REG - British Land Co PLC British Land Jersey - Final Results - Part 3 <Origin Href="QuoteRef">BLND.L</Origin> - Part 2
17/05/2017 07:06
- Part 2: For the preceding part double click ID:nRSQ3584Fa
% % £m %
Regional Lifestyle 19.4 21.3 2,954 21.6
Local Lifestyle 16.3 15.4 2,148 16.1
Multi-lets 35.7 36.7 5,102 37.7
Department Stores & Leisure 6.9 4.1 575 4.2
Superstores 5.3 4.5 632 3.9
Solus/Other 2.3 2.5 345 2.5
Retail & Leisure 50.2 47.8 6,654 48.3
West End 26.6 28.4 3,960 29.8
City 19.7 20.7 2,884 18.7
Offices 46.3 49.1 6,844 48.5
Residential3 1.6 1.2 171 1.2
Offices & Residential 47.9 50.3 7,015 49.7
Canada Water 1.9 1.9 271 2.0
Total 100.0 100.0 13,940 100.0
Of which London 58% 58% 8,050 58%
1 On a proportionally consolidated basis including the Group's share of joint ventures and funds
2Pro forma for developments under construction and committed developments at estimated end value (as determined by the Group's external valuers) and post year end transactions including the expected completion of the sale of our 50% interest in The Leadenhall Building and the Tesco JV swap transaction
3 Stand-alone residential
Annualised Rent & Estimated Rental Value (ERV)1
At 31 March 2017 Annualised rent ERV £m Average rent £psf
(valuation basis) £m2
Group JVs & Funds Total Total Contracted3 ERV
Regional Lifestyle 61 87 148 164 31.1 33.1
Local Lifestyle 90 28 118 126 24.9 26.1
Multi-lets 151 115 266 290 28.0 29.6
Department Stores & Leisure 36 - 36 28 14.9 11.4
Superstores 6 32 38 36 21.3 20.1
Solus/Other 20 - 20 17 19.8 17.0
Retail & Leisure 213 147 360 371 24.5 24.6
West End4 132 - 132 179 54.2 62.2
City4,5 4 103 107 150 52.5 60.2
Offices4 136 103 239 329 53.4 61.2
Residential6 4 - 4 4
Offices & Residential 140 103 243 333
Canada Water 8 - 8 10 16.4 21.0
Total 361 250 611 714 30.3 33.2
1On a proportionally consolidated basis including the Group's share of joint ventures and funds
2 Gross rents plus, where rent reviews are outstanding, any increases to ERV (as determined by the Group's external valuers), less any ground rents payable under head leases, excludes contracted rent subject to rent free and future uplift
3 Annualised rent, plus rent subject to rent free
4 £psf metrics shown for office space only
5 City average rent psf on a contracted basis is £50.1 and on an ERV basis is £57.4 pro-forma for completion of the sale of our 50% interest in The Leadenhall Building.
