TIDMBLND
RNS Number : 1621T
British Land Co PLC
13 November 2023
13 November 2023
Continued operational momentum & strong rental growth
Simon Carter, CEO said:
"We are pleased with the performance in the first half with
underlying profits increasing 3% on the back of another strong
period of leasing and good cost control. We have seen yields
continue to move out, but as we predicted in May, at a slower pace.
Rental growth has accelerated, with lettings 12% ahead of ERV, and
occupancy remains strong at 96% well above levels in the wider
market.
We are benefitting from our decision to pursue a value-add
strategy across campuses, retail parks and London urban logistics.
These submarkets have the strongest occupational fundamentals and
highest rental growth within the office, retail and logistics
sectors. We now expect ERV growth at the top end of our previous
guidance for FY24.
Whilst in the past 18 months we have delivered good earnings
growth, asset values have been impacted by the increase in interest
rates. The geopolitical and economic landscape remains uncertain;
however, with our portfolio yield now over 6% and an increased
likelihood we are approaching the peak in UK base rates we expect
the strong occupational fundamentals of our submarkets, together
with the differentiated quality of our assets, to reassert
themselves as the primary drivers of performance."
Financial
-- Underlying Profit growth of 3.4%
-- EPRA cost ratio 14.8% vs 19.5% at FY23
-- Underlying earnings per share of 15.2p up 3.4%
-- Dividend per share of 12.16p up 4.8%
Balance sheet
-- EPRA Net Tangible Assets per share of 565p down 3.9%
-- Loan To Value at 36.9% (FY23 36.0%), Group Net Debt to EBITDA 6.0x (FY23 6.4x)
-- Fitch affirmed our Senior Unsecured credit rating at 'A' with stable outlook
-- GBP1.7bn undrawn facilities and cash
-- GBP600m of financing activity, including GBP350m new loans
post period end which further increase our capacity
-- Debt 99% hedged for the six months to March 2024 and 84%
hedged on average over the next five years
CAPITAL ACTIVITY
-- Sale of office and data centre portfolio for GBP125m(1) , 13%
above book value at a NIY of 4.6%
-- Surrender of 1 Triton Square lease on 25 September 2023 for GBP149m
-- Acquisition of Thanet Retail Park in April 2023 for GBP55m at a NIY of 8.1%
operational metrics
-- Portfolio occupancy 96%: Campuses 94%, Retail Parks 99% and London Urban Logistics 100%
-- Leased 1.6m sq ft, 12.2% ahead of ERV and a further 1.1m sq ft under offer, 16.6% above ERV
-- Campus leasing 368,000 sq ft, 7.5% ahead of ERV, 281,000 sq
ft under offer, 9.7% above ERV and 1.8m sq ft in negotiations on
1.0m sq ft of space (including near term pipeline)
-- Retail & London Urban Logistics leasing 1.2m sq ft, 14.2%
ahead of ERV, and 844,000 sq ft under offer, 20.5% ahead of ERV
Portfolio VALUATION
-- ERV growth of +3.2%: Campuses +3.2%, Retail Parks +4.0%, London Urban Logistics +3.1%
-- Yields +23bps to 6.1% NEY: Campuses +32bps to 5.3%, Retail
Parks +13bps to 6.7%, London Urban Logistics +9bps to 4.7%
-- Values down 2.5%: Campuses -4.0%, Retail Parks up +0.2% and London Urban Logistics up +0.6%
Sustainability
-- GRESB rating of 5* for both standing investments and developments
-- 50% of portfolio rated EPC A or B (up from 45% at FY23)
Outlook
-- Expecting ERV growth at the top end of our previously guided
ranges for FY24: Campuses 2-4%, Retail Parks 3-5%, London Urban
Logistics 4-5%
-- Comfortable with current market expectations for FY24
earnings
Summary performance
30 September 30 September
Period ended 2023 2022(2) % Change
-------------------------------------------------------- ------------ ------------ --------
INCOME STATEMENT
Underlying Profit(3) GBP142m GBP138m 3.4%
Underlying earnings per share(3) 15.2p 14.7p 3.4%
IFRS loss after tax GBP(61)m GBP(32)m
IFRS basic earnings per share (6.6)p (3.5)p
Dividend per share(4) 12.16p 11.60p 4.8%
Total accounting return(3) (2.0)% (2.8)%
-------------------------------------------------------- ------------ ------------ --------
30 September 31 March
As at 2023 2023
-------------------------------------------------------- ------------ ------------ --------
BALANCE SHEET
Portfolio at valuation (proportionally consolidated)(5) GBP8,704m GBP8,898m (2.5)%
EPRA Net Tangible Assets per share(3) 565p 588p (3.9)%
IFRS net assets GBP5,367m GBP5,525m
Net Debt to EBITDA (Group)(6, 7) 6.0x 6.4x
Loan to value (proportionally consolidated)(7, 8) 36.9% 36.0%
Senior Unsecured credit rating A A
-------------------------------------------------------- ------------ ------------ --------
30 September 30 September
Period ended 2023 2022
-------------------------------------------------------- ------------ ------------ --------
OPERATIONAL STATISTICS
1.3m sq 1.1m sq
Lettings and renewals over 1 year ft ft
1.6m sq 1.5m sq
Total lettings and renewals ft ft
1.9m sq 1.7m sq
Committed and recently completed development ft ft
-------------------------------------------------------- ------------ ------------ --------
SUSTAINABILITY PERFORMANCE
MSCI ESG AAA rating AAA rating
GRESB (Standing Investments / Developments) 5* / 5* 4* / 5*
-------------------------------------------------------- ------------ ------------ --------
1. Of which GBP29m completed post period end.
2. Prior period comparatives have been restated for a change in
accounting policies in respect of rental concessions (as disclosed
in Note 1 of the condensed interim financial statements).
3. See Note 2 to the condensed interim financial statements for
definition and calculation.
4. The growth in the dividend is higher than the Underlying EPS
growth due to the impact of the rental concession restatement in
the prior period.
5. Valuation movement during the period (after taking account of
capex) of properties held at the balance sheet date, including
developments (classified by end use), purchases, sales and
surrender premium received at 1 Triton Square.
6. Net Debt to EBITDA on a Group basis excludes non-recourse and
joint venture borrowings and includes distributions from
non-recourse companies and joint ventures.
7. See Note 9 to the condensed interim financial statements for
definition, calculation and reference to IFRS metrics.
8. EPRA Loan to value is disclosed in Table E of the condensed
interim financial statements.
Results Presentation and Investor Conference Call
A presentation of the results will take place at 9.00am on
Monday 13 November 2023 at Peel Hunt, 100 Liverpool Street,
Broadgate and will be broadcast live via webcast
(www.britishland.com) and conference call. The details for the
conference call and weblink are as follows:
UK Toll Free Number: 0800 260 6466
International: +44 20 3481 4247
Access code: 9857826
Click for access: Audio weblink
A dial in replay will be available later in the day for 7 days.
The details are as follows:
Replay number: 020 3433 3849
Passcode: 9857826
Accompanying slides will be made available at Britishland.com
just prior to the event starting.
For Information Contact
Investors
Sandra Moura, British Land 07989 755535
Media
Charlotte Whitley, British Land 07887 802535
Guy Lamming/Gordon Simpson, FGS Global 020 7251 3801
britishland@finsbury.com
CHIEF EXECUTIVE'S REVIEW
Overview
Since we reported our FY23 results in May, market interest rates
have risen further and are expected to stay higher for longer, but
the economy has been more resilient than expected. We have seen
yields continue to move out but, as we predicted, at a slower pace,
and our portfolio Net Equivalent Yield (NEY) of 6.1% is now 180 bps
above the 5 year swap rate. Resilience in the UK economy combined
with our low vacancy and improving fundamentals in our markets
meant rental growth accelerated in the first half. Our portfolio
valuation was down 2.5% with yields 23 bps wider, offset by rental
growth of 3.2%.
Strong leasing and tight control of costs meant that underlying
earnings per share has grown by 3.4% and the interim dividend is
4.8% higher. Capital recycling and smart asset management offset
the impact of development spend and a 2.5% decline in values. As a
result, our LTV was largely unchanged at 36.9% (FY23: 36.0%) and
Group Net Debt to EBITDA improved from 6.4x at FY23 to 6.0x.
Operational update
We delivered a strong operational performance this half, with
1.6m sq ft of leasing, 12.2% ahead of ERV, and occupancy remained
high at 96.2%. Key deals in the period included LGC - one of the
largest life sciences lettings in the UK this year - Steamship
Mutual, Skidmore Owings & Merrill and a regear with The Bank of
Nova Scotia at Broadgate and regears with H&M, Asda and Marks
& Spencer on our retail parks.
We are benefitting from our value-add strategy in campuses,
retail parks and London urban logistics. These segments have the
strongest fundamentals within the London office, retail and
logistics sectors, which is reflected in our 370 bps [1] total
return outperformance vs the market in the period.
Vacancy across our campuses was 4.2% adjusting for the impact of
recently completed asset management initiatives as we take back
space to refurbish it into lab and innovation space at Regent's
Place. This compares to 8.0% [2] in the wider London office market
and reflects the location of our campuses which are close to major
transport nodes, the quality and sustainability of our buildings,
the provision of great amenities and public realm as well as the
ability of our occupiers to cluster close to other businesses. As a
result, ERV growth for our campuses was 3.2% compared to 2.2% [3]
in the wider market. Recently, we've seen a noticeable increase in
demand, with 1.8m sq ft of deals in negotiations on 1m sq ft of
space (including near term pipeline), reflecting the quality of our
portfolio and growing customer requirements for best in class
workspace.
Our retail parks have an underlying vacancy of 0.8% compared to
UK retail market vacancy of 13.9% [4] . Retail parks are retailers'
preferred format due to their affordability, adaptability and
accessibility. As a result, we are seeing ERV growth of 4.0%
compared to an ERV decline in the wider market of 1.0%3 for
shopping centres and an increase of 0.7%(3) on the high street.
Our urban logistics portfolio is focused exclusively on
densification and repurposing opportunities in Central London.
Demand is driven by the continued rise of e-commerce, as well as
demand for priority delivery services and growing carbon concerns.
Supply is constrained which has resulted in an underlying vacancy
of 0.2% in our assets compared to 6.7% [5] for the UK big box
market.
Strategy
Campuses
Many column inches have been written on the future of the office
in a hybrid world. Early in the pandemic, we formed the view that
hybrid working was here to stay and that London would need less
office space, but we did not believe that the office was dead,
rather that the type of workspace businesses would require would
change. We could see that Covid had been a catalyst for most
companies to reevaluate what they wanted from their workspace -
their conclusion: higher quality space to attract and retain
talent. We captured this in a simple mantra that London would need
"less, but better space". Alongside this, we identified that
science and technology or 'Innovation and Life Sciences' as we call
it, would be a key growth driver of the UK economy over the next
decade, particularly in the Golden Triangle of Oxford, Cambridge
and London. In 2021, we set about reshaping our office business
around these expectations.
At the heart of this was our successful campus model. Our
campuses provide the great amenity, transport connectivity, public
realm and high quality sustainable buildings that businesses are
seeking post pandemic and are also ideal for the clustering and
collaboration which is key to science and technology businesses. We
disposed of the majority of our standalone office assets, upgraded
the quality of our campuses via new developments and committed to a
fourth mixed use campus at Canada Water with our JV partner,
AustralianSuper. Two and half years on, campuses now represent 91%
of our office portfolio and we have an innovation and life sciences
pipeline of over 2m sq ft (representing 34% of the current campus
portfolio) across the Golden Triangle.
How will hybrid working impact rental growth?
It is sensible to consider whether a reduction in overall demand
from hybrid working will be a barrier to rental growth in London.
This is almost certainly the case for secondary or even average
quality offices, particularly those in inferior locations where
rents are probably falling today. However, across our portfolio we
have seen the opposite, with ERV growing 3.2% over the last 6
months. Why is this? We believe it is due to demand polarising to
the best space as businesses upgrade their workspace to reflect the
changing way in which people work in a hybrid world and
increasingly see the workplace as a key tool for attracting and
retaining talent. For example, occupiers want better end of trip
facilities to cater for growing numbers of cyclists, more breakout
space for collaboration and better areas for entertaining staff and
customers, with outside terraces particularly in demand. The
elevated cost of housing in London is causing average commute times
to increase, so businesses have a strong preference for central
locations in close proximity to key transport hubs. The flight to
quality is amplified by the need to attract and retain talent, and
that talent not only wants a great place to work, but also to be in
an interesting part of town with great restaurants, bars, coffee
shops and retail and they care about the sustainability credentials
of the building in which they work.
UK headquarters represent around 80% of the space occupied at
our campuses. For obvious reasons, headquarter space is where the
demand for best in class is strongest, but the supply of buildings
that meet these requirements is very constrained. For example, only
0.5% [6] of the London office stock is BREEAM Outstanding (our
target for all our developments). Our campuses are benefiting from
this imbalance between demand and supply for best in class space.
This is probably most striking at Broadgate, which is located in
the City. Overall City vacancy is 11.5% [7] , however at Broadgate,
vacancy has reduced to just 3.0% and ERV has increased 3.7% in the
last 6 months. This reflects the high quality of the space,
amenities and public realm as well as Broadgate's location above
Liverpool Street station, a key transport hub at the intersection
of London's traditional financial district, the artisan quarter of
Spitalfields, the creative district of Shoreditch and the Old
Street tech belt.
occupational risks
We regularly ask ourselves the question, what might disrupt the
favourable occupational fundamentals for best in class workspace.
Here, we think there are two key risks. Firstly, the risk of a
significant increase in London unemployment, which might reduce our
customers' willingness to invest in the best space as they would no
longer face the same challenges in attracting and retaining talent.
In relation to this risk, we share the view of the majority of
forecasters, that London unemployment should remain low. The second
risk we monitor closely is the potential for an increase in new
development or refurbishments in the core markets we operate in.
Here we have good visibility on the development pipeline, which
shows that the supply of best in class space, to be delivered in
2025 and 2026, that is not already let or under offer, will be
around 2.5m sq ft and 1.4m sq ft respectively. [8] This is
significantly below the 4.5m sq ft per annum medium term average
take up of new or refurbished space in core central London.
INNOVATION AND LIFE SCIENCES
On our campuses we are also growing our exposure to innovation
and life sciences occupiers. The life sciences subsector has strong
occupational fundamentals. There is 3.5x [9] less space per capita
in the UK than the US and the UK has a deep and affordable talent
pool. The UK is already a world leader in life sciences research
concentrated primarily in the Golden Triangle. The government is
keen to support this sector further to make the UK the global hub
for life sciences with an unrivalled ecosystem that brings together
business, researchers, clinicians and patients.
An ecosystem with proximity to leading teaching hospitals,
universities and research institutions is incredibly important to
occupiers in this sector. Our campus at Regent's Place in London's
Knowledge Quarter is uniquely located in this regard. In September,
we negotiated with Meta a surrender of its lease of 1 Triton Square
- one of the two buildings it has leased at Regent's Place - for a
receipt of GBP149m. Although they had secured an occupier to take
over their lease, we believe there is more value to be created by
taking back the building given that market rents are now
significantly higher than the rent they were paying. We have a
flexible plan to add lab space on the bottom floors whilst
retaining best in class office space on upper floors, which will
accelerate our plans to reposition Regent's Place as London's
premier innovation and life sciences campus.
In Cambridge, given the acute shortage of lab and innovation
space we were pleased to have acquired the Peterhouse Technology
Park two years ago, and in this half we committed to the Peterhouse
Extension, a 96,000 sq ft lab enabled and lab fitted building. We
also secured one of the largest life sciences lettings in the UK
with a 48,000 sq ft pre-let to LGC, a leading global life sciences
company, at The Priestley Centre in Guildford.
Retail Parks
The second limb of the strategy we set in 2021, was to grow our
exposure to retail parks. We could see from our leasing activity
that retail parks had become the preferred physical retail format
for an increasing number of retailers due to the three "A's" -
affordability, adaptability and accessibility. The affordability of
retail property is generally assessed by reference to the occupancy
cost ratio - rent, rates and service charge as a percentage of
total sales. A combination of reduced rents, lower business rates,
already low service charges and robust sales reduced this ratio
from 17.7% in 2016 to 9.1% now - at this level a very broad range
of retailers can trade profitably. Retail parks are highly
accessible for consumers as they are typically located on major
arterial roads on the outskirts of towns and cities with ample free
carparking. This makes them ideal not only for shopping, but for
click and collect, returning goods to store and increasingly
shipping from store. The adaptability of a retail park unit, which
is essentially a basic steel box, is an important feature for
retailers who face significant challenges in remodeling stores on
the high street and in shopping centres.
The occupational fundamentals combined with low capital
expenditure requirements (half that of shopping centres) and
pricing below replacement cost make retail parks an attractive
investment. Consequently, we are increasing our exposure to parks
and have invested GBP410m since 2021 at an attractive blended yield
of 7.8%. Occupancy of our portfolio has increased to 99%, and over
the last 2.5 years retail parks have been the best performing
subsector in UK real estate, and we delivered a total property
return of 11.3% per annum outperforming the wider retail park
sector by 270bps.
We are sometimes asked whether the footfall and sales
outperformance of retail parks is just a Covid bounce because they
are open air and were perceived to be safer to visit. We believe it
is instead a permanent structural shift driven by the three "A's"
above. Affordability is driving incremental demand from discounters
and essential retailers and accessibility and adaptability are key
for the multichannel retailers. This is borne out by statistics on
store closings and openings - since 2016 there have been net
closures [10] of -3,749 and -1,272 on the high street and within
shopping centres respectively, but +572 net store openings at
retail parks reflecting this incremental demand.
LONDON Urban Logistics
Our urban logistics strategy is to deliver new space in London
by repurposing assets, like the Finsbury Square carpark, or
densifying existing industrial land with multistorey schemes like
our scheme in Enfield. Strong demand is underpinned by the growth
of e-commerce and rising customer expectations on the speed and
convenience of deliveries. Occupiers want to optimize their
distribution operations and lower costs, while at the same time
reducing their carbon footprint and pollution by using e-bikes and
e-vehicles for the last mile logistics. Over the last two decades,
significant amounts of industrial space in London has been
converted to other uses, which combined with strong demand has led
to very low vacancy of 0.4% [11] in inner London. This backdrop
plays well to our planning expertise and track record of delivering
complex developments in London. Our urban logistics development
pipeline has a gross development value of GBP1.3bn.
Since our full year results in May we have been busy. We have
received planning consents for our schemes at The Box in
Paddington, Mandela Way in Southwark, and Heritage House in
Enfield. In the half we also submitted plans for approval of our
schemes in Verney Road in Southwark, and in Thurrock.
Unsurprisingly, the financials of these projects have changed in
the last 18 months. Exit yields and construction costs are higher,
however, returns still look good as we have been able to mitigate
these headwinds by increasing the massing of schemes and rents have
grown faster than expected. We are pleased that returns are also
attractive when we use the original purchase price / land
value.
CAPITAL ALLOCATIOn
We actively recycle our capital to create value. Since we
launched our new strategy in 2021, we have disposed of GBP2.6bn of
dry office and non core retail assets at attractive prices,
reinvesting in developments, retail parks and our London urban
logistics pipeline. As a result of this capital recycling, 89% of
the portfolio is now in our chosen segments of campuses, retail
parks and London urban logistics.
Since March 2023 we have disposed of GBP170m [12] of non core
assets including an office and data centre portfolio. We expect to
continue to recycle capital and our priorities for capital
allocation remain unchanged.
The resilience of our balance sheet is of utmost importance as
it gives the ability to navigate macroeconomic uncertainties and
the flexibility to invest in opportunities as they arise. In
August, Fitch affirmed our Senior Unsecured credit rating at 'A'
with stable outlook. Our LTV is 36.9% (FY23 36.0%), Group Net Debt
to EBITDA is 6.0x (FY23 6.4x) and we have GBP1.7bn of undrawn
facilities and cash at September.
We will continue to buy retail parks opportunistically. They
have strong occupational fundamentals, values below replacement
costs, attractive yields and are earnings accretive upon
acquisition. Developments have created significant value for us
over the years. However, the "higher for longer" interest rate
environment has increased exit yields and finance costs. We have a
disciplined approach to developments and have adjusted our return
and yield on cost requirements to reflect this. Our pipeline is
focused on campuses and London urban logistics, both subsectors
where supply of new schemes is constrained. As a result, we are
securing higher than expected rents, which combined with levelling
off construction costs, is resulting in returns above our
investment hurdles. In this half, we committed to one new scheme,
the Peterhouse Expansion, a lab enabled building in Cambridge with
a forecast IRR of 12%. The next projects on our radar are 2
Finsbury Avenue, a scheme at Broadgate where we are having very
constructive pre-letting conversations, The Box, an urban logistics
scheme on our Paddington Central campus and Mandela Way, a
multistorey urban logistics scheme in Southwark.
We remain committed to shareholder distributions. Our dividend
policy is to pay 80% of underlying EPS and we consider other
shareholder distributions as and when appropriate.
SUSTAINABILITY
Our sustainability strategy has three pillars and we have
delivered further good progress against each in the half. Our
Greener Spaces pillar is centered around our commitment to
achieving a net zero carbon portfolio by 2030. We have a pathway
and set of targets to reduce both the embodied carbon in our
developments and the operational carbon across our portfolio. In
addition, we have a plan in place to improve the EPC ratings of the
portfolio to A or B to be fully MEES [13] compliant by 2030. In the
first half of FY24 we continued to make good progress. We increased
the percentage of the portfolio which is rated EPC A or B to 50%,
up from 45% at FY23, and we expect to be around 60% at FY24. We
estimate the total cost to improve the standing portfolio to EPC A
or B to be around GBP100m, of which two thirds will be recovered
through the service charge. By the end of FY24, we will have spent
a total of GBP20m on these initiatives, 70% of which will be
recovered via the service charge. We have continued to make good
progress reducing the operational energy and carbon intensity of
our portfolio, often in collaboration with our customers.
Our Thriving Places pillar focuses on our Social Impact
strategy. Highlights in the half included achieving Living Wage
accreditation. We recognize that people are key to the success of
our business and have always paid at least the real Living Wage to
our direct employees and across our developments. The accreditation
reflects the work we have done in recent years to encourage our
supply chain to do the same. We also celebrated 10 years of
Broadgate connect, our employment and training scheme that, in
partnership with the East London Business Alliance, connects
Broadgate businesses with local talent. Over the last ten years,
GBP8.9m of social value has been added by the program.
Against our Responsible Choices pillar, we achieved a GRESB
rating of 5*, up from 4* in FY23, for our standing investments and
for developments we are a global leader, retaining our 5* rating
and achieving a score of 99/100 [14] .
Outlook
Macroeconomic and geopolitical uncertainty remains elevated
given persistently high inflation and the wars in the Ukraine and
the Middle East. In the near term, property performance is likely
to continue to be dominated by movements in market interest rates.
However, with the portfolio NEY now at 6.1%, 180 bps higher than
the 5 year swap, and an increased likelihood we are approaching the
peak in base rates, we expect the strong occupational fundamentals
of our submarkets to reassert themselves as the primary driver of
medium term performance.
In May, we guided to rental growth in FY24 of 2-4% for campuses
and retail parks and 4-5% in London urban logistics. In September,
we upgraded our retail park rental growth guidance to 3-5%. Taking
account of the performance in the first half and the strong
occupational fundamentals, we expect full year performance to be at
the top end of the guidance ranges. In terms of earnings, we remain
comfortable with current market expectations for FY24.
Whilst the economic and geopolitical environment remains
uncertain, we expect to deliver 8-10% total accounting return per
annum over the medium term given our value-add approach and the
attractive fundamentals of campuses, retail parks and London urban
logistics.
MARKET
Macro-economic backdrop
Despite the uncertain UK macroeconomic outlook, we are seeing an
improvement in some leading indicators. While GDP forecasts
continue to adjust from quarter to quarter, the UK has thus far
avoided a recession, consumer confidence has been resilient and
labour markets have remained robust with unemployment at 4%.
London office market
In the wake of the mini budget, searches for London office space
paused, impacting take up in the first three quarters of 2023
(calendar year), which was 25% below the ten year average [15] .
