REG - British Land Co PLC - Half-year Report
17/11/2021 07:05
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RNS Number : 6047S British Land Co PLC 17 November 2021
British Land
Half Year Results
30 September 2021
Good financial and operational performance - delivering against strategy
17 November 2021
Simon Carter, CEO said: "We have delivered good financial and operational
performance. Strong leasing activity, significantly improved rent collection
and increasing values across our Campuses and Retail Parks have driven 6.1%
total returns in the half.
Current market trends reinforce the conviction we have in our strategy, and we
are already seeing the benefits of our decision to focus on our unique campus
proposition, the value play in retail parks and urban logistics development in
London. Innovative growth businesses are focused more than ever on the
highest quality, most sustainable workspace which we deliver at our Campuses.
We expect the value opportunity in retail parks to continue with rents
stabilising and yields moving in. The fundamentals for urban logistics
development to support last mile delivery in London remain excellent.
In the last six months we have made good progress recycling capital from
mature assets into our 1.6m sq ft development programme and £501m of
acquisitions. We look ahead with confidence in our ability to drive
performance from our development, asset management and repositioning skills."
Performance summary
Delivering against our strategy - actively recycling capital into growth markets
- £814m total capital activity behind our strategy since 1
April 2021
- £102m of acquisitions in Cambridge and Guildford, building
our exposure to innovation sectors
- £189m of acquisitions with potential for urban logistics in
London, total GDV of urban logistics pipeline of c.£600m
- £210m investment into retail parks, leveraging the value play
opportunity
- 718,000 sq ft of new Campus development commitments bringing
total development on site to 1.6m sq ft
- £196m sales of dry or mature assets; 6.0% ahead of book value
Good operational performance with positive market trends supporting strategic activity
- Portfolio value up 2.9% with Campuses up 3.0% and Retail &
Fulfilment up 2.7% driven by Retail Parks up 7.1%
- 15 bps yield contraction overall; 6 bps yield contraction in
Campuses; 54 bps in Retail Parks; rate of yield expansion slowing in Shopping
Centres
- 1.8m sq ft leasing activity across the portfolio
- Strong rent collection: 96% for the half, close to
pre-pandemic levels in retail, with offices fully collected
- Footfall and sales on our Retail portfolio 89% and 98% (97%
and 98% for Retail Parks) of pre pandemic levels respectively; footfall 879bps
ahead of benchmark
Good financial performance and strong balance sheet driven by strategic and operational progress
- Underlying EPS up 22.9% reflecting a significant reduction in
provisions in the half
- EPRA Net Tangible Assets (NTA) up 5.1% to 681p
- HY22 dividend of 10.32p per share, representing 80% of
underlying EPS
- 6.1% Total Accounting Return for the half
- LTV at 33.4% with 43% headroom to Group debt covenants
- £1.5bn undrawn facilities and cash with no requirement to
refinance until late 2024
- Fitch affirmed senior unsecured credit rating at 'A'
Further progress against 2030 sustainability strategy
- Delivered our second net zero carbon development at 1 Triton
Square
- 100 Liverpool Street named Green Building Project of the Year
by BusinessGreen
- Community Funds established in partnership with occupiers at
Paddington Central and Broadgate, following the success of our Regent's Place
Community Fund
- New Diorama Theatre launched at Broadgate following its
success at Regent's Place
- First UK REIT to achieve the Disability Smart Standard from
the Business Disability Forum
- Awarded GRESB 5* rating and AAA rating from MSCI
Progress against our priorities
Realising the potential of our Campuses
- Total lettings and renewals at 819,000 sq ft; including
315,000 sq ft to Facebook at 1 Triton Square and 129,000 sq ft pre-let to JLL
at 1 Broadgate with a further 254,000 sq ft pre-let to Allen & Overy post
period end
- Lettings and renewals over one year on the standing portfolio
6.1% ahead of ERV
- Under offer on a further 330,000 sq ft
- Recently completed and committed developments 41% pre-let or
under offer generating £91m of rent when fully let; committed office space
46% pre-let or under offer
- Storey operational across 345,000 sq ft (c.5% of Campuses);
occupancy on stabilised space increased to 81%
- Acquisition of £102m of assets in Cambridge and Guildford
leveraging our Campus proposition and increasing our exposure to innovation
sectors
Progressing value accretive development
- Delivered 1 Triton Square, our second net zero carbon
development which is fully let to Facebook
- New development commitments of 718,000 sq ft across Canada
Water and Aldgate Place, Phase 2
- Total committed development covering 1.6m sq ft
- 1 Broadgate offices space fully pre-let or under option (see
note 1)
Targeting the opportunities in Retail & Fulfilment
- Total leasing activity of 1m sq ft; occupancy high at 95.9%
- 632,000 sq ft of deals over one year; in line with ERV, 18.5%
below previous passing rent;
- 571,000 sq ft under offer, 6.6% above ERV
- Acquired £189m of assets with urban logistics potential,
including Heritage House, Enfield; Finsbury Square car park and Thurrock
Retail Park; total GDV of urban logistics pipeline of c.£600m
- Acquired £210m of other retail parks including Blackwater
Shopping Park in Farnborough and the remaining interest in HUT, targeting the
value opportunity in retail parks
Active capital recycling
- £196m assets sold, including £117m retail sales and £79m
residential sales
- Reinvesting proceeds into value accretive acquisitions and
development
- Total financing activity of £527m including £420m new 'Green
Loan' and £107m bond redemption
Summary performance
HY 2020/21 HY 2021/22 Change
Income statement
Underlying Profit £107m £120m 12.1%
Underlying earnings per share3 10.5p 12.9p 22.9%
IFRS profit/(loss) after tax £(730)m £370m
IFRS basic earnings per share (78.7)p 39.9p
Dividend per share 8.40p 10.32p
Total accounting return(3) (10.3)% 6.1%
Balance sheet 31 March 2021 30 Sep 2021
Portfolio at valuation (proportionally consolidated) £9,132m £9,840m 2.9%2
EPRA Net Tangible Assets per share(3) 648p 681p 5.1%
IFRS net assets £5,983m £6,249m
Loan to value ratio (proportionally consolidated) 32.0% 33.4%
Fitch senior unsecured rating A A
Operational Statistics HY 2020/21 HY 2021/22
Lettings and renewals over 1 year 0.2m sq ft 1.3m sq ft
Total lettings and renewals 0.6m sq ft 1.8m sq ft
Gross investment activity £0.6bn £0.8bn
Committed and recently completed development 1.2m sq ft 2.0m sq ft
Sustainability Performance
MSCI ESG AAA rating AAA rating
GRESB 5* and 5* and
Green Star
Green Star
1. 383,000 sq ft pre let and 114,000 sq ft space under option
2. 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 and sales
3. See Note 2 to the condensed interim financial statements
Results Presentation and Investor Conference Call
A presentation of the results will take place at 8.30am on 17 November 2021 at
Peel Hunt, 100 Liverpool Street, Broadgate and will be broadcast live via
webcast (Britishland.com) and conference call. The details for the conference
call and weblink are as follows:
UK Toll Free Number: 0800 640 6441
Access code: 867501
Click for access: Audio weblink (https://streamstudio.world-television.com/927-1254-30734/en)
A dial in replay will be available later in the day for 7 days. The details
are as follows:
Replay number: 020 3936 3001
Passcode: 636973
Accompanying slides will be made available at britishland.com just prior to
the event starting.
