Valuation performance 6 months to Valuation Movement Movement Yield ERV NEY Weighting September 2016 £bn £m % Expansion Growth % % bps % Retail & Leisure 6.8 (178) (2.4) 18 0.9 5.3 49 Offices & Residential 6.8 (238) (3.3) 21 0.1 4.6 49 Canada Water 0.3 (6) (2.1) 4 0.9 3.3 2 Total 13.9 (422) (2.8) 19 0.5 4.9 100 – Of which Standing 13.1 (395) (2.8) Investments – Of which 0.8 (27) (3.0) Development 26
Valuation growth drivers – Retail & Leisure 6 months to September 2016 Valuation Movement Movement Yield ERV £bn £m % Expansion Growth bps % H1 H1 H1 Regional 2.9 (83) (2.8) 16 1.3 Local 2.2 (116) (4.8) 29 1.3 Multi-let 5.1 (199) (3.7) 22 1.3 Dept St + Leisure 0.6 32 3.2 4 0.4 Superstores 0.7 (24) (3.0) 8 (3.0) 9 Solus/Other 0.3 13 3.7 4.8 18 Retail & Leisure 6.8 (178) (2.4) 0.9 27
Valuation growth drivers – Offices & Residential 6 months to September 2016 Valuation Movement Movement Yield ERV £bn £m % Expansion Growth bps % H1 H1 H1 West End 3.9 (95) (2.4) 16 0.3 City 2.7 (143) (4.9) 27 (0.2) Offices 6.6 (238) (3.5) 21 0.1 – – Residential 0.2 Offices & Residential 6.8 (238) (3.3) 28
Reduction in diluted EPRA net asset value (22p) 18p (13p) (17p) 10p (4p) 919p 891p Mar 16 Offices & Retail & Underlying Dividends Debt Reversal of Sep 16 Residential Leisure Profit transaction 2012 costs & other convertible bond dilution 29
Strength of debt metrics Proportionally Consolidated 31 Mar 2016 30 Sep 2016 Loan to Value (LTV) 32.1% 31.6% Weighted Average Interest Rate 3.3% 3.2% Interest Cover 3.0x 3.5x Average Maturity of Drawn Debt (years) 8.1 8.0 Group 31 Mar 2016 30 Sep 2016 Loan to Value (LTV) 25.2% 24.6% Available undrawn facilities £1.2bn £1.0bn Weighted Average Interest Rate 2.6% 2.5% Interest Cover 3.3x 4.4x 30
5 % Development pipeline – Committed and Near Term Speculative development • Speculative commitment is £m – Current Value & Costs to Come commitment £660m including 100 Liverpool 700 Street, 5% of the portfolio 600 • Residential £250m pre-sold, £230m to sell 500 • Costs to complete of £280m on the committed programme 400 • Near term includes 1 Finsbury Avenue and leisure extensions 300 at Speke and Plymouth 200 100 0 Committed – Committed – Near Term Under Construction 100 Liverpool Street Speculative development commitment Pre-sold / pre-let 31
£780m Development programme – Medium Term Value of medium term pipeline • £320m income producing, £m – Current Value yielding 2.8% 700 – Canada Water 600 – Eden Walk • £330m with upcoming 500 lease expiries – 2-3 Finsbury Avenue 400 – 135 Bishopsgate – 1 Triton Square 300 • £130m non-income producing 200 sites, including 5 Kingdom Street 100 0 Income Upcoming Non-income producing expiries producing sites 32
Future income profile Annualised Gross Rents Cash Flow Basis Accounting Basis £m £m Current Passing Rent 624 Contracted Uplifts 61 636 Total Contracted Rent 685 Letting of Completed and Under Construction Developments 17 14 Lease Expiries – Committed Developments (100 Liverpool Street) (9) (9) Lease Expiries – Near Term Developments (1 Finsbury Avenue) (7) (7) Letting of Committed and Near Term Developments 30 25 Lease Expiries – Medium Term Office Developments (21) (20) RPI Linked Leases 1 9 9 Reversion 2 19 17 Sales exchanged but not completed (12) (13) Potential Rent in 5 Years excl. Medium Term developments 711 652 Letting of Medium Term Developments (excl. Canada Water) 113 88 Valuation rent, includes assumptions on outstanding rent review settlements 1 Assumed at 2.6% per annum and uplift at rent review based on ERVs determined by the Group’s valuers 2 Includes letting of vacant space and reversion on expiries and open market rent reviews within 5 years 33
Summary • Good results • Operationally strong • Modest development commitments • Strong capital structure 4 Kingdom Street 34
Summary Chris Grigg Chief Executive
+16 % Delivering performance with our actions underlying profit • 769,000 sq ft of leasing, 11.6% ahead of ERV • Low cost financing; reducing admin costs • £690m of non-core Retail disposals • Committed to 100 Liverpool Street • Planning successes across the pipeline Meadowhall Leisure Hall 36
Resilience built in; positioned to capture future upside • Quality of the portfolio – High level of leasing activity and interest • Resilience built into the business – Secure income, robust finances and lean operating model • Strategy aligned to long term trends – Positions portfolio to capture greater share of demand • Optionality to respond to changing environment – Proceed with caution on developments and commit at the right time 37
Appendices
Portfolio evenly split between London Offices and high quality Retail Offices Retail & Leisure £6.8bn £6.6bn Total portfolio valuation £13.9bn at March 16 including £0.3bn at Canada Water and £0.2bn of Residential assets 39