However, the forward looking indicators in Q3 are very encouraging
with the volume of space under offer 8% above the 10 year average
and active demand 27% higher(15) . Demand remains focused on core
markets, with location a critical criteria for occupiers. The City
is performing particularly well with take up in Q3 exceeding the
long term average by 5%. The banking and financial sectors continue
to drive activity in both the City and West End, with most larger
deals and under offers, originating from these sectors. We are also
seeing increased demand for larger requirements. There are now 24
active requirements over 100,000 sq ft, compared with 11 at the
start of the year. [16] Furthermore, most of this demand is for
best in class space, which is shown in the high proportion of take
up for new buildings, reaching 71% in September [17] . Supply is
also constrained, with very low levels of best in class space being
delivered beyond 2025. The result is that we are seeing strong
rental growth for best in class space, particularly new space in
the development pipeline.
Investment markets were subdued in the first half of the year
with investors continuing to exercise caution in a high interest
rate environment with ongoing macroeconomic and geopolitical
uncertainty. Total volumes were GBP2.9bn across the City and West
End compared to GBP6.6bn in the same period last year.
Life sciences market
The Golden Triangle remains the focus for innovation and life
sciences occupiers and the current demand supply imbalance for lab
space continues to drive rents in these locations. Take up volumes
of life sciences space across the Golden Triangle remains subdued
due to limited supply, with availability in Cambridge and Oxford
being particularly acute. Volumes in the third quarter of 2023 are
38% below the five year average. [18] Demand for space in the
sector is very strong. Active requirements for science and
innovation space in the Golden Triangle totals 2.7m sq ft, far
outweighing the existing supply and space under construction.
Investment volumes in the first half of the year were quiet with
debt pricing impacting transaction volumes across all sectors,
including life sciences. Volumes in the half were GBP153m across
the Golden Triangle compared to GBP1.9bn in the same period last
year.
Retail market
Occupational markets have been strong in the half as the
consumer remained resilient. Retail parks continue to perform very
well with 510 new unit openings recorded in the first half of 2023
(calendar year), meaning the market is poised to exceed the long
term full year average total of 843 new openings. [19] Retail park
vacancy rates remain very low due to increased demand from
retailers who prefer the format and limited supply coming
through.
Investment volumes in the first half were GBP1.1bn down from
GBP2.3bn in the same period last year. However, investment volumes
are increasing quarter on quarter, due to the strong occupational
fundamentals combined with low capital expenditure requirements and
pricing below replacement cost making them an attractive
investment. Shopping centre volumes in the half were GBP297m, down
from GBP661m in the same period last year.
Logistics market
In London, take up in the first half of 2023 (calendar year) was
0.5m sq ft, tracking slightly below 2022, as businesses have taken
more time to consider larger capital investment in new properties.
However, agents report that there is now significant pent up
demand, as excess capacity acquired during 2021 and 2022 is now
full. Rents continue to grow, reflecting the strength of demand for
very centrally located space driven by the growth of e-commerce and
increased expectations for priority delivery and lack of available
stock, particularly in London. As a result, inner London vacancy is
0.4%. [20]
Investment volumes in the first half were GBP2.9bn, down from
GBP5.5bn in the same period last year.
BUSINESS REVIEW
Key metrics
30 September 31 March
Period ended 2023 2023
--------------------------------------------- ------------ ------------
Portfolio valuation GBP8,704m GBP8,898m
Occupancy(1) 96.2% 96.7%
Weighted average lease length to first break 5.0 yrs 5.7 yrs
30 September 30 September
Six months to: 2023 2022
--------------------------------------------- ------------ ------------
Total property return (0.2)% (1.0%)
- Yield shift +23 bps +17 bps
- ERV movement 3.2% 1.2%
- Valuation movement (2.5)% (3.0%)
Lettings/renewals (sq ft) over 1 year 1.3m 1.1m
Lettings/renewals over 1 year vs ERV +12.2% +14.7%
Gross capital activity GBP457m GBP894m
- Acquisitions GBP55m GBP47m
- Disposals(2) GBP(170)m GBP(694)m
- Capital investment GBP232m GBP153m
Net investment/(divestment) GBP117m GBP(494)m
--------------------------------------------- ------------ ------------
On a proportionally consolidated basis including the Group's
share of joint ventures and excluding non-controlling interests
1. Where occupiers have entered CVA or administration but are
still liable for rates, these are treated as occupied. If units in
administration are treated as vacant, then the occupancy rate would
reduce from 96.2% to 95.7%.
2. Of which GBP37m completed post period end.
Portfolio performance
Total
Valuation Yield property Net equivalent
Valuation movement ERV movement shift return yield
At 30 September 2023 GBPm % % bps % %
---------------------------------- --------- --------- ------------ ------ --------- --------------
Campuses 5,382 (4.0) 3.2 +32 (2.5) 5.3
Central London 4,790 (3.6) 3.3 +32 (2.1) 5.3
Canada Water & other Campuses 474 (9.2) 0.0 +21 (8.4) 5.7
Retail & London Urban Logistics 3,322 0.1 3.3 +12 3.7 6.9
Retail Parks 2,060 0.2 4.0 +13 3.5 6.7
Shopping Centres 751 0.0 2.6 +10 5.1 8.0
London Urban Logistics 270 0.6 3.1 +9 2.0 4.7
---------------------------------- --------- --------- ------------ ------ --------- --------------
Total 8,704 (2.5) 3.2 +23 (0.2) 6.1
---------------------------------- --------- --------- ------------ ------ --------- --------------
See supplementary tables for detailed breakdown
The value of the portfolio was down 2.5% driven by further yield
expansion of 23 bps across the portfolio. This was partly offset by
positive ERV growth of 3.2%.
Campus valuations were down 4.0%, with our West End portfolio
down 2.5% and City portfolio down 4.6%, reflecting yield expansion
of 27 bps and 38 bps respectively. While investment markets
continue to be impacted by macroeconomic and geopolitical
uncertainty, occupational demand has remained robust, particularly
for new, best in class buildings, located next to transport hubs
with strong sustainability credentials. We saw ERV growth of 3.2%
across campuses, with 3.5% and 3.2% ERV growth in our City and West
End office portfolio respectively, reflecting leasing activity and
limited supply.
The value of our retail park portfolio is marginally up 0.2% in
the period, with strong ERV growth of 4.0%, driven by occupier
demand and high occupancy on our parks, offsetting marginal outward
yield shift of 13 bps. The value of our shopping centres was flat,
with a 2.6% increase in ERV offsetting a 10 bps yield expansion.
Transaction volumes remained low, albeit with investor interest
continuing for best in class assets. In London urban logistics,
values increased marginally by 0.6%, with an increase in ERV of
3.1% offsetting an outward yield shift of 9 bps.
Campus offices outperformed the MSCI benchmark for All Offices
and Central London Offices by 380 bps and 340 bps respectively on a
total return basis for the six months to 30 September 2023. Retail
outperformed the MSCI All Retail benchmark on a total return basis
by 330 bps due to our outperformance across the subsectors, as well
as our weighting towards retail parks, which was the strongest
performing retail subsector. Despite the continued strength of
Industrials, our portfolio overall outperformed the MSCI All
Property total return index by 30 bps over the period and by 370
bps on a reweighted basis.
Capital activity
Retail
& London
Urban
Campuses Logistics Total
From 1 April 2023 GBPm GBPm GBPm
----------------------- -------- ---------- -----
Purchases - 55 55
Sales(1) (144) (26) (170)
Development Spend 188 3 191
Capital Spend 16 25 41
----------------------- -------- ---------- -----
Net Investment 60 57 117
----------------------- -------- ---------- -----
Gross Capital Activity 348 109 457
----------------------- -------- ---------- -----
On a proportionally consolidated basis including the Group's
share of joint ventures and excluding non-controlling interests
1. Of which GBP37m completed post period end
The total gross value of our capital activity since 1 April 2023
was GBP457m. The most significant transaction was the sale of six
office and data centres from the Cable and Wireless portfolio for
GBP125m [21] , reflecting a net initial yield (NIY) of 4.6%, 13%
ahead of book value.
We continue to be disciplined in our approach to capital
recycling within the retail portfolio. Since April 2023, we've
disposed of non core assets including superstores in Burton on
Trent and Coleraine for GBP8m and GBP10m. We also completed the
purchase of Westwood Retail Park in Thanet for GBP55m (NIY 8.1%).
This is a dominant retail park within the catchment area, which
benefits from excellent accessibility and is let to a strong mix of
retailers.
At Peterhouse in Cambridge, we've committed to a 96,000 sq ft
office and lab building, on the land adjacent to the Peterhouse Arm
Headquarters. Start on site commenced in July 2023 with PC targeted
for January 2025 and we are having encouraging discussions with
potential occupiers to pre-let this space.
Campuses
Key metrics
Period ended 30 September 31 March
2023 2023
--------------------------------------------- ------------ ------------
Portfolio valuation GBP5,382m GBP5,650m
Occupancy 93.8% 96.2%
Weighted average lease length to first break 5.8 yrs 7.2 yrs
--------------------------------------------- ------------ ------------
Six months to 30 September 30 September
2023 2022
--------------------------------------------- ------------ ------------
Total property return (2.5)% (1.3)%
- Yield shift +32 bps +18 bps
- ERV growth 3.2% 1.6%
- Valuation movement (4.0)% (2.7)%
Total lettings/renewals (sq ft) 368,000 494,000
Lettings/renewals (sq ft) over 1 year 265,000 433,000
Lettings/renewals over 1 year vs ERV +7.5% +18.4%
Like-for-like income(1) +0.6% +4.0%
--------------------------------------------- ------------ ------------
On a proportionally consolidated basis including the Group's
share of joint ventures and excluding non-controlling interests
1. Like-for-like excludes the impact of surrender premia, CVAs
& admins, provisions for debtors and tenant incentives, and
Storey. Including Storey like-for-like income would be -2.1% in H1
FY24 and +9.2% for H1 FY23
Campus operational review
Campuses were valued at GBP5.4bn, down 4.0%. This was driven by
yield expansion of 32 bps, which was partly offset by ERV growth of
3.2%. Lettings and renewals totalled 368,000 sq ft, 7.5% ahead of
ERV and 19.4% above previous passing rent. Weighted average lease
length is 5.8 years. Across our campuses, we are under offer on a
further 281,000 sq ft, 9.7% ahead of ERV.
Campus like-for-like income growth was +0.6% in the period
driven by strong leasing and asset management activity,
particularly at Broadgate and Paddington, which added GBP5m. The
timing of lease events can create fluctuations to our income and we
saw GBP4m of like-for-like campus expiries in the period. This was
the case at Storey and even more evident at Regent's Place, where,
as leases have expired, we have taken the opportunity to convert
space for innovation and life sciences. As a result, occupancy was
93.8%, slightly down compared to March 2023. If we adjust for the
recently completed asset management initiatives at Regent's Place,
occupancy across the portfolio was 95.8%.
Our campuses provide the great amenity, transport connectivity,
public realm and high quality sustainable buildings that businesses
are seeking post pandemic. Across our standing portfolio, we
benefit from a diverse group of high quality customers across
financial, corporate, science, health, technology and media
sectors.
Broadgate
Broadgate saw a valuation decline of 4.9% predominantly driven
by outward yield shift of 35 bps, partially offset by ERV growth of
3.7%. Occupancy has increased to 97.0% from 94.9% six months ago,
reflecting the high quality of the space, amenities and public
realm as well as its location next to Liverpool Street station, a
key transport hub at the intersection of London's financial
district, the artisan quarter of Spitalfields, the creative
district of Shoreditch and the Old Street tech belt. Leasing
activity at Broadgate (excluding Storey) covered 135,000 sq ft, of
which 124,000 sq ft were long term deals, 1.8% ahead of ERV. The
most significant deal was a regear to the Bank of Nova Scotia at
Broadgate Tower, covering 39,000 sq ft, extending their lease to
2035. There is a further 155,000 sq ft under offer, 8.3% ahead of
ERV. We are seeing strong demand for developments at Broadgate and
are in discussions on a potential pre-let at 2 Finsbury Avenue.
We are making good progress on asset management initiatives to
improve the sustainability credentials of several buildings on the
campus. At 10 Exchange Square, LED lighting has been installed
bringing the building's EPC rating to B and at 201 Bishopsgate, the
installation of all electric heating has improved the building's
EPC rating to B. Looking ahead to the next six months, we are
targeting an EPC B rating at 199 Bishopsgate, where we have taken
the opportunity to incorporate energy efficient interventions at
little incremental cost since they are part of the wider
refurbishment.
Our social impact initiatives continue to focus on forging
connections between our occupiers and local communities and we were
pleased to have run a successful pilot of the Social Mobility
Business Partnership's Insights and Skills Programme alongside one
of our occupiers. Through the Young Readers Programme, in
partnership with the National Literacy Trust, 190 school children
participated in activities across the campus.
Regent's Place
Regent's Place saw valuation declines of 1.6%, driven by outward
yield shift of 28 bps, which has been offset by ERV growth of 2.0%.
Occupancy at the campus is 87.6% due to the timing of recently
completed asset management initiatives, as we take back space on
the campus to refurbish it into lab and innovation space. If we
adjust for this, occupancy is 93.9%. We currently have 122,000 sq
ft of space under offer and in negotiations at Regent's Place
across 20 Triton Street and 350 Euston Road.
In September, we negotiated with Meta a surrender of its lease
of 1 Triton Square - one of the two buildings it has leased at
Regent's Place - for a receipt of GBP149m. Although Meta had
secured an occupier to take over their lease, we believed there was
more value to be created by taking back the building given that
market rents are now significantly higher than the rent they were
paying. We have a flexible plan to add a mix of fitted and lab
enabled space and Storey, our flexible office product, on the
bottom floors whilst retaining best in class office space on upper
floors. Our Innovation Advisory Council, established in May, which
is formed of five leading research scientists and executives, is
working with us on this initiative.
Regent's Place continues to gain momentum as a life sciences and
innovation hub. In the half, we have signed an Agreement for Lease
with Impact Hub London, the incubator behind innovation and life
science organisations in the Knowledge Quarter, to take the
affordable workspace at 1 Triton Square. As part of this agreement,
the Knowledge Quarter HQ will be located there. This builds on the
Memorandum of Understanding we signed with UCL in May, which will
give our occupiers access to their technical services and
facilities. It will also mean we are in partnership with an
organisation that is a very effective incubator for spin out
businesses and the next generation of occupiers.
Our social programmes at Regent's Place include partnering with
Hypha Studios, a charity matching creatives with empty spaces
across London. The organisation has opened at a vacant retail unit
in Euston Tower, which will feature exhibitions from local artists.
In addition, Little Village, a baby bank, will open on the campus.
Through the Young Readers Programme, in partnership with the
National Literacy Trust, 150 school children participated in
activities across the campus.
Paddington Central
Paddington Central saw valuation declines of 8.9% driven by
outward yield shift of 50 bps. This has been partially offset by
ERV growth of 9.3%. With occupancy at the campus very high at
99.7%, leasing activity (excluding Storey) covered 95,000 sq ft,
6.9% ahead of ERV. We are under offer on a further 27,000 sq ft to
a life sciences occupier at 3 Sheldon Square, which is currently
under refurbishment. The building is already 65% pre-let to Virgin
Media O2 and this deal would take it to 86% pre-let four months
ahead of completion.
As part of our social impact initiatives, we continue to provide
affordable space to the Ukrainian Institute to run their English
language courses. To date, the classes have benefitted 1,020
displaced Ukrainians, with 760 individuals gaining English
qualifications. In partnership with occupiers on the campus, we
hosted Mastering My Future insight days for 26 young people to
experience different careers at Paddington Central. Through the
Young Readers Programme, in partnership with the National Literacy
Trust, 196 school children participated in activities across the
campus.
Storey: our flexible workspace offer
Storey is part of our campus proposition and provides occupiers
with the flexibility to expand and contract depending on their
requirements. The quality of the space, central location and access
to campus amenities make the space appealing to scale up businesses
for their HQ's. Customers on our campuses also benefit from access
to ad hoc meeting and events space at Storey Club and this service
is an increasingly important factor when making workspace
decisions.
Storey is currently operational across 300,000 sq ft, with a
further 44,000 sq ft in the pipeline, including 35,500 sq ft at 201
Bishopsgate on our Broadgate campus, which is due to complete in Q2
2024 and 7,500 sq ft at 2 Kingdom Street on our Paddington campus
completing in May 2024.
Leasing activity covered 71,000 sq ft in the half. Storey rents
(after property operating expenses) command an average premium over
traditional net effective rents of 18% across the stabilised
portfolio. Storey occupancy is at 87% due to timings of
expiries.
Canada Water
The valuation of Canada Water declined 10.1%, driven by a 35 bps
outward yield shift on the offices. The first phase of the Canada
Water development, which comprises a mix of workspace, retail,
leisure and residential is progressing well and is on programme.
Roberts Close (K1), which consists of 79 affordable homes is on
track to complete at the end of the calendar year. 1-3 Deal Porters
Way (A1), which is a mix of 186 residential units (The Founding)
and workspace and The Dock Shed (A2), workspace with a leisure
centre on the ground floors is due to complete in Q4 2024.
We are targeting rents on the workspace from GBP50 psf.
Residential sales for The Founding launched in February and current
sales are above targeted pricing levels, achieving in excess of
GBP1,250 psf, which is attractive relative to competing
schemes.
The London Borough of Southwark held an initial 20% interest in
the scheme and has the ability to participate in the development up
to a maximum of 20% with returns pro-rated accordingly. Although it
has elected not to fully participate in Phase 1, Southwark has
pre-purchased the 79 affordable homes at Roberts Close and have
part funded the 55,000 sq ft leisure centre in The Dock Shed.
In the period, we achieved planning consent for Zone G of the
Masterplan, which includes a replacement Tesco store, 384 homes of
which 42% are affordable housing, some smaller flexible retail
space and a new 3.5 acre public park. We are intending to submit
our revised plans for a cultural and office scheme at the
Printworks, in Zone H of the Masterplan shortly which together with
the planning permissions received in July 2022 for Zones L and F,
represent the next phases of the Canada Water Masterplan.
Building on the success of the TEDI modular campus we recently
completed the build of a 33,000 sq ft modular innovation campus on
the site. We have completed our first letting to CheMastery, a
startup aiming to increase the efficiency of chemical research and
manufacturing. We are under offer on additional space to a clean
energy tech business with good interest from other life science and
innovation businesses for the remainder. Canada Water is well
located to cater to innovation and life sciences businesses, due to
its proximity to three leading teaching and research hospitals
including Guy's Hospital in London Bridge, St Thomas' Hospital in
Waterloo and King's College Hospital in Denmark Hill.
Retail & London Urban Logistics
Key metrics
30 September 31 March
Period ended 2023 2023
--------------------------------------------- ------------ ------------
Portfolio valuation GBP3,322m GBP3,248m
- Of which Retail Parks GBP2,060m GBP1,976m
- Of which Shopping Centres GBP751m GBP746m
- Of which London Urban Logistics GBP270m GBP263m
Occupancy(1) 98.4% 97.3%
Weighted average lease length to first break 4.5 yrs 4.6 yrs
--------------------------------------------- ------------ ------------
Six months to 30 September 30 September
2023 2022
--------------------------------------------- ------------ ------------
Total property return 3.7% (0.3)%
- Yield shift +12 bps +17 bps
- ERV growth 3.3% 0.6%
- Valuation movement 0.1% (3.6)%
Total lettings/renewals (sq ft) 1,225,000 1,017,000
Lettings/renewals (sq ft) over 1 year 1,049,000 698,000
Lettings/renewals over 1 year vs ERV +14.2% +10.3%
Like-for-like income(2) +5.2% +0.8%
--------------------------------------------- ------------ ------------
On a proportionally consolidated basis including the Group's
share of joint ventures and excluding non-controlling interests
1. Where occupiers have entered CVA or administration but are
still liable for rates, these are treated as occupied. If units in
administration are treated as vacant, then the occupancy rate for
Retail would reduce from 98.4% to 97.5%.
2. Like-for-like excludes the impact of surrender premia, CVAs
& admins and provisions for debtors and tenant incentives.
Retail & London Urban Logistics operational review
Valuations in these subsectors have stabilised in the half.
Retail park and London urban logistics values were up 0.2% and 0.6%
respectively, slightly outperforming shopping centres, which were
flat. Average rental growth across the three subsectors was 3.3% in
the half, exceeding the 3% growth delivered in 12 months to March
2023, and offsetting marginal yield increase of 12 bps, as the
impact of rising interest rates have largely now fed through.
Occupationally, retail ERVs continue to grow with retail parks
performing strongly in the half. ERVs were up 4.0% and 2.6% for
retail parks and shopping centres respectively.
We continue to lease well, with 1.2m sq ft of deals signed in
the period, of which half were at our retail parks. Deals completed
over the period were 14.2% ahead of ERV and 9.5% below previous
passing rent. Occupancy across the three subsectors remains high at
98.4%. Like-for-like income was up GBP6m (5.2%) as we kept our
retail parks full and filled vacant space in our shopping
centres.
Weighted average lease length is 4.5 years. We had 344,000 sq ft
of rent reviews that were agreed 0.2% above previous passing rent.
In total, we have 844,000 sq ft of deals under offer, 20.5% above
March 2023 ERV.
Retail Parks
We continue to see significant leasing momentum across our
retail parks with 629,000 sq ft of deals signed in the half, 14.9%
above ERV and 8.3% below previous passing rent. We have a further
697,000 sq ft under offer, 19.3% above ERV and 8.9% below previous
passing rent. Occupancy remains high at 99%, reflecting strong
demand and limited supply. Retail parks are the preferred format
for a wide range of customers due to the format's affordability,
adaptability and accessibility, which in September, led us to
upgrade ERV growth guidance from 2-4% to 3-5%.
Key deals in the half include five deals with Frasers Group
totaling 72,000 sq ft, including Sports Direct doubling in size at
Teesside Park and Wheatley Retail Park and a new letting to
FLANNELS at Teesside Park. At Glasgow Fort, fashion retailer
Primark took 23,000 sq ft of new space and ZARA opened their 37,000
sq ft flagship store. At Teesside Park, we've exchanged on 165,000
sq ft of leasing in the half, including 43,000 sq ft to value
retailer B&M, with a further 55,000 sq ft under offer. We have
also agreed four lease renewals with Asda totaling 88,000 sq ft and
3 deals with Hotel Chocolat covering 11,000 sq ft.
Shopping Centres
We continue to actively manage our shopping centres improving
occupancy and driving rents forward. We have completed 500,000 sq
ft of deals, on average 13.1% ahead of ERV and 12.7% below previous
passing rent. This activity improved occupancy which is now at
96.8%. Notable recent deals include 124,000 sq ft to Frasers Group
in the former Debenhams at Meadowhall and 43,000 sq ft to Inditex
(Zara) also at Meadowhall.
LONDON URBAN LOGISTICS
In London urban logistics we've assembled a 2.9m sq ft pipeline
with a GDV of GBP1.3bn. We continue to make good progress, with
planning consent achieved at The Box in Paddington, Mandela Way in
Southwark and Heritage House in Enfield, in the half. We have also
submitted planning for a second multi-storey scheme at Verney Road
in Southwark and we expect to commit to The Box and Mandela Way
shortly.
Retail Footfall and Sales
02 April 2023 - 30
September 2023
-------------- ----------------------------------
Benchmark
% of 2022(1) outperformance(2,3)
-------------- ------------ --------------------
Footfall
- Portfolio 101.0% n/a
- Retail Parks 99.6% n/a
Sales
- Portfolio 106.3% 270 bps
- Retail Parks 107.6% 395 bps
-------------- ------------ --------------------
1. Compared to the equivalent weeks in 2022
2. Footfall benchmark: Springboard Overall & Springboard
Retail Parks only
3. Sales benchmark: BRC UK Total Instore retail sales
Developments
ERV
Current Cost to Let & under
Sq ft Value complete ERV offer
At 30 September 2023 '000 GBPm GBPm GBPm GBPm
--------------------- ------ ------- --------- ----- -------------
Committed 1,916 783 417 70.8 27.2
Near term 1,872 528 742 96.9 -
Medium term 8,235 - - - -
--------------------- ------ ------- --------- ----- -------------
Total pipeline 12,023 1,311 1,159 167.7 27.2
--------------------- ------ ------- --------- ----- -------------
On a proportionally consolidated basis including the Group's
share of joint ventures (except area which is shown at 100%)
Development Pipeline
Developments are a key driver of long term value creation for
British Land. Altogether, we expect our development pipeline to
deliver profits of around GBP1.4bn. Against a backdrop of higher
interest rates, which have pushed yields out and impacted funding
costs, we have increased the return hurdles for our new
developments. We now target IRRs of 12-14% on our campuses and mid
teens on our London urban logistics developments. Because we are in
the right parts of our markets with good supply demand tension, we
are securing higher rents. Higher funding costs have resulted in
limited new supply coming on stream and construction cost inflation
appears to be levelling off.
