Full Year Results Presentation Full Year ended 31 March 2016 www.britishland.com @BritishLandPLC #BLFY2016 $BLND
Results Overview Chris Grigg Chief Executive
Results highlights • Another strong set of results • Underlying profits up 16% to £363m • NAV up 11% to 919p • Good performances across the business • Rising rental growth and strong lettings • 5.3% ERV growth 4
Well positioned for the future • Resilience built into the company • Optionality in our development pipeline • A portfolio suited to future and current needs 5
A resilient business • Quality of income – Long leases – 9 years to first break – High occupancy (99%) – Modern buildings • Over £1.4bn of Retail assets recycled • Strength of financing – Gearing at 32% – Long average debt maturity – over 8 years – Weighted average interest rate at 3.3% 6
Optionality embedded into our development pipeline • Current level of development commitment is modest Committed Near term Medium term • Meadowhall Leisure • 180,000 sq ft of offices • 100 Liverpool Street • 2 – 3 Finsbury Avenue – 4 Kingdom Street • 1 Finsbury Avenue • Eden Walk, Kingston – Clarges Mayfair • Plymouth Leisure • Glasgow Fort extension • Canada Water • 1 Triton Square • Blossom Street 2016 2017 7
Aligning our strategy to long term trends Key long term trends Implications for British Land Continued strength Globalisation of London Transforming impact Rise of omnichannel of technology Population growth Sharpened focus and urbanisation on end user Importance of Blurring of work infrastructure and leisure Focus on health Sustainability & wellbeing 8
Placemaking lies at the heart of our business Offices Retail Lifestyle orientated mixed use offices Multi-let lifestyle centres Regional Campuses Large, office-led mixed use Attracting visitors from a wide lifestyle campuses catchment for a planned trip Campus-lite Local Smaller clusters Fitting into the daily life of local communities 9
Our purpose and strategy is aligned around Places People Prefer Places People Prefer Places where people want to work, shop and live Strategic focus Placemaking Values Customer Orientation We Connect Right Places We Design Capital Efficiency We Enhance Expert People We Enliven 10
How Britain shops today 39% of food eaten out of home in the UK 90% 28% of shopping spend touches of BL visitors the physical store use F&B/leisure Source: IPF/Conlumino Source: ONS/British Land surveys <20 mins average customer drive time to BL assets Convenience ranked 70% #1 importance for a shopping trip more click and collect than national average Source: Kantar Source: British Land surveys 11
A well positioned multi-let portfolio Potential to reach 60% of the population BL regional centres BL local Annual footfall of centres 330 m BL asset catchments Average rent to sales ratio 10 % 90 % of our car parking spaces are free 12
Our data shows both regional and local can succeed Ealing Doncaster Off-peak Meadowhall Glasgow Fort Broadway Wheatley Regional Regional Local Local Size (‘000 sq ft) 1,500 510 470 232 Drive time (mins) 24 16 10 12 Frequency 33 pa 50 pa 70 pa 52 pa of visit Dwell time (mins) 118 78 69 55 Annualised spend £3,358 £2,751 £3,056 £2,798 Rent/sales ratio 14% 9% 12% 10% 13
Attracting a more diverse occupier base Lettings and renewals by sector by rent Retailers taking space in non-traditional locations 3% 9% 32% 9% 8.0 % Letting/renewals ahead of ERV 13% 18% 16% Fashion & Footwear DIY Food & Leisure Other Electrical & Health & Beauty Mobile Phone General Retail 14
Our Retail operational metrics remain strong Total multi-let Regional Local portfolio +3.0% Footfall +2.9% +3.2% Ahead of market by 440 bps in-store sales +2.4% Retailer +2.2% +3.2% Ahead of market by 200 bps ERV growth 3.4% 3.3% 3.5% Ahead of market by 200 bps 15
Local: Providing convenience and quality at Old Market, Hereford Footfall ERV Rent to sales +11.5% +4.9% 8% 16
Regional: Expanding and improving Glasgow Fort Footfall ERV Leisure/F&B +6.7% +4.7% 13% 17
Investment driving performance at Meadowhall Proposed Meadowhall leisure extension New additions • On site with a £60m refurbishment • Attracting new occupiers • Substantial leisure extension planned 18
> 70 % Delivering growth across our London campuses Our 3 campuses as a % of office assets Regent’s Place Broadgate Paddington Central 19