Major property holdings At 30 September 2016 BL Share Sq ft Rent Occupancy Lease Length 000’s £m pa 1 Rate % 2,4 yrs 3,4 (excl. developments under construction) % 1 Broadgate 50 4,721 225 98.7 8.0 2 Regent's Place 100 1,590 80 99.1 7.1 3 Paddington Central 100 806 34 99.9 7.3 4 Meadowhall, Sheffield 50 1,500 82 98.3 6.6 5 The Leadenhall Building 50 603 40 99.9 10.8 Sainsbury's Superstores 5 6 52 2,259 49 100.0 10.8 Drake Circus, Plymouth 6 7 100 1,132 21 98.0 5.1 8 Teesside, Stockton 100 523 17 98.5 6.1 9 Glasgow Fort 77 510 20 97.4 6.4 10 Ealing Broadway 100 423 13 93.1 6.1 1 Annualised EPRA contracted rent including 100% of Joint Ventures & Funds 2 Includes accommodation under offer or subject to asset management at 30 September 2016 3 Weighted average to first break 4 Excludes committed developments (100 Liverpool Street) 5 Comprises stand-alone stores 6 Includes New George Street Estate, Plymouth acquired during the period 40
High quality, diverse occupier base As at 30 September 2016 % of Contracted Occupier split by sector by rent Rent UBS AG 1 5.8% Other 7% Tesco plc General 5.7% Retail 16% DIY 7% J Sainsbury plc 4.7% Debenhams 3.8% TMT 7% Kingfisher (B&Q) 2.6% Next plc 2.3% Fashion & HM Government 2.2% Beauty 16% Professional & Corporate Virgin Active 2.0% 9% Facebook 1.7% Wesfarmers (Homebase/Bunnings) 1.6% Spirit Group 1.6% Food/Leisure Banks & 10% M&S Plc 1.5% Financial Alliance Boots 1.5% Services 17% Supermarket 11% Visa Inc 1.4% Dixons Carphone 1.4% Dentsu Aegis 1.4% Upcoming expiries 2 5% Arcadia Group 1.3% UBS – 5 Broadgate 3% Herbert Smith 1.2% Other banks 4% RBS 1.1% TJX Cos Inc (TK Maxx) 1.0% Total banks 12% 1 Rent contracted on 5 Broadgate, 1-3 Finsbury Avenue and 100 Liverpool Street. Asset Management & 5% 3.0% pro-forma for run off of rent at 1-3 Finsbury Avenue and 100 Liverpool Street. Other Financial 2 Includes lease expiries on committed, near term and medium term developments 41
Placemaking Framework applied across the business We We We We Connect Design Enhance Enliven Communication Form Occupier mix Customer service Occupiers & campus On-site hospitality Branding, marketing Efficient and effective & digital, messaging buildings & spaces community & customer service Accessibility Authenticity Segment mix Events Convenience How our users feel and Balance of different Events to create a buzz & access interact with the space segments and uses and drive footfall Community Function Occupier service Memorable experience Facilities & safety Clustering of occupiers Support & involvement of local community & value added Creating lasting impressions 42
Retail Multi-let Portfolio Our two core products each fulfil specific shopper missions 1 2 Regional Local Missions include Leisure-dominated Trips, Missions include Local Neighbourhood Shopper, Family Day Out and The Big Ticket Shop Convenient Leisure and Single Item Pick-Up Typically >30 occupiers Typically 10 – 30 occupiers Footfall >5m , spend >£100m p.a . Footfall often <5m , spend <£100m p.a. Drive-time >15 mins Drive-time <15 mins Dwell >60 mins Dwell <60 mins Retail offer covers multiple categories Retail offer covers multiple categories with depth of choice in each & includes local amenities Significant leisure and F&B Convenient leisure and F&B e.g. restaurants, cinema e.g. gym and coffee shops 43
Multi-let assets Regional – attracting visitors from a wide catchment Local – fitting into the daily life of local communities for a planned trip St. Peter’s, Mansfield Southgate, Bath Mayflower, Basildon Broughton, Chester 1 Weston Lock, Bath Kingston Centre, Milton Keynes Fort Kinnaird, Edinburgh 1 Cornerhouse, Barrow Studlands, Newmarket Glasgow Fort 1 Hindpool, Barrow Newport, Harlech St. Stephen’s, Hull Forster Square, Bradford Elk Mill, Oldham Eden Walk, Kingston Woodfields, Bury Nugent, Orpington Gallagher, Cheltenham 1 Giltbrook, Nottingham Botley Road, Oxford Deepdale, Preston 1 Serpentine Green, Peterborough Tollgate, Colchester Prospect Place, Dartford 1 Queens, Stafford 1 Drake Circus, Plymouth Meadowhall, Sheffield Crown Point, Denton Orbital, Swindon New Mersey, Speke 1 Westgate, Wakefield 2 Wheatley, Doncaster Crown Wharf, Walsall 1 Teesside, Stockton Ealing Broadway Whiteley, Fareham Lion, Woking Clifton Moor, York 2 Old Market, Hereford Inverness 1 Westside, Leeds Beaumont, Leicester Valentine, Lincoln 1 Mostyn Champneys, Llandudno 1 Lisnagelvin, Londonderry 1 Assets held within Hercules Unit Trust or its subsidiaries 44 2 Properties where sale exchanged in period, completing post period end
Our portfolio is well positioned to meet both consumer and retailer demands Potential to reach 60% BL regional centres of the population BL local centres BL asset Annual footfall of catchments 330 m Average rent to sales ratio 10 % 90 % of our car parking spaces are free Source: CACI Retail Footprint 2015 45
BL footfall performance vs benchmark +240 bps Outperformance in H1 2017 Mar-10 = 100 115 110 105 100 95 90 85 80 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 British Land UK Market (ShopperTrak) 46
1.3 % Continued polarisation in Retail Rental growth on ERV growth vs IPD and Retail sales, including online multi-let assets in H1 2017 Index Mar-13 = 100 115.0 112.5 110.0 107.5 105.0 102.5 100.0 97.5 95.0 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Retail sales inc. online BL Multi-let IPD All Retail IPD Prime IPD Secondary Source: Oxford Economics, IPD 47