For Information Contact
Investors
David Walker, British Land 07753 928382
Joanna Waddingham, British Land 07714 901166
Media
Charlotte Whitley, British Land 07887 802535
Guy Lamming/Gordon Simpson, Finsbury 020 7251 3801
britishland@finsbury.com
Chief Executive's review
Good financial and operational performance - delivering against strategy
We have delivered good financial and operational performance. Strong leasing
activity, significantly improved rent collection and increasing values across
our Campuses and Retail Parks have driven 6.1% total returns in the half.
Operational performance
Campus leasing activity rebounded strongly with 819,000 sq ft of lettings and
renewals, 6.1% ahead of ERV. Post period end, we let a further 254,000 sq ft
to Allen & Overy at 1 Broadgate in addition to a previously announced
pre-let of 129,000 sq ft to JLL, so the office space at that building is now
fully pre-let or under option. We have a healthy pipeline of deals under
offer, totalling 330,000 sq ft reflecting renewed optimism in London offices
with occupiers more confident of committing to space as their employees return
to the office. Demand is firmly focused on the very best space, with an
emphasis on sustainability, wellness, shared and flexible space and excellent
transport connections. In line with this, the value of our Campus business
was up 3.0% and we saw some modest yield contraction. Offices rent
collection was 100%.
In Retail & Fulfilment, we delivered more than 1m sq ft of leasing
activity including 632,000 sq ft of long term deals. Encouragingly, we are
letting ahead of ERV on Retail Parks (+1.8%) whilst on Shopping Centres, deals
were 2.7% below ERV. The relative outperformance of Retail Parks was
reflected in valuations which were up 7.1% in the half. Retail parks proved
more resilient throughout the pandemic and their attractive long term
fundamentals including occupier affordability, compatibility with online
propositions and alternative use potential now underpin improving demand in
the occupational market and strong investment markets. Shopping Centre
values were down 4.2%, although the rate of decline moderated significantly in
the half year. We have continued our proactive engagement with occupiers
to drive progress on rent collection and with Covid-related restrictions now
lifted, this is close to pre-pandemic levels at 93% in retail for the half
year.
The Priorities for our business
A year ago, we identified four clear priorities for our business. We have
delivered further clear progress in each area since the start of the financial
year which is summarised below:
Priority Progress since May
Realising the potential of our Campuses - Commitment to Phase 1 at Canada Water covering 582,000 sq ft
- Acquisition of £102m of assets outside of London aligned to growth and
innovation including Peterhouse Technology Park in Cambridge, The Priestley
Centre and Waterside House in Guildford
- Attracting innovative and growing businesses to our Campuses including
pre-lets of 129,000 sq ft to JLL and 254,000 sq ft to Allen & Overy post
period end and 315,000 sq ft to Facebook
Progressing value accretive development - Delivered 1 Triton Square, our second net zero development
- Total development commitments in the half of 718,000 sq ft across Canada
Water and Phase 2 at Aldgate Place
- Costs fixed at Canada Water, Norton Folgate, Aldgate Place Phase 2 and well
progressed to place contract at 1 Broadgate
Targeting the opportunities in Retail & Fulfilment - Acquisition of £189m of assets with urban logistics potential, including
Heritage House, Enfield, Finsbury Square car park and Thurrock Retail Park
- Acquisition of the remaining 22% in HUT at £148m GAV taking our ownership
to 100%, NIY of 8%
- £62m other retail park acquisitions including Blackwater Shopping Park,
Farnborough
Active capital recycling - £196m of asset sales since April 2021, overall 6.0% ahead of book value
- £399m of Retail & Fulfilment acquisitions
- £102m additions to our Campuses portfolio
- Investing in sustainable development; now on site with 1.6m sq ft of
development commitments
- £527m of financing activity in the period
Business model & strategy
Our strategy is to more actively focus our capital on our competitive
strengths in development, active management and repositioning assets. We are
investing behind two strategic themes which play to our skill set and where we
currently see the most attractive opportunities to drive future returns:
- Campuses - Dynamic neighbourhoods focused on customers in
growth and innovation sectors including technology, science, engineering and
health; and
- Retail & Fulfilment - retail parks and urban logistics
aligned to the growth of convenience, online and last mile fulfilment
Reflecting this approach, we have updated our reporting segments along these
lines. Campuses comprises our London Campuses including Canada Water and
campus assets outside of London. Retail & Fulfilment includes all our
retail assets and assets acquired to deliver urban logistics or those with
logistics potential on our portfolio.