13.3 % Regent’s Place: A model for our campus approach ERV growth in FY2016 • A more diverse occupier base Type of occupier by rent 3% 3% • Significant rental growth – 25% ERV growth over last 12% 33% three years – Rent reviews 30% above previous passing rent 13% • Further growth from development 17% 19% TMT General Retail Government Professional and Corporate Financial Services Other Manufacturing 20
Transforming Broadgate into a London destination • Buildings for a wide range of occupiers • Increasing and diversifying retail offer • Significant public realm improvements 21
100 Liverpool Street • Major development opportunity • Significant retail and leisure • Close proximity to Crossrail station 22
Significant potential at Paddington Central • Progressing public realm improvements and campus completion • Due to top out at 4 Kingdom Street this month • New co-working space opening at 2 Kingdom Street • Rental growth reflecting our actions 23
9.6 % A focus on campuses driving Office performance • Our actions contributed ERV growth FY2016 45% of the valuation uplift – ERV growth a key driver • Lettings/renewals 6% ahead of ERV – Setting new rental highs at Leadenhall • Offices portfolio c10% reversionary • Rent reviews a more important element • Overall, leasing activity added over £13m of rent 24
Canada Water • Roger Madelin appointed • Planning submission in 2017 25
Financial Review Lucinda Bell Chief Financial Officer
Highlights FY to 31 March 2015 2016 Change % Underlying Profit (£m) 313 363 16.0 Underlying Earnings per Share (p) 30.6 34.1 11.4 Dividend per Share (p) 27.7 28.4 2.5 Valuation Performance 12.1% 6.7% EPRA Net Asset Value per Share (p) 829 919 10.9 LTV 35% 32% Total Accounting Return 24.5% 14.2% 27
Underlying profit up £50 million £m 27 (4) (6) 15 18 363 313 FY 2015 Developments Like for like Financing Investment Administrative FY 2016 rental growth activities activity expenses 28
Net rental income £m (43) 40 15 23 Retail 1.5% 620 Retail 1.4% 585 Offices 4.2% Offices 6.8% Total 2.3% Total 3.4% FY 2015 Developments Like for like Acquisitions Disposals FY 2016 rental growth 29
Financing Costs Weighted average interest rate at 3.3% £m 27 (11) 10 (5) (201) (180) FY 2015 Financing activity Acquisitions Disposals Completion of FY 2016 developments 30
Income statement FY to 31 March 2015 2016 Change % Net Rental Income (£m) 585 620 35 6.0 Fees & Other Income 1 (£m) 17 17 - - Administrative Expenses 1 (£m) (88) (94) (6) 6.8 Net Finance Costs (£m) (201) (180) 21 (10.4) Underlying Profit (£m) 313 363 50 16.0 Underlying Earnings per Share (p) 30.6 11.4 34.1 3.5 Dividend per Share (p) 27.7 28.4 0.7 2.5 1 Fees & other income and administrative expenses have been restated to reflect the change in presentation of the results of Broadgate Estates, a wholly owned subsidiary of the Group. This restatement has had no impact on Underlying Profit. 31
Valuation performance FY to March 2016 Valuation Uplift Uplift Yield ERV NEY Weighting £bn £m % Compression Growth % % bps % Retail & Leisure 7.3 184 2.4 13 2.4 5.0 49 Offices & Residential 7.0 761 11.8 21 9.6 4.4 49 Canada Water 0.3 5 1.7 13 0.5 3.2 2 Total 14.6 950 6.7 17 5.3 4.7 100 - Of which Standing 13.9 857 6.4 Investments - Of which 0.7 93 9.4 Development 32
Valuation growth drivers – Retail & Leisure FY to March 2016 Valuation Uplift Uplift Yield Compression ERV Growth £bn £m % bps % H1 H2 FY H1 H2 FY H1 H2 FY Regional 2.8 86 2.8 0.2 3.0 11 4 15 1.7 1.8 3.5 Local 7 2 9 2.4 61 1.5 1.1 2.6 1.0 2.2 3.3 9 3 12 Multi-let 5.2 147 2.2 0.6 2.8 1.4 2.0 3.4 19 17 37 Dept St + Leisure 1.0 59 3.4 2.5 6.0 0.2 0.2 0.4 Superstores 0.8 (20) (1.7) (0.5) (2.1) (5) 1 (6) (0.9) (0.3) (1.3) Solus/Other 0.3 (2) (0.1) (0.4) (0.5) 1 1 2 0.1 0.0 0.1 Retail & Leisure 7.3 184 1.8 0.7 2.4 8 5 13 0.9 1.5 2.4 33
Valuation growth drivers – Offices & Residential FY to March 2016 Valuation Uplift Uplift Yield Compression ERV Growth £bn £m % bps % H1 H2 FY H1 H2 FY H1 H2 FY 458 8.1 4.6 West End 3.9 12.8 24 3 28 4.1 5.6 9.9 City 2.9 288 8.5 2.4 11.1 16 (4) 12 4.8 4.3 9.3 6.8 746 8.3 3.7 12.1 Offices 20 - 21 4.4 5.0 9.6 Residential 0.2 15 6.7 (0.3) 5.7 Offices & 7.0 761 8.2 3.5 11.8 Residential 34
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