We are currently on site with 1.9m sq ft of space, which will
target BREEAM Outstanding (for offices) and Excellent (for retail),
delivering GBP70.8m of ERV, with 38% already pre-let or under
offer. Excluding build to sell residential and retail space, which
we will let closer to completion, we are 43% pre-let or under offer
by ERV. Total development exposure is now 4.9% of portfolio gross
asset value. Speculative exposure, which is based on ERV and
includes space under offer, is 7.7% and within our internal risk
parameter of 12.5%.
Against a backdrop of rising inflation and given broader market
uncertainty, development valuations were down 2.6% driven primarily
by outward yield shift.
Committed Developments
Our committed pipeline stands at 1.9m sq ft and in the period we
have committed to the Peterhouse Expansion in Cambridge, delivering
a 96,000 sq ft office and lab building, into a highly constrained
market.
The development of 1 Broadgate is progressing on programme and
the office space is fully pre-let or under option to JLL and Allen
& Overy, demonstrating the strong demand for best in class,
sustainable buildings. Norton Folgate is on track to complete later
this year. We have let over a third of the office space to Reed
Smith, and are having good discussions with a range of occupiers on
the rest of the space.
3 Sheldon Square is currently undergoing a full refurbishment,
significantly minimising the embodied carbon of the development by
retaining and reusing the existing structure and materials. The
building is already 65% let to Virgin Media O2, which signed 83,000
sq ft for their UK Headquarters in February 2023 and we are in
negotiations on a further 27,000 sq ft of space, which will take
the building to 86% let ahead of completion in Q1 2024.
We are making good progress on the development of the first
phase of Canada Water, which comprises of three buildings covering
578,000 sq ft. We are targeting BREEAM Outstanding on all the
commercial space, BREEAM Excellent on retail and a minimum of HQM
One 4(* [22]) for private residential.
The development of phase 2 at Aldgate Place is progressing to
plan. The scheme comprises 159 premium rental apartments with
19,000 sq ft of office space and 8,000 sq ft of retail and leisure
space. It is well located, adjacent to Aldgate East and between
Liverpool Street and Whitechapel stations. Completion is expected
in Q2 2024.
We are also on site with an 84,000 sq ft development at The
Priestley Centre in Guildford, which will be a mix of innovation
and lab enabled space. The building is already 62% pre-let to LGC,
a leading global life sciences company, ahead of completion in Q1
2024.
Committed Developments
100% sq Gross Yield
BL Share ft PC Calendar ERV on Cost(2)
As at 30 September 2023 Sector % '000 Year GBPm(1) %
------------------------------- -------------- -------- ------- ----------- -------- -----------
The Priestley Centre Life Sciences 100 84 Q1 2024 3.3 8.1
Norton Folgate Office 100 335 Q4 2023 24.4 5.4
3 Sheldon Square Office 25 140 Q1 2024 2.6 6.4
Aldgate Place, Phase 2 Residential 100 138 Q2 2024 6.7 5.0
Peterhouse Western Expansion Life Sciences 100 96 Q1 2025 4.7 6.4
1 Broadgate Office 50 545 Q2 2025 20.0 6.0
Canada Water(3)
blended
Roberts Close (Plot K1) Residential 50 62 Q4 2023 - 7.0
-----------
1-3 Deal Porters Way (Plot A1) Mixed use 50 270 Q4 2024 3.6
-----------
The Dock Shed (Plot A2) Mixed use 50 246 Q4 2024 5.5
------------------------------- -------------- -------- ------- ----------- -------- -----------
Total Committed 1,916 70.8
----------------------------------------------- -------- ------- ----------- -------- -----------
1. Estimated headline rental value net of rent payable under
head leases (excluding tenant incentives).
2. Gross yield on cost is calculated by dividing the ERV of the
project by the total development costs, including the land value at
the point of commitment, and any actual / estimated capitalisation
of interest.
3. The London Borough of Southwark has confirmed they will not
be investing in Phase 1, but retain the right to participate in the
development of subsequent plots up to a maximum of 20% with their
returns pro-rated accordingly.
Reflecting the higher interest rate environment exit yields are
c.100 bps higher than when we committed to Norton Folgate, 1
Broadgate, Aldgate and Canada Water Phase 1, which has reduced
their IRRs to c.3% (compared to a negative total return for MSCI
over this period [23] ). There is c.GBP70m of profit to come on
these schemes. We expect the IRRs and profit to come to improve
given the strong rental growth we are seeing in our markets. On the
remaining projects we committed to after summer 2022, the outward
shift in yields has been less (c.50 bps) and they are forecast to
make c.12% IRRs off the original land values.
Near Term Pipeline
Our near term pipeline covers 1.9m sq ft. The largest scheme is
2 Finsbury Avenue, where we have planning consent for a 747,000 sq
ft best in class, sustainable office building at Broadgate. We are
already having very positive pre-let discussions on the building
and although the development is not committed, we have commenced
demolition and basement works to improve optionality. 1 Triton
Square is now part of our near term pipeline, where we have the
opportunity to repurpose the building for innovation and life
sciences occupiers. We have a flexible plan to add lab space and
Storey on the bottom floors whilst retaining best in class office
space on upper floors.
Our near term pipeline also includes our first three London
urban logistics developments, The Box at Paddington, Mandela Way in
Southwark and Verney Road also in Southwark. In the half, we
achieved planning consent for Mandela Way and The Box, and we have
submitted planning for a multi-storey scheme at Verney Road in
Southwark. We expect to commit to The Box and Mandela Way shortly.
These schemes have IRRs of around 20% and will provide flexible
space for a range of customers.
Medium Term Pipeline
Our medium term pipeline covers 8.2m sq ft, the largest of which
are the future phases of the Canada Water Masterplan, which
accounts for 4.2m sq ft and Euston Tower, where we have an exciting
opportunity to deliver a highly sustainable innovation and lab
enabled building in London's Knowledge Quarter.
London urban logistics opportunities account for 2.4m sq ft of
medium term opportunities. This includes Thurrock, where we have
submitted plans for a 644,000 sq ft two-storey logistics scheme
east of London; Heritage House, Enfield where we have achieved
planning for a two-storey logistics scheme totalling 437,000 sq ft
and Hannah Close in Wembley, where there is potential to deliver
668,000 sq ft of well located, multi-storey urban logistics space,
within the M25.
FINANCE REVIEW
Six months to 30 September 30 September
2023 2022(1)
------------------------------------------------------ ------------ ------------
Underlying Profit(2,3) GBP142m GBP138m
Underlying earning per share(2,3) 15.2p 14.7p
IFRS (loss) after tax GBP(61)m GBP(32)m
Dividend per share 12.16p 11.60p
Total accounting return(2) (2.0)% (2.8)%
------------------------------------------------------ ------------ ------------
As at 30 September 31 March
2023 2023
EPRA Net Tangible Assets per share(2,3) 565p 588p
EPRA Net Disposal Value per share(2,3) 594p 606p
IFRS net assets GBP5,367m GBP5,525m
------------------------------------------------------ ------------ ------------
LTV(4,5,6) 36.9% 36.0%
Net Debt to EBITDA (Group)(4,7) 6.0x 6.4x
Net Debt to EBITDA (proportionally consolidated)(4,5) 8.0x 8.4x
Weighted average interest rate(5) 3.4% 3.5%
Senior Unsecured credit rating A A
------------------------------------------------------ ------------ ------------
1. Prior period comparatives have been restated for a change in
accounting policies in respect of rental concessions and tenant
deposits (as disclosed in Note 1 of the condensed interim financial
statements).
2. See Note 2 to condensed interim financial statements for
definition and calculation.
3. See Table B within supplementary disclosures for
reconciliations to IFRS metrics.
4. See Note 9 to condensed interim financial statements for
definition, calculation and reference to IFRS metrics.
5. On a proportionally consolidated basis including the Group's
share of joint ventures and excluding non-controlling
interests.
6. EPRA Loan to value is disclosed in Table E of the condensed
interim financial statements.
7. Net Debt to EBITDA on a Group basis excludes non-recourse and
joint venture borrowings, and includes distributions from
non-recourse companies and joint ventures.
Overview
Operational momentum continued in the period driven by
like-for-like rental growth, a tight grip on costs and collection
of historic Covid arrears. Underlying Profit and Underlying
earnings per share (EPS) were up 3.4% at GBP142m and 15.2p
respectively. Based on our policy of setting the dividend at 80% of
Underlying EPS, the Board has proposed an interim dividend of
12.16p per share, up 4.8%. The growth in the dividend is higher
than Underlying EPS growth due to the impact of the rental
concession restatement in the prior period.
IFRS loss after tax for the period to 30 September 2023 was
GBP61m, compared with a loss after tax for the prior period to 30
September 2022 of GBP32m. The movement period on period primarily
reflects a larger downward valuation movement on the Group's
properties and those of its joint ventures, lower net capital
finance income from mark-to-market gains on the derivatives hedging
the interest rate on our debt, which is offset by the capital
uplift from the surrender premium received at 1 Triton Square.
Overall valuations have fallen by 2.5% on a proportionally
consolidated basis resulting in a decrease in EPRA NTA per share of
3.9%. Including dividends of 11.04p per share paid during the
period, total accounting return was -2.0%.
Group Net Debt to EBITDA improved by 0.4x to 6.0x, and Net Debt
to EBITDA on a proportionally consolidated basis also improved by
0.4x to 8.0x, driven by the growth in Underlying earnings and
capital activity in the period.
Loan to value (LTV) on a proportionally consolidated basis has
increased marginally by 90 bps from 36.0% at 31 March 2023 to 36.9%
at 30 September 2023. This reflects the valuation declines noted
above and capital expenditure on our committed development
pipeline, largely offset by the sale of an office and data centre
portfolio and the 1 Triton Square surrender receipt, both of which
completed in September 2023.
Our financial position remains strong with GBP1.7bn of undrawn
facilities and cash as at 30 September 2023. Based on our current
commitments and facilities, we have no requirement to refinance
until mid-2026.
We continue to have good access to finance markets. Since March
we completed GBP600m of financing activity for the Group. This
included the extension of GBP250m in two existing RCFs by an
additional year to 2028, and post period end we completed four new
5 year term loans totalling GBP350m, also maturing 2028, on
favourable terms.
Our weighted average interest rate at 30 September 2023 was
3.4%, a 10 bps decrease from 31 March 2023. The impact of increased
rates on our interest costs is limited by our hedging which
includes fixed rate debt, interest rate swaps to fixed rate and
caps where the strike rates are below current SONIA. The interest
rate on our debt is 99% hedged for the six months to March 2024
and, 84% hedged on average over the next five years.
We have an advantageous debt structure with access to diverse
sources of finance through debt raised by British Land for the
Group and in our joint ventures. Debt in British Land (except for
the legacy debentures) is unsecured with no interest cover
covenants. We retain significant headroom to our unsecured debt
covenants; at September 2023 the Group could withstand a fall in
asset values across the portfolio of 45% before reaching the
covenant limits, prior to taking any mitigating actions. Joint
venture debt is secured on the assets of the relevant entity,
non-recourse to the Group, and the majority is "covenant light"
with no LTV default covenants.
Fitch Ratings, as part of their annual review in August 2023,
affirmed all our credit ratings with a stable outlook, including
the Senior Unsecured rating at 'A'.
Underlying Profit
GBPm
----------------------------------------------------------------------- ----
Underlying Profit for the six months ended 30 September 2022 138
----------------------------------------------------------------------- ----
Disposals (7)
Acquisitions 3
Developments (7)
Like-for-like net rent 4
CVAs, administrations and provisions for debtors and tenant incentives 9
Net finance costs, administrative costs & fee income 2
----------------------------------------------------------------------- ----
Underlying Profit for the six months ended 30 September 2023 142
----------------------------------------------------------------------- ----
1. Prior year comparatives have been restated for a change in
accounting policy in respect of rental concessions (as disclosed in
Note 1 of the condensed interim financial statements).
Underlying Profit increased by GBP4m, with like-for-like net
rental growth, strong cost control, improved fee income, and the
collection of historic Covid arrears offsetting the impacts of net
divestment and properties going into development and the
incremental finance costs associated with our development
pipeline.
Underlying Profit for the period reduced by GBP7m as a result of
the GBP0.9bn disposal of mature assets (primarily the sale of a 75%
interest in the majority of our assets in Paddington Central) over
the last 18 months. This was offset by the GBP0.2bn of acquisitions
in Retail Parks, London Urban Logistics and innovation
opportunities which resulted in a GBP3m increase to Underlying
Profit.
Proceeds from sales have been deployed into our development
pipeline and value accretive acquisitions. Our committed schemes
are expected to generate an ERV of GBP70.8m, of which 38% is
already pre-let or under offer. In the period developments reduced
Underlying Profit by GBP7m as properties have moved into
development and finance costs increased due to incremental spend.
Interest on development expenditure is capitalised at the Group's
weighted average interest rate at 30 September 2023 of 2.6% (30
September 2022: 3.0%) which is currently below the Group's marginal
cost of borrowing.
Like-for-like net rental growth across the portfolio was 2.1% in
the period, adding GBP4m to net rents.
CVAs, administrations and provisions made against debtors and
tenant incentives improved by GBP9m compared to the prior period.
This improvement is primarily due to the one-off collection of
Covid arrears relating to Arcadia in the period of GBP12m.
Administrative costs were GBP1m lower period on period as we
continue to focus on cost control, whilst fee income from our joint
ventures increased GBP2m. Finance costs were GBP1m higher.
Presentation of financial information and alternative
performance measures
The Group financial statements are prepared under IFRS
(UK-adopted International Accounting Standards) where the Group's
interests in joint ventures are shown as a single line item on the
income statement and balance sheet and all subsidiaries are
consolidated at 100%.
Management considers the business principally on a
proportionally consolidated basis when setting the strategy,
determining annual priorities, making investment and financing
decisions and reviewing performance. This includes the Group's
share of joint ventures on a line-by-line basis and excludes
non-controlling interests in the Group's subsidiaries. The
financial key performance indicators are also presented on this
basis.
A summary income statement and summary balance sheet which
reconcile the Group income statement and balance sheet to British
Land's interests on a proportionally consolidated basis are
included in Table A within the supplementary disclosures.
Management uses a number of performance metrics in order to
assess the performance of the Group and allow for greater
comparability between periods, however, does not consider these
performance measures to be a substitute for IFRS measures.
Management monitors Underlying Profit as it is an additional
informative measure of the underlying recurring performance of our
core property rental activity and excludes the non-cash valuation
movement on the property portfolio when compared to IFRS metrics.
It is based on the Best Practices Recommendations of the European
Public Real Estate Association (EPRA) which are widely used
alternate metrics to their IFRS equivalents, with additional
Company adjustments when relevant (see Note 2 in the condensed
interim financial statements for further detail).
Management monitors EPRA NTA as this provides a transparent and
consistent basis to enable comparison between European property
companies. Linked to this, the use of Total Accounting Return
allows management to monitor return to shareholders based on
movements in a consistently applied metric, being EPRA NTA, and
dividends paid.
Loan to value (proportionally consolidated) and Net Debt to
EBITDA (Group and proportionally consolidated) are monitored by
management as key measures of the level of debt employed by the
business to meet its strategic objectives, along with a measurement
of risk. It also allows comparison to other property companies who
similarly monitor and report these measures. The definitions and
calculations of Loan to value and Net Debt to EBITDA are shown in
Note 9 of the condensed interim financial statements.
Income statement
1.1 Underlying Profit
Underlying Profit is the measure that we use to assess income
performance. This is presented below on a proportionally
consolidated basis. In the period to 30 September 2023, GBP25m of
rent receivable, GBP149m of surrender premia receivable, and GBP54m
of tenant incentive impairment were excluded from the calculation
of Underlying Profit(1) (see Note 2 of the condensed interim
financial statements for further details). No company adjustments
were made in the period to 30 September 2022.
Six months to Section 30 September 30 September
2023 2022(2)
GBPm GBPm
----------------------------------------------- ------- ------------ ------------
Gross rental income 246 253
Property operating expenses (15) (24)
----------------------------------------------- ------- ------------ ------------
Net rental income 1.3 231 229
----------------------------------------------- ------- ------------ ------------
Net fees and other income 11 9
Administrative expenses 1.4 (43) (44)
Net financing costs 1.5 (57) (56)
----------------------------------------------- ------- ------------ ------------
Underlying Profit 142 138
----------------------------------------------- ------- ------------ ------------
Underlying tax (1) (1)
Non-controlling interests in Underlying Profit 1 1
EPRA and Company adjustments(3) (203) (170)
----------------------------------------------- ------- ------------ ------------
IFRS (loss)/profit after tax 2 (61) (32)
----------------------------------------------- ------- ------------ ------------
Underlying EPS 1.2 15.2p 14.7p
IFRS basic EPS 2 (6.6)p (3.5)p
Dividend per share 3 12.16p 11.60p
----------------------------------------------- ------- ------------ ------------
1. On 25 September 2023, the Group completed a deed of surrender
in relation to an in-force lease of one of its investment
properties. The consideration for the surrender was a GBP149m
premium paid by the tenant on the completion date. In line with the
requirements of IFRS 16, the surrender transaction was treated as a
modification to the lease, with the surrender premium received
recognised in full through the income statement at the point of
completion, which represented the modified termination date of the
lease. At the point of modification, the lease had associated
tenant incentive balances of GBP54m, and as the right to receive
these amounts was extinguished through the lease modification, with
an impairment recognised in full through the income statement at
the point of completion. Also at the point of modification, the
lease had an associated deferred lease premium balance of GBP25m,
which in line with the surrender premium received, was recognised
in full through the income statement at the point of completion.
Owing to the unusual and significant size and nature of this
transaction, and in line with the Group's accounting policies, all
elements of the transaction have been included within the Capital
and other column of the income statement.
2. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions (as disclosed in
Note 1 of the condensed interim financial statements).
3. EPRA adjustments consist of investment and development
property revaluations, gains/losses on investment and trading
property disposals, changes in the fair value of financial
instruments, associated close out costs and related deferred tax.
Company adjustments consist of items which are considered to be
unusual and/or significant by virtue of their size or nature. These
items are presented in the 'capital and other' column of the
consolidated income statement.
1.2 Underlying EPS
Underlying EPS was 15.2p, up 3.4%. This reflects the Underlying
Profit increase of 3.4%, and the GBP1m tax charge in the
period.
1.3 Net rental income
GBPm
----------------------------------------------------------------------- ----
Net rental income for the six months ended 30 September 2022 229
----------------------------------------------------------------------- ----
Disposals (12)
Acquisitions 6
Developments (5)
Like-for-like net rent 4
CVAs, administrations and provisions for debtors and tenant incentives 9
----------------------------------------------------------------------- ----
Net rental income for the six months ended 30 September 2023 231
----------------------------------------------------------------------- ----
1. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions (as disclosed in
Note 1 of the condensed interim financial statements).
Disposals of income producing assets over the last 18 months
reduced net rents by GBP12m in the period, primarily relating to
the sale of a 75% interest in the majority of our assets in
Paddington Central. The proceeds from sales are being reinvested
into value accretive acquisitions and developments. Acquisitions
have increased net rents by GBP6m, primarily as a result of the
purchase of nearly GBP0.2bn retail parks in Farnborough, Preston,
and Thanet. Developments have decreased net rents by GBP5m, driven
by 3 Sheldon Square going into development and a one-off rate
rebate received on Euston Tower in the prior period, where we
de-rated it for development. The committed development pipeline is
expected to deliver GBP70.8m of ERV in future years.
Like-for-like net rental growth across the portfolio was 2.1% in
the period, adding GBP4m to net rents.
Campus like-for-like net rental growth was driven by strong
leasing and asset management activity, adding GBP5m to net rents in
the period, offset by expiries which reduced net rent by GBP4m.
Storey like-for-like rent declined by GBP2m, impacted by the timing
of expiries. Like-for-like net rental growth for Retail &
London Urban Logistics was GBP6m, reflecting good leasing in
Shopping Centres and continued high occupancy on our Retail
Parks.
CVAs, administrations and provisions made against debtors and
tenant incentives improved by GBP9m compared to the prior period.
This improvement is primarily due to the collection of Covid
arrears relating to Arcadia in the period of GBP12m. We also
continue make good progress on prior year debtors with cash
collection now in line with pre-pandemic levels.
1.4 Administrative expenses
Administrative expenses of GBP43m in the period are marginally
lower period on period, despite the inflationary environment, at
GBP43m as a result of our continued focus on cost control. The
Group's EPRA operating cost ratio decreased to 14.8% (September
2022: 19.5%) through our cost control, higher fee income from our
joint ventures and by the one-off collection of historic Covid
arrears.
1.5 Net financing costs
GBPm
--------------------------------------------------------------- ----
Net financing costs for the six months ended 30 September 2022 (56)
--------------------------------------------------------------- ----
Net divestment 2
Developments (2)
Market rates (1)
Net financing costs for the six months ended 30 September 2023 (57)
--------------------------------------------------------------- ----
Net financing costs increased by GBP1m period on period. Net
divestment reduced financing costs by GBP2m; disposals of GBP0.9bn
over the last 18 months reduced costs by GBP5m, partially offset by
acquisitions made over the same period. A further GBP2m increase in
financing costs was from spend on our committed development
pipeline and other maintenance capex.
Despite the significant increase in market rates over the last
18 months (rates at March 2022 were 0.75%), our hedging has limited
the impact on our financing costs, to the GBP1m increase.
The interest rate on our debt is 99% hedged for the six months
to 31 March 2024 and 84% hedged on average over the next five
years, with a gradually declining profile.
2. IFRS loss after tax
The main differences between IFRS loss after tax and Underlying
Profit are that IFRS includes the valuation movements on investment
properties, fair value movements on financial instruments and
associated deferred tax, capital financing costs and any Company
adjustments. In addition, the Group's investments in joint ventures
are equity accounted in the IFRS income statement but are included
on a proportionally consolidated basis within Underlying
Profit.
The IFRS loss after tax for the six months to 30 September 2023
was GBP(61)m, compared with a loss after tax for the prior period
of GBP(32)m. IFRS basic EPS was (6.6)p, compared to (3.5)p in the
prior period. The IFRS loss after tax for the period primarily
reflects the downward valuation movement on the Group's properties
of GBP(201)m, the capital and other loss from joint ventures of
GBP(123)m, the capital and other gain from surrender of 1 Triton
Square of GBP120m (as disclosed in Note 3 of the condensed interim
financial statements), and the Underlying Profit of GBP142m. The
Group valuation movement and capital and other income profit from
joint ventures was driven principally by outward yield shift of 23
bps offset by ERV growth of 3.2% in the portfolio resulting in a
valuation loss of 2.5%.
The basic weighted average number of shares in issue during the
year was 927m (H1 2022/23: 927m).
3. Dividends
Our dividend is semi-annual and calculated at 80% of Underlying
EPS based on the most recently completed six-month period. Applying
this policy, the Board has announced an interim dividend for the
six months ended 30 September 2023 of 12.16p per share. Payment
will be made on Friday 5 January 2024 to shareholders on the
register at close of business on Friday 24 November 2024. The
dividend will be a Property Income Distribution and no SCRIP
alternative will be offered.
Balance sheet
As at Section 30 September 31 March
2023 2023
GBPm GBPm
------------------------------ ------- ------------- --------
Property assets 8,713 8,907
Other non-current assets 78 141
------------------------------ ------- ------------- --------
8,791 9,048
Other net current liabilities (282) (348)
Adjusted net debt 6 (3,231) (3,221)
Other non-current liabilities - (50)
------------------------------ ------- ------------- --------
EPRA Net Tangible Assets 5,278 5,487
------------------------------ ------- ------------- --------
EPRA NTA per share 4 565p 588p
------------------------------ ------- ------------- --------
Non-controlling interests 13 13
Other EPRA adjustments(1) 76 25
------------------------------ ------- ------------- --------
IFRS net assets 5 5,367 5,525
------------------------------ ------- ------------- --------
Proportionally consolidated basis
1. EPRA Net Tangible Assets NTA is a proportionally consolidated
measure that is based on IFRS net assets excluding the
mark-to-market on derivatives and related debt adjustments, the
carrying value of intangibles as well as deferred taxation on
property and derivative valuations. The metric includes the
valuation surplus on trading properties and is adjusted for the
dilutive impact of share options. Details of the EPRA adjustments
are included in Table A within the supplementary disclosures.