Campuses
Our unique Campus proposition is well established and resonates strongly with
occupiers. At Broadgate, Paddington Central and Regent's Place we provide
modern, high quality and sustainable space in some of the most exciting parts
of London. The buildings and the spaces between them support wellbeing and
are aligned to the changing ways people work. They have excellent transport
connections, an engaging public realm and offer an authentic sense of
community. We provide additional flexibility through Storey, our flexible
workspace offer.
We have a unique opportunity to replicate our Campus model at Canada Water,
where we have committed to Phase 1 of our Masterplan which will provide
582,000 sq ft of mixed use space, including 265 homes. In the first half, we
completed a modular campus for TEDI-London, an engineering higher education
provider which welcomed its first students in September. We are exploring
opportunities to roll out this modular approach to other growth and innovation
sectors. The wider Masterplan is deliberately flexible. We can deliver
between 2,000 and c.4,000 residential units and from 500,000 sq ft to 2.5m sq
ft of workspace enabling us to adapt our offer as the market and demand
evolves.
We also see an opportunity to take our Campus model outside London and made
£102m of acquisitions in Cambridge and Guildford. Cambridge is an exciting
market focused on technology, science, engineering and health - sectors where
the ability to co-locate in clusters plays a key role in innovation. This
leverages our skills in curating campuses and underpins our focus on
innovation sectors which are a growing source of demand in our markets.
Peterhouse Technology Park, Cambridge acquired for £75m in August 2021 is let
to ARM, the UK's pre-eminent technology business and offers significant
reversionary potential. In Guildford we made £27m of acquisitions at the
Surrey Research Park, which is emerging as a centre of innovation. The
Priestley Centre was acquired for £12m and our business plan is to refurbish
the building to deliver lab enabled space. We also acquired the adjacent
Waterside House for £15m post period end.
Retail & Fulfilment
We have a market leading position in retail parks which account for 59% of our
Retail & Fulfilment portfolio. These are increasingly preferred by
retailers, as they are affordable and support an online offer by facilitating
click & collect, returns and ship from store and we see this as a long
term structural trend. Retail parks are also preferred by online resilient
businesses, including discount food and homeware retailers. In May, we
identified a clear opportunity in this space to leverage our asset management
expertise to deliver attractive returns as rents and values stabilise. This
rationale underpinned the acquisition of the A1 Retail Park in Biggleswade,
where we have seen values up 19%. We expect to make additional acquisitions
given our competitive advantage in sourcing, underwriting and asset managing
but we will maintain our discipline on returns.
We are complementing our Retail Park business with the development of new
logistics warehouse space for last mile delivery inside the M25. This
specific part of the market, where customer requirements are evolving rapidly
and demand is strong but supply of the right kind of space is highly
constrained, will require innovative solutions to increase density and
repurpose space in Central London. This is a nascent market which plays well
to our skill set in site assembly, planning and delivering complex
developments in Central London. We have identified three key themes in urban
logistics and have made good progress against each:
- Retail park conversions: we acquired Thurrock Shopping Park
for £82m where we have the potential to deliver a double-height, urban
logistics warehouse leveraging its location just off the M25
- Densification opportunities: we acquired Heritage House in
Enfield for £87m, a well located, urban logistics warehouse where we intend
to increase densification by adding an additional floor
- Repurposing and mixed use in Central London: we acquired the
Finsbury Square car park for £20m which provides an excellent opportunity to
deliver an urban logistics hub in the City of London, where supply is highly
constrained
Including the opportunities identified above and those on our portfolio, the
estimated gross development value of our urban logistics opportunities is
c.£600m with a blended forecast IRR from acquisition of c.15%.
Capital allocation and balance sheet
We have sold £196m of assets since April 2021, 6.0% ahead of book value and
expect to make further disposals this year. We maintain good long term
relationships with debt providers across the markets and have completed £527m
of financing activity in the half year. This included a five year 'Green Loan'
facility in our Broadgate joint venture, secured on 100 Liverpool Street.
We are pleased to be announcing a half year dividend of 10.32p, in line with
our policy of setting the dividend at 80% of Underlying EPS.
Our people
Like our occupiers, we have been pleased to welcome our people back to the
office and our business is benefitting from face to face collaboration across
all our teams. We continue to support individuals with more flexible working
arrangements and our employee networks have done an excellent job of keeping
us connected as we transition back to the office. This includes NextGen, our
latest employee network, which launched in October to help junior
professionals and those who are new to the Real Estate sector.
Bhavesh Mistry joined us as Chief Financial Officer in July 2021 and Mark Aedy
joined the Board as a non-executive director in September 2021. Following
Mark's appointment, we are changing our Board Committee memberships. Mark
will join the Corporate Social Responsibility Committee, replacing Irvinder
Goodhew who joins the Remuneration Committee, both with effect from 17(th)
November.
Outlook
Current market trends reinforce the conviction we have in our strategy. The
trend towards more flexible working has clearly accelerated during Covid and
office demand is more firmly polarising towards the highest quality most
sustainable space. This is exactly what we deliver at all our Campuses,
where we also benefit from strong demand from innovative growth sectors.
Over the next 12 months, our central case is for rental growth on our
Campuses of 0-3% with yield compression likely.
We expect the value play opportunity in retail parks to continue, driven by
reducing yields and rent stabilisation including some rental growth for small,
well located parks. In Shopping Centres, valuation decline has slowed, and
we expect to see continued yield stabilisation with the rate of ERV decline
also slowing. The market for urban logistics assets to support last mile
delivery in London remains excellent and we expect continued strong rental
growth with further yield compression possible.