London Assets 48
Broadgate – our lease expiries give us the opportunity to add a wider range of uses and attract a broader range of occupiers 2 – 3 Finsbury Avenue • 2 Finsbury Avenue – lease break in Dec 2016 • 3 Finsbury Avenue – expected lease break in late 2018 • Current size: 190k sq ft • Potential size: 560k sq ft 1 Finsbury Avenue • Lease break in Dec 2016 • Current size: 281k sq ft 135 Bishopsgate • Leases expiring in 2019 • Current size: 340k sq ft 100 Liverpool Street • Lease break in Dec 2016 • Current size: 380k sq ft • Redevelopment: 520k sq ft % Rent Ave lease term – Broadgate Overview Current contracted rent £m (BL Share) yrs Core income, including recent developments 84 75% 9.5 Committed (100 Liverpool Street) 9 8% n/a Near term pipeline (1 Finsbury Avenue) 7 6% 0.2 Medium term pipeline (2 – 3 Finsbury Avenue, 135 Bishopsgate) 12 11% 1.8 Total 112 8.0 49
Regent’s Place Campus 50
Paddington Central Campus 51
Canada Water 52
£951m Investment activity Gross investment activity in H1 2017 Net Spend £m £484m £648m (£267m) £31m (£469m) £52m Net Acquisitions (£524m) (£277m) £244m £386m (£620m) (£326m) & Disposals £m £m 1200 800 400 0 -400 -800 -1200 -1600 2012 2013 2014 2015 2016 Year to 31 March H1 2017 Disposals Acquisitions Net Spend Capital Investment Net Acquisitions/ Disposals Note: 2016 restated to exclude post period end disposal of Sainsburys Newquay for £10m, which is now included in H1 2017. 53
Investment Activity 6 months to 30 September 2016 Retail Offices Residential Canada Water Total £m £m £m £m £m – – Purchases 82 8 90 Sales 1 – – (690) (20) (710) – Net Purchases/Sales (608) (20) 8 (620) Development Spend 12 70 13 5 100 – – Capital Spend 47 4 51 Net Investment (549) 74 (7) 13 (469) Gross Investment 831 74 33 13 951 1 Of which £191m Retail sales and £9m Residential sales completing post period end 54
Acquisitions Sector Region Price Price Annual 6 months to 30 September 2016 (Gross) (BL Share) Passing Rent £m 2 £m £m Completed New George Street Estate, Plymouth Retail South 64 64 5 Hercules Unit Trust unit purchase 1 Retail Various 18 18 1 – Dock Offices Canada Water London 8 8 Total 90 90 6 1 Units purchased over the course of the period. £18m represents purchased GAV 2 BL share of annualised rent topped up for rent frees 55
Disposals Sector Region Price Price Annual 6 months to 30 September 2016 (Gross) (BL Share) Passing Rent £m 1 £m £m Completed Debenhams, Oxford Street Retail London 400 400 13 Superstores Retail Various 147 79 3 Dumfries Cuckoo Bridge Retail Scotland 20 20 1 – The Hempel Collection Residential London 5 5 – Aldgate Place Residential London 13 6 Exchanged 2 Portfolio of retail assets (Debenhams Manchester, Retail North 191 191 12 York Clifton Moor, Wakefield Westgate) – The Hempel Collection Residential London 8 8 – Aldgate Place Residential London 1 1 Total 785 710 29 1 BL share of annualised rent topped up for rent frees 2 Sales will complete post period end 56
Gross rental income 1,2 Accounting Basis £m 6 months to 30 September 2016 Annualised as at 30 September 2016 Group JVs & Funds 3 Total Group JVs & Funds 3 Total Regional 29 43 58 84 72 142 Local 49 13 62 97 26 123 Multi-let 78 56 134 155 110 265 – – Department Stores & Leisure 26 26 43 43 Superstores 5 16 21 10 31 41 – – Solus & Other 10 10 20 20 Retail and Leisure 119 72 191 228 141 369 – – West End 66 66 127 127 City 2 60 4 120 62 124 Offices 68 60 128 131 120 251 Residential 4 – – 2 3 2 3 Offices and Residential 70 60 130 134 120 254 – – Canada Water 5 5 8 8 Total 194 132 326 370 261 631 1 Excluding developments under construction and assets held for development 2 Gross rental income will differ from annualised rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives 3 Group’s share of properties in joint ventures and funds including HUT at share 4 Stand-alone residential 57
Operating costs metric HY to 30 September (£m) H1 2016 H1 2017 Property operating expenses 17 15 Administrative expenses 1 49 43 (7) (8) Net fees and other income 1 (1) (1) Ground rent costs EPRA Costs (including direct vacancy costs) 58 49 Gross rental income 326 327 Ground rent costs (1) (1) Gross Rental Income (EPRA basis) 325 326 EPRA Cost Ratio (including direct vacancy costs) 17.8% 15.0% Table shows figures on a proportionately consolidated basis which includes the Group's share of joint ventures and funds and excludes non-controlling interests in the Group's subsidiaries. 1 Net fees & other income and administrative expenses have been restated by £2m 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. 58
Administrative Expenses HY to 30 September (£m) H1 2016 H1 2017 26 26 Personnel Costs Share Scheme Costs 8 3 15 14 Other Administrative Expenses Total – British Land 49 43 2 2 Broadgate Estates Total – Group 51 45 Capitalised Costs (2) (2) Total Administrative Expenses 49 43 Table includes the Group's share of joint ventures and funds and excludes non-controlling interests in the Group's subsidiaries. 59