4. EPRA Net Tangible Assets per share
pence
---------------------------------------- -----
EPRA NTA per share at 31 March 2023 588
---------------------------------------- -----
Valuation performance (36)
Surrender at 1 Triton Square 13
Underlying Profit 15
Dividend (11)
Other (4)
---------------------------------------- -----
EPRA NTA per share at 30 September 2023 565
---------------------------------------- -----
The 3.9% decrease in EPRA NTA per share reflects a valuation
decrease of 2.5%, including the uplift from the surrender of 1
Triton Square, compounded by the Group's gearing. The decrease in
valuations was as a result of further yield expansion as interest
rates continued to rise in the period.
Campus valuations were down 4.0%, driven by yields moving out 32
bps, but offset by ERV growth of 3.2% reflecting our successful
leasing activity and the premium customers are placing on the
amenity, transport connections, sustainability and location.
Valuations in Retail & London Urban Logistics were up 0.1%
overall, with outward yield shift of 12 bps and ERV growth of 3.3%.
Retail Parks increased by 0.2% in the period, driven by strong ERV
growth of 4.0% offsetting yield expansion of 13 bps. Shopping
Centres yields expanded by 10 bps whilst ERVs growth was 2.6%.
London Urban Logistics saw yield expansion of 9 bps but the
continued strong occupational demand and acute undersupply of space
has driven ERV growth of 3.1%.
On 19 October 2023 the RICS published guidelines on a new
time-limited, mandatory rotation cycle for regulated purpose
valuations. Rules are effective from 1 May 2024 and require, after
a 2 year transition period, a valuation firm to be rotated after 10
consecutive years of valuing a given asset. This matches our
existing voluntary policy of 10 yearly valuer rotation, therefore
our planned valuer rotation cycle remains unchanged.
5. IFRS net assets
IFRS net assets at 30 September 2023 were GBP5,367m, a decrease
of GBP158m from 31 March 2023. This was primarily due to the IFRS
loss after tax of GBP61m and dividends paid in the period of
GBP102m.
Cash flow, net debt and financing
6. Adjusted net debt(1)
GBPm
------------------------------------------ -------
Adjusted net debt at 31 March 2023 (3,221)
------------------------------------------ -------
Disposals 131
1 Triton Square surrender premium receipt 149
Acquisitions (58)
Developments (191)
Capex (asset management initiatives) (41)
Net cash from operations 104
Dividend (102)
Other (2)
------------------------------------------ -------
Adjusted net debt at 30 September 2023 (3,231)
------------------------------------------ -------
1. Adjusted net debt is a proportionally consolidated measure.
It represents the principal amount of gross debt, less cash, short
term deposits and liquid investments and is used in the calculation
of proportionally consolidated LTV and Net Debt to EBITDA. A
reconciliation between the Group net debt as disclosed in Note 9 to
the condensed interim financial statements and adjusted net debt is
included in Table A within the supplementary disclosures.
Disposals and the 1 Triton Square surrender premium receipt
decreased net debt by GBP280m whilst retail park acquisitions
increased net debt by GBP58m and development spend totalled GBP191m
with a further GBP41m on capital expenditure related to asset
management on the standing portfolio. Net cash from operations
offset by the dividend payment reduced net debt by GBP2m.
7. Financing
Group Proportionally consolidated
---------------------------------------- ----------------------- -----------------------------
30 September 31 March 30 September 31 March
2023 2023 2023 2023
---------------------------------------- ------------ --------- ---------------- -----------
Net debt / adjusted net debt(1,2) GBP2,019m GBP2,065m GBP3,231m GBP3,221m
Principal amount of gross debt GBP2,255m GBP2,250m GBP3,462m GBP3,448m
Loan to value(2) 28.0% 27.4% 36.9% 36.0%
Net Debt to EBITDA(2,3) 6.0x 6.4x 8.0x 8.4x
Weighted average interest rate 2.6% 2.9% 3.4% 3.5%
Interest cover 5.8x 5.4x 3.5x 3.4x
Weighted average maturity of drawn debt 5.6 years 5.6 years 5.7 years 5.9 years
---------------------------------------- ------------ --------- ---------------- -----------
1. Group data as presented in Note 9 of the condensed interim
financial statements. The proportionally consolidated figures
include the Group's share of joint ventures' net debt and
represents the principal amount of gross debt, less cash, short
term deposits and liquid investments.
2. Note 9 of the condensed interim financial statements sets out
the calculation of the Group and proportionally consolidated LTV
and Net Debt to EBITDA.
3. Net Debt to EBITDA on a Group basis excludes non-recourse and
joint venture borrowings, and includes distributions from
non-recourse companies and joint ventures.
At 30 September 2023, our proportionally consolidated LTV was
36.9%, marginally up from 36.0% at 31 March 2023. Disposals in the
period, primarily the office and data centre portfolio and 1 Triton
Square surrender premium receipt decreased LTV by 270 bps. This was
offset by the impact of valuation movements which added 140 bps,
development spend which added 170 bps and acquisitions in the
period which added 40 bps.
Since March 2023, driven by growth in Underlying earnings and
capital activity in the period, Net Debt to EBITDA for the Group
improved from 6.4x to 6.0x; on a proportionally consolidated basis
the ratio improved to 8.0x.
Our weighted average interest rate at 30 September 2023 was
3.4%, down 10 bps from 3.5% at March 2023, primarily due to changes
in our mix of hedging, with net divestment and development spend
overall offsetting.
We maintain good long term relationships, and seek to develop
new relationships, with debt providers across the markets. The
strength of these enabled us to continue to raise funds on good
terms, despite volatile market conditions. During the year to date
our total financing activity was GBP600m. For British Land, during
the half year, we extended two bilateral unsecured revolving bank
credit facilities (RCF) totalling GBP250m by a further year to
mature in 2028. Since 30 September 2023, we have agreed four new
bilateral 5 year term loans totalling GBP350m with existing
relationship banks on favourable terms in line with other
facilities and including our unsecured financial covenants.
Sustainability targets apply to the majority of these new loans
and extended RCFs, aligned with our other ESG linked RCFs and to
our sustainability strategy. In British Land and our joint ventures
we have a total GBP1.7bn (GBP1.5bn BL Share) of 'Green' and
sustainability/ESG linked loans and facilities.
At 30 September 2023, we had GBP1.7bn of undrawn facilities and
cash from a total of GBP2.1bn of facilities. The term loans agreed
since September add further capacity. Based on our current
commitments and facilities, the Group has no requirement to
refinance until mid-2026.
We have an advantageous debt structure with access to diverse
sources of finance through debt raised by British Land and in our
joint ventures. Our debt in British Land (except for the legacy
debentures) is unsecured with no interest cover covenants. At 30
September 2023 we retain significant headroom to our debt
covenants, meaning the Group could withstand a fall in asset values
across the portfolio of 45%, prior to taking any mitigating
actions. Joint venture debt is secured on the assets of the
relevant entity, non-recourse to the Group, and the majority is
"covenant light" with no LTV default covenants.
Fitch Ratings, as part of their annual review in August 2023
affirmed all our credit ratings, with a stable outlook; Senior
Unsecured 'A', long term IDR 'A-' and short term IDR 'F1'.
Our strong balance sheet, established lender relationships,
access to different sources of finance and liquidity enable us to
deliver on our strategy.
Bhavesh Mistry
Chief Financial Officer
About British Land
Our portfolio of high quality UK commercial property is focused
on London Campuses and Retail & London Urban Logistics assets
throughout the UK. We own or manage a portfolio valued at GBP12.7bn
(British Land share: GBP8.7bn) as at 30 September 2023 making us
one of Europe's largest listed real estate investment
companies.
We create Places People Prefer, delivering the best, most
sustainable places for our customers and communities. Our strategy
is to leverage our best in class platform and proven expertise in
development, repositioning and active management, investing behind
two key themes: Campuses and Retail & London Urban
Logistics.
Our three campuses at Broadgate, Paddington Central and Regent's
Place are dynamic neighbourhoods, attracting growth customers and
sectors, and offering some of the best connected, highest quality
and most sustainable space in London. We are delivering our fourth
Campus at Canada Water, where we have planning consent to deliver
5m sq ft of residential, commercial, retail and community space
over 53 acres. Our Campuses account for 62% of our portfolio.
Retail & London Urban Logistics accounts for 38% of the
portfolio and is focused on retail parks which are aligned to the
growth of convenience, online and last mile fulfilment. We are
complementing this with urban logistics primarily in London,
focused on development-led opportunities.
Sustainability is embedded throughout our business. Our approach
is focused on three key pillars where British Land can create the
most benefit: Greener Spaces, making our whole portfolio net zero
carbon by 2030, Thriving Places, partnering to grow social value
and wellbeing in the communities where we operate and Responsible
Choices, advocating responsible business practices across British
Land and throughout our supply chain, and maintaining robust
governance structures. Further details can be found on the British
Land website at www.britishland.com
Risk management and principal risks
At British Land, effective risk management is fundamental to how
we do business. We have an established risk management and control
framework that enables us to effectively identify, assess and
manage the range of financial and non-financial risks facing our
business, including those principal risks that could threaten
solvency and liquidity, as well as identifying emerging risks. Our
approach is not intended to eliminate risk entirely, but instead to
manage our risk exposures within our appetite for each risk, whilst
at the same time making the most of our opportunities.
Our integrated risk management approach combines a top-down
strategic view with a complementary bottom-up operational process.
Whilst ultimate responsibility for risk rests with the Board, the
effective day to day management of risk is integral to the way the
Group conducts business. In summary, our approach to risk
management is centred on being risk-aware, clearly defining our
risk appetite, responding quickly to changes in our risk profile
and having a strong risk management culture amongst all employees
with clearly defined roles and accountability. The Group's risk
appetite, our integrated approach to managing risk, and our
governance framework are unchanged from that set out in the
Managing Risk section of the 2023 Annual Report on pages 46 -
50.
We remain focused on the risk of continued challenges to the UK
economy, including the prevailing higher interest rate and
inflation levels along with the geopolitical uncertainty stemming
from the wars in the Ukraine and the Middle East. Encouragingly,
the economy has been more resilient than expected and recent data
indicates a decline in the inflation rate, albeit the macroeconomic
outlook remains uncertain. The Board and key committees have been
overseeing the Group's response to the impact of these challenges
on our business, as well as their wider impacts on our markets,
portfolio strategy, development programme and our customers, with
business resilience and risk management at the core of our
approach. We are proactively employing a risk-focused approach in
managing our business, especially with regards to capital
allocation decisions and focussing on maintaining a strong
financial position.
The Board has performed a robust assessment of the principal and
emerging risks facing the Group and considers that whilst some
risks have reduced or are showing initial signs of improving in the
period (as set out in the table over the page), all principal risks
and uncertainties presented on pages 51 to 60 of our 2023 Annual
Report, remained valid during the period and we believe will
continue to be relevant for the remainder of the year. Our
comprehensive risk management process, coupled with the Group's
continued ability to be flexible to adjust and respond to our
principal risks and emerging risks as they evolve, will be pivotal
to the future performance of our business.
External Principal Risks
Status
at
Principal year Change since
Risk end year end Commentary
------------- -------- ------------ -------------------------------------------------------
Macroeconomic High Stable The UK's macroeconomic outlook remains uncertain,
and inflation and interest rate risks persist,
which could potentially impact our portfolio
strategy, our markets and our customers. We're
proactively managing our business by strategically
allocating capital, maintaining financial strength,
and effectively mitigating development and
financing risks. With a strong balance sheet
and experienced leadership, we're well-prepared
to tackle challenges and capitalise on opportunities,
including potential strategic investments.
------------- -------- ------------ -------------------------------------------------------
Political, Medium Stable The political, legal, and regulatory risks
Legal and to High remain uncertain and elevated, primarily due
Regulatory to macroeconomic conditions, ongoing geopolitical
tensions arising from the wars in Ukraine and
the Middle East, and increased government regulations.
This uncertainty has the potential to impact
various aspects, including interest rates,
supply chains, security, cyber threats, compliance,
and reputation. The Board and key committees
are closely monitoring these external risks
and their potential impact on both the UK economy
and our operations to ensure we are taking
appropriate mitigating actions.
------------- -------- ------------ -------------------------------------------------------
Property
Markets
(a) Campuses Medium Stable The prime London office occupier market remains
robust supported by a limited new development
pipeline and good rental growth. However, rising
interest rates have affected investor sentiment
and structural challenges remain from increased
remote working practices. That said, our Campus
model offers well-connected, sustainable buildings
with amenities, attracting occupiers as they
focus on the best-in-class space for their
business.
-------------------------------------------------------
(b) Retail Medium Reducing Despite the challenges facing the retail market
to High from both increased costs and reduced consumer
disposable income, the occupational market
has shown improvement, with a growing number
of retailers reporting positive footfall and
sales levels. The retail park investment market
remains in line with historical norms, while
shopping centres continues to lag behind long
term averages. Our Retail portfolio focuses
on retail parks, aligning with convenience
trends and omni-channel strategies. As a result,
our leasing remains strong. We continue to
seek acquisition opportunities in retail parks
to leverage our scale and asset expertise for
value creation.
-------------------------------------------------------
(c) London Low Stable London's urban logistics occupational fundamentals
Urban are strong due to e-commerce shifts and limited
Logistics space supply. However, rising interest rates
have softened investment pricing. Our Urban
Logistics portfolio, driven by development
and repurposing, capitalises on high demand
and scarce supply.
------------- -------- ------------ -------------------------------------------------------
Major Events/ Medium Stable The heightened global and political uncertainties,
Business further intensified by the wars in the Ukraine
Disruption and the Middle East, still have the potential
to affect the Group's operations and stakeholders.
The challenges faced in recent years due to
the Covid pandemic have highlighted the strength
of our business model and robust crisis management
plans. We remain vigilant regarding continued
risks posed by external threats.
------------- -------- ------------ -------------------------------------------------------
Internal Principal Risks
Status
at
Principal year Change since
Risk end year end Commentary
--------------- -------- ------------ -------------------------------------------------------
Portfolio Medium Stable Our portfolio strategy has faced ongoing challenges
Strategy due to macroeconomic conditions and more difficult
investment markets. The impact of rising interest
rates has been felt on our strategy and portfolio
valuations, however, there are signs that upward
yield pressure is diminishing, particularly
for retail parks and London urban logistics.
Our operational performance remains strong,
reinforcing our confidence in our core markets:
campuses, retail parks, and London urban logistics.
Additionally, we foresee more favourable rental
growth prospects across our portfolio. We will
maintain a disciplined approach to capital
allocation and remain flexible in looking to
take advantage of opportunities.
--------------- -------- ------------ -------------------------------------------------------
Development Medium Stable Despite ongoing inflationary pressures in construction
supply chains, amplified by the Ukraine conflict,
we are observing more encouraging trends. Construction
cost inflation is easing, aligning with our
projections of 3-4% this year and marking a
significant decrease from the 10% peak in 2022.
Our committed pipeline is progressing well,
and our development exposure at 4.9% of our
portfolio's gross asset value, is well within
our risk tolerance. Progressing value accretive
development is a key priority to driving the
performance of our business and our strong
balance sheet, contractor relationships, and
management experience position us well to move
forward with our pipeline while mitigating
the associated risks. Prior to committing to
future developments, we will continue to evaluate
their impact against specific criteria, subject
to approval from the Investment Committee.
This assessment will consider returns, prevailing
interest rates and our balance sheet capacity.
--------------- -------- ------------ -------------------------------------------------------
Financing Low to Stable Despite the sharp rise in market interest rates
Medium over the past 18 months, current forecasts
suggest an increased likelihood that interest
rates are approaching their peak, albeit they
may remain elevated for an extended period
of time. We have continued to actively manage
our financing risk and maintain access to a
diverse range of sources of finance with a
spread of repayment dates, along with the use
of hedging to mitigate interest rate risk.
Our strong balance sheet, coupled with continued
capital recycling, provides us with the liquidity
to effectively support our business needs and
respond to opportunities. We have no requirement
to refinance until mid-2026.
--------------- -------- ------------ -------------------------------------------------------
Environmental Medium Stable The importance of environmental sustainability
Sustainability risks and their connection to our business,
customers and other stakeholders is increasing.
Concurrently, regulatory requirements and expectations
are on the rise. Our targets for 2030 are centred
on attaining a carbon net-zero portfolio and
demonstrating environmental leadership, and
we have already made significant strides in
this direction. Our achievements have been
recognised in various international benchmarks
including GRESB, where we were delighted to
achieve a GRESB 5* rating in the period.
--------------- -------- ------------ -------------------------------------------------------
People Medium Stable The competition for talent, which was until
and Culture recently very intense, has eased off in light
of recent economic uncertainties. Our focus
will continue to ensure we have the right resources
and skills in place to support our strategic
priorities. Our goal remains to foster a diverse,
inclusive and ambitious culture so we can develop,
attract and inspire the best people to deliver
our strategy. Additionally, we will take a
proactive approach to oversee and enhance the
wellbeing of our staff.
--------------- -------- ------------ -------------------------------------------------------
Customer Medium Stable Our overall customer risk is showing signs
to High of decreasing, yet it remains elevated with
an uncertain outlook and mixed indicators with
a number of retailer CVAs and administrations
in the period. We are fully aware of the challenges
posed by higher input prices, particularly
within the retail sector, and the potential
implications for customer profitability and
associated risks. To address these challenges,
we take a proactive approach to maintaining
a robust and resilient customer base and focus
on providing affordable space with lower overall
occupancy costs. It is pivotal that our strategic
positioning across our Campuses, Retail Parks
and London Urban Logistics portfolios, coupled
with our strong focus on collaborative relationships
with our customers, enables us to provide high
quality spaces at sustainable occupancy costs,
which in turn attracts high quality occupiers.
This is demonstrated by our 96% occupancy rate
and 99% rent collection rate.
--------------- -------- ------------ -------------------------------------------------------
Operational Medium Stable Key areas of risk encompass Technology and
and Compliance Cyber Security, Health & Safety, Third Party
Relationships and Internal Controls and Compliance.
We maintain a vigilant stance regarding these
key operational risks within our business,
and we are pleased to report no significant
issues have arisen during the first half of
the year. We remain committed to ongoing monitoring
and are actively implementing strategies to
fortify our cyber security, IT infrastructure
and related key controls, as well as enhancing
our overall internal control framework.
--------------- -------- ------------ -------------------------------------------------------
DIRECTORS' RESPONSIBILITIES STATEMENT
The Directors confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the United Kingdom and that the interim management report
includes a fair review of the information required by DTR 4.2.7R
and DTR 4.2.8R, namely:
-- An indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- Material related party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
The Directors of British Land plc are listed on the company
website www.britishland.com
By order of the Board.
Bhavesh Mistry
Chief Financial Officer
12 November 2023
Independent review report to The
British Land Company PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed The British Land Company PLC's condensed
consolidated interim financial statements (the "interim financial
statements") in the Half-Year Results of The British Land Company
PLC for the 6 month period ended 30 September 2023 (the
"period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Consolidated Balance Sheet as at 30 September 2023;
-- the Consolidated Income Statement and the Consolidated
Statement of Comprehensive Income for the period then ended;
-- the Consolidated Statement of Cash Flows for the period then ended;
-- the Consolidated Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half-Year
Results of The British Land Company PLC have been prepared in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half-Year
Results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with ISRE (UK) 2410.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Half-Year Results, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the
Half-Year Results in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the Half-Year Results, including
the interim financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the group or to cease operations, or
have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Half-Year Results based on our review.
Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
12 November 2023
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 September 2023
Restated(1)
Six months ended 30 Six months ended 30
September 2023 September 2022
Unaudited Unaudited
-------------------------------------- ---- --------------------------------- ---------------------------------
Capital Capital
Underlying(2) and other Total Underlying(2) and other Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- ---- ------------- ---------- ------ ------------- ---------- ------
Revenue 3 212 174 386 216 - 216
Costs(3) 3 (46) (54) (100) (51) - (51)
-------------------------------------- ---- ------------- ---------- ------ ------------- ---------- ------
3 166 120 286 165 - 165
Joint ventures (see also below) 7 49 (123) (74) 48 (97) (49)
Administrative expenses (42) - (42) (43) - (43)
Valuation movement 4 - (201) (201) - (189) (189)
Profit (loss) on disposal of
investment properties and revaluation
of investments - 2 2 - (20) (20)
Net financing (charges) income
financing income 5 - 10 10 4 147 151
financing charges 5 (30) - (30) (35) - (35)
------------- ---------- ------ ------------- ---------- ------
(30) 10 (20) (31) 147 116
-------------------------------------- ---- ------------- ---------- ------ ------------- ---------- ------
(Loss) profit before taxation 143 (192) (49) 139 (159) (20)
Taxation (1) (11) (12) (1) (11) (12)
-------------------------------------- ---- ------------- ---------- ------ ------------- ---------- ------
(Loss) profit for the period after
taxation 142 (203) (61) 138 (170) (32)
-------------------------------------- ---- ------------- ---------- ------ ------------- ---------- ------
Attributable to non-controlling
interests 1 (1) - 1 (1) -
Attributable to shareholders of the
Company 141 (202) (61) 137 (169) (32)
-------------------------------------- ---- ------------- ---------- ------ ------------- ---------- ------
Earnings per share:
basic 2 (6.6)p (3.5)p
diluted 2 (6.6)p (3.5)p
------ ------
All results derive from continuing operations.
Restated(1)
Six months ended 30 Six months ended 30
September 2023 September 2022
Unaudited Unaudited
------------------------------------ ---- -------------------------------- --------------------------------
Capital Capital
Underlying(2) and other Total Underlying(2) and other Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ ---- ------------- ---------- ----- ------------- ---------- -----
Results of joint ventures accounted
for using the equity method
Underlying Profit 49 - 49 48 - 48
Valuation movement 4 - (126) (126) - (126) (126)
Capital financing income - 3 3 - 30 30
Taxation - - - - (1) (1)
------------------------------------ ---- ------------- ---------- ----- ------------- ---------- -----
7 49 (123) (74) 48 (97) (49)
------------------------------------ ---- ------------- ---------- ----- ------------- ---------- -----
1. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions. Refer to Note 1
for further information.
2. See definition in Note 2 and a reconciliation between
Underlying Profit and IFRS profit in Note 11.
3. Included within 'Costs' is a credit relating to provisions
for impairment of tenant debtors, accrued income, tenant incentives
and contracted rent increases of GBP11m (six months ended 30
September 2022: credit of GBP2m).
Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2023
Restated(1)
Six months Six months
ended ended
30 September 30 September
2023 2022
Unaudited Unaudited
GBPm GBPm
------------------------------------------------------------------------- ------------- -------------
Loss for the period after taxation (61) (32)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Gains on cash flow hedges
* Joint ventures 6 4
------------- -------------
6 4
Reclassification of foreign exchange differences to the income statement (2) -
------------------------------------------------------------------------- ------------- -------------
Other comprehensive income for the period 4 4
------------------------------------------------------------------------- ------------- -------------
Total comprehensive loss for the period (57) (28)
------------------------------------------------------------------------- ------------- -------------
Attributable to non-controlling interests - -
Attributable to shareholders of the Company (57) (28)
------------------------------------------------------------------------- ------------- -------------
1. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions. Refer to Note 1
for further information.