6 Stand-alone residential
Rent Subject to Open Market Rent Review1
At 31 March 2017 2018 2019 2020 2021 2022 2018-20 2018-22
For year to 31 March £m £m £m £m £m £m £m
Regional Lifestyle 13 17 12 18 13 42 73
Local Lifestyle 24 17 10 11 6 51 68
Multi-lets 37 34 22 29 19 93 141
Department Stores & Leisure - - - - - - -
Superstores 4 7 10 12 3 21 36
Solus/Other - - - - - - -
Retail & Leisure 41 41 32 41 22 114 177
West End 24 20 15 10 9 59 78
City 4 14 14 15 1 32 48
Offices 28 34 29 25 10 91 126
Canada Water 1 1 - - - 2 2
Total 70 76 61 66 32 207 305
1 On a proportionally consolidated basis including the Group's share of joint ventures and funds
Rent Subject to Lease Break or Expiry1
At 31 March 2017 2018 2019 2020 2021 2022 2018-20 2018-22
For year to 31 March £m £m £m £m £m £m £m
Regional Lifestyle 19 10 14 10 15 43 68
Local Lifestyle 8 7 10 9 11 25 45
Multi-lets 27 17 24 19 26 68 113
Department Stores & Leisure - - - - - - -
Superstores - - - - - - -
Solus/Other - 1 - - - 1 1
Retail & Leisure 27 18 24 19 26 69 114
West End 6 10 3 17 21 19 57
City 7 11 11 9 2 29 40
Offices 13 21 14 26 23 48 97
Canada Water 1 1 - 1 - 2 3
Total 41 40 38 46 49 119 214
% of contracted rent 6.3% 6.3% 6.0% 7.1% 7.7% 18.6% 33.4%
1 On a proportionally consolidated basis including the Group's share of joint ventures and funds
Superstores
Stand-alone Superstores1 In Multi-let assets 2 Total Exposure1,2,3
Store Size No of Stores Valuation (BL share) Capital Value Lease length4 No of Stores Valuation (BL share) Capital Value Lease length4 No of Stores Valuation (BL share) Capital Value Lease length4
'000 SQ FT £m psf £m psf £m psf
>100 6 152 340 11.1 4 286 419 11.1 10 438 388 11.1
75-100 10 171 384 11.3 3 73 274 15.0 13 244 342 12.5
50-75 12 179 364 10.8 - - - - 12 179 364 10.8
25-50 3 15 272 8.1 3 32 456 18.5 6 47 375 14.7
0-25 2 6 138 8.1 21 98 465 10.2 23 104 409 10.0
March 2017 33 523 352 10.9 31 489 397 12.6 64 1,012 373 11.7
March 2016 47 763 383 13.9 28 537 482 12.7 75 1,301 419 13.5
Geographical Spread Gross Rent (BL Share) Lease Structure
London & South 58% Tesco £29m RPI and Fixed 10%
Rest of UK 42% Sainsbury's £26m OMRR 90%
Other £5m
Table reflects post year end disposals of £116m and purchase of £23m as part of a property exchange transaction with Tesco
1 Excludes £13m non-foodstore occupiers in superstore led assets
2 Excludes non-food format stores e.g. Asda Living
3 Excludes £93m of investments held for trading comprising freehold reversions in a pool of Sainsbury's Superstores
4 Weighted average lease length to first break
Recently Completed & Committed Developments1
At 31 March 17 Sector BL Share Sq ft PC Calendar Year Current Value Cost to come ERV Let & Under Offer
% '000 £m2 £m3 £m4 £m
4 Kingdom Street Office 100 147 Q2 2017 151 18 9.5 7.0
Clarges Mayfair - Offices Office 100 51 Q2 2016 135 6 5.6 4.3
Glasgow Fort Leisure Quarter Retail 77 12 Q3 2016 8 - 0.4 0.2
The Hempel Phase 1 Residential 100 25 Q4 2016 4 3 - -
The Hempel Phase 2 Residential 100 33 Q4 2016 45 3 - -
Aldgate Place Phase 1 Residential 50 221 Q2 2016 - 7 - -
Total Completed in Year 489 343 37 15.5 11.5
100 Liverpool Street Office 50 520 Q4 2019 112 152 18.6 -
Speke (Leisure) Retail 67 66 Q2 2018 4 14 1.2 0.8
Clarges Mayfair - Retail and Residential5 Mixed Use 100 104 Q4 2017 362 52 0.8 -
Total Committed 690 478 218 20.6 0.8
Retail Capex 6 111
1 On a proportionally consolidated basis including the Group's share of joint ventures and funds (except area which is shown at 100%)
2 Excludes completed sales of £120m
3 From 1 April 2017. Cost to come excludes notional interest as interest is capitalised individually on each development at our capitalisation rate
4 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives)
5Current value includes units exchanged and not completed of £278m
6 Capex committed and underway within our investment portfolio relating to leasing and asset management
Near Term Development Pipeline1
At 31 March 17 Sector BL Share Sq ft Expected Start On Site Current Value Cost to Come ERV Status