H2 17 income statement guidance • Rental Income • 2012 Convertible Bond – – Virtually fully let portfolio with contracted accounting Dilution of convertible bond will depend on share price gross rent of £631m as at 30 September 2016 at the end of the reporting period. If share price is at or above conversion price of 693p then Underlying EPS – Retail sales exchanged but not completed and EPRA NAV are diluted for the 2012 convertible are expected to reduce rents by £3m in H2 bond post completion – For earnings calculations, the interest payable on – Annual rent relating to the development pipeline of the 2012 convertible bond of £6m should be added £23m is expected to run off in H2 FY17, up to £6m back and the number of shares increased by 57.8m impact in period – For NAV calculation, debt is reduced by £400m – Property outgoings likely to be similar to H1 and number of shares increased by 57.8m as a percentage of gross rents • Dividend • Administrative costs and fee income – As announced in May 2016, the dividend for the year – Expected to be broadly in line with H1 levels ending 31 March 2017 is increased by 3% to 29.2 • Financing pence per share (quarterly dividend of 7.3 pence per – Weighted average interest rate now 3.24% share) on gross debt of £4.8bn • Other – Indicative capitalised interest is £4m based on – Capital activity has the potential to significantly impact current development commitments profits. For example, selling £100m of assets would reduce profits by c.£4m, based on an average portfolio topped up NIY of 4.8%, and LTV by c.0.5% 60
Reconciliation of Underlying Profit HY to 30 September (£m) H1 2016 H1 2017 IFRS profit / (loss) before tax 823 (205) Net valuation (profit)/loss (614) 462 Profit on disposal of investment and trading properties (36) (42) Capital financing costs/(income) 6 (9) Non-controlling interests (8) (7) Underlying Profit 1 171 199 – Dilution adjustments 3 EPRA Earnings Before Tax 174 199 1 On a proportionately consolidated basis 61
EPRA balance sheet (proportional consolidation) £m 31 March 16 Group JVs & Funds 30 September 16 Total properties 14,648 9,321 4,598 13,919 Adjusted net debt (3,110) (1,353) (4,765) (4,463) Other net liabilities (209) (97) (105) (202) EPRA Net Assets (undiluted) 9,674 6,114 3,140 9,254 – – – Dilution impact of 2012 convertible bond 400 EPRA Net Assets (diluted) 10,074 6,114 3,140 9,254 Loan to Value (LTV) 1 24.6% 32.1% 31.6% Average interest rate 3.3% 2.5% 3.2% Interest cover 4.4x 3.0x 3.5x Average maturity of drawn debt (years) 8.1 7.2 8.0 1 Group LTV based on Group Properties and net investment in JV & Funds, and Group net debt 62
Reconciliation of EPRA NAV & NNNAV 31 March 16 30 September 16 £m pence £m pence Balance Sheet (IFRS) Net Assets 9,619 935 9,181 891 Deferred tax arising on revaluation movements 5 2 Mark to market on effective cash flow hedges and 198 205 related debt adjustments Adjust to fully diluted on exercise of share options 36 39 – Adjust to dilute for 2012 convertible bond 400 Surplus on trading properties 93 76 Non-controlling interests (277) (249) EPRA NAV 10,074 919 9,254 891 Deferred tax arising on revaluation movements (24) (15) Mark to market of debt and derivatives (410) (616) EPRA NNNAV 9,640 880 8,623 830 63
Gross and net debt reconciliation As at 30 September 2016 Group JVs & Funds Less non-controlling £m £m £m interests £m Gross Debt (principal value) 3,297 1,631 (124) 4,804 IFRS adjustments: Issue costs and premia (13) (3) 1 (15) – – Fair value hedges 281 281 – – Other Items (3) (3) IFRS gross debt 3,562 1,628 (123) 5,067 Market value of derivatives (83) 49 (4) (38) Cash (107) (261) 7 (361) IFRS net debt 3,372 1,416 (120) 4,668 Adjustments: Remove market value of derivatives 38 Remove fair value hedges (246) Other adjustments 3 Adjusted net debt 4,463 64
Adjusted net debt – proportionally consolidated (£bn) LTV LTV 32.1% 31.6% 0.1 (0.5) 0.1 4.8 4.5 Mar 16 Acquisitions Development & Capex Disposals Sep 16 Net Debt Net Debt 65
Debt maturity – group (£m) 1,000 800 600 400 200 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Year to March Bank RCF Drawn (Unsecured) US Private Placements (Unsecured) Bank RCF Undrawn (Unsecured) Convertible Bond (Unsecured) Debenture & loan notes (Secured) 66
Debt maturity – joint ventures and funds 1 (£m) 1,000 800 600 400 200 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 Year to March JVs – Securitisations JVs & Funds – Bank drawn Funds – Bank undrawn 1 At British Land share (including share of HUT) 67
Debt Financing – Diverse profile • Weighted Average Interest Rate Diverse Debt Profile 1 (30 September 2016) reduced by 10 bps to 3.2% £0.5bn £0.7bn • Average debt term 8.0 years • £1.7bn of revolving credit facilities £0.6bn available within British Land £1.4bn • Extended £0.9bn of unsecured revolving bank facilities • Repaid £0.3bn of secured debt £0.8bn • Proportion of debt at fixed rate 52% average over the next 5 years £0.8bn • The Group has no requirement to Bank RCFs Drawn (Unsecured) Convertible Bonds (Unsecured) refinance until 2020 US Private Placements (Unsecured) JVs Securitisations JV & Funds Term Loans (Secured) 2 Debentures & loan notes (Secured) 1 Proportionally Consolidated 2 HUT’s debt shown at our share (£0.4 billion) within JV & Funds 68