Consolidated Balance Sheet
As at 30 September 2023
30 September 31 March
2023 2023
Unaudited Audited
Note GBPm GBPm
--------------------------------------------------- ---- ------------ --------
ASSETS
Non-current assets
Investment and development properties 6 5,495 5,677
------------ --------
5,495 5,677
------------ --------
Other non-current assets
Investments in joint ventures 7 2,157 2,206
Other investments 56 58
Property, plant and equipment 22 22
Interest rate and currency derivative assets 9 144 144
------------ --------
7,874 8,107
------------ --------
Current assets
Trading properties 6 22 22
Debtors 8 47 34
Corporation tax - 2
Cash and cash equivalents 9 152 125
------------ --------
221 183
--------------------------------------------------- ---- ------------ --------
Total assets 8,095 8,290
--------------------------------------------------- ---- ------------ --------
LIABILITIES
Current liabilities
Short term borrowings and overdrafts 9 (297) (402)
Creditors (290) (282)
------------ --------
(587) (684)
------------ --------
Non-current liabilities
Debentures and loans 9 (1,940) (1,865)
Other non-current liabilities (117) (145)
Deferred tax liabilities (6) (4)
Interest rate and currency derivative liabilities 9 (78) (67)
------------ --------
(2,141) (2,081)
--------------------------------------------------- ---- ------------ --------
Total liabilities (2,728) (2,765)
--------------------------------------------------- ---- ------------ --------
Net assets 5,367 5,525
--------------------------------------------------- ---- ------------ --------
EQUITY
Share capital 234 234
Share premium 1,309 1,308
Merger reserve 213 213
Other reserves 19 15
Retained earnings 3,579 3,742
--------------------------------------------------- ---- ------------ --------
Equity attributable to shareholders of the Company 5,354 5,512
--------------------------------------------------- ---- ------------ --------
Non-controlling interests 13 13
--------------------------------------------------- ---- ------------ --------
Total equity 5,367 5,525
--------------------------------------------------- ---- ------------ --------
EPRA Net Tangible Assets per share(1) 2 565p 588p
--------------------------------------------------- ---- ------------ --------
1. See definition in Note 2.
Consolidated Statement of Cash Flows
For the six months ended 30 September 2023
Restated(1)
Six months Six months
ended ended
30 September 30 September
2023 2022
Unaudited Unaudited
Note GBPm GBPm
------------------------------------------------------------------ ---- ------------- -------------
Income received from tenants 183 190
Surrender premia received(2) 3 178 -
Fees and other income received 24 26
Operating expenses paid to suppliers and employees (106) (101)
Cash generated from operations 279 115
------------- -------------
Interest paid (31) (37)
Corporation tax payments (3) -
Distributions and other receivables from joint ventures 7 37 34
------------- -------------
Net cash inflow from operating activities 282 112
------------- -------------
Cash flows from investing activities
Development and other capital expenditure (141) (128)
Sale of investment properties 131 4
Purchase of investment properties (58) (24)
Sale of investment properties to Paddington Central Joint Venture - 685
Purchase of investments (2) (14)
Investment in and loans to joint ventures (65) (59)
Loan repayments from joint ventures - 125
Indirect taxes (paid) received in respect of investing activities (8) 3
------------- -------------
Net cash (outflow) inflow from investing activities (143) 592
------------- -------------
Cash flows from financing activities
Dividends paid (102) (106)
Dividends paid to non-controlling interests - (1)
Capital payments in respect of interest rate derivatives (12) -
Decrease in lease liabilities (3) (3)
Decrease in bank and other borrowings (166) (584)
Drawdown on bank and other borrowings 171 34
------------- -------------
Net cash outflow from financing activities (112) (660)
------------- -------------
Net increase in cash and cash equivalents 27 44
Cash and cash equivalents at 1 April 125 105
------------------------------------------------------------------ ---- ------------- -------------
Cash and cash equivalents at 30 September 152 149
------------------------------------------------------------------ ---- ------------- -------------
Cash and cash equivalents consists of:
Cash and short-term deposits 124 118
Tenant deposits 28 31
------------------------------------------------------------------ ---- ------------- -------------
1. Prior period comparatives have been restated for a change in
accounting policy in respect of tenant deposits. Refer to Note 1
for further information.
2. Surrender premia received includes GBP149m (six months ended
30 September 2022: GBPnil) of the consideration for the surrender
of 1 Triton Square and GBP29m (six months ended 30 September 2022:
GBPnil) of related VAT. Refer to Note 3 for further
information.
Consolidated Statement of Changes in Equity
For the six months ended 30 September 2023
Six month movements in equity (unaudited)
Hedging
and
Share Share translation Revaluation Merger Retained Non-controlling Total
capital premium reserve reserve reserve earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------- -------- -------- ----------- ----------- -------- -------- ----- --------------- -------
Balance at 1 April
2023 234 1,308 2 13 213 3,742 5,512 13 5,525
------------------- -------- -------- ----------- ----------- -------- -------- ----- --------------- -------
Total comprehensive
(expense) income
for the period - - (2) 6 - (61) (57) - (57)
-------- -------- ----------- ----------- -------- -------- ----- --------------- -------
Share issues - 1 - - - - 1 - 1
Dividends paid in
period
(11.04p per share) - - - - - (102) (102) - (102)
Balance at 30
September 2023 234 1,309 - 19 213 3,579 5,354 13 5,367
------------------- -------- -------- ----------- ----------- -------- -------- ----- --------------- -------
Balance at 1 April
2022 as published 234 1,307 2 3 213 4,994 6,753 15 6,768
------------------- -------- -------- ----------- ----------- -------- -------- ----- --------------- -------
Total comprehensive
(expense) income
for the period
(restated(1) ) - - - 4 - (32) (28) - (28)
-------- -------- ----------- ----------- -------- -------- ----- --------------- -------
Share issues - 1 - - - - 1 - 1
Fair value of share
and share
option awards - - - - - 3 3 - 3
Dividends paid in
period
(11.60p per share) - - - - - (108) (108) - (108)
Dividends paid to
non-controlling
interests - - - - - - - (1) (1)
------------------- -------- -------- ----------- ----------- -------- -------- ----- --------------- -------
Balance at 30
September 2022
(restated(1) ) 234 1,308 2 7 213 4,857 6,621 14 6,635
------------------- -------- -------- ----------- ----------- -------- -------- ----- --------------- -------
1. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions. Refer to Note 1
for further information.
Prior year movements in equity (audited)
Hedging
and
Share Share translation Revaluation Merger Retained Non-controlling Total
capital premium reserve reserve reserve earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------- ------- ------- ----------- ----------- -------- -------- ------- --------------- -------
Balance at 1 April
2022 234 1,307 2 3 213 4,994 6,753 15 6,768
------------------- ------- ------- ----------- ----------- -------- -------- ------- --------------- -------
Total comprehensive
(expense) income
for the year - - - 10 - (1,038) (1,028) (1) (1,029)
------- ------- ----------- ----------- -------- -------- ------- --------------- -------
Shares issued in
the year - 1 - - - - 1 - 1
Fair value of share
and share
option awards - - - - - 1 1 - 1
Dividends payable
in year
(23.20p per share) - - - - - (215) (215) - (215)
Dividends payable
by subsidiaries - - - - - - - (1) (1)
------------------- ------- ------- ----------- ----------- -------- -------- ------- --------------- -------
Balance at 31 March
2023 234 1,308 2 13 213 3,742 5,512 13 5,525
------------------- ------- ------- ----------- ----------- -------- -------- ------- --------------- -------
Notes to the Accounts
For the six months ended 30 September 2023
1 Basis of preparation
The financial information for the period ended 30 September 2023
does not constitute statutory accounts as defined in section 434 of
the Companies Act 2006. A copy of the statutory accounts for the
year ended 31 March 2023 has been delivered to the Registrar of
Companies. The auditors' report on those accounts was not
qualified, did not include a reference to matters to which the
auditor drew attention by way of emphasis without qualifying the
report, and did not contain statements under section 498(2) or (3)
of the Companies Act 2006.
The condensed consolidated interim financial statements for the
half-year reporting period ended 30 September 2023 included in this
announcement has been prepared on a Going Concern basis using
accounting policies consistent with UK-adopted international
accounting standards, in accordance with UK-adopted IAS 34 'Interim
Financial Reporting', and in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
The condensed consolidated interim financial statements do not
include all the notes of the type normally included in the annual
report and accounts. Accordingly, this report is to be read in
conjunction with the annual report and accounts for the year ended
31 March 2023, which has been prepared in accordance with both
UK-adopted International Accounting Standards in conformity with
the requirements of the Companies Act 2006, and any public
announcements made by the Group during the interim reporting
period. The same accounting policies are followed in the condensed
consolidated interim financial statements as applied in the Group's
audited financial statements for the year ended 31 March 2023.
A number of new standards and amendments to standards and
interpretations have been issued for the current accounting period.
The IASB issued narrow-scope amendments to IAS 12 that are yet to
be adopted by the UK endorsement board, as part of the Pillar Two
model implementation. The Group is currently assessing the impact
of Pillar Two and the associated IAS 12 amendments. The following
standards and interpretations which have been issued but are not
yet effective include IAS 1 'Presentation of Financial Statements'
on the classification of liabilities and non-current liabilities
with covenants, IFRS 16 'Leases' on sale and leaseback
arrangements, and limited scope amendments to both IFRS 10
'Consolidated Financial Statements' and IAS 28 'Investments in
Associates and Joint Ventures' in respect of sale or contribution
of assets between an investor and its associates or joint ventures.
These amendments to standards that are not yet effective are not
expected to have a material impact on the Group's results.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of these interim financial statements requires
management to make critical accounting judgements and assess key
sources of estimation uncertainty, that affect the application of
accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results might differ from
these estimates.
Critical accounting judgements
The Group's critical accounting judgements are consistent with
those disclosed in the Group's audited financial statements for the
year ended 31 March 2023.
Key sources of estimation uncertainty
As outlined in the Group's audited financial statements for the
year ended 31 March 2023, the valuation of investment, development
and trading properties, and impairment provisioning of tenant
debtors (including accrued income) and tenant incentives were
identified as key sources of estimation uncertainty.
As at 30 September 2023, the Group no longer identifies the
impairment provisioning of tenant debtors and tenant incentives as
a key source of estimation uncertainty as, in the Group's view, the
inherent uncertainty related to these balances, which was driven by
the Covid-19 pandemic, no longer has the potential to materially
impact the carrying amount of these assets within the next
financial year.
Going concern
The interim financial statements are prepared on a Going Concern
basis. The balance sheet shows the Group is in a net current
liability position of GBP366m, predominantly due to short term
borrowings and overdrafts of GBP297m and deferred income of GBP50m
(related to quarterly rents paid in advance which will not result
in cash outflows) and other current creditors which will result in
cash outflows over the next 12 months in the ordinary course of
business. Set against this, the Group has access to GBP1.7bn of
undrawn facilities and cash, which provides the Directors with a
reasonable expectation that the Group will be able to meet these
current liabilities as they fall due. In making this assessment the
Directors also took into account the headroom on Group debt
covenants, equivalent to a 45% fall in property values as at 30
September 2023 (and a 33% fall in property values on a committed
look forward basis), and the absence of interest cover covenants on
the unsecured facilities. Before factoring in any income
receivable, the facilities and cash would be sufficient to cover
forecast capital expenditure, property operating costs,
administrative expenses, maturing debt and interest over the next
12 months from the approval date of these interim financial
statements.
Having assessed the Principal Risks, the Directors believe that
the Group is well placed to manage its financing and other business
risks satisfactorily despite the current economic climate, and have
a reasonable expectation that the Company and the Group have
adequate resources to continue in operation for at least 12 months
from the signing date of these interim financial statements. They
therefore consider it appropriate to adopt the Going Concern basis
of accounting in preparing the interim financial statements. The
interim financial statements were approved by the Board on 12
November 2023.
Change in accounting policies
Rental concessions
The Group changed its accounting policy in respect of
concessions (or rental forgiveness) granted to tenants as outlined
in the Group's audited financial statements for the year ended 31
March 2023 in response to the IFRS Interpretations Committee
(IFRIC) Agenda Decision in relation to Lessor Forgiveness of Lease
Payments (IFRS 9 and IFRS 16). This change of accounting policy has
led to a restatement of the 30 September 2022 comparatives
disclosed in these condensed consolidated interim financial
statements. The restatement arises due to the reversal of
previously recognised amortisation (of the concessions previously
granted to tenants) in the six-month period to 30 September 2022.
The overall restatement quantum is GBP2m and results in a decrease
to the loss for the period after taxation from GBP34m to GBP32m.
Within the condensed consolidated interim financial statements, the
restatement has resulted in a change to the following balances:
-- Gross rental income; and
-- Joint venture result.
The quantitative impact on each balance has been outlined in the
table below.
Tenant deposits
The Group changed its accounting policy in relation to tenant
deposits as detailed in the Group's audited financial statements
for the year ended 31 March 2023 in response to the IFRIC Agenda
Decision in relation to Demand Deposits with Contractual
Restrictions in Use. This change of accounting policy has led to a
restatement of the 30 September 2022 comparatives disclosed in the
consolidated statement of cash flows. The restatement has led to
the Group recognising GBP5m of rental deposits and a further GBP26m
of service charge deposits within cash and cash equivalents as at
30 September 2022. Additionally, the Group will also recognise
service charge income and expense related cash flows leading to a
restatement of the 30 September 2022 comparatives for income
received from tenants and operating expenses paid to suppliers and
employees of GBP27m respectively.
The quantitative impact on each balance has been outlined in the
table below.
30 September Rental 30 September
2022 concessions Tenant deposits 2022
Published Restatement Restatement Restated
GBPm GBPm GBPm GBPm
--------------------------------------------------- ------------ ------------ --------------- ------------
Consolidated income statement (extract)
Revenue 215 1 - 216
Joint ventures (50) 1 - (49)
Loss for the period after taxation (34) 2 - (32)
Consolidated statement of cash flows (extract)
Income received from tenants 163 - 27 190
Operating expenses paid to suppliers and employees (74) - (27) (101)
Cash and cash equivalents at 1 April 74 - 31 105
Cash and cash equivalents at 30 September 118 - 31 149
Cash and cash equivalents consist of:
Tenant deposits - - 31 31
Performance measures (Note 2)
Underlying Profit (Table A) 136 2 - 138
Underlying diluted earnings per share (pence) 14.5 0.2 - 14.7
--------------------------------------------------- ------------ ------------ --------------- ------------
2 Performance measures
Earnings per share
The Group measures financial performance with reference to
Underlying earnings per share, the European Public Real Estate
Association ('EPRA') earnings per share and IFRS earnings per
share. The relevant earnings and weighted average number of shares
(including dilution adjustments) for each performance measure are
shown below, and a reconciliation between these is shown within the
supplementary disclosures (Table B).
EPRA earnings per share is calculated using EPRA earnings, which
is the IFRS profit after taxation attributable to shareholders of
the Company excluding investment and development property
revaluations, gains/losses on investing and trading property
disposals, changes in the fair value of financial instruments and
associated close-out costs and their related taxation.
Underlying earnings per share is calculated using Underlying
Profit adjusted for Underlying taxation, with the dilutive measure
being the primary disclosure measure used. Underlying Profit is the
pre-tax EPRA earnings measure, with additional Company adjustments
for items which are considered to be unusual and/or significant by
virtue of their size and nature. In the current period to 30
September 2023, GBP25m of rent receivable, GBP149m of surrender
premia receivable, and GBP54m of tenant incentive impairment were
excluded from the calculation of Underlying Profit (see Note 3 for
further details). No Company adjustments were made in the prior
period to 30 September 2022.
Restated(1)
Six months ended 30 Six months ended 30
September 2023 September 2022
------------------- --------------------------------- ---------------------------------
Relevant Relevant
Relevant number Earnings Relevant number Earnings
earnings of shares per share earnings of shares per share
Earnings per share GBPm million pence GBPm million pence
------------------- --------- ---------- ---------- --------- ---------- ----------
Underlying
Underlying basic 141 927 15.2 137 927 14.8
Underlying diluted 141 929 15.2 137 930 14.7
------------------- --------- ---------- ---------- --------- ---------- ----------
EPRA
EPRA basic 261 927 28.2 137 927 14.8
EPRA diluted 261 929 28.1 137 930 14.7
------------------- --------- ---------- ---------- --------- ---------- ----------
IFRS
Basic (61) 927 (6.6) (32) 927 (3.5)
Diluted (61) 927 (6.6) (32) 927 (3.5)
------------------- --------- ---------- ---------- --------- ---------- ----------
1. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions. Refer to Note 1
for further information.
Net asset value
The Group measures financial position with reference to EPRA Net
Tangible Assets ('NTA'), Net Reinvestment Value ('NRV') and Net
Disposal Value ('NDV'). The net assets and number of shares for
each performance measure is shown below. A reconciliation between
IFRS net assets and the three EPRA net asset valuation metrics, and
the relevant number of shares for each performance measure, is
shown within the supplementary disclosures (Table B). EPRA NTA is a
measure that is based on IFRS net assets excluding the
mark-to-market on derivatives and related debt adjustments, the
carrying value of intangibles, as well as deferred taxation on
property and derivative valuations. The metric includes the
valuation surplus on trading properties and is adjusted for the
dilutive impact of share options.
30 September 2023 31 March 2023
-------------------------- ----------------------------------- -----------------------------------
Relevant Net asset Relevant Net asset
Relevant number value Relevant number value
net assets of shares per share net assets of shares per share
Net asset value per share GBPm million pence GBPm million pence
-------------------------- ----------- ---------- ---------- ----------- ---------- ----------
EPRA
EPRA NTA 5,278 934 565 5,487 933 588
EPRA NRV 5,809 934 622 6,029 933 646
EPRA NDV 5,549 934 594 5,658 933 606
-------------------------- ----------- ---------- ---------- ----------- ---------- ----------
IFRS
Basic 5,367 927 579 5,525 927 596
Diluted 5,367 934 575 5,525 933 592
-------------------------- ----------- ---------- ---------- ----------- ---------- ----------
Total accounting return
The Group also measures financial performance with reference to
total accounting return. This is calculated as the movement in EPRA
NTA per share and dividend paid in the period as a percentage of
the EPRA NTA per share at the start of the period.
Six months ended 30 Six months ended 30
September 2023 September 2022
------------------------ ----------------------------------- -----------------------------------
Movement Dividend Movement Dividend
in NTA per share Total in NTA per share Total
per share paid accounting per share paid accounting
pence pence return pence pence return
------------------------ ---------- ---------- ----------- ---------- ---------- -----------
Total accounting return (23) 11.04 (2.0%) (32) 11.60 (2.8%)
------------------------ ---------- ---------- ----------- ---------- ---------- -----------
3 Revenue and costs
Restated(1)
Six months ended 30 Six months ended 30
September 2023 September 2022
--------------------------------------------------- -------------------------------- -----------------------------
Capital Capital
Underlying and other(2) Total Underlying and other Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------------------- ---------- ------------- ----- ---------- ---------- -----
Rent receivable(2) 152 25 177 160 - 160
Spreading of tenant incentives and contracted
rent increases 5 - 5 8 - 8
Surrender premia(2) 1 149 150 - - -
--------------------------------------------------- ---------- ------------- ----- ---------- ---------- -----
Gross rental income 158 174 332 168 - 168
--------------------------------------------------- ---------- ------------- ----- ---------- ---------- -----
Service charge income 33 - 33 30 - 30
Management and performance fees
(from joint ventures) 9 - 9 6 - 6
Other fees and commissions 12 - 12 12 - 12
--------------------------------------------------- ---------- ------------- ----- ---------- ---------- -----
Revenue 212 174 386 216 - 216
--------------------------------------------------- ---------- ------------- ----- ---------- ---------- -----
Service charge expenses (28) - (28) (26) - (26)
Property operating expenses (19) - (19) (18) - (18)
Release of impairment of trade debtors
and accrued income 11 - 11 3 - 3
Provisions for impairment of tenant incentives and
contracted rent increases(2) - (54) (54) (1) - (1)
Other fees and commissions expenses (10) - (10) (9) - (9)
--------------------------------------------------- ---------- ------------- ----- ---------- ---------- -----
Costs (46) (54) (100) (51) - (51)
--------------------------------------------------- ---------- ------------- ----- ---------- ---------- -----
166 120 286 165 - 165
--------------------------------------------------- ---------- ------------- ----- ---------- ---------- -----
1. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions. Refer to Note 1
for further information.
2. On 25 September 2023, the Group completed a deed of surrender
in relation to an in-force lease of one of its investment
properties. The consideration for the surrender was a GBP149m
premium paid by the tenant on the completion date. In line with the
requirements of IFRS 16, the surrender transaction was treated as a
modification to the lease, with the surrender premium received
recognised in full through the income statement at the point of
completion, which represented the modified termination date of the
lease. At the point of modification, the lease had associated
tenant incentive balances of GBP54m, and as the right to receive
these amounts was extinguished through the lease modification, with
an impairment recognised in full through the income statement at
the point of completion. Also at the point of modification, the
lease had an associated deferred lease premium balance of GBP25m,
which in line with the surrender premium received, was recognised
in full through the income statement at the point of completion.
Owing to the unusual and significant size and nature of this
transaction, and in line with the Group's accounting policies, all
elements of the transaction have been included within the Capital
and other column of the income statement.
4 Valuation movements on property
Six months Six months
ended ended
30 September 30 September
2023 2022
GBPm GBPm
--------------------------------------------------------------------------------------- ------------- -------------
Revaluation of properties (201) (189)
Revaluation of properties held by joint ventures accounted for using the equity method (126) (126)
--------------------------------------------------------------------------------------- ------------- -------------
(327) (315)
--------------------------------------------------------------------------------------- ------------- -------------
5 Net financing
Six months Six months
ended ended
30 September 30 September
2023 2022
GBPm GBPm
--------------------------------------------------------------------- -------------------------------- -------------
Underlying
Financing charges
Facilities and overdrafts (27) (12)
Derivatives 26 11
Other loans (37) (38)
Obligations under head leases (2) (2)
-------------------------------- -------------
(40) (41)
Development interest capitalised 10 6
-------------------------------- -------------
(30) (35)
Financing income
Deposits, securities and liquid investments - 4
--------------------------------------------------------------------- -------------------------------- -------------
Net financing charges - Underlying (30) (31)
--------------------------------------------------------------------- -------------------------------- -------------
Capital and other
Financing income
Valuation movement on translation of foreign currency debt and
investments - 3
Valuation movement on fair value hedge accounted debt (10) 26
Valuation movement on fair value hedge accounted derivatives 5 (22)
Valuation movement on non-hedge accounted derivatives 15 140
-------------------------------- -------------
10 147
--------------------------------------------------------------------- -------------------------------- -------------
Net financing income - Capital and other 10 147
--------------------------------------------------------------------- -------------------------------- -------------
Total financing income 10 151
Total financing charges (30) (35)
--------------------------------------------------------------------- -------------------------------- -------------
Net financing (charges) income (20) 116
--------------------------------------------------------------------- -------------------------------- -------------
Interest on development expenditure is capitalised at the
Group's weighted average interest rate at 30 September 2023 of 2.6%
(30 September 2022: 3.0%). The weighted average interest rate on a
proportionately consolidated basis at 30 September 2023 was 3.4%
(30 September 2022: 3.5%).
6 Property
Property reconciliation
Six months ended 30 Year ended 31 March
September 2023 2023
-------------------------------------------------------------- ------------------------------ ------------------------------
Investment Investment
and and
development development
properties properties
Level Trading Level Trading
3 properties Total 3 properties Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------------------------------- ----------- ---------- ----- ----------- ---------- -----
Carrying value at the start of the period/year 5,677 22 5,699 7,032 18 7,050
Additions
* property purchases 58 - 58 158 - 158
* development expenditure 91 - 91 152 4 156
* capitalised interest and staff costs 9 - 9 13 - 13
* capital expenditure on asset management initiatives 31 - 31 62 - 62
189 - 189 385 4 389
----------- ---------- ----- ----------- ---------- -----
Disposals (120) - (120) (945) - (945)
Revaluations included in income statement (201) - (201) (798) - (798)
Movement in tenant incentives and contracted
rent uplift balances (50) - (50) 3 - 3
----------- ---------- ----- ----------- ---------- -----
Carrying value at the end of the period/year 5,495 22 5,517 5,677 22 5,699
----------- ---------- ----- ----------- ---------- -----
Lease liabilities (101) (102)
Less surplus on right-of-use assets(1) (9) (9)
Valuation surplus on trading properties 6 7
-------------------------------------------------------------- ----------- ---------- ----- ----------- ---------- -----
Group property portfolio valuation at the end of the
period/year 5,413 5,595
Non-controlling interests (13) (13)
-------------------------------------------------------------- ----------- ---------- ----- ----------- ---------- -----
Group property portfolio valuation at the end of the
period/year attributable to shareholders 5,400 5,582
-------------------------------------------------------------- ----------- ---------- ----- ----------- ---------- -----
1. Relates to the fair value of right-of-use assets in excess of
their associated lease liabilities. The fair value of right-of-use
assets is determined by calculating the present value of net rental
cashflows over the term of the lease agreements. IFRS 16
right-of-use assets are not externally valued, their fair value is
determined by management, and are therefore not included in the
Group property portfolio valuation of GBP5,413m (31 March 2023:
GBP5,595m) above.