% '000 £m £m2 £m3
135 Bishopsgate Office 50 325 2017 107 55 9.4 Submitted
1 Triton Square Office 100 366 2018 161 200 23.3 Resolution to grant
1 Finsbury Avenue Office 50 288 2017 77 35 7.7 Submitted
Plymouth (Leisure) Retail 100 104 2018 - 48 3.1 Consented
Total Near-Term 1,083 345 338 43.5
Retail Capex4 75
1 On a proportionally consolidated basis including the Group's share of joint ventures and funds (except area which is shown at 100%)
2 From 1 April 2017. Cost to come excludes notional interest as interest is capitalised individually on each development at our capitalisation rate
3 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives)
4 Forecast capital commitments within our investment portfolio over the next 12 months relating to leasing and asset enhancement
Medium Term Development Pipeline
At 31 March 17 Sector BL Share% Sq ft Status
'000
2-3 Finsbury Avenue Office 50 563 Consented
1-2 Broadgate Office 50 375 Pre-submission
Blossom Street Office 100 340 Consented
5 Kingdom Street1 Office 100 332 Consented
Gateway Building Office 100 105 Pre-submission
Meadowhall (Leisure) Retail 50 322 Submitted
Peterborough (Leisure) Retail 100 182 Pre-submission
Teesside (Leisure) Retail 100 80 Pre-submission
Bradford (Leisure) Retail 100 49 Pre-submission
Aldgate Place Phase 2 Resi 50 145 Consented
Eden Walk Retail & Residential Mixed Use 50 538 Consented
Total Medium Term excl. Canada Water 3,031
Canada Water2 Mixed Use 100 5,500 Pre-submission
1 Planning consent for previous 240,000 sq ft scheme
2 Assumed net area based on gross area of up to 7m sq ft
Residential development programme1
At 31 March 2017 BL Share Sq Ft Total No. Units No. Units to sell PC Date Current Value2 Cost To Come3 Sales Exchanged & not Completed2,4 Value to sell
% '000 £m £m £m £m
Clarges Mayfair 100 94 34 11 Q4 2017 347 52 278 150
The Hempel Phase 1 100 25 15 1 Q4 2016 4 3 - 7
The Hempel Phase 2 100 33 18 13 Q4 2016 45 3 - 46
Aldgate Place Phase 1 50 221 154 1 Q2 2016 - 7 - 7
Total Committed Residential 373 221 26 396 65 278 210
1 On a proportionally consolidated basis including the Group's share of joint ventures and funds (except area which is shown at 100%)
2 Excludes completed sales of £120m
3 From 1 April 2017. Cost to come excludes notional interest as interest is capitalised individually on each development at our capitalisation rate
4 At agreed sales price
GLOSSARY
Adjusted net debt is the Group net debt and the Group's share of joint venture
and funds' net debt excluding the mark-to-market on effective cash flow hedges
and related debt adjustments and non-controlling interests. A reconciliation
between Group net debt and adjusted net debt is included in table A within the
supplementary disclosures.
AGM is the Annual General Meeting of The British Land Company plc. The 2017
AGM will be held on 18 July 2017 at The Hyatt Regency London - The Churchill,
30 Portman Square, London W1H 7BH commencing at 11.00am.
Annualised rent is the gross property rent receivable on a cash basis as at
the reporting date. Additionally, it includes the external valuers' estimate
of additional rent in respect of unsettled rent reviews, turnover rent and
sundry income such as that from car parks and commercialisation, less any
ground rents payable under head leases.
Assets under management is the full value of all assets owned and managed by
British
Land and includes 100% of the value of all assets owned by joint ventures and
funds.
BREEAM (Building Research Establishment Environmental Assessment Method)
assesses the sustainability of buildings against a range of social and
environmental criteria.
Capital return is calculated as the change in capital value of the portfolio,
less any capex incurred, expressed as a percentage of capital employed (start
value plus capital expenditure) over the period, as calculated by IPD. Capital
returns are calculated monthly and indexed to provide a return over the
relevant period.
Contracted rent is the annualised rent adjusting for the inclusion of rent
subject to rent free periods.