Number of shares Number of shares (m) 31 Mar 16 30 Sep 16 IFRS Basic Weighted Average 1 1,025 1,029 IFRS Diluted Weighted Average 2 1,089 1,091 Underlying/EPRA Diluted Weighted Average 3 1,089 1,033 Period End 4 1,096 1,039 1 For use in IFRS basic earnings per share 2 For use in IFRS diluted earnings per share, includes dilution for 2012 1.5% convertible bond 3 For use in Underlying/EPRA diluted earnings per share. Movement since March 2016 reflects 2012 1.5% convertible no longer being treated as dilutive 4 For use in EPRA net asset value per share and EPRA triple net asset value per share. Movement since March 2016 reflects 2012 1.5% convertible no longer being treated as dilutive 69
Portfolio valuation by sector JVs & Funds 1 H1 Change 2 Group Total At 30 September 2016 £m £m £m % £m Regional 1,087 1,791 2,878 (2.8) (83) Local 1,796 471 (4.8) (116) 2,267 Multi-let 2,883 2,262 5,145 (3.7) (199) Department Stores and Leisure 638 1 639 3.2 32 Superstores 139 542 681 (3.0) (24) – Solus and Other 346 346 3.7 13 Retail and Leisure 4,006 2,805 6,811 (2.4) (178) – West End 3,868 (2.4) (95) 3,868 City 103 2,653 2,756 (4.9) (143) Offices 3,971 2,653 6,624 (3.5) (238) Residential 3 – – 173 22 195 Offices and Residential 4,144 2,675 6,819 (3.3) (238) – Canada Water 289 289 (2.1) (6) Total 8,439 5,480 13,919 (2.8) (422) Standing Investments 7,810 5,287 13,097 (2.8) (395) Developments 629 193 822 (3.0) (27) 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 Stand-alone residential 70
Portfolio weighting 2016 (pro-forma 1 ) At 30 September 2015 2016 (current) 2016 (current) % % £m % Regional 19.5% 20.7% 2,878 19.5% Local 16.3% 16.3% 2,267 16.1% Multi-let 35.8% 37.0% 5,145 35.6% Department Stores and Leisure 7.0% 4.6% 639 4.4% Superstores 6.0% 4.9% 681 4.8% Solus and Other 2.6% 2.5% 346 2.3% Retail and Leisure 51.4% 49.0% 6,811 47.1% West End 25.5% 27.8% 3,868 28.4% City 19.6% 19.8% 2,756 21.1% Offices 45.1% 47.6% 6,624 49.5% Residential 2 1.5% 1.4% 195 1.5% Offices and Residential 46.6% 49.0% 6,819 51.0% Canada Water 2.0% 2.0% 289 1.9% Total 3 100.0% 100.0% 13,919 100.0% 1 Pro forma for developments under construction and committed developments at estimated end value (as determined by the Group’s external valuers) and post period end transactions 2 Stand-alone residential 3 On a proportionately consolidated basis 71
Portfolio yields & ERV movements 1,2 At 30 September 2016 EPRA EPRA Overall Net Net Net ERV Growth 5,6 net initial topped up topped up equivalent equivalent reversionary % yield % net initial net initial yield % yield yield % 3 4 yield % yield % expansion 5 bps Regional 4.5 4.7 4.7 5.0 16 5.0 1.3% Local 5.1 5.3 5.4 5.5 29 5.5 1.3% Multi-let 4.8 4.9 5.0 5.2 22 5.2 1.3% Department Stores and 6.0 6.0 7.5 6.1 4 4.5 0.4% Leisure Superstores 5.5 5.5 5.5 5.4 8 5.3 (3.0%) Solus & Other 5.7 5.7 5.7 5.3 9 4.9 4.8% Retail and Leisure 5.0 5.1 5.3 5.3 18 5.1 0.9% West End 3.8 4.0 4.1 4.5 16 4.8 0.3% City 3.3 4.6 4.6 4.6 27 5.3 (0.2%) Offices 3.6 4.2 4.3 4.6 21 5.0 0.1% Canada Water 2.7 2.7 2.8 3.3 4 3.4 0.9% Total 4.3 4.7 4.8 4.9 19 5.0 0.5% 1 Including notional purchaser's costs 2 On a proportionately consolidated basis. Excluding developments under construction, committed developments, assets held for development and residential assets 3 Including rent contracted from expiry of rent-free periods and fixed uplifts not in lieu of rental growth 4 Including fixed/minimum uplifts (excluded from EPRA definition) 5 6 months to 30 September 2016 6 As calculated by IPD 72
Lease length and occupancy 1 Average Lease Length (yrs) Occupancy Rate (%) At 30 September 2016 To Expiry To Break Occupancy Occupancy (underlying) 2 Regional 8.0 6.9 96.6 98.1 Local 8.4 7.4 97.6 98.0 Multi-let 8.2 7.2 97.1 98.1 Department Stores and Leisure 18.3 18.2 99.9 99.9 Superstores 12.0 11.6 100.0 100.0 Solus & Other 13.0 12.8 100.0 100.0 Retail and Leisure 10.0 9.2 97.8 98.5 West End 9.1 7.2 95.5 96.7 City 10.1 8.5 98.2 98.5 Offices 9.6 7.8 96.8 97.5 Canada Water 7.1 6.9 96.9 98.1 Total 9.8 8.5 97.3 98.1 1 On a proportionately consolidated basis. Excluding developments under construction, committed developments, assets held for development and residential assets 2 Including accommodation under offer or subject to asset management and owner-occupied space 73
Annualised rent & estimated rental value (ERV) 1 At 30 September 2016 Annualised Rents ERV Average Rent (Valuation Basis) £m 2 £m (£psf) JVs & Funds 3 Contracted 4 Group Total Total ERV Regional 60 85 145 158 31.2 33.3 Local 98 28 126 135 24.3 25.2 Multi-let 158 113 271 293 27.6 29.0 – Department Stores and Leisure 41 41 32 13.8 10.6 Superstores 8 32 40 38 20.7 19.7 – Solus & Other 20 20 17 19.8 17.0 Retail and Leisure 227 145 372 380 23.7 23.7 – West End 137 137 171 53.0 61.7 City 4 88 92 149 51.0 60.2 Offices 141 88 229 320 52.4 60.9 Residential 5 – 4 4 4 Offices and Residential 145 88 233 324 – Canada Water 8 8 10 18.5 21.7 Total 380 233 613 714 29.7 31.9 1 Excluding developments under construction, committed developments (100 Liverpool Street with annualised rents £9m and ERV £13m) 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 Group’s share of properties in joint ventures and funds including HUT at share 4 Annualised rent, plus rent subject to rent free 74 5 Stand-alone residential