The economy continues to recover but we recognise that uncertainties remain in
the macro environment, particularly with respect to rising input costs.
However, longer term trends including the demand for high quality workspace,
omni-channel retail space and urban logistics in London positions us well for
the future. We also benefit from an excellent team, with the experience and
ability to deliver on our strategy.
Market backdrop
Macro-economic context
The UK economy continued to recover in the period, with the roll out of the
vaccination programme enabling Covid-19 related restrictions to be eased.
As a result, GDP rose sharply in the June quarter driven by retail and
hospitality and the impact of new variants has become more muted, so far not
requiring restrictions to be reintroduced. Unemployment has reduced quicker
than expected, falling to 4.3% from a high of 5.2% and in August, consumer
confidence improved to pre-Covid levels. However, rising fuel and food
prices have affected confidence more recently increasing inflationary
expectations and the potential for interest rate rises. Notwithstanding
these uncertainties, most forecasters expect the recovery to continue and long
term real interest rates remain close to historic lows.
London office market
The level of investment market activity was encouraging with nearly £7bn of
transactions in the period despite continued travel restrictions and limited
stock on the market. Investor demand pent up during the pandemic is starting
to unfold and European investors who see London as the key diversification
market post Brexit have been particularly active. It is estimated that more
than £40bn of equity is currently targeting London real estate, reflecting
its long term secure income stream and attractive yields compared to other
global cities. With greater certainty on the role of London post Brexit and
renewed confidence in physical offices, the outlook for the investment market
is more positive now that travel restrictions have eased. Prime yields
currently average 3.5% for West End offices and 3.75% for City offices.
Prime yields are stable in the West End but have moved in 25bps in the City.
In the central London occupational market, take up remains below its long term
average, but there are signs that confidence is building and the market has
reached a turning point. Take up for the period was 4.3m sq ft, nearly
double the previous 6 month period and nearly 40% came from the creative and
consumer services sector. Demand is clearly polarising towards the very best
space, with an emphasis on sustainability, wellness, shared and flexible space
and excellent transport connections. This part of the market has commanded
rents in excess of conventional prime and vacancy is estimated at 3.5%
compared to 9.1% for the whole market. Supply is near record highs but is
skewed towards smaller, poorer quality space, with secondhand space accounting
for 75% of total, of which 41% is sublet. Encouragingly recent data points
to a withdrawal of sublet space from the market as occupiers who felt they had
too much space in the early stages of Covid-19 now expect to use it.
Reflecting the strong preference for new and high quality refurbished space,
32% of development under construction is currently pre-let.
Retail market
Investment activity has been dominated by retail parks, which have seen
volumes of £1.6bn in the period, up nearly 50% on the prior two quarters.
Confidence in the sector continues to build, reflecting lower occupancy costs
for retailers and the important role retail parks can play in online
fulfilment. In particular, the market has focused on assets which are
small-to-medium in lot size and offer secure, sustainable income streams. As
a result, yields have moved in 100 bps over the six months to 6%. The
investment market for shopping centres, where occupancy costs are typically
higher, remains challenging in the context of a tough occupational market and
demand for shopping centres was weaker with £333m transacted in the period.
As a result, yields have drifted out a further 25 bps to 7.75%.
The occupational market for retail has endured a challenging few years
reflecting the structural shift to online which has accelerated through
Covid-19. In that time, many retailers have successfully adapted their
operating models to incorporate an attractive online offer and are emerging
from the pandemic in a stronger position. While the market remains
challenging and rising input costs will be an issue for many occupiers, with
restrictions now eased there are encouraging pockets of demand in food &
beverage, leisure & entertainment, homewares, sports and athleisure. As
in the investment market, activity has been skewed towards retail parks which
are more affordable and where footfall and sales are approaching pre-pandemic
levels.
Logistics market
In logistics, investment volumes were high at £7.5bn over the six months and
the sector is on track to post its strongest ever year of investment
activity. Robust occupier demand, underpinned by structural trends in
e-commerce has led to attractive rental growth which continues to appeal to
long income investors. In the occupational market, year to date take-up across
the UK is already more than any previous full calendar year with take up in
London reaching 4.5m sq ft for April to September. In London, the occupier
base is increasingly broad with alternative uses such as quick commerce and
dark kitchens an emerging source of demand. In these cases, central
locations are critical to their business models and are commanding a rental
premium as a result. Vacancy rates are declining across the UK but in
London, where space is most constrained and demand is very strong, vacancy is
around 2%.
Business review
Key metrics
As at 31 Mar 2021 30 Sep 2021
Portfolio valuation £9,132m £9,840m
Occupancy 94.1% 94.5%1
Weighted average lease length to first break 5.3 yrs 6.0 yrs
Total property return (7.0)% 5.1%
- Yield shift +33 bps (15) bps
- ERV movement (7.6)% (1.0)%
- Valuation movement (10.8)% 2.9%
6 months to 30 Sept 2020 30 Sept 2021
Lettings/renewals (sq ft) over 1 year 259,000 1,300,500
Lettings/renewals over 1 year vs ERV (4.3)% +4.3%
Gross investment activity £565m £814m
- Acquisitions - £501m
- Disposals £(456)m £(196)m
- Capital investment £109m £117m
Net investment/(divestment) £(347)m £422m
On a proportionally consolidated basis including the Group's share of joint
ventures and funds
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 94.5% to 94.2%
Portfolio performance
At 30 September 2021 Valuation Valuation movement ERV movement Yield shift Total property return
£m
%
%
bps
%
Campuses 6,903 3.0 (0.3) (6) 4.5
Central London 6,245 2.8 (0.3) (6) 4.3
Canada Water & other Campuses 600 6.9 (0.2) +1 8.9
Retail & Fulfilment 2,937 2.7 (1.9) (32) 6.5
Retail Parks 1,732 7.1 (1.1) (54) 11.7
Shopping Centres 814 (4.2) (3.8) +8 (0.3)
Urban Logistics 118 (0.9) - (26) (0.2)
Total 9,840 2.9 (1.0) (15) 5.1
See supplementary tables for detailed breakdown
The value of the portfolio was up 2.9% with Campuses and Retail &
Fulfilment overall delivering similar performances but with significant
variation in Retail & Fulfilment at the sub-sector level. Retail Parks
delivered their strongest performance in five years, up 7.1%, driven by inward
yield shift of 54 bps underpinned by strong investment markets and as footfall
and sales recover towards pre-pandemic levels. Shopping Centre values
continue to decline, down 4.2%. Yields have continued to move outwards and
ERVs to decline although the rate of change has slowed. Urban logistics was
up 3.7% excluding the impact of purchasers' costs; including purchaser' costs
values reduced by 0.9% in the half.