Customer satisfaction combines survey results on overall experience ratings
from decision makers, property directors, store managers and visitors across
our retail and office businesses.
Developer's profit is the profit on cost estimated by the valuers that a
developer would expect. The developer's profit is typically calculated by the
valuers to be a percentage of the estimated total development costs, including
land and notional finance costs.
Development cost is the total cost of construction of a project to completion,
excluding site values and finance costs (finance costs are assumed by the
valuers at a notional rate of 5% per annum).
Development uplift is the total increase in the value (after taking account of
capex and capitalised interest) of properties held for development during the
period. It also includes any developer's profit recognised by valuers in the
period.
Dividend yield is calculated as dividends per share expressed as a percentage
of EPRA NAV per share.
EPRA is the European Public Real Estate Association, the industry body for
European REITs.
EPRA cost ratio (including direct vacancy costs) is a proportionally
consolidated measure of the ratio of net overheads and operating expenses
against gross rental income (with both amounts excluding ground rents
payable). Net overheads and operating expenses relate to all administrative
and operating expenses, net of any service fees, recharges or other income
specifically intended to cover overhead and property expenses.
EPRA cost ratio (excluding direct vacancy costs) is the ratio calculated
above, but with direct vacancy costs removed from the net overheads and
operating expenses balance.
EPRA earnings 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. These items are presented in the capital and other column of
the income statement. A reconciliation between profit attributable to
shareholders of the Company and EPRA earnings is included in table B within
the supplementary disclosures.
EPRA NAV per share is EPRA NAV divided by the diluted number of shares at the
period end.
EPRA net asset value (EPRA NAV) is a proportionally consolidated measure,
representing the IFRS net assets excluding the mark-to-market on effective
cash flow hedges and related debt adjustments, the mark-to-market on the
convertible bonds as well as deferred taxation on property and derivative
valuations. It includes the valuation surplus on trading properties and is
adjusted for the dilutive impact of share options. A reconciliation between
IFRS net assets and EPRA NAV is included in table B within the Supplementary
Disclosures.
EPRA net initial yield is the annualised rents generated by the portfolio,
after the deduction of an estimate of annual recurring irrecoverable property
outgoings, expressed as a percentage of the portfolio valuation (adding
notional purchaser's costs), excluding development and residential
properties.
EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of debt and
derivatives and to include deferred taxation on revaluations.
EPRA occupancy rate is the ERV of occupied space divided by ERV of the whole
portfolio, excluding developments and residential property.
EPRA topped-up net initial yield is the current annualised rent, net of costs,
topped up for contracted uplifts, where these are not in lieu of rental
growth, expressed as a percentage of capital value (adding notional purchasers
costs).
EPRA vacancy rate is the ERV of vacant space divided by ERV of the whole
portfolio, excluding developments and residential property.
Estimated rental value (ERV) is the external valuers' opinion of the open
market rent which, on the date of valuation, could reasonably be expected to
be obtained on a new letting or rent review of a property.
ERV growth is the change in ERV over a period on the standing investment
properties expressed as a percentage of the ERV at the start of the period.
ERV growth is calculated monthly and compounded for the period subject to
measurement, as calculated by IPD.
Fair value movement is the accounting adjustment to change the book value of
an asset or liability to its market value.
Footfall is the estimated annualised number of visitors entering our assets.
Footfall growth is the like-for-like movement in footfall against the same
period in the prior year, on properties owned throughout both comparable
periods, aggregated at British Land's ownership share for each asset.
Gross investment activity as measured by our share of acquisitions, sales and
capital expectations on investments and development.
Gross rental income is the gross accounting rent receivable (quoted either for
the period or on an annualised basis) prepared under IFRS which requires that
rental income from fixed/minimum guaranteed rent reviews and tenant incentives
is spread on a straight-line basis over the entire lease to first break. This
can result in income being recognised ahead of cash flow.
Group is The British Land Company PLC and its subsidiaries and excludes its
share of joint ventures and funds (where not treated as a subsidiary) on a
line-by-line basis (i.e. not proportionally consolidated).