Rent subject to open market rent review 1 2017 – 19 2017 – 21 For period to 31 March 2017 2018 2019 2020 2021 At 30 September 2016 £m £m £m £m £m £m £m Regional 6 11 17 10 18 34 62 Local 4 25 21 12 10 50 72 Multi-let 10 36 38 22 28 84 134 – – – – – – – Department Stores and Leisure Superstores 1 4 8 11 13 13 37 – – – – – – – Solus & Other Retail and Leisure 11 40 46 33 41 97 171 West End 4 22 20 15 9 46 70 – City 4 14 14 16 18 48 Offices 4 26 34 29 25 64 118 – – – – Canada Water 2 2 2 Total 15 68 80 62 66 163 291 Potential uplift at current ERV 2 – 2 4 3 1 6 10 1 On a proportionately consolidated basis. Excluding developments under construction, committed developments and assets held for development 2 As determined by the Group’s valuers, excluding near term developments 75
Rent subject to lease break or expiry 1 2017 – 19 2017 – 21 For period to 31 March 2017 2018 2019 2020 2021 At 30 September 2016 £m £m £m £m £m £m £m Regional 6 15 9 13 10 30 53 Local 6 5 8 11 9 19 39 Multi-let 12 20 17 24 19 49 92 – – – – Department Stores and Leisure 1 1 1 – – – – – – – Superstores – – – – Solus and Other 2 2 2 Retail and Leisure 12 21 19 24 19 52 95 West End 6 11 10 4 18 27 49 – 18 City 10 11 8 28 47 Offices 2 16 11 28 15 26 55 96 – – – Canada Water 1 1 1 2 Total 29 32 47 39 46 108 193 % of contracted rent 4.3% 4.7% 6.9% 6.0% 6.7% 15.9% 28.6% Potential uplift at current ERV (excl. 2 2 6 1 2 10 13 Near and Medium Term developments) 1 On a proportionately consolidated basis. Excluding developments under construction, committed developments and assets held for development 2 For further detail, see following slide 76
Rent subject to lease break or expiry – Office expiries detail 2017 – 19 For period to 31 March 2017 2018 2019 2020 2021 At 30 September 2016 £m £m £m £m £m £m – – – – 100 Liverpool Street 9 9 – – – – Committed developments 9 9 – – – – 1 Finsbury Avenue 7 7 – – – – Near Term developments 7 7 – – – 1 Triton Square 4 5 9 – – – 2-3 Finsbury Avenue 3 2 5 – – – – 135 Bishopsgate 7 7 – – Medium Term developments 7 5 9 21 Other West End expiries 2 6 10 4 18 18 – – Other City expiries 9 11 8 9 Office expiries (excl. committed 16 11 28 15 26 55 developments) 77
Rent resetting to market 2017 – 19 2017 – 21 For period to 31 March 2017 2018 2019 2020 2021 At 30 September 2016 £m £m £m £m £m £m £m Rent expiring – existing portfolio 29 32 47 39 46 108 193 (per slide 76) Developments – committed & under – – – 10 19 10 29 Construction Total Rent Resetting to Market 29 42 47 58 46 118 222 excluding Near Term Developments Near term developments – expiries – – – – (7) (7) (7) Near term developments – completions – – – 8 3 8 11 Total Rent Resetting to Market 22 42 55 61 46 119 226 including Near Term Developments ERV of current vacancies 1,2 – – – – 19 19 19 Vacant & Income Expiring 41 42 55 61 46 138 245 1 Including space under offer of £4m and space subject to asset management of £1m 2 Including £7m of vacant space at recently completed developments 78
Contracted rental increases (cash flow basis) 2017 – 19 2017 – 21 For period to 31 March 2017 2018 2019 2020 2021 At 30 September 2016 £m £m £m £m £m £m £m – Expiry of rent free periods 29 14 3 1 46 47 – – – Fixed uplifts (EPRA basis) 1 1 2 2 Fixed & minimum uplifts in lieu 3 1 1 1 1 5 7 of rental growth Total 32 16 5 2 1 53 56 79
Superstores Stand-alone Superstores 1 In Multi-let assets 2 Total Exposure 1,2,3 Store Size Number Valuation Capital WALL Number Valuation Capital WALL Number Valuation Capital WALL ‘000 sq ft of (BL share) Value to FB of (BL share) Value to FB of (BL share) Value to FB stores £m psf yrs stores £m psf yrs stores £m psf yrs >100 8 171 256 11.9 5 339 423 12.5 13 510 347 12.3 75 – 100 11 197 398 12.1 3 61 276 15.8 14 258 361 13.0 50 – 75 16 248 353 12.1 1 12 189 10.6 17 260 339 12.0 25 – 50 8 50 220 7.8 2 27 502 13.0 10 77 274 9.4 0 – 25 2 6 145 8.6 18 79 426 10.6 20 85 373 10.4 September 2016 45 672 315 11.6 29 518 391 12.6 74 1,190 344 12.1 March 2016 47 763 383 13.9 28 536 482 12.7 75 1,299 419 13.5 Geographical Spread Gross Rent (BL Share) Lease Structure RPI and Fixed London & South 54% Tesco £38m 9% Sainsbury’s Rest of UK 46% £26m OMRR 91% Other £5m 1 Excludes £9m non-foodstore occupiers in superstore led assets 2 Excludes non food-format stores e.g. Asda Living 3 Excludes £93m of investments held for trading comprising freehold reversions in a pool of Sainsbury’s Superstores 80