Campuses were up 3.0% driven by our actions with strong leasing and
development activity at Regent's Place and Broadgate generating uplifts.
Canada Water was up 10.9%, reflecting good progress on the Masterplan
including our commitment to Phase 1. Developments overall were up 6.3%
reflecting positive lettings at 1 Triton Square.
Campus offices outperformed the MSCI benchmark for All Offices and Central
London Offices by 150 bps and 100 bps respectively on a total returns basis.
Retail outperformed the MSCI All Retail benchmark on a total returns basis by
140 bps due to our weighting towards retail parks. Reflecting the continued
strength of industrials, our portfolio overall underperformed the MSCI All
Property total return index by 250 bps over the period.
Capital activity
From 1 April 2021 Campuses Retail & Fulfilment Total
£m
£m
£m
Purchases1 102 399 501
Sales2 (79) (117) (196)
Development Spend 90 4 94
Capital Spend 13 10 23
Net Investment 126 296 422
Gross Capital Activity 284 530 814
On a proportionally consolidated basis including the Group's share of joint
ventures and funds
1. Includes the purchase of Blackwater Shopping Park (£38m), Waterside House,
Guildford (£15m) and B&Q, Cambridge (£24m) which exchanged and completed
post period end
2. Includes Virgin Active, Brighton (£14m) and Debenhams, Plymouth (£4m)
which exchanged post period end and St Anne's (£6m) which exchanged prior to
1 April 2021
The total gross value of our investment activity since 1 April 2021 was
£814m. We have actively pursued acquisitions in retail parks, urban
logistics and those aligned to innovation and growth sectors outside London,
including technology, science, engineering and health, together totalling
£501m.
We acquired £102m of assets aligned to innovation sectors including The
Peterhouse Technology Park in Cambridge for £75m representing a NIY of
4.15%. This 8.25 acre site just outside the centre of Cambridge comprises
four buildings covering 140,000 sq ft and is fully let to technology business
ARM for its global headquarters. The buildings are held on a long leasehold
with significant reversionary potential and benefit from their location in an
emerging part of south Cambridge, close to the Cambridge Biomedical Campus.
In addition, we purchased a B&Q for £24m, also in Cambridge, which has
good longer term potential for conversion to innovation space (within the
Retail & Fulfilment category above). We also acquired The Priestley
Centre in Guildford on the Surrey Research Park for £12m and adjacent
Waterside House for £15m giving us a combined footprint in Guildford of over
11 acres. This provides an opportunity to deploy our Campus proposition and
development skills to deliver high quality space for the innovative industries
in this affluent town.
In Urban Logistics, we acquired £189m of assets including Heritage House, a
216,000 sq ft urban logistics warehouse in Enfield for £87m. It is fully
let to high quality occupiers Waitrose (for their North London customer
fulfilment centre) and Crown Records Management and offers significant
redevelopment potential given the opportunity to increase density. We have
also made acquisitions of retail parks with the potential for urban logistics
conversion. The Thurrock Shopping Park, acquired for £82m presents exactly
this opportunity given its prime location just off the M25, east of London.
It benefits from its elevated location, which will make delivering
multi-storey logistics more straightforward as both floors will have ground
floor access. Leveraging our skills in planning and complex development in
London, we also acquired an underground car park in Finsbury Square for £20m
where we plan to create a last mile logistics hub in the City of London.
Retail & Fulfilment acquisitions totalled £399m and included the purchase
of the Blackwater Shopping Park in Farnborough and the outstanding units in
the Hercules Unit Trust. These represent value opportunities where we expect
to deliver attractive financial returns off stabilised rents utilising our
asset management expertise.
We made £196m of asset disposals, overall 6.0% ahead of book value. Our
£117m of Retail & Fulfilment sales included the part sale of the
Woodfields Retail Park in Bury for £36m, 18% ahead of book value and the
Virgin Active in Chiswick for £54m, in line with book value. The blended
NIY for retail disposals was 6.4%. We sold Wardrobe Court, a standalone
residential building in the City of London for £70m, 5.4% ahead of book
value. Other residential sales included the remaining unit at Clarges for
£3.1m and St Annes, our affordable housing development at Regent's Place for
£6m.
Rent collection
Half year to September 20211
As at 9 November, we have collected 96% of rent due between 25 March 2021 and
28 September 2021. Of the remainder, 1% has been forgiven and 3% is
outstanding.
Rent due between 25 March 2021 Offices Retail2 Total
and 28 September 2021
Received 100% 93% 96%
Rent forgiven - 2% 1%
Outstanding - 5% 3%
Total 100% 100% 100%
£94m £137m £231m
September 2021 Quarter1
As at 9 November, we have collected 93% of rent due between 29 September and 9
November. Of the remainder, 2% is being paid monthly and 5% is outstanding.