Additions include capital expenditure in response to climate
change, in line with our Sustainability Strategy to reduce both the
embodied carbon in our developments and the operational carbon
across the Group's standing property portfolio.
The Group's total property portfolio was valued by external
valuers on the basis of fair value, in accordance with the RICS
Valuation - Global Standards 2022, published by The Royal Institute
of Chartered Surveyors. The information provided to the valuers,
and the assumptions and valuation models used by the valuers are
reviewed by the property portfolio team, the Head of Real Estate,
the Chief Financial Officer and the Chief Executive Officer. The
valuers meet with the external auditors and also present directly
to the Audit Committee on a half yearly basis.
Property valuations are inherently subjective as they are made
on the basis of assumptions made by the valuer which may not prove
to be accurate. For these reasons, and consistent with EPRA's
guidance, we have classified the valuations of our property
portfolio as level 3 as defined by IFRS 13. The inputs to the
valuations are defined as 'unobservable' by IFRS 13. These key
unobservable inputs are net equivalent yield and estimated rental
values for investment properties, and costs to complete for
development properties. Further analysis and sensitivity
disclosures of these key unobservable inputs have been included
below. There were no transfers between levels in the current period
nor in the prior year comparative.
There has been no change in the valuation methodology used for
investment property.
Information about the impact of changes in unobservable inputs
(Level 3) on the fair value of the Group's property portfolio
valuation for the six months ended 30 September 2023
Impact on valuations Impact on valuations Impact on valuations
------------- ---------------------- ---------------------- ----------------------
Fair value
at
30 September -25bps +25bps
2023 +5% ERV -5% ERV NEY NEY -5% costs +5% costs
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ------------- ---------- ---------- ---------- ---------- ---------- ----------
Campuses(1) 1,570 65 (60) 81 (75) - -
Retail & London Urban
Logistics 2,641 105 (104) 106 (100) - -
Developments 1,202 102 (100) 106 (97) 36 (37)
------------------------- ------------- ---------- ---------- ---------- ---------- ---------- ----------
Group property portfolio
valuation 5,413 272 (264) 293 (272) 36 (37)
------------------------- ------------- ---------- ---------- ---------- ---------- ---------- ----------
1. Includes trading properties at fair value.
Information about fair value measurements using unobservable
inputs (Level 3) for the six months ended 30 September 2023
Costs to complete
ERV per sq ft Equivalent yield per sq ft
--------------- ------------- ------------ ------------------- -------------------- ---------------------
Fair value
at
30 September
2023 Valuation Min Max Average Min Max Average Min Max Average
Investment GBPm technique GBP GBP GBP % % % GBP GBP GBP
--------------- ------------- ------------ ---- ---- ------- ---- ---- -------- ----- ----- -------
Investment
Campuses 1,542 methodology 20 136 62 4 8 6 - 158 30
Retail &
London Urban Investment
Logistics 2,641 methodology 2 31 19 4 23 7 - 33 5
Residual
Developments 1,202 methodology 29 106 74 5 7 5 145 1,503 725
--------------- ------------- ------------ ---- ---- ------- ---- ---- -------- ----- ----- -------
Total 5,385
Trading
properties
at fair
value 28
--------------- ------------- ------------ ---- ---- ------- ---- ---- -------- ----- ----- -------
Group property
portfolio
valuation 5,413
--------------- ------------- ------------ ---- ---- ------- ---- ---- -------- ----- ----- -------
All other factors being equal:
-- a higher equivalent yield or discount rate would lead to a
decrease in the valuation of an asset;
-- an increase in the current or estimated future rental stream
would have the effect of increasing the capital value; and
-- an increase in the costs to complete would lead to a decrease in the valuation of an asset.
However, there are interrelationships between the unobservable
inputs which are partially determined by market conditions, which
would impact on these changes.
Additional property covenant information
Properties valued at GBP1,124m (31 March 2023: GBP1,135m) were
subject to a security interest and other properties of non-recourse
companies amounted to GBP638m (31 March 2023: GBP612m), totalling
GBP1,762m (31 March 2023: GBP1,747m).
7 Joint ventures
Summary movement for the period of the investments in joint
ventures
Equity Loans Total
GBPm GBPm GBPm
-------------------------------------- ------ ----- -----
At 1 April 2023 1,419 787 2,206
Additions 21 57 78
Disposals (23) 1 (22)
Share of (loss) profit after taxation (92) 18 (74)
Distributions and dividends:
* Revenue (36) (1) (37)
Hedging and exchange movements 6 - 6
-------------------------------------- ------ ----- -----
At 30 September 2023 1,295 862 2,157
-------------------------------------- ------ ----- -----
Summary income statement for the period of the investments in
joint ventures
Restated(1)
Six months ended Six months ended
30 September 2023 30 September 2022
-------------------------------------------- -------------------- --------------------
GBPm GBPm GBPm GBPm
100% BL Share 100% BL Share
-------------------------------------------- ------- ----------- ------- -----------
Revenue 242 111 216 104
Costs (76) (34) (63) (30)
-------------------------------------------- ------- ----------- ------- -----------
166 77 153 74
Administrative expenses (3) (1) (3) (1)
Net financing charges (62) (27) (53) (25)
------- ----------- ------- -----------
Underlying Profit 101 49 97 48
Net valuation movement (272) (126) (285) (126)
Capital financing income 11 3 89 30
------- ----------- ------- -----------
Loss before taxation (160) (74) (99) (48)
------- ----------- ------- -----------
Taxation - - (4) (1)
-------------------------------------------- ------- ----------- ------- -----------
Loss after taxation (160) (74) (103) (49)
-------------------------------------------- ------- ----------- ------- -----------
Loss split between controlling and
non-controlling interests
Attributable to non-controlling interests - - - -
Attributable to shareholders of the Company (160) (74) (103) (49)
-------------------------------------------- ------- ----------- ------- -----------
1. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions. Refer to Note 1
for further information.
8 Debtors
30 September 31 March
2023 2023
GBPm GBPm
------------------------------- ------------ --------
Trade and other debtors 28 22
Prepayments and accrued income 19 12
47 34
------------------------------- ------------ --------
9 Net debt
9.1 Fair value and book value of net debt
30 September 2023 31 March 2023
-------------------------------------------- ---------------------------------- ----------------------------------
Fair value Book value Difference Fair value Book value Difference
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Debentures and unsecured bonds 1,392 1,506 (114) 1,533 1,627 (94)
Bank debt and other floating rate debt 736 731 5 645 640 5
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Gross debt 2,128 2,237 (109) 2,178 2,267 (89)
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Interest rate and currency derivative
liabilities 78 78 - 67 67 -
Interest rate and currency derivative assets (144) (144) - (144) (144) -
Cash and cash equivalents (152) (152) - (125) (125) -
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Total net debt 1,910 2,019 (109) 1,976 2,065 (89)
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Net debt attributable to non-controlling
interests 1 1 - 1 1 -
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Net debt attributable to shareholders
of the Company 1,911 2,020 (109) 1,977 2,066 (89)
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Total net debt 1,910 2,019 (109) 1,976 2,065 (89)
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Amounts payable under leases 122 122 - 126 126 -
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Net debt (including lease liabilities) 2,032 2,141 (109) 2,102 2,191 (89)
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Net debt attributable to non-controlling
interests (including lease liabilities) 1 1 - 1 1 -
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Net debt attributable to shareholders of the
Company (including lease liabilities) 2,033 2,142 (109) 2,103 2,192 (89)
-------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
The fair values of debentures and unsecured bonds have been
established by obtaining quoted market prices from brokers. The
bank debt and other floating rate debt has been valued assuming it
could be renegotiated at contracted margins. The derivatives have
been valued by calculating the present value of expected future
cash flows, using appropriate market discount rates, by an
independent treasury advisor. Short-term debtors and creditors and
other investments have been excluded from the disclosures on the
basis that the fair value is equivalent to the book value.
9.2 Loan to value ('LTV')
LTV is the ratio of principal value of gross debt less cash,
short term deposits and liquid investments to the aggregate value
of properties and investments, excluding non-controlling
interests.
EPRA LTV has been disclosed in Table E.
Group LTV
30 September 31 March
2023 2023
GBPm GBPm
------------------------------------------------------------------------ ------------ --------
Group LTV 28.0% 27.4%
------------------------------------------------------------------------ ------------ --------
Principal value of gross debt 2,255 2,250
Less debt attributable to non-controlling interests - -
Less cash and short term deposits (statement of cash flows)(1) (124) (99)
Plus cash attributable to non-controlling interests 1 1
------------------------------------------------------------------------ ------------ --------
Total net debt for LTV calculation 2,132 2,152
------------------------------------------------------------------------ ------------ --------
Group property portfolio valuation (Note 6) 5,413 5,595
Investments in joint ventures (Note 7) 2,157 2,206
Other investments and property, plant and equipment (balance sheet)(2) 60 61
Less property and investments attributable to non-controlling interests (13) (13)
------------------------------------------------------------------------ ------------ --------
Total assets for LTV calculation 7,617 7,849
------------------------------------------------------------------------ ------------ --------
1. Cash and short term deposits exclude tenant deposits of
GBP28m (31 March 2023: GBP26m).
2. The GBP18m (31 March 2023: GBP19m) difference between other
investments and plant, property and equipment per the balance sheet
totalling GBP78m (31 March 2023: GBP80m), relates to a right-of-use
asset recognised under a lease which is classified as property,
plant and equipment which is not included within Total assets for
the purposes of the LTV calculation.
Proportionally consolidated LTV
30 September 31 March
2023 2023
GBPm GBPm
----------------------------------------------------------------------- ------------ --------
Proportionally consolidated LTV 36.9% 36.0%
----------------------------------------------------------------------- ------------ --------
Principal value of gross debt 3,462 3,448
Less attributable to non-controlling interests - -
Less cash and short term deposits(1) (232) (228)
Plus cash attributable to non-controlling interests 1 1
----------------------------------------------------------------------- ------------ --------
Total net debt for proportional LTV calculation 3,231 3,221
----------------------------------------------------------------------- ------------ --------
Group property portfolio valuation (Note 6) 5,413 5,595
Share of property of joint ventures 3,304 3,316
Other investments and property, plant and equipment (balance sheet)(2) 60 61
Less property attributable to non-controlling interests (13) (13)
----------------------------------------------------------------------- ------------ --------
Total assets for proportional LTV calculation 8,764 8,959
----------------------------------------------------------------------- ------------ --------
1. Cash and short term deposits exclude tenant deposits of
GBP51m (31 March 2023: GBP49m).
2. The GBP18m (31 March 2023: GBP19m) difference between other
investments and plant, property and equipment per the balance sheet
totalling GBP78m (31 March 2023: GBP80m), relates to a right-of-use
asset recognised under a lease which is classified as property,
plant and equipment which is not included within Total assets for
the purposes of the LTV calculation.
9.3 Net Debt to EBITDA
Net Debt to EBITDA is the ratio of principal amount of gross
debt less cash, short term deposits and liquid investments to
earnings before interest, tax, depreciation and amortisation
(EBITDA).
The Group ratio excludes non-recourse and joint venture
borrowings and includes distributions and other receivables from
non-recourse companies and joint ventures.
Group Net Debt to EBITDA
30 September 31 March
2023 2023
GBPm GBPm
------------------------------------------------------------------------------------------- ------------ --------
Group Net Debt to EBITDA 6.0x 6.4x
------------------------------------------------------------------------------------------- ------------ --------
Principal amount of gross debt 2,255 2,250
Less non-recourse borrowings (297) (298)
Less cash and short term deposits (statement of cash flows)(1) (124) (99)
Plus cash attributable to non-recourse companies 24 37
------------------------------------------------------------------------------------------- ------------ --------
Total net debt for group Net Debt to EBITDA calculation 1,858 1,890
------------------------------------------------------------------------------------------- ------------ --------
Underlying Profit (Table A) 142 264
Plus Net financing charges (Note 5) 30 60
Less Underlying Profit due to joint ventures and non-recourse companies(2) (76) (144)
Plus distributions and other receivables from joint ventures and non-recourse companies(3) 57 107
Plus depreciation and amortisation (Table A) 3 7
------------------------------------------------------------------------------------------- ------------ --------
Total EBITDA for group Net Debt to EBITDA calculation 156 294
------------------------------------------------------------------------------------------- ------------ --------
Annualisation adjustment x2 -
------------------------------------------------------------------------------------------- ------------ --------
Annualised EBITDA for group Net Debt to EBITDA calculation 312 294
------------------------------------------------------------------------------------------- ------------ --------
1. Cash and short term deposits exclude tenant deposits of
GBP28m (31 March 2023: GBP26m).
2. Underlying Profit due to joint ventures GBP49m (31 March
2023: GBP92m) as disclosed in the consolidated income statement and
Underlying Profit due to non-recourse companies GBP27m (31 March
2023: GBP52m).
3. Distributions and other receivables from joint ventures
GBP37m (31 March 2023: GBP73m) as disclosed in the consolidated
statement of cash flows and distributions and other receivables
from non-recourse companies GBP20m (31 March 2023: GBP34m).
Proportionately consolidated Net Debt to EBITDA
30 September 31 March
2023 2023
GBPm GBPm
------------------------------------------------------------------------ ------------ --------
Proportionally consolidated Net Debt to EBITDA 8.0x 8.4x
------------------------------------------------------------------------ ------------ --------
Principal amount of gross debt 3,462 3,448
Less cash and short term deposits(1) (232) (228)
Plus cash attributable to non-controlling interests 1 1
------------------------------------------------------------------------ ------------ --------
Total net debt for proportional Net Debt to EBITDA calculation 3,231 3,221
------------------------------------------------------------------------ ------------ --------
Underlying Profit (Table A) 142 264
Plus Net financing charges (Table A) 57 111
Plus depreciation and amortisation (Table A) 3 7
------------------------------------------------------------------------ ------------ --------
Total EBITDA for proportional Net Debt to EBITDA calculation 202 382
------------------------------------------------------------------------ ------------ --------
Annualisation adjustment x2 -
------------------------------------------------------------------------ ------------ --------
Annualised Total EBITDA for proportional Net Debt to EBITDA calculation 404 382
------------------------------------------------------------------------ ------------ --------
1. Cash and short term deposits exclude tenant deposits of
GBP51m (31 March 2023: GBP49m).
9.4 British Land Unsecured Financial Covenants
The two financial covenants applicable to the Group unsecured
debt are shown below:
30 September 31 March
2023 2023
GBPm GBPm
---------------------------------------------------------------------------------- ------------ --------
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves 39% 38%
---------------------------------------------------------------------------------- ------------ --------
Principal amount of gross debt 2,255 2,250
Less the relevant proportion of borrowings of the partly-owned subsidiary/
non-controlling interests - -
Less cash and short term deposits (statement of cash flows)(1) (124) (99)
Plus the relevant proportion of cash and deposits of the partly-owned subsidiary/
non-controlling interests 1 1
---------------------------------------------------------------------------------- ------------ --------
Net Borrowings 2,132 2,152
---------------------------------------------------------------------------------- ------------ --------
Share capital and reserves (balance sheet) 5,367 5,525
Deferred tax liabilities (Table A) 8 6
Trading property surpluses (Table A) 1 7
Exceptional refinancing charges (see below) 154 161
Fair value adjustments of financial instruments (Table A) (94) (44)
Less reserves attributable to non-controlling interests (balance sheet) (13) (13)
---------------------------------------------------------------------------------- ------------ --------
Adjusted Capital and Reserves 5,423 5,642
---------------------------------------------------------------------------------- ------------ --------
1. Cash and short term deposits exclude tenant deposits of
GBP28m (31 March 2023: GBP26m).
In calculating Adjusted Capital and Reserves for the purpose of
the unsecured debt financial covenants, there is an adjustment of
GBP154m (31 March 2023: GBP161m) to reflect the cumulative net
amortised exceptional items relating to the refinancings in the
years ended 31 March 2005, 2006 and 2007.
30 September 31 March
2023 2023
GBPm GBPm
------------------------------------------------------------------------------------------- ------------ --------
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets 33% 32%
------------------------------------------------------------------------------------------- ------------ --------
Principal amount of gross debt 2,255 2,250
Less cash and deposits not subject to a security interest (being GBP124m less cash subject
to a security interest of GBP7m) (117) (86)
Less principal amount of secured and non-recourse borrowings (932) (933)
------------------------------------------------------------------------------------------- ------------ --------
Net Unsecured Borrowings 1,206 1,231
------------------------------------------------------------------------------------------- ------------ --------
Group property portfolio valuation (Note 6) 5,413 5,595
Investments in joint ventures (Note 7) 2,157 2,206
Other investments and property, plant and equipment (balance sheet)(1) 60 61
Less investments in joint ventures (Note 7) (2,157) (2,206)
Less encumbered assets (Note 6) (1,762) (1,747)
------------------------------------------------------------------------------------------- ------------ --------
Unencumbered Assets 3,711 3,909
------------------------------------------------------------------------------------------- ------------ --------
1. The GBP18m (31 March 2023: GBP19m) difference between other
investments and plant, property and equipment per the balance sheet
totalling GBP78m (31 March 2023: GBP80m), relates to a right-of-use
asset recognised under a lease which is classified as property,
plant and equipment which is not included within Unencumbered
Assets for the purposes of the covenant calculation.
9.5 Fair value hierarchy
The table below analyses financial instruments carried at fair
value, by the valuation method. The different levels are defined as
follows:
Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2: Inputs other than quoted prices included within level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The fair value of interest rate and currency derivatives are
determined using the present value of estimated future cash flows
and discounted based on the applicable yield curves derived from
quoted interest rates and the appropriate exchange rate at the
balance sheet date.
30 September 2023 31 March 2023
------------------------------------------------------- -------------------------- --------------------------
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
Interest rate and currency derivative assets - (144) - (144) - (144) - (144)
Other investments - fair value through profit and loss - - (48) (48) - - (48) (48)
------------------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
Assets - (144) (48) (192) - (144) (48) (192)
------------------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
Interest rate and currency derivative liabilities - 78 - 78 - 67 - 67
------------------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
Liabilities - 78 - 78 - 67 - 67
------------------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
Total - (66) (48) (114) - (77) (48) (125)
------------------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
There have been no transfers between levels in the period.
10 Dividend
The Interim dividend payment for the six months ended 30
September 2023 will be 12.16p. Payment will be made on 5 January
2024 to shareholders on the register at close of business on 24
November 2023. The Interim dividend will be a Property Income
Distribution (PID) and no SCRIP alternative will be offered.
The 2023 Final dividend of 11.04p pence per share, totalling
GBP102m was paid on 28 July 2023. The whole of the 2023 Final
dividend was a PID and no scrip alternative was offered. GBP87m was
paid to shareholders, and GBP15m of withholding tax was
retained.
11 Segment information
Operating segments
The Group allocates resources to investment and asset management
according to the sectors it expects to perform over the medium
term.
The relevant gross rental income, net rental income, operating
result and property assets, being the measures of segment revenue,
segment result and segment assets used by the management of the
business, are set out below. Management reviews the performance of
the business principally on a proportionally consolidated basis,
which includes the Group's share of joint ventures on a
line-by-line basis and excludes non-controlling interests in the
Group's subsidiaries. The chief operating decision maker for the
purpose of segment information is the Executive Committee.
Gross rental income is derived from the rental of buildings.
Operating result is the net of net rental income, fee income and
administrative expenses. No customer exceeded 10% of the Group's
revenues in either period.
From 1 April 2023 the Group renamed the Retail & Fulfilment
operating segment to Retail & London Urban Logistics, in line
with our evolving strategy. There have been no changes in the
allocation of the segment results or assets as a consequence of
this change.
Segment result
Six months ended 30 September
Retail & London
Campuses Urban Logistics Unallocated Total
------------------------ -------------- ------------------- -------------- -------------------
Restated(1) Restated(1)
2023 2022 2023 2022 2023 2022 2023 2022
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ------ ------ ------ ----------- ------ ------ ------ -----------
Gross rental income
British Land Group 48 65 109 101 - - 157 166
Share of joint ventures 55 54 29 29 - - 84 83
------------------------ ------ ------ ------ ----------- ------ ------ ------ -----------
Total 103 119 138 130 - - 241 249
------------------------ ------ ------ ------ ----------- ------ ------ ------ -----------
Net rental income
British Land Group 42 63 109 88 - - 151 151
Share of joint ventures 49 49 26 24 - - 75 73
------------------------ ------ ------ ------ ----------- ------ ------ ------ -----------
Total 91 112 135 112 - - 226 224
------------------------ ------ ------ ------ ----------- ------ ------ ------ -----------
Operating result
British Land Group 51 58 108 92 (26) (28) 133 122
Share of joint ventures 43 54 25 19 (2) (1) 66 72
------------------------ ------ ------ ------ ----------- ------ ------ ------ -----------
Total 94 112 133 111 (28) (29) 199 194
------------------------ ------ ------ ------ ----------- ------ ------ ------ -----------
Restated(1)
Six months Six months
ended ended
30 September 30 September
2023 2022
Reconciliation to Underlying Profit before taxation GBPm GBPm
--------------------------------------------------------------- -------------- -------------
Operating result - proportionately consolidated (Table A) 199 194
Net financing charges - proportionately consolidated (Table A) (57) (56)
--------------------------------------------------------------- -------------- -------------
Underlying Profit 142 138
--------------------------------------------------------------- -------------- -------------
Reconciliation to loss before taxation
--------------------------------------------------------------- -------------- -------------
Underlying Profit 142 138
Capital and other (192) (159)
Underlying Profit attributable to non-controlling interests 1 1
--------------------------------------------------------------- -------------- -------------
Total loss before taxation (49) (20)
--------------------------------------------------------------- -------------- -------------
1. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions. Refer to Note 1
for further information.
Of the operating result above, GBP199m (six months ended 30
September 2022: GBP194m restated) was derived from within the
UK.
Segment assets
Campuses Retail & London Total
Urban Logistics
------------------------ ---------------------- ---------------------- ----------------------
30 September 31 March 30 September 31 March 30 September 31 March
2023 2023 2023 2023 2023 2023
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ------------ -------- ------------ -------- ------------ --------
Property assets
British Land Group 2,728 2,972 2,681 2,619 5,409 5,591
Share of joint ventures 2,663 2,687 641 629 3,304 3,316
------------------------ ------------ -------- ------------ -------- ------------ --------
Total 5,391 5,659 3,322 3,248 8,713 8,907
------------------------ ------------ -------- ------------ -------- ------------ --------
Reconciliation to net assets
30 September 31 March
2023 2023
British Land Group GBPm GBPm
------------------------------------------------------------- ------------ --------
Property assets 8,713 8,907
Other non-current assets - proportionately consolidated 78 141
------------------------------------------------------------- ------------ --------
Non-current assets 8,791 9,048
------------------------------------------------------------- ------------ --------
Other net current liabilities - proportionately consolidated (360) (384)
EPRA net debt (Table A) (3,153) (3,127)
Other non-current liabilities - (50)
------------------------------------------------------------- ------------ --------
EPRA NTA 5,278 5,487
------------------------------------------------------------- ------------ --------
Non-controlling interests 13 13
EPRA adjustments (Table A) 76 25
------------------------------------------------------------- ------------ --------
IFRS net assets 5,367 5,525
------------------------------------------------------------- ------------ --------
12 Related party transactions
There have been no material changes in the related party
transactions described in the last annual report.
13 Contingent liabilities
The Group and joint ventures have contingent liabilities in
respect of legal claims, guarantees and warranties arising in the
ordinary course of business. It is not anticipated that any
material liabilities will arise from contingent liabilities.
14 Share capital and reserves
Ordinary
shares
of 25p
GBPm each
------------------------------ ---- -----------
Issued, called and fully paid
At 1 April 2023 234 938,334,977
Share issues - 181,601
------------------------------ ---- -----------
At 30 September 2023 234 938,516,578
------------------------------ ---- -----------
At 30 September 2023, of the issued 25p ordinary shares, 7,376
shares were held in the ESOP trust (31 March 2023: 7,376),
11,266,245 shares were held as treasury shares (31 March 2022:
11,266,245) and 927,242,957 shares were in free issue (31 March
2023: 926,997,041). No treasury shares were acquired by the ESOP
trust during the period. All issued shares are fully paid.