Total Property Return (as calculated by IPD) 6 months to 30 September 2016 Retail Offices Total % British British British IPD IPD IPD Land Land Land Capital Return (2.4) (3.0) (3.4) (2.9) (2.8) (2.1) - ERV Growth 0.9 0.5 0.1 1.0 0.5 0.8 - Yield Expansion 1 18 bps 20 bps 21 bps 21 bps 19 bps 15 bps Income Return 2.6 2.5 1.7 1.8 2.1 2.3 Total Property Return 0.1 (0.5) (1.8) (1.1) (0.8) 0.2 1 Net equivalent yield movement 81
BL property outperformance vs IPD – 5 years 5 years ended 30 September 2016 Outperformance bps pa 350 300 310 250 200 200 150 160 100 120 100 90 50 0 Retail Offices Total Capital Returns Total Returns 82
BL property outperformance vs IPD – 3 years 3 years ended 30 September 2016 Outperformance bps pa 180 170 160 140 120 100 80 80 60 70 60 50 40 20 10 0 Retail Offices Total Capital Returns Total Returns 83
Recently completed & committed developments Sector BL Sq PC Current Cost to ERV Let & Resi Sales At 30 September 2016 Share ft Calendar Value Complete Under Exchanged & Offer Year not Completed £m 1 £m 2 £m 3 £m 4 % '000 £m – – Aldgate Place, Phase 1 Residential 50 221 Completed 7 9 n/a Clarges Mayfair – Offices Offices 100 51 Completed 120 9 5.5 2.0 n/a – Glasgow Fort Leisure Quarter Retail 75 12 Completed 8 0.4 0.3 n/a – Total Completed in Period 284 135 18 5.9 2.3 – 4 Kingdom Street Offices 100 147 Q2 2017 111 39 9.4 n/a Clarges Mayfair – – Residential 100 114 Q4 2017 322 74 0.8 259 Retail and Residential The Hempel Phase 1 Residential 100 25 Q4 2016 16 1 n/a n/a 13 The Hempel Phase 2 Residential 100 32 Q4 2016 55 6 n/a n/a 14 – – 100 Liverpool Street Offices 50 520 Q4 2019 115 157 18.5 – Total Under Construction & Committed 838 619 277 28.7 286 Retail Capital Expenditure 5 117 Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 Excludes completed sales of £93m 2 From 1 October 2016. Cost to complete excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 3 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives) 4 At agreed sales price 5 Capex committed and underway within our investment portfolio relating to leasing and asset management 84
Development pipeline At 30 September 2016 Sector BL Share Sq ft Start On Total Status 1 % '000 Site Cost £m Near term Pipeline 1 Finsbury Avenue Offices 50 281 2017 102 Consented Speke (Leisure) Retail 67 66 2017 18 Consented Plymouth (Leisure) Retail 100 102 2018 35 Consented Total Near Term 449 155 Retail Capital Expenditure 2 100 Medium term Pipeline 2-3 Finsbury Avenue Offices 50 560 Resolution to grant 135 Bishopsgate Offices 50 340 Pre-submission Blossom Street Offices 100 340 Consented 1 Triton Square Offices 100 338 Submitted 5 Kingdom Street Offices 100 240 Consented Gateway Building Offices 100 104 Pre-submission Aldgate Phase 2 Residential 50 145 Consented Canada Water Phase 1 3 Mixed Use 100 5,500 Pre-submission Bradford (Retail & Leisure) Retail 100 43 Consented Meadowhall Leisure Retail 50 330 Submitted Eden Walk Retail & Residential Mixed Use 50 562 Resolution to grant Total Medium Term 8,502 Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 Total cost including site value. Excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 2 Forecast capital commitments within our investment portfolio over the next 12 months relating to leasing & asset enhancement 3 Assumed net area based on gross area of up to 7m sq ft 85 85
Residential development programme At 30 September 2016 Sq Ft No. PC BL Current Cost to Sales Value 1 come 2 Market Date/ Share Exchanged & Units Status not Completed 1,3 '000 % £m £m £m Clarges Mayfair 4 103 34 Q4 2017 100 308 72 259 Mixed use 103 34 308 72 259 The Hempel Phase 1 25 15 Q4 2016 100 16 1 13 The Hempel Phase 2 32 19 Q4 2016 100 55 6 14 Aldgate Place Phase 1 221 154 Completed 50 7 9 - Residential-led 278 188 78 16 27 Total Committed Residential 381 222 386 88 286 Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 Excludes completed sales of £93m 2 From 1 October 2016. Cost to complete excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 3 At agreed sales price 4 Includes 9,500 sq ft of affordable housing (11 units) 86
Estimated future development spend and capitalised interest PC Cost to complete £m At 30 September 2016 (excluding notional interest) – 6 mths Calendar Year Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Total – – 4 Kingdom Street 2017 30 4 4 1 39 – Clarges Mayfair 2017 53 13 3 3 1 74 – – – – – The Hempel Phase 1 2016 1 1 – – – The Hempel Phase 2 2016 4 1 1 6 100 Liverpool Street 2019 12 18 29 32 26 19 157 Total Committed & 100 36 37 36 27 19 277 Under Construction Total Near Term 2 9 19 16 15 12 76 Indicative Interest Capitalised on above at 4 1 2 2 1 2 attributable rates 1 – – – – Contracted Residential receipts 28 184 1 Financing costs are capitalised at 4% on qualifying expenditure for developments 87
Estimated future development rental income (accounting basis) At 30 September 2016 PC Gross Rental Income (Accounting basis) Calendar £m Year Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Under Construction & Committed developments – – Clarges Retail Q4 2017 Non-contracted 1 1 1 Non-contracted – 4 Kingdom Street Q2 2017 3 8 8 8 – – – 100 Liverpool Street Q4 2019 Non-contracted 3 15 Non-contracted – 3 9 12 24 88