Rent due between 29 September 2021 and 9 November 2021 Offices Retail2 Total
Received 99% 87% 93%
Rent forgiven - - -
Customer paid monthly - 4% 2%
Outstanding 1% 9% 5%
Total 100% 100% 100%
£48m £52m £100m
1. As at 9 November
2. Includes non-office customers located within our London Campuses
Sustainability
We continue to make good progress on our 2030 commitments and were delighted
to retain our GRESB 5 star rating in their annual sustainability benchmark.
We retained a 5 star rating for both Standing Investments and Development for
the second year. We also achieved a AAA rating from MSCI. 100 Liverpool
Street was recently named Green Building Project of the year in the
BusinessGreen Leaders awards and 1 Triton Square was highly commended. In
November, 100 Liverpool Street was also named Project of the Year at the
Building Awards.
Net Zero
We are committed to achieving a net zero carbon portfolio by 2030 and
completed our second net zero carbon development at 1 Triton Square in the
half year following 100 Liverpool Street. Embodied carbon was low at 436 kg
CO(2)e per sqm, below our 2030 target of 500 kg CO(2)e per sqm reflecting our
focus on reusing existing materials which at 1 Triton Square, included
virtually all of the superstructure of the building. Residual embodied
carbon was fully offset through certified, nature-based solutions which remove
carbon from the atmosphere - a teak afforestation project in Mexico and a
community reforestation project in Ghana. We achieved a BREEAM Outstanding
certification on this building.
We made further development commitments at Canada Water where we are committed
to achieving BREEAM Outstanding on all commercial space, BREEAM Excellent on
retail and Home Quality Mark Beta 3* for residential. For commercial space,
we will be using the UK NABERS system to help achieve our target energy
efficiency. Canada Water is a ground-up redevelopment, so our ability to
re-use existing materials will be limited and makes meeting our embodied
carbon targets more challenging. Therefore, our focus will be on using the
most sustainable materials and processes we can and piloting more innovative
techniques. One example of this is at building A1, where we were awarded an
Applied Innovation Credit from BRE recognising an industry first for capturing
waste heat from the office building and re-using to heat the residential
homes. This strategy will be implemented where appropriate across the
Masterplan. We were the first to use cement free, Earth Friendly Concrete in
permanent piling works in the UK, saving 240 tonnes of carbon emissions, a
saving of 45% compared to the embodied carbon of traditional piling concrete
mix.
We are also on site at 1 Broadgate and Norton Folgate which are in line with
the UKGBC's 2030-35 and 2020-25 energy performance targets respectively for
whole building energy efficiency and 1 Broadgate is tracking the NABERS 4.5 to
5 star rating reflecting its excellent overall energy efficiency. Embodied
carbon at 1 Broadgate is above our 2030 targets at 901 kg CO(2)e per sqm but
we are designing out as much carbon as possible and operational carbon
intensity will be one-sixth of the previous building. In addition,
residual carbon will be offset at practical completion in line with our
commitment to deliver net zero carbon developments. At Norton Folgate
embodied carbon is in line with our 2030 targets at 444kg CO(2)e per sqm.
MEES Legislation and EPCs
Continuing to improve the energy efficiency of our standing portfolio also
plays a key role in our net zero strategy and with regulations around this
expected to tighten, this is a key area of focus. In offices, we are already
fully compliant with 2023 MEES legislation which stipulates a minimum EPC
rating of E, and 36% of our offices space is currently rated A or B (by ERV).
For the whole portfolio, 29% is currently A or B rated. Over the coming
eight years we will focus on raising our EPC ratings to be in line with
expected legislation which will require our whole portfolio to be a minimum
EPC B or with valid exemptions registered by 2030.
We have a clear plan to achieve this. We are progressing net zero carbon
audits to identify energy saving interventions with 12 audits completed and a
further 15 are on track for completion by the end of the year. These audits
will identify interventions at assets accounting for over 90% of landlord
procured energy. Typical interventions identified include LED lighting
replacements, which are relatively low cost and replacement air or water
source heat pumps. Some of these interventions and associated costs will be
included within our redevelopment plans and initial findings suggest the
retrofit cost for our standing assets to be in the region of £100m over the
coming eight years, of which a significant proportion will be recovered
through the service charge as we work with our occupiers to achieve our shared
goals in this respect. Work will also be financed by our Transition Vehicle,
which was specifically set up to fund the retrofitting of our portfolio. It
is funded by our internal levy on embodied carbon in new developments of £60
per tonne and supplemented by an annual float of £5m.
Place Based approach
Our Place Based approach means understanding the most important issues and
opportunities in the communities around our places and focusing our efforts
collaboratively to deliver the biggest impact. We have worked with the
Brixton Finishing School to support its AD-Cademy programme. AD-Cademy
provides employability workshops which upskill participants in key aspects of
marketing, creativity and digital, increasing their chances of gaining
employment. Our Campuses provided financial support and used their local
connections to encourage participation. Almost 600 18-25 year olds local to
our Campuses registered for the programme. At Regent's Place we are
providing 10,000 sq ft of affordable workspace at 1 Triton Square and donated
space at the Triton Café for use by Camden Giving and the Diorama Theatre as
meeting space. We have also created Community Funds at Paddington and
Broadgate, following the success of our Regent's Place Community Fund, an
occupier-led initiative which funds local community projects. At our
retail places, we are working with our community partners to identify key
local issues at priority assets. This has included working with the Capital
City Partnership on a recruitment and upskilling programme at Fort Kinnaird.
At Canada Water we have committed to a further three years of our secondary
school education partnership with the Construction Youth Trust which aims to
engage over 1,000 local students per year in careers in the built
environment.