15 Subsequent events
There have been no significant subsequent events post the
balance sheet date.
Supplementary Disclosures
Table A: Summary income statement and balance sheet
Summary income statement based on proportional consolidation for
the six months ended 30 September 2023
The following pro forma information is unaudited and does not
form part of the consolidated primary statements or the notes
thereto. It presents the results of the Group, with its share of
the results of joint ventures included on a line by line basis and
excluding non-controlling interests.
Restated(1)
Six months ended 30 September Six months ended 30 September
2023 2022
--------------- ------------------------------------------------ -------------------------------------------------
Less Less
Joint non-controlling Proportionally Joint non-controlling Proportionally
Group ventures interests consolidated Group ventures interests consolidated
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ----- -------- --------------- -------------- ----- --------- --------------- --------------
Gross rental
income(2) 163 85 (2) 246 172 83 (2) 253
Property
operating
expenses(3) (8) (8) 1 (15) (16) (9) 1 (24)
----- -------- --------------- -------------- ----- --------- --------------- --------------
Net rental
income 155 77 (1) 231 156 74 (1) 229
Administrative
expenses(4) (42) (1) - (43) (43) (1) - (44)
Net fees and
other income 11 - - 11 9 - - 9
----- -------- --------------- -------------- ----- --------- --------------- --------------
Ungeared Income
Return 124 76 (1) 199 122 73 (1) 194
Net financing
charges (30) (27) - (57) (31) (25) - (56)
--------------- ----- -------- --------------- -------------- ----- --------- --------------- --------------
Underlying
Profit 94 49 (1) 142 91 48 (1) 138
--------------- ----- -------- --------------- -------------- ----- --------- --------------- --------------
Underlying
taxation (1) - - (1) (1) - - (1)
--------------- ----- -------- --------------- -------------- ----- --------- --------------- --------------
Underlying
Profit after
taxation 141 90 48 (1) 137
--------------- ----- -------- --------------- -------------- ----- --------- --------------- --------------
Valuation
movement (327) (315)
Other capital
and taxation
(net)(5) 129 150
--------------- ----- -------- --------------- -------------- ----- --------- --------------- --------------
Result
attributable
to
shareholders
of the Company (57) (28)
--------------- ----- -------- --------------- -------------- ----- --------- --------------- --------------
1. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions. Refer to Note 1
for further information.
2. Group gross rental income includes GBP5m (six months ended 30
September 2023: GBP4m) of all inclusive rents relating to service
charge income and excludes the GBP25m (six months ended 30
September 2023: GBPnil) of rent receivable and GBP149m (six months
ended 30 September 2023: GBPnil) of surrender premia received
within the Capital and other column of the income statement (see
Note 3).
3. Group property operating expenses excludes GBP54m (six months
ended 30 September 2023: GBPnil) of provisions for impairment of
tenant incentives and contracted rent increases within the Capital
and other column of the income statement (see Note 3).
4. Administrative expenses includes GBP3m (six months ended 30
September 2023: GBP4m) of depreciation and amortisation.
5. Includes other comprehensive income, movement in dilution of
share options and the movement in items excluded for EPRA NTA.
Summary balance sheet based on proportional consolidation as at
30 September 2023
The following pro forma information is unaudited and does not
form part of the consolidated primary statements or the notes
thereto. It presents the results of the Group, with its share of
the results of joint ventures included on a line-by-line basis and
excluding non-controlling interests.
Mark-to-market EPRA EPRA
on derivatives Valuation Intangibles NTA NTA
Share Less and related surplus and 30 31
of joint non-controlling Share debt Head on trading Deferred September March
Group ventures interests options adjustments leases properties tax 2023 2023
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------- -------- --------------- ------- -------------- ------ ---------- ----------- --------- -------
Campuses
properties 2,773 2,695 - - - (78) 1 - 5,391 5,659
Retail &
London Urban
Logistics
properties 2,744 631 (13) - - (40) - - 3,322 3,248
------- -------- --------------- ------- -------------- ------ ---------- ----------- --------- -------
Total
properties(1) 5,517 3,326 (13) - - (118) 1 - 8,713 8,907
Investments in
joint
ventures 2,157 (2,157) - - - - - - - -
Other
investments 56 - - - - - - (8) 48 50
Other net
(liabilities)
assets (338) (128) 1 17 - 118 - - (330) (343)
Deferred tax
liability (6) (2) - - - - - 8 - -
Net debt (2,019) (1,039) (1) - (94) - - - (3,153) (3,127)
-------------- ------- -------- --------------- ------- -------------- ------ ---------- ----------- --------- -------
Net assets 5,367 - (13) 17 (94) - 1 - 5,278 5,487
-------------- ------- -------- --------------- ------- -------------- ------ ---------- ----------- --------- -------
EPRA NTA per
share (Note
2) 565p 588p
-------------- ------- -------- --------------- ------- -------------- ------ ---------- ----------- --------- -------
1. Included within the total property value of GBP8,713m (31
March 2023: GBP8,907m) are right-of-use assets net of lease
liabilities of GBP9m (31 March 2023: GBP9m), which in substance,
relates to properties held under leasing agreements. The fair value
of the right-of-use asset is determined by calculating the present
value of net rental cashflows over the term of the lease
agreements.
EPRA Net tangible assets movement
30 September 2023 31 March 2023
----------------- ------------------- ------------------
Pence per Pence per
GBPm share GBPm share
----------------- ------- ---------- ------- ---------
Opening EPRA NTA 5,487 588 6,806 730
Income return 141 15 263 28
Capital return (248) (27) (1,367) (147)
Dividend paid (102) (11) (215) (23)
----------------- ------- ---------- ------- ---------
Closing EPRA NTA 5,278 565 5,487 588
----------------- ------- ---------- ------- ---------
Table B: EPRA Performance measures
EPRA Performance measures summary table
Restated(1)
Six months ended Six months ended
30 September 2023 30 September 2022
------------------------------------------------- -------------------- --------------------
Pence per Pence per
GBPm share GBPm share
------------------------------------------------- ------ ------------ ------ ------------
EPRA Earnings - basic 261 28.2 137 14.8
- diluted 261 28.1 137 14.7
------------------------------------------------- ------ ------------ ------ ------------
Percentage Percentage
------------------------------------------------- ------ ------------ ------ ------------
EPRA Net Initial Yield 5.4% 4.5%
EPRA 'topped-up' Net Initial Yield 6.0% 5.2%
EPRA Vacancy Rate 6.7% 6.1%
------------------------------------------------- ------ ------------ ------ ------------
EPRA Cost Ratio (including direct vacancy costs) 14.8% 19.5%
EPRA Cost Ratio (excluding direct vacancy costs) 7.0% 13.7%
------------------------------------------------- ------ ------------ ------ ------------
1. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions. Refer to Note 1
for further information.
30 September 2023 31 March 2023
--------- ------------------- -----------------
Pence per Pence per
GBPm share GBPm share
--------- ------ ----------- ----- ----------
EPRA NTA 5,278 565 5,487 588
EPRA NRV 5,809 622 6,029 646
EPRA NDV 5,549 594 5,658 606
--------- ------ ----------- ----- ----------
Percentage Percentage
--------- ------ ----------- ----- ----------
EPRA LTV 39.9% 39.5%
--------- ------ ----------- ----- ----------
Calculation and reconciliation of Underlying/EPRA/IFRS Earnings
and Underlying/EPRA/IFRS Earnings per share
Restated(1)
Six months Six months
ended ended
30 September 30 September
2023 2022
GBPm GBPm
---------------------------------------------------------------------------------------- ------------- -------------
Loss attributable to the shareholders of the Company (61) (32)
Exclude:
Group - Underlying taxation 1 -
Group - Capital and other taxation 11 11
Group - valuation movement 201 189
Group - (profit) loss on disposal of investment properties and revaluation of
investments (2) 20
Group - Capital and other revenue and costs (see Note 3) (120) -
Joint ventures - valuation movement (including result on disposals) 126 126
Joint ventures - capital financing income (3) (30)
Joint ventures - deferred tax - 1
Changes in fair value of financial instruments and associated close-out costs (10) (147)
Non-controlling interests in respect of the above (1) -
---------------------------------------------------------------------------------------- ------------- -------------
Underlying Profit 142 138
---------------------------------------------------------------------------------------- ------------- -------------
Group - Underlying current taxation (1) (1)
---------------------------------------------------------------------------------------- ------------- -------------
Underlying Earnings - basic and diluted 141 137
---------------------------------------------------------------------------------------- ------------- -------------
Group - Capital and other revenue and costs (see Note 3) 120 -
---------------------------------------------------------------------------------------- ------------- -------------
EPRA Earnings - basic and diluted 261 137
---------------------------------------------------------------------------------------- ------------- -------------
Loss attributable to the shareholders of the Company (61) (32)
---------------------------------------------------------------------------------------- ------------- -------------
IFRS Earnings - basic and diluted (61) (32)
---------------------------------------------------------------------------------------- ------------- -------------
1. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions. Refer to Note 1
for further information.
Six months Six months
ended ended
30 September 30 September
2023 2022
Number Number
million million
--------------------------------------------------------------- ------------- -------------
Weighted average number of shares 938 938
Adjustment for Treasury shares (11) (11)
--------------------------------------------------------------- ------------- -------------
IFRS/EPRA/Underlying weighted average number of shares (basic) 927 927
--------------------------------------------------------------- ------------- -------------
Dilutive effect of share options - -
Dilutive effect of ESOP shares 2 3
--------------------------------------------------------------- ------------- -------------
EPRA/Underlying weighted average number of shares (diluted) 929 930
--------------------------------------------------------------- ------------- -------------
Remove anti-dilutive effect (2) (3)
--------------------------------------------------------------- ------------- -------------
IFRS weighted average number of shares (diluted) 927 927
--------------------------------------------------------------- ------------- -------------
Net assets per share
30 September 2023 31 March 2023
----------------------------------------------------------- ------------------- ----------------
Pence per Pence per
GBPm share GBPm share
----------------------------------------------------------- ------- ---------- ----- ---------
IFRS net assets 5,367 5,525
----------------------------------------------------------- ------- ---------- ----- ---------
Deferred tax arising on revaluation of derivatives 8 6
Mark-to-market on derivatives and related debt adjustments (94) (44)
Dilution effect of share options 17 14
Surplus on trading properties 1 7
Intangible assets (8) (8)
Less non-controlling interests (13) (13)
----------------------------------------------------------- ------- ---------- ----- ---------
EPRA NTA 5,278 565 5,487 588
----------------------------------------------------------- ------- ---------- ----- ---------
Intangible assets 8 8
Purchasers' costs 523 534
----------------------------------------------------------- ------- ---------- ----- ---------
EPRA NRV 5,809 622 6,029 646
----------------------------------------------------------- ------- ---------- ----- ---------
Deferred tax arising on revaluation movements (8) (7)
Purchasers' costs (523) (534)
Mark-to-market on derivatives and related debt adjustments 94 44
Mark-to-market on debt 177 126
----------------------------------------------------------- ------- ---------- ----- ---------
EPRA NDV 5,549 594 5,658 606
----------------------------------------------------------- ------- ---------- ----- ---------
EPRA NTA is the Group's primary measure of net assets and
assumes that entities buy and sell assets, thereby crystallising
certain levels of unavoidable deferred tax. Due to the Group's REIT
status, deferred tax is only provided at each balance sheet date on
properties outside the REIT regime. As a result deferred taxes are
excluded from EPRA NTA for properties within the REIT regime. For
properties outside of the REIT regime, deferred tax is included to
the extent that it is expected to crystallise, based on the Group's
track record and tax structuring. EPRA NRV reflects what would be
needed to recreate the Group through the investment markets based
on its current capital and financing structure. EPRA NDV reflects
shareholders' value which would be recoverable under a disposal
scenario, with deferred tax and financial instruments recognised at
the full extent of their liability.
30 September 31 March
2023 2023
Number Number
million million
------------------------------------- ------------ --------
Number of shares at period/year end 938 938
Adjustment for treasury shares (11) (11)
------------------------------------- ------------ --------
IFRS/EPRA number of shares (basic) 927 927
------------------------------------- ------------ --------
Dilutive effect of share options 5 3
Dilutive effect of ESOP shares 2 3
------------------------------------- ------------ --------
IFRS/EPRA number of shares (diluted) 934 933
------------------------------------- ------------ --------
EPRA Net Initial Yield and 'topped-up' Net Initial Yield
30 September 30 September
2023 2022
GBPm GBPm
------------------------------------------------------------------ ------------ ------------
Investment property - wholly-owned 5,400 5,942
Investment property - share of joint ventures 3,304 3,701
Less developments, residential and land (1,817) (1,358)
------------ ------------
Completed property portfolio 6,887 8,285
Allowance for estimated purchasers' costs 473 589
------------------------------------------------------------------ ------------ ------------
Gross up completed property portfolio valuation (A) 7,360 8,874
------------------------------------------------------------------ ------------ ------------
Annualised cash passing rental income 430 435
Property outgoings (33) (33)
------------------------------------------------------------------ ------------ ------------
Annualised net rents (B) 397 402
------------------------------------------------------------------ ------------ ------------
Rent expiration of rent-free periods and fixed uplifts(1) 41 59
------------------------------------------------------------------ ------------ ------------
'Topped-up' net annualised rent (C) 438 461
EPRA Net Initial Yield (B/A) 5.4% 4.5%
EPRA 'topped-up' Net Initial Yield (C/A) 6.0% 5.2%
------------------------------------------------------------------ ------------ ------------
Including fixed/minimum uplifts received in lieu of rental growth 6 4
------------------------------------------------------------------ ------------ ------------
Total 'topped-up' net rents (D) 444 465
Overall 'topped-up' Net Initial Yield (D/A) 6.0% 5.2%
------------------------------------------------------------------ ------------ ------------
'Topped-up' net annualised rent 438 461
ERV vacant space 32 30
Reversions 5 (4)
------------------------------------------------------------------ ------------ ------------
Total Estimated Rental Value (E) 475 487
Net Reversionary Yield (E/A) 6.5% 5.5%
------------------------------------------------------------------ ------------ ------------
1. The weighted average period over which rent-free periods
expire is 1 year (30 September 2022: 1 year).
EPRA Net Initial Yield ('NIY') basis of calculation
EPRA NIY is calculated as the annualised net rent (on a cash
flow basis), divided by the gross value of the completed property
portfolio. The valuation of our completed property portfolio is
determined by our external valuers as at 30 September 2023, plus an
allowance for estimated purchaser's costs. Estimated purchaser's
costs are determined by the relevant stamp duty liability, plus an
estimate by our valuers of agent and legal fees on notional
acquisition. The net rent deduction allowed for property outgoings
is based on our valuers' assumptions on future recurring
non-recoverable revenue expenditure.
In calculating the EPRA 'topped-up' NIY, the annualised net rent
is increased by the total contracted rent from expiry of rent-free
periods and future contracted rental uplifts were defined as not in
lieu of growth. Overall 'topped-up' NIY is calculated by adding any
other contracted future uplift to the 'topped-up' net annualised
rent.
The net reversionary yield is calculated by dividing the total
estimated rental value (ERV) for the completed property portfolio,
as determined by our external valuers, by the gross completed
property portfolio valuation.
The EPRA Vacancy Rate is calculated as the ERV of the un-rented,
lettable space as a proportion of the total rental value of the
completed property portfolio.
EPRA Vacancy Rate
30 September 30 September
2023 2022
GBPm GBPm
----------------------------------------------------------------------- ------------ ------------
Annualised potential rental value of vacant premises 32 30
Annualised potential rental value for the completed property portfolio 483 489
EPRA Vacancy Rate 6.7% 6.1%
----------------------------------------------------------------------- ------------ ------------
EPRA Cost Ratios
Restated(1)
Six months Six months
ended ended
30 September 30 September
2023 2022
GBPm GBPm
---------------------------------------------------------------------------------------- ------------- -------------
Property operating expenses 7 15
Administrative expenses 42 43
Share of joint ventures expenses 9 10
Less: Performance & management fees (from joint ventures) (9) (6)
Net other fees and commissions (2) (3)
Ground rent costs and operating expenses de facto included in rents (13) (12)
---------------------------------------------------------------------------------------- ------------- -------------
EPRA Costs (including direct vacancy costs) (A) 34 47
Direct vacancy costs (18) (14)
---------------------------------------------------------------------------------------- ------------- -------------
EPRA Costs (excluding direct vacancy costs) (B) 16 33
Gross rental income less ground rent costs and operating expenses de facto included in
rents 152 159
Share of joint ventures (Gross Rental Income less ground rent costs) 78 82
---------------------------------------------------------------------------------------- ------------- -------------
Total Gross rental income (C) 230 241
EPRA Cost Ratio (including direct vacancy costs) (A/C) 14.8% 19.5%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C) 7.0% 13.7%
---------------------------------------------------------------------------------------- ------------- -------------
Reversal of impairment of tenant debtors, tenant incentives and accrued income (D) (10) (1)
Adjusted Cost Ratio (including direct vacancy costs and excluding impairment of tenant
debtors,
tenant incentives and accrued income) (A-D)/C 19.1% 19.9%
Adjusted Cost Ratio (excluding direct vacancy costs and excluding impairment of tenant
debtors,
tenant incentives and accrued income) (B-D)/C 11.3% 14.1%
---------------------------------------------------------------------------------------- ------------- -------------
Overhead and operating expenses capitalised (including share of joint ventures) 5 3
---------------------------------------------------------------------------------------- ------------- -------------
1. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions. Refer to Note 1
for further information.
In the current and prior periods employee costs in relation to
staff time on development projects are capitalised into the base
cost of relevant development assets. In addition to the standard
EPRA Cost Ratios (both including and excluding direct vacancy
costs), adjusted versions of these ratios have also been presented
which remove the impact of the reversal of impairment of tenant
debtors, tenant incentives and accrued income which are exceptional
items in the current period, to show the impact of these items on
the ratios.
Table C: Gross rental income
Restated(1)
Six months Six months
ended ended
30 September 30 September
2023 2022
GBPm GBPm
------------------------------------------------------------- ------------- -------------
Rent receivable 239 232
Spreading of tenant incentives and contracted rent increases 4 19
Surrender premia 3 2
------------------------------------------------------------- ------------- -------------
Gross rental income 246 253
------------------------------------------------------------- ------------- -------------
1. Prior period comparatives have been restated for a change in
accounting policy in respect of rental concessions. Refer to Note 1
for further information.
The current and prior period information is presented on a
proportionally consolidated basis, excluding non-controlling
interests.
Table D: Property related capital expenditure
Six months ended 30 Year ended 31 March
September 2023 2023
------------------------------------------- ----------------------- -----------------------
Joint Joint
Group ventures Total Group ventures Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------- ----- --------- ----- ----- --------- -----
Acquisitions 58 - 58 158 - 158
Development 91 100 191 156 106 262
Investment properties
Incremental lettable space - - - - - -
No incremental lettable space 30 11 41 60 26 86
Tenant incentives 1 3 4 2 1 3
Other material non-allocated types
of expenditure 2 2 4 3 3 6
Capitalised interest 7 3 10 10 3 13
------------------------------------------- ----- --------- ----- ----- --------- -----
Total property related capex 189 119 308 389 139 528
------------------------------------------- ----- --------- ----- ----- --------- -----
Conversion from accrual to cash basis 10 (3) 7 (50) (6) (56)
------------------------------------------- ----- --------- ----- ----- --------- -----
Total property related capex on cash basis 199 116 315 339 133 472
------------------------------------------- ----- --------- ----- ----- --------- -----
The above is presented on a proportionally consolidated basis,
excluding non-controlling interests and business combinations. The
'Other material non-allocated types of expenditure' category
contains capitalised staff costs of GBP4m (31 March 2023:
GBP6m).