Headline rent is the contracted gross rent receivable which becomes payable
after all the tenant incentives in the letting have expired.
IFRS are the International Financial Reporting Standards as adopted by the
European Union.
Income return is calculated as net income expressed as a percentage of capital
employed over the period, as calculated by IPD. Income returns are calculated
monthly and indexed to provide a return over the relevant period.
Interest cover is the number of times net financing costs are covered by
underlying profit before net financing costs and taxation.
IPD is a brand of real estate indices, owned by MSCI, which produce
independent benchmarks of property returns and British Land UK portfolio
returns.
Lettings and lease renewals are compared both to the previous passing rent as
at the start of the financial year and the ERV immediately prior to letting.
Letting performance against ERV comparison of achieved letting terms on long
term lettings and renewals against valuation assumptions on like-for-like
space, calculated on a net effective basis, aggregated at British Land's
ownership share for each asset.
Leverage see loan to value (LTV).
Like-for-like rental income growth is the growth in net rental income on
properties owned throughout the current and previous periods under review.
This growth rate includes revenue recognition and lease incentive adjustments
but excludes properties held for development in either period and lease
accounting adjustments related to fixed and minimum rent reviews.
Loan to value (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.
Managed portfolio consists of multi-let properties where we have control of
facilities and utilities management.
Mark-to-market is the difference between the book value of an asset or
liability and its market value.
Multi-channel retailing is the use of a variety of channels in a customer's
shopping experience, including research, before a purchase. Such channels
include: retail stores, online stores, mobile stores, mobile app stores,
telephone sales and any other method of transacting with a customer.
Transacting includes browsing, collecting, buying, returning as well as pre
and post-sale service.
Net development value is the estimated end value of a development project as
determined by the external valuers when the building is completed and fully
let (taking into account tenant incentives and notional purchaser's costs). It
is based on the valuer's view on ERVs, yields, letting voids and tenant
incentives.
Net effective rent is the contracted gross rent receivable taking into account
any rent-free period or other tenant incentives. The incentives are treated as
a cost-to-rent and spread over the lease to the earliest termination date.
Net equivalent yield (NEY) is the time weighted average return (after adding
notional purchasers costs) that a property will produce. In accordance with
usual practice, the equivalent yield (as determined by the external valuers)
assume rent is received annually in arrears.
Net initial yield (NIY) is the current annualised rent, net of costs,
expressed as a percentage of capital value, after adding notional purchaser's
costs.
Net rental income is the rental income receivable in the period after payment
of direct property outgoings which typically comprise ground rents payable
under head leases, void costs, net service charge expenses and other direct
irrecoverable property expenses. Net rental income is quoted on an accounting
basis. Net rental income will differ from annualised net cash rents and
passing rent due to the effects of income from rent reviews, net property
outgoings and accounting adjustments for fixed and minimum contracted rent
reviews and lease incentives.
Net reversionary yield (NRY) is the anticipated yield to which the initial
yield will rise (or fall) once the rent reaches the estimated rental value.
Occupancy rate is the estimated rental value of let units as a percentage of
the total estimated rental value of the portfolio, excluding development and
residential properties. It includes accommodation under offer, subject to
asset management (where they have been taken back for refurbishment and are
not available to let as at the measurement date) or occupied by the Group.
Omni-channel retailing seeks to provide the customer with a seamless shopping
experience across channels, including stores, online and mobile. This
empowers customers to switch between channels during the shopper journey
according to their preferences. For example, they can use mobile in-store to
research or make a purchase, buy online and collect in-store, or they can buy
in-store and initiate a return online.
Over rented is the term used to describe when the contracted rent is above the
estimated rental value.
Overall 'topped-up' net initial yield (TUNIY) is the EPRA 'topped-up' net
initial yield, adding all contracted uplifts to the annualised rents.
Passing rent is the gross rent, less any ground rent payable under head
leases.
Property income distributions (PIDs) are profits distributed to shareholders
which are subject to tax in the hands of the shareholders as property income.