The impact of Covid-19 continues to play out on the many individuals who have
lost their livelihoods because of the pandemic. We have therefore refocused
our Bright Lights skills and employment programme to support some of those
affected with training and employment support. We delivered virtual
employment training at two of our London Campuses and three of our retail
sites, with 62% of those supported moving into work thereafter. At Ealing
Broadway, we engaged with occupiers to find available roles within their
businesses, providing guaranteed interviews to participants in our scheme and
helping our occupiers find local people to fill their vacancies.
To celebrate our ten year partnership with the National Literacy Trust we
funded research into the link between reading for pleasure and life chances
which found that if all children in the UK read for pleasure daily, the number
achieving five good GCSE grades could increase by 1.1 million in 30 years,
boosting average lifetime earnings by an estimated £57,500 and raise the UK's
GDP by as much as £4.6bn per year within a generation.
Following its success at Regent's Place and in partnership with New Diorama
Theatre, we launched the New Diorama Theatre at Broadgate. NDT Broadgate is
one of the biggest rehearsal and development complexes in London, the 20,000
sq ft space is provided completely free of charge for independent and
freelance artists to use. With a reach and engagement of over 600,000 people
and a footfall of 80,000 creatives across the year the launch of NDT Broadgate
marked one of the highest profile artist support projects in recent years.
We also announced a partnership with The National Theatre to bring creative
events and experiences to our Campuses. This will involve monthly workshops
led by creative experts focusing on theatrical skills and exploring how these
can be applied to enhance the working day. The launch of NDT Broadgate and our
partnership with The National Theatre will help rebuild the sense of workplace
community and supports the creative industry's recovery.
Reflecting our continued focus on diversity, we were pleased to become the
first real estate organisation to achieve the Disability Smart Standard, which
is awarded by the Business Disability Forum to organisations who can
demonstrate a culture of inclusion for all abilities. Our Campuses also
achieved Excellent in the Mayor's Good Work Standard accreditation.
Campuses
Key metrics
31 Mar 2021 30 Sep 2021
Portfolio Valuation (BL share) £6,538m £6,903m
Occupancy 93.9% 95.1%
Weighted average lease length to first break 5.5 yrs 7.1 yrs
Six months to: 30 Sept 2020 30 Sept 2021
Total property return (1.6)% 4.5%
- Yield shift +8 bps (6) bps
- ERV growth +0.7% (0.3)%
- Valuation movement (3.1)% 3.0%
Total lettings/renewals (sq ft) 139,000 819,000
Lettings/renewals (sq ft) over 1 year 78,000 668,000
Lettings/renewals over 1 year vs ERV +3.2% +6.1%
Like-for-like income(1) +4.5% +1.4%
On a proportionally consolidated basis including the Group's share of joint
ventures and funds
1. Like-for-like excludes the impact of surrender premia, CVAs & admins
and provisions for debtors and tenant incentives
Campus operational and financial highlights
- Campus value of £6.9bn, up 3.0% driven by leasing activity
and development performance. Similar performance from City and West End
assets, up 2.6% and 2.8% respectively; strong performance from Canada Water up
10.9%
- 6 bps yield contraction, similar in City and West End
- ERVs marginally down, impacted by change in valuation
assumptions at 10 Triton Street, excluding this LFL ERV growth of 0.3%
- Like-for-like income up 1.4%, driven primarily by letting
activity at Broadgate and rent reviews at Regent's Place
- Strong rebound in leasing activity with 668,000 sq ft deals
(greater than one year) driven by development lettings; further 254,000 sq ft
pre-let to Allen & Overy post period end at 1 Broadgate
- Total lettings and renewals at 819,000 sq ft, including 87,000
sq ft Storey lettings
- Under offer on a further 330,000 sq ft
- Investment lettings and renewals over one year, 6.1% ahead of
ERV
- 354,000 sq ft rent reviews agreed 9.1% ahead of passing rent
adding £1.4m to rents
- Occupancy of 95.1%
- Rent collection 100% for HY22
Campus operational review
Following the reorganisation of our reporting segments, Campuses comprises our
three London Campuses (Broadgate, Regent's Place and Paddington Central), as
well as Canada Water, new Campuses in Cambridge and the Surrey Research Park,
standalone offices and residential.
Our London Campuses are located in some of London's most exciting
neighbourhoods. They provide best in class space which meets the highest
standards of sustainability and wellbeing and benefit from excellent transport
connections, an engaging public realm and wide range of amenities. As the
nature of occupier demand evolves, these characteristics enable us to attract
successful businesses to our space and is a model we can replicate outside
London to continue to attract a wide range of innovative, growing
businesses.
Occupancy is 95.1%, improving slightly since March 2021. We benefit from a
diverse portfolio of high quality occupiers focused on financial, corporate
and media & technology sectors. As a result, we have collected all our
rent for the half year.
Broadgate
Total leasing activity covered 257,000 sq ft in the half year, of which
233,000 were long term deals, with short term deals focused on Storey or
meanwhile use for space entering development. The pre-let of 129,000 sq ft
to JLL at 1 Broadgate was the largest single deal and demonstrates JLL's
continuing conviction in the importance of modern, high quality and
sustainable space. We pre-let a minimum of 254,000 sq ft to Allen &
Overy post period end, significantly de-risking this development. Including
space under option to JLL and Allen & Overy totalling 114,000 sq ft, this
building is now fully pre-let or under option. Allen & Overy will have a
separate entrance to the building, known as 2 Broadgate. We have been
encouraged by activity we are seeing on the retail and leisure side, including
2,900sq ft to Revolve, a new restaurant concept at 100 Liverpool Street which
will feature a regular rotation of new and emerging chefs. We are under
offer on a further 138,000 sq ft across the Campus.