Table E: EPRA LTV
30 September 2023 31 March 2023
---------------------------------------- ----------------------------------------
Proportionately consolidated Proportionately consolidated
------------------------------ ---------------------------------------- ----------------------------------------
Share Share
of Joint Non-controlling of Joint Non-controlling
Group Ventures interests Total Group Ventures interests Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ ----- --------- --------------- ----- ----- --------- --------------- -----
Include:
Gross debt 2,255 1,207 - 3,462 2,250 1,198 - 3,448
Net payables 213 101 - 314 271 93 - 364
Exclude:
Cash and cash equivalents (152) (131) 1 (282) (125) (152) 1 (276)
------------------------------ ----- --------- --------------- ----- ----- --------- --------------- -----
EPRA Net Debt (a) 2,316 1,177 1 3,494 2,396 1,139 1 3,536
------------------------------ ----- --------- --------------- ----- ----- --------- --------------- -----
Include:
Property portfolio valuation 5,413 3,304 (13) 8,704 5,595 3,316 (13) 8,898
Other financial assets 48 - - 48 50 - - 50
Intangibles 8 - - 8 8 - - 8
------------------------------ ----- --------- --------------- ----- ----- --------- --------------- -----
EPRA Total Property Value (b) 5,469 3,304 (13) 8,760 5,653 3,316 (13) 8,956
------------------------------ ----- --------- --------------- ----- ----- --------- --------------- -----
EPRA LTV (a/b) 42.3% 39.9% 42.4% 39.5%
------------------------------ ----- --------- --------------- ----- ----- --------- --------------- -----
Supplementary Tables
Data includes Group's share of Joint Ventures
HY24 rent collection
Rent due between 25 March 2023 and 28 September 2023 Offices Retail Total
----------------------------------------------------- ------- ------- -------
Received 99% 98% 99%
Outstanding 1% 2% 1%
----------------------------------------------------- ------- ------- -------
100% 100% 100%
-----------------------------------------------------
Total GBP94m GBP133m GBP227m
----------------------------------------------------- ------- ------- -------
September quarter 2023 rent collection
Rent due between 29 September 2023 and 8 November 2023 Offices Retail Total
------------------------------------------------------- ------- ------ ------
Received 97% 93% 95%
Outstanding 3% 7% 5%
------------------------------------------------------- ------- ------ ------
100% 100% 100%
-------------------------------------------------------
Total GBP42m GBP51m GBP93m
------------------------------------------------------- ------- ------ ------
Purchases
Price Price Annualised
(100%) (BL Share) Net Rents
Since 1 April 2023 Sector GBPm GBPm GBPm(1)
----------------------------- ------------ ------- ----------- ----------
Completed
Westwood Retail Park, Thanet Retail Park 55 55 4
Total 55 55 4
------------------------------------------- ------- ----------- ----------
Sales
Price Price Annualised
(100%) (BL Share) Net Rents
Since 1 April 2023 Sector GBPm GBPm GBPm(1)
-------------------------------------- ------------------- ------- ----------- ----------
Completed
Burton Upon Trent, Sainsburys Other Retail 8 8 1
Riverside Retail Park, Coleraine Retail Park 10 10 1
126-134 Baker Street Office 17 17 1
Vodafone Portfolio Office 96 96 5
Exchanged
Vodafone Portfolio (Addison House)(3) Office 29 29 1
Other(2) Residential/Retail 13 10 1
Total 173 170 10
----------------------------------------------------------- ------- ----------- ----------
1. BL share of annualised rent topped up for rent frees
2. Of which GBP8m completed post period end
3. Completed post period end
Portfolio Valuation by Sector
Change(1)
-------------------------------- ----- -------------- ----- ------------
Group Joint ventures Total
At 30 September 2023 GBPm GBPm GBPm % GBPm
-------------------------------- ----- -------------- ----- ----- -----
West End 1,994 330 2,324 (2.5) (60)
City 439 2,027 2,466 (4.6) (124)
Canada Water & other Campuses 170 304 474 (9.2) (48)
Residential(2) 116 2 118 0.8 1
Campuses 2,719 2,663 5,382 (4.0) (231)
-------------------------------- ----- -------------- ----- ----- -----
Retail Parks 1,877 183 2,060 0.2 4
Shopping Centre 311 440 751 0.0 0
London Urban Logistics 261 10 271 0.6 2
Other Retail 232 8 240 (0.8) (2)
Retail & London Urban Logistics 2,681 641 3,322 0.1 4
-------------------------------- ----- -------------- ----- ----- -----
Total 5,400 3,304 8,704 (2.5) (227)
-------------------------------- ----- -------------- ----- ----- -----
Standing Investments 4,198 2,699 6,897 (2.5) (179)
Developments 1,202 605 1,807 (2.6) (48)
-------------------------------- ----- -------------- ----- ----- -----
On a proportionally consolidated basis including the Group's
share of joint ventures and excluding non-controlling interests
1. 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
2. Standalone residential
Gross Rental Income(1)
6 months to 30 September Annualised as at 30 September
2023 2023
-------------------------------- ---------------------------- ---------------------------------
Accounting Basis GBPm Group Joint ventures Total Group Joint ventures Total
-------------------------------- ----- -------------- ----- ------- ---------------- ------
West End 41 8 49 56 16 72
City 7 45 52 9 90 99
Other Campuses 5 2 7 9 4 13
Campuses 53 55 108 74 110 184
-------------------------------- ----- -------------- ----- ------- ---------------- ------
Retail Parks 74 8 82 138 14 152
Shopping Centre 21 21 42 39 41 80
London Urban Logistics 4 - 4 7 - 7
Other Retail 10 - 10 18 1 19
Retail & London Urban Logistics 109 29 138 202 56 258
-------------------------------- ----- -------------- ----- ------- ---------------- ------
Total 162 84 246 276 166 442
-------------------------------- ----- -------------- ----- ------- ---------------- ------
On a proportionally consolidated basis including the Group's
share of joint ventures and excluding non-controlling interests
Residential consists of only developments and ground rents,
thereby excluded from gross rental income analysis
1. Gross rental income will differ from annualised valuation
rents due to accounting adjustments for fixed & minimum
contracted rental uplifts and lease incentives
Portfolio Net Yields(1,2)
EPRA net EPRA topped Overall topped Net Net
As at 30 initial up net up net equivalent Net equivalent reversionary
September yield initial yield initial yield yield yield movement yield ERV Growth
2023 % %(3) %(4) % bps %(5) %(6)
---------------- -------- -------------- --------------- ----------- --------------- --------------- ----------
West End 3.7 4.5 4.5 5.3 27 5.9 3.2
City 4.4 5.0 5.0 5.3 38 6.1 3.5
Other Campuses 5.6 5.6 6.0 5.7 21 6.5 0.0
Campuses 4.1 4.8 4.8 5.3 32 6.0 3.2
---------------- -------- -------------- --------------- ----------- --------------- --------------- ----------
Retail Parks 6.7 7.3 7.4 6.7 13 6.8 4.0
Shopping Centre 8.0 8.5 8.6 8.0 10 8.0 2.6
London Urban
Logistics 3.2 3.2 3.3 4.7 9 5.0 3.1
Other Retail 6.8 7.0 7.1 7.0 6 6.2 0.5
Retail & London
Urban
Logistics 6.8 7.3 7.4 6.9 12 6.9 3.3
---------------- -------- -------------- --------------- ----------- --------------- --------------- ----------
Total 5.4 6.0 6.0 6.1 23 6.5 3.2
---------------- -------- -------------- --------------- ----------- --------------- --------------- ----------
On a proportionally consolidated basis including the Group's
share of joint ventures and excluding non-controlling interests
Residential consists of only developments and ground rents,
thereby excluded from yield analysis
1. Including notional purchaser's costs
2. Excluding 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. Net reversionary yield is the anticipated yield to which the
initially yield will rise (or fall) once the rent reaches the
estimated rental value, assuming 100% occupancy
6. As calculated by MSCI
Total Property Return (as calculated by MSCI)
6 months to 30 September 2023 Offices Retail Total
------------------------------ ---------------- ---------------- ---------------
British British British
% Land(2) MSCI Land(2) MSCI Land MSCI
------------------------------ -------- ------ -------- ------ ------- ------
Capital Return (3.8) (8.1) 0.2 (2.5) (2.3) (2.7)
ERV Growth 3.2 1.4 3.3 0.5 3.2 1.8
Yield Movement(1) 32 bps 56 bps 12 bps 17 bps 23 bps 22 bps
Income Return 1.3 1.9 3.5 2.9 2.1 2.3
------------------------------ -------- ------ -------- ------ ------- ------
Total Property Return (2.5) (6.3) 3.7 0.4 (0.2) (0.5)
------------------------------ -------- ------ -------- ------ ------- ------
On a proportionally consolidated basis including the Group's
share of joint ventures and excluding non-controlling interests
1. Net equivalent yield movement
2. British Land Offices reflects Campuses; British Land Retail
reflects Retail & London Urban Logistics
Top 20 Occupiers by Sector
% of
Retail
& London % of
Urban Logistics Campuses
As at 30 September 2023 rent As at 30 September 2023 rent
-------------------------------- ---------------- ------------------------- ---------
Retail & London Urban Logistics Campuses
-------------------------------- ---------------- ------------------------- ---------
Next 4.8 Meta 12.8
Walgreens (Boots) 4.2 dentsu 6.3
M&S 3.7 Herbert Smith Freehills 3.9
Currys Plc 2.9 SEFE Energy 3.5
TJX (TK Maxx) 2.8 Sumitomo Mitsui 3.0
JD Sports 2.7 Deutsche Bank 2.6
Frasers Group 2.6 Janus Henderson 2.3
DFS Furniture 2.1 TP ICAP Plc 2.1
Tesco Plc 2.0 The Interpublic Group 2.1
TGI Friday's 2.0 Softbank Group 2.1
Kingfisher 1.9 Reed Smith(1) 2.0
Asda Group 1.8 Bank of Montreal 1.9
Hutchison Whampoa 1.8 Mayer Brown 1.9
Sainsbury 1.7 Mimecast Plc 1.7
Homebase 1.7 Milbank LLP 1.7
River Island 1.4 Credit Agricole 1.6
Primark 1.4 Accor 1.6
Pets at Home 1.4 Visa International 1.5
H&M 1.3 Dimensional Fund Advisors 1.2
Smyths Toys 1.1 Government 1.1
-------------------------------- ---------------- ------------------------- ---------
Total top 20 45.3 Total top 20 56.9
-------------------------------- ---------------- ------------------------- ---------
1. Taking into account their pre-let of 114,000 sq ft at Norton
Folgate, % contracted rent would rise to 6.3%
Major Holdings
Lease
BL Share Sq ft Rent (100%) Occupancy length
As at 30 September 2023 % '000(5) GBPm pa(1,4) rate %(2,4) yrs(3,4)
------------------------- -------- -------- ------------- ------------ ---------
Broadgate 50 4,468 191 97.0 5.9
Regent's Place 100 1,052 62 87.6 5.4
Paddington Central 25 958 13 99.7 8.3
Meadowhall, Sheffield 50 1,500 71 99.4 3.4
Glasgow Fort, Glasgow 100 510 36 98.3 4.9
Teesside, Stockton 100 569 29 97.6 3.4
Hannah Close, Wembley 100 246 4 100.0 2.3
Ealing Broadway, London 100 540 12 98.8 3.4
Drake's Circus, Plymouth 100 1,190 32 93.4 5.1
Giltbrook, Nottingham 100 198 13 100.0 6.3
------------------------- -------- -------- ------------- ------------ ---------
1. Annualised EPRA contracted rent including 100% of joint
ventures
2. Includes accommodation under offer or subject to asset
management
3. Weighted average to first break
4. Excludes committed and near term developments
5. Owned and managed
Lease Length & Occupancy
Average lease length Occupancy rate
yrs %
-------------------------------- ---------------------- ----------------------------
EPRA
As at 30 September 2023 To expiry To break Occupancy Occupancy(1,2,3)
-------------------------------- ----------- --------- ---------- ----------------
West End 6.4 5.7 89.7 90.0
City 7.2 5.9 90.0 96.7
Other Campuses 10.6 7.6 100.0 100.0
Residential(4) 12.3 12.3 100.0 100.0
Campuses 6.9 5.8 90.1 93.8
-------------------------------- ----------- --------- ---------- ----------------
Retail Parks 6.0 4.5 97.1 99.2
Shopping Centre 5.3 4.0 93.6 96.8
London Urban Logistics 3.2 1.8 99.8 99.8
Other Retail 8.2 7.6 96.4 97.4
Retail & London Urban Logistics 5.9 4.5 96.2 98.4
-------------------------------- ----------- --------- ---------- ----------------
Total 6.3 5.0 93.3 96.2
-------------------------------- ----------- --------- ---------- ----------------
1. EPRA Occupancy vs Occupancy: Occupancy includes space under
offer or subject to asset management
2. Space allocated to Storey is shown as occupied where there is
a Storey tenant in place otherwise it is shown as vacant. Total
occupancy for Campuses would rise from 93.8% to 94.4% if Storey
space was assumed to be fully let
3. Where occupiers have entered administration or CVA but are
still liable for rates, these are treated as occupied. If units in
administration are treated as vacant, then the occupancy rate for
Retail & London Urban Logistics would reduce from 98.4% to
97.5%, and total occupancy would reduce from 96.2% to 95.7%
4. Standalone residential
Portfolio Weighting
2023 2023 2022
As at 30 September % GBPm %
-------------------------------- ---- ------ ----
West End 26.7 2,324 29.4
City 28.3 2,466 29.3
Canada Water & other Campuses 5.5 474 4.8
Residential(1) 1.3 118 1.1
Campuses 61.8 5,382 64.6
-------------------------------- ---- ------ ----
Of which London 97 5,234 98
Retail Parks 23.7 2,060 21.2
Shopping Centre 8.6 751 8.2
London Urban Logistics 3.1 271 3.3
Other Retail 2.8 240 2.7
Retail & London Urban Logistics 38.2 3,322 35.4
-------------------------------- ---- ------ ----
Total 100 8,704 100
-------------------------------- ---- ------ ----
Of which London 68 5,901 71
-------------------------------- ---- ------ ----
On a proportionally consolidated basis including the Group's
share of joint ventures and excluding non-controlling interests
1. Standalone residential
Annualised Rent & Estimated Rental Value (ERV)
Annualised rent (valuation ERV Average rent
basis) GBPm GBPpsf
GBPm(1)
-------------------------------- ------------------------------ ----- -------------------
As at 30 September 2023 Group Joint ventures Total Total Contracted(2) ERV
-------------------------------- ------ --------------- ----- ----- ------------- ----
West End(3) 56 15 71 104 67.7 77.7
City(3) 5 83 88 121 56.6 65.3
Other Campuses 6 - 6 8 27.8 35.1
Campuses 67 98 165 233 55.5 62.9
-------------------------------- ------ --------------- ----- ----- ------------- ----
Retail Parks 143 14 157 154 22.7 20.8
Shopping Centre 40 42 82 79 25.8 23.7
London Urban Logistics 8 - 8 12 14.0 21.9
Other Retail 17 1 18 17 14.3 12.8
Retail & London Urban Logistics 208 57 265 262 22.3 20.8
-------------------------------- ------ --------------- ----- ----- ------------- ----
Total 275 155 430 495 29.4 30.4
-------------------------------- ------ --------------- ----- ----- ------------- ----
On a proportionally consolidated basis including the group's
share of joint ventures and funds and excluding non-controlling
interests, and excluding committed, near term and assets held for
development
Residential consists of only developments and ground rents,
thereby excluded from rent analysis
1. 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
2. Annualised rent, plus rent subject to rent free
3. GBPpsf metrics shown for office space only
Rent Subject to Open Market Rent Review
For year to 31 March 2024 2025 2026 2027 2028 2024-26 2024-28
As at 30 September 2023 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- ----- ----- ----- ----- ----- ------- -------
West End 3 14 9 - 2 26 28
City 13 8 26 4 1 47 52
Other Campuses - 1 - - - 1 1
Campuses 16 23 35 4 3 74 81
-------------------------------- ----- ----- ----- ----- ----- ------- -------
Retail Parks 6 10 9 10 5 25 40
Shopping Centre 2 4 2 3 2 8 13
London Urban Logistics - 1 - - - 1 1
Other Retail 2 1 - 1 1 3 5
Retail & London Urban Logistics 10 16 11 14 8 37 59
-------------------------------- ----- ----- ----- ----- ----- ------- -------
Total 26 39 46 18 11 111 140
-------------------------------- ----- ----- ----- ----- ----- ------- -------
On a proportionally consolidated basis including the Group's
share of joint ventures and excluding non-controlling interests,
and excluding committed, near term and assets held for
development
Residential consists of only developments and ground rents,
thereby excluded from open market rent analysis
1. Standalone residential
Rent Subject to Lease Break or Expiry
For year to 31 March 2024 2025 2026 2027 2028 2024-26 2024-28
As at 30 September 2023 GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- ----- ----- ----- ----- ----- ------- -------
West End 2 8 14 4 7 24 35
City 8 10 13 5 3 31 39
Other Campuses 1 - - - 1 1 2
Campuses 11 18 27 9 11 56 76
-------------------------------- ----- ----- ----- ----- ----- ------- -------
Retail Parks 20 20 25 22 14 65 101
Shopping Centre 10 10 16 9 13 36 58
London Urban Logistics 1 1 4 - 2 6 8
Other Retail 1 3 1 1 - 5 6
Retail & London Urban Logistics 32 34 46 32 29 112 173
-------------------------------- ----- ----- ----- ----- ----- ------- -------
Total 43 52 73 41 40 168 249
-------------------------------- ----- ----- ----- ----- ----- ------- -------
% of contracted rent 9 11 16 9 8 36 53
-------------------------------- ----- ----- ----- ----- ----- ------- -------
On a proportionally consolidated basis including the Group's
share of joint ventures and excluding non-controlling interests
excluding committed and near term, and assets held for
development
Residential consists of only developments and ground rents,
thereby excluded from lease break or expiry analysis
Committed Developments
Pre-let Gross
100% Current Cost & under Yield
As at 30 September BL Share sq ft PC Calendar Value to come ERV offer on Cost
2023 Sector % '000 Year GBPm GBPm(1) GBPm(2) GBPm(4) %
---------------------- ------------- -------- ------ ----------- ------- -------- -------- -------- ---------
Norton Folgate Office 100 335 Q4 2023 346 77 24.4 9.2 5.4
The Priestley Centre Life Science 100 84 Q1 2024 30 12 3.3 2.0 8.1
3 Sheldon Square Office 25 140 Q1 2024 39 4 2.6 2.2 6.4
Aldgate Place, Phase 2 Residential 100 138 Q2 2024 111 28 6.7 0.1 5.0
Peterhouse Expansion Life Science 100 96 Q1 2025 20 44 4.7 - 6.4
1 Broadgate(4) Office 50 545 Q2 2025 158 166 20.0 13.7 6.0
Canada Water
Robert's Close, K1(3) Residential 50 62 Q4 2023 4 - - -
---------
Mixed
The Dock Shed, A2(3) Use 50 246 Q4 2024 25 29 5.5 -
1-3 Deal Porters Way, Mixed
A1(3) Use 50 270 Q4 2024 50 57 3.6 - Blended 7
---------------------- ------------- -------- ------ ----------- ------- -------- -------- -------- ---------
Total Committed 1,916 783 417 70.8 27.2
------------------------------------- -------- ------ ----------- ------- -------- -------- -------- ---------
On a proportionally consolidated basis including the group's
share of joint ventures (except area which is shown at 100%)
1. From 30 September 2023. Cost to come excludes notional
interest as interest is capitalised individually on each
development at our capitalisation rate
2. Estimated headline rental value net of rent payable under
head leases (excluding tenant incentives)
3. The London Borough of Southwark has confirmed they will not
be investing in Phase 1, but retain the right to participate in the
development of subsequent plots up to a maximum of 20% with their
returns pro-rated accordingly
4. Pre-let & under offer excludes 114,000 sq ft of office
space under option
5. Gross yield on costs is calculated by dividing the ERV of the
project by the total development costs, including the land value at
the point of commitment, and any actual /estimated capitalisation
of interest
Near Term Development Pipeline
100% sq Earliest Current Cost to
As at 30 September ft Start Value come ERV Planning
2023 Sector BL Share% '000 on Site GBPm GBPm(1) GBPm(2) Status
---------------------- ----------------- --------- ------- -------- ------- -------- -------- ----------------
London
Mandela Way, Southwark Urban Logistics 100 144 Q1 2024 19 53 4.7 Consented
1 Triton Square Life Science 100 318 Q2 2024 353 85 34.0 Pre-submission
London
The Box, Paddington Urban Logistics 100 152 Q2 2024 35 47 6.5 Consented
London
Verney Road, Southwark Urban Logistics 100 200 Q4 2024 27 76 7.4 Submitted
2 Finsbury Avenue Office 50 747 Q1 2024 94 376 35.7 Consented
Canda Water
Printworks, H1 & H2 Mixed Use 50 311 Q4 2024 - 105 8.6 Consented
---------------------- ----------------- --------- ------- -------- ------- -------- -------- ----------------
Total Near Term 1,872 528 742 96.9
----------------------------------------- --------- ------- -------- ------- -------- -------- ----------------
On a proportionally consolidated basis including the group's
share of joint ventures (except area which is shown at 100%)
1. From 30 September 2023. Cost to come excludes notional
interest as interest is capitalised individually on each
development at our capitalisation rate
2. Estimated headline rental value net of rent payable under
head leases (excluding tenant incentives)
Medium Term Development Pipeline
100% Sq
As at 30 September BL Share ft
2023 Sector % '000 Planning Status
---------------------- ------------- --------- -------- -----------------
1 Appold Street Office 50 397 Consented
International House,
Ealing Office 100 165 Consented
Euston Tower Office 100 539 Pre-submission
5 Kingdom Street Office 100 112 Consented
London Urban
Finsbury Square Logistics 100 81 Pre-submission
London Urban
Thurrock Logistics 100 644 Submitted
Enfield, Heritage London Urban
House Logistics 100 437 Consented
London Urban
Hannah Close, Wembley Logistics 100 668 Pre-submission
London Urban
Meadowhall Logistics 50 611 Outline Consented
West One Development Mixed Use 25 72 Consented
Ealing - 10-40,
The Broadway Mixed Use 100 318 Consented
Canada Water
Plot H3 Office 50 313 Outline Consented
Zone L Residential 50 200 Consented
Plot F2 Mixed Use 50 448 Consented
Future phases(1) Mixed Use 50 3,230 Outline Consented
---------------------- ------------- --------- -------- -----------------
Total Medium Term 8,235
------------------------------------- --------- -------- -----------------
On a proportionally consolidated basis including the group's
share of joint ventures (except area which is shown at 100%)
1. The London Borough of Southwark has the right to invest in up
to 20% of the completed development. The ownership share of the
joint venture between British Land and AustralianSuper will change
over time depending on the level of contributions made, but will be
no less than 80%
Forward-looking statements
This Press Release contains certain (and we may make other
verbal or written) 'forward-looking' statements. These
forward-looking statements include all matters that are not
historical fact. Such statements reflect current views, intentions,
expectations, forecasts and beliefs of British Land concerning,
among other things, our markets, activities, projections, strategy,
plans, initiatives, objectives, performance, financial condition,
liquidity, growth and prospects, as well as assumptions about
future events and developments. Such 'forward-looking' statements
can sometimes, but not always, be identified by their reference to
a date or point in the future, the future tense, or the use of
'forward-looking' terminology, including terms such as 'believes',
'considers', 'estimates', 'anticipates', 'expects', 'forecasts',
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'objective', 'guidance', 'trends', 'future', 'outlook', 'schedule',
'target', 'aim', 'may', 'likely to', 'will', 'would', 'could',
'should' or similar expressions or in each case their negative or
other variations or comparable terminology. By their nature,
forward-looking statements involve inherent known and unknown
risks, assumptions and uncertainties because they relate to future
events and circumstances and depend on circumstances which may or
may not occur and may be beyond our ability to control, predict or
estimate. Forward-looking statements should be regarded with
caution as actual outcomes or results may differ materially from
those expressed in or implied by such statements. Recipients should
not place reliance on, and are cautioned about relying on, any
forward-looking statements.
Important factors that could cause actual results (including the
payment of dividends), performance or achievements of British Land
to differ materially from any outcomes or results expressed or
implied by such forward-looking statements include, among other
things, changes and/or developments as regards: (a) general
business and political, social and economic conditions globally,
(b) the United Kingdom's withdrawal from, and evolving relationship
with, the European Union, (c) industry and market trends (including
demand in the property investment market and property price
volatility), (d) competition, (e) the behaviour of other market
participants, (f) government, law or regulation including in
relation to the environment, landlord and tenant law, health and
safety and taxation (in particular, in respect of British Land's
status as a Real Estate Investment Trust), (g) inflation and
consumer confidence, (h) labour relations, work stoppages and
increased costs for, or shortages of, talent, (i) climate change,
natural disasters and adverse weather conditions, (j) terrorism,
conflicts or acts of war, (k) British Land's overall business
strategy, risk appetite and investment choices in its portfolio
management, (l) legal or other proceedings against or affecting
British Land, (m) cyber-attacks and other disruptions and
reliability and security of IT infrastructure, (n) occupier demand
and tenant default, (o) financial and equity markets including
interest and exchange rate fluctuations, (p) accounting practices
and the interpretation of accounting standards (q) the availability
and cost of finances, including prolonged higher interest rates,
(r) public health crises, and (s) changes in construction supplies
and labour availability or cost inflation. The Company's principal
risks are described in greater detail in the section of this Press
Release headed "Risk Management and Principal Risks" and in the
Company's latest annual report and accounts (which can be found at
www.britishland.com). Forward-looking statements in this Press
Release, or the British Land website or made subsequently, which
are attributable to British Land or persons acting on its behalf,
should therefore be construed in light of all such factors.
Information contained in this Press Release relating to British
Land or its share price or the yield on its shares are not
guarantees of, and should not be relied upon as an indicator of,
future performance, and nothing in this Press Release should be
construed as a profit forecast or profit estimate, or be taken as
implying that the earnings of British Land for the current year or
future years will necessarily match or exceed the historical or
published earnings of British Land. Any forward-looking statements
made by or on behalf of British Land speak only as of the date they
are made. Such forward-looking statements are expressly qualified
in their entirety by the factors referred to above and no
representation, assurance, guarantee or warranty is given in
relation to them (whether by British Land or any of its associates,
directors, officers, employees or advisers), including as to their
completeness, accuracy, fairness, reliability, the basis on which
they were prepared, or their achievement or reasonableness.
Other than in accordance with our legal and regulatory
obligations (including under the UK Financial Conduct Authority's
Listing Rules, Disclosure Guidance and Transparency Rules, the UK
Market Abuse Regulation, and the requirements of the Financial
Conduct Authority and the London Stock Exchange), British Land does
not intend or undertake any obligation to update or revise publicly
forward-looking statements to reflect any changes in British Land's
expectations with regard thereto or any changes in information,
events, conditions or circumstances on which any such statement is
based. This document shall not, under any circumstances, create any
implication that there has been no change in the business or
affairs of British Land since the date of this document or that the
information contained herein is correct as at any time subsequent
to this date.
Nothing in this document shall constitute, in any jurisdiction,
an offer or solicitation to sell or purchase any securities or
other financial instruments, nor shall it constitute a
recommendation, invitation or inducement, or advice, in respect of
any securities or other financial instruments or any other
matter.
[1] MSCI performance is reweighted to match the British Land
portfolio composition at a sector level
[2] CBRE, Q3 23
[3] MSCI, 6 months to September 23
[4] British Retail Consortium, May 23
[5] Savills: +100,000 sq ft UK
[6] Costar
[7] CBRE, Q3 23
[8] CBRE and company estimates
[9] Savills, U.S. Department of Energy: Office of Scientific and
Technical Information, UK Government: Office for Life Sciences
[10] LDC
[11] Savills: inner London
[12] Of which GBP37m completed post period end
[13] Minimum Energy Efficiency Standard
[14] 2023 GRESB Development Benchmark Report: score for Northern
Europe/ Diversified - Office/ Residential
[15] CBRE, Q3 23
[16] JLL, Q3 23
[17] Cushman & Wakefield, September 23
[18] Cushman & Wakefield, Q3 23
[19] Savills, August 23
[20] Savills, Q3 23
[21] Of which GBP29m completed post period end
[22] The Home Quality Mark is an independently assessed
certification scheme for new homes, with a simple star rating based
on a home's design, construction and sustainability. Every home
with an HQM certificate meets standards that are significantly
higher than minimum standards such as Building Regulations
[23] MSCI 2 year All Property total return, which was -1.7% per
annum
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END
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