Property Yields and interest rate yield gap Retail and London Office Yields All Retail Central London Offices 10.0 8.0 NIY % 6.0 4.0 2.0 0.0 Source: IPD Property Yield vs 10 Year Gilt Yields 6.0 Gap as multiple of gilt yield 5.0 4.0 3.0 2.0 1.0 - -1.0 1994 1997 2000 2002 2005 2007 2010 2012 2015 2016 Source: IPD/Bloomberg 89
Central London development pipeline Q3 2016 c. 7.3m sq ft in ’16–’20 m sq ft pipeline delayed since Brexit 12.0 10.0 8.0 6.0 4.0 2.0 0.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Source: CBRE 10 year rolling average new and Completed Pipeline Pre-let Potential Speculative under-construction take-up U/C – Speculative U/C Pre-let 10 year rolling average dev completions Note: Forecast reflects agent’s estimate of earliest completions 90
West End development pipeline Q3 2016 m sq ft 2.5 2.0 1.5 1.0 0.5 0.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Source: CBRE 10 year rolling average new and Completed Pipeline Pre-let Potential Speculative under-construction take-up U/C – Speculative U/C Pre-let 10 year rolling average dev completions Note: Forecast reflects agent’s estimate of earliest completions 91
City development pipeline Q3 2016 m sq ft 6.0 5.0 4.0 3.0 2.0 1.0 0.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Source: CBRE 10 year rolling average new and Completed Pipeline Pre-let Potential Speculative under-construction take-up U/C – Speculative U/C Pre-let 10 year rolling average dev completions Note: Forecast reflects agent’s estimate of earliest completions 92
Vacancy Central London West End & City Vacancy Rates 20 18 16 14 12 10 8 6 4 2 0 1985 1990 1995 2000 2005 2010 Q3 2016 Source: CBRE (historic) West End Void Rate (Period end) City Void Rate (Period end) 93
London office market rental outlook Prime London Office Rents £ psf 140 120 100 80 60 40 20 Actual Forecast 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: CBRE (historic) and Average Agents' Consensus (including PMA, November 16) for forecasts West End City 94
Additional Disclosures – Previous Retail Classification Basis 95
Retail Portfolio Valuation – previous classification JVs & Funds 1 H1 Change 2 Group Total At 30 September 2016 £m £m £m % £m Shopping parks 2,104 1,137 3,241 (4.1) (139) Shopping centres 1,125 1,121 2,246 (2.1) (47) Superstores 139 542 (3.0) (24) 681 Department stores 241 1 5.6 34 242 Leisure 397 4 (0.5) (2) 401 Retail and Leisure 4,006 2,805 6,811 (2.4) (178) 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 96
Retail portfolio net yields 1,2 – previous classification At 30 September 2016 EPRA EPRA Overall Net Net Net ERV Growth 5,6 net initial topped up topped up equivalent equivalent reversionary % yield % net initial net initial yield % yield yield % 3 4 5 yield % yield % expansion 5.0 5.1 5.2 5.3 26 5.3 1.6% Shopping parks Shopping centres 4.6 4.8 4.8 5.0 14 5.1 1.3% 5.5 5.5 5.5 5.4 8 5.3 (3.0%) Superstores Department stores 5.3 5.3 7.3 5.5 3 4.1 0.4% Leisure 6.4 6.4 7.7 6.5 4 4.8 0.4% Retail and Leisure 5.0 5.1 5.3 5.3 18 5.1 0.9% 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 fixed uplifts not in lieu of rental growth 4 Including fixed/minimum uplifts (excluded from EPRA definition) 5 6 months to 30 September 2016 6 As calculated by IPD 97
Retail gross rental income 1,2 – previous classification Accounting Basis £m 6 months to 30 September 2016 Annualised as at 30 September 2016 Group JVs & Funds 3 Total Group JVs & Funds 3 Total Shopping parks 57 30 87 112 59 171 Shopping centres 31 26 57 63 51 114 Superstores 5 16 21 10 31 41 Department stores 12 - 12 14 - 14 Leisure 14 - 14 29 - 29 Retail & Leisure 119 72 191 228 141 369 1 Excluding developments under construction and assets held for development. 2 Gross rental income will differ from annualised rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives 3 Group’s share of properties in joint ventures and funds including HUT at share 98
Retail portfolio weighting – previous classification 2016 (pro-forma 1 ) At 30 September 2015 2016 (current) 2016 (current) % % £m % Shopping parks 23.3 23.3 3,241 22.8 Shopping centres 15.1 16.1 2,246 15.0 Superstores 6.1 4.9 681 4.8 Department stores 4.2 1.8 242 1.7 Leisure 2.7 2.9 401 2.8 Retail & Leisure 51.4 49.0 6,811 47.1 1 Pro forma for developments under construction at estimated end value (as determined by the Group’s external valuers) and transactions exchanged in the period but completing after the period end 99
Retail portfolio lease length and occupancy 1 – previous classification Average Lease Length (yrs) Occupancy Rate (%) At 30 September 2016 Occupancy (underlying) 2 To Expiry To Break Occupancy Shopping parks 8.6 7.5 97.7 98.5 Shopping centres 8.5 7.6 96.6 97.6 Superstores 12.0 11.6 100.0 100.0 Department stores 18.4 18.2 99.9 99.9 Leisure 18.2 18.2 99.8 99.8 Retail & Leisure 10.0 9.2 97.8 98.5 1 Excluding developments under construction and assets held for development 2 Including accommodation under offer or subject to asset management 100
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