PIDs are normally paid net of withholding tax currently at 20% which the REIT
pays to the tax authorities on behalf of the shareholder. Certain types of
shareholder (e.g. pension funds) are tax exempt and receive PIDs without
withholding tax. REITs also pay out normal dividends, called non-PIDs, which
are taxed in the same way as dividends received from non REIT companies; these
are not subject to withholding tax and for UK individual shareholders qualify
for the tax free dividend allowance.
Portfolio valuation is reported by the Group's external valuers. In accordance
with usual practice, they report valuations net, after the deduction of
notional purchaser's costs, including stamp duty land tax, agent and legal
fees.
Proportionally consolidated measures include the Group's share of joint
ventures and funds and exclude non-controlling interests in the Group's
subsidiaries.
Rack rented is the term used to describe when the contracted rent is in line
with the estimated rental value, implying nil reversion.
Rent-free period see Tenant (or lease) incentives.
REITs are property companies that allow people and organisations to invest in
commercial property and receive benefits as if they directly owned the
properties themselves. The rental income, after costs, is passed directly to
shareholders in the form of dividends. In the UK REITs are required to
distribute at least 90% of their tax exempt property income to shareholders as
dividends. As a result, over time, a significant proportion of the total
return for shareholders is likely to come from dividends. The effect is that
taxation is moved from the corporate level to the investor level as investors
are liable for tax as if they owned the property directly. British Land became
a REIT in January 2007.
Rent reviews take place at intervals agreed in the lease (typically every five
years) and their purpose is usually to adjust the rent to the current market
level at the review date. For upwards-only rent reviews, the rent will either
remain at the same level or increase (if market rents have increased) at the
review date.
Rents with fixed and minimum uplifts are either where rents are subject to
contracted uplifts at a level agreed at the time of letting; or where the rent
is subject to an agreed minimum level of uplift at the specified rent review.
Retailer sales growth is the like-for-like movement in retailer in-store sales
against the same period in the prior year, on occupiers providing sales data
throughout both comparable periods, aggregated at British Land's ownership
share for each asset.
Retail planning consents are separated between A1, A2 and A3 - as set out in
The Town and Country Planning (Use Classes) Order. Within the A1 category,
Open A1 permission allows for the majority of types of retail including
fashion to be accommodated, while Restricted A1 permission places limits on
the types of retail that can operate (for example, a restriction that only
bulky goods operators are allowed to trade at that site).
Class Description Use for all/any of the following purposes
A1 Shops Shops, retail warehouses, hairdressers, undertakers,travel and ticket agencies, post offices, pet shops, sandwich bars, showrooms, domestic hire shops dry cleaners, funeral directors and internet cafes.
A2 Financial and professional services Financial services such as banks and building societies, professional services (other than health and medical services) and including estate and employment agencies. It does not include betting offices or pay day loan shops - these are now classed as "sui generis" uses.
A3 Restaurants and cafes For the sale of food and drink for consumption on the premises - restaurants, snack bars and cafes.
D2 Assembly and leisure Cinemas, music and concert halls, bingo and dancehalls (but not night clubs), swimming baths, skating rinks, gymnasiums or areas for indoor or outdoor sports and recreations.
Reversion is change in rent estimated by the external valuers, where the
passing rent is different to the estimated rental value. The increase or
decrease of rent arises on rent reviews and letting of vacant space or re
letting of expiries.
Scrip dividend For certain periods, British Land offers its shareholders the
opportunity to receive dividends in the form of shares instead of cash. This
is known as a Scrip dividend.
Standing investments are assets which are not in the course of, or held for,
development.
Tenant (or lease) incentives are incentives offered to occupiers to enter into
a lease. Typically this will be an initial rent-free period, or a cash
contribution to fit-out. Under accounting rules the value of lease incentives
is amortised through the income statement on a straight line basis to the
earliest lease termination date.
The residual site value of a development is calculated as the estimated net
development value, less development profit, all development construction
costs, finance costs (assumed at a notional
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