculative 10 year average new/refurb take-up 10 year average dev completions Source: Knight Frank, British Land

83

2 4 6 8 10 12 14 16 18

1985 1990 1995 2000 2005 2010 Q3 2015

Vacancy Central London

West End & City Vacancy Rates

West End Void Rate (Period end) City Void Rate (Period end)

Source: CBRE

%

84

London office market rental outlook

Prime London Office Rents

20 40 60 80 100 120 140

1992 1991 1990 2000 1999 1998 1997 1996 1995 1994 1993 2013 2007 2005 2009 2015 2011 2017 2019 2016 2002 2008 2003 2014 2018 2012 2004 2001 2006 2010

Rental Growth Driven by Imbalance Between Supply and Demand

£ psf

Source: CBRE (historic) and Average Agents' Consensus (including PMA) for forecasts

Actual Forecast

West End City

85

Property Yields and interest rate yield gap

• 1.0

1.0 3.0

1990 1996 1998 2000 2003 2004 2007 2009 2010 2013 2015

Source: IPD/Bloomberg Source: IPD

Gap as multiple of gilt yield 2.0 4.0 6.0 8.0 10.0 All Retail Central London Offices

Retail and London Office Yields Property Yield vs 10 Year Gilt Yields

NIY %

85

86

Regent’s Place Campus

87

Paddington Central Campus

88

Broadgate Campus

89

Disclaimer

The information contained in this presentation has been extracted largely from the Half Year Results Announcement for the period ended 30 September 2015. 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) a person who is authorised or exempt under FSMA; and (ii) 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

• ther 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.