We continue to invest in our buildings to modernise our space and are on site
with asset management initiatives including the refurbishment of 155
Bishopsgate (our share £35m). Other projects include partial refurbishments
of Exchange House and 10 Exchange Square. This investment ensures that
existing as well as new space is well positioned to benefit as occupiers
increasingly focus on the best space. Improving the energy efficiency of our
buildings to target a minimum EPC B rating is integral to that approach and
over the next eight years we will deliver energy efficient interventions
identified through our net zero carbon audits. We are also on site improving
the public realm at Exchange Square, which will deliver 1.5 acres of green
space, including amphitheatre style seating and outside events space which
will be open to all, and a range of tree and plant life to support
biodiversity.
Eataly opened in April and has transformed the frontage onto Bishopsgate.
This was followed by successful leasing of retail units at 155 Bishopsgate:
Black Sheep Coffee are open and trading, with Neat Burger, Nest and Honi Poke
all complete and due to open by the end of the year.
With the lifting of restrictions, we have relaunched our occupier engagement
programme. We hosted the Brilliant Breakfast in collaboration with The
Princes Trust's Women Supporting Women initiative and a series of events for
Corporate Queer anchored by a photographic exhibition.
The Campus saw a valuation gain of 3.0% reflecting 7bps of inward yield shift
and improvement in some headline ERVs. The improvement being delivered at
Exchange House and 155 Bishopsgate were key drivers of the uplift. 100
Liverpool Street, which benefited from inward yield shift and the reducing of
rent free periods, also saw a notable uptick in value. Broadgate occupancy
is 95.3%.
Regent's Place
The key transaction in the half was the letting of the office space at 1
Triton Square to Facebook which accounted for 315,000 sq ft of the 335,000 sq
ft of long term leasing activity. Facebook has expanded at Regent's Place
and this deal is a testament to their commitment to the Campus where total
occupation will be 635,000 sq ft. dentsu international who had previously
committed to taking 1 Triton Square will now remain at 10 and 20 Triton Street
(180,000 sq ft). Rent reviews totalled 190,000 sq ft overall, 10.8% ahead of
previous passing rent adding £1.3m to rents.
Regent's Place is well located to attract innovative and growth businesses
looking to cluster around the academic, scientific and research institutions
in London's Knowledge Quarter. Reflecting this we have signed life sciences
business Fabricnano who are taking 7,000 sq ft at Drummond Street.
We have completed phase 1 of our public realm improvement programme and have
committed to further upgrades across the whole Campus over the next 12
months. As part of this, we are working with an ecologist to improve the
biodiversity at Regent's Place.
The Campus was up 4.4% in value, benefitting from the leasing activity at 1
Triton Square and 10 and 20 Triton Street, driving yield compression of 17
bps. ERVs were down 1.9% reflecting the change in valuation assumptions at
10 Triton Street and occupancy is 96.1%.
Paddington Central
Reflecting its high occupancy, leasing activity at Paddington focused on short
term deals through Storey (total activity of 31,000 sq ft). Footfall to the
Campus has been encouraging and ahead of pre-pandemic levels driven by
Pergola, the outdoor dining pop up on the site of 5 Kingdom Street and
expansion of the canal-side food and beverage offer.
Future investment into the Campus, having successfully achieved planning,
includes a comprehensive upgrade at 3 Sheldon Square making the building
all-electric and targeting a BREEAM Excellent rating. This is estimated to
reduce operational energy consumption and carbon emissions by over 40% per
annum. We are planning an extensive upgrade to the public realm which will
transform the landscaping and revitalise the amphitheatre with work due to
commence in the coming months.
The Campus saw a valuation increase of 1.0%, benefitting from progress on
planning at 5 Kingdom Street. ERVs saw growth of 1.4% with yields broadly
flat. Occupancy is 99.7%.
Storey: our flexible workspace offer
Storey is operational across 345,000 sq ft (c.5% of Campuses) and occupancy on
stabilised buildings (those two years' post fit out or fully let) has
increased to 81%. This reflects rising customer demand with strong momentum
building around the return to work, increased demand for flexible space and
greater confidence in the economic outlook.
Since 1 April, we have agreed leases on 100,000 sq ft of space, with 87,000 sq
ft in the half year period, focused on new additions to the portfolio. At 2
Kingdom Street all 30,000 sq ft is now fully let and 100 Liverpool Street is
48% let with 20,000 sq ft of deals, rising to 75% including space under
offer. New occupiers across the portfolio include Featurespace, Genflow, BAI
Communications, Here Technologies and Kyndryl. We have a further 23,000 sq
ft under offer across the portfolio and viewings are back to pre-pandemic
levels.
Bookings at Storey Club, which provides ad hoc meeting and events space at 100
Liverpool Street and 4 Kingdom Street, have increased after a subdued first
quarter. Reflecting the strength of its customer base, with the majority of
occupiers being UK / European headquarters, scale up businesses or large
multinationals rent collection has been resilient throughout Covid and is 100%
for the half year.
Canada Water
At Canada Water, our 53 acre redevelopment scheme, we are working with the
London Borough of Southwark to deliver a new town centre for London. Our 5m
sq ft Masterplan is flexible, with the ability to deliver between 2,000 and
4,000 new homes alongside a mix of commercial, retail and community space.
The site is located on the Jubilee Line and the London Overground, making it
easily accessible from London Bridge, the West End, Canary Wharf and
Shoreditch.
Our ownership is consolidated into a single 500-year lease with Southwark
Council as the lessor. The headlease allows for the comprehensive
redevelopment and investment in the site with Southwark Council owning an
initial 20% interest and the ability to participate in the development up to a
maximum of 20% with returns pro-rated accordingly. This is a ten to twelve
year programme for which we will target annual development returns in the low
teens. In parallel, we are advancing plans to bring in partners to support
the delivery of the wider scheme and are engaged in discussions to take this
forward.
We have outline planning permission for the Masterplan and detailed planning
consent for the first three buildings (A1, A2 and K1) which we committed to in
October. These buildings cover 582,000 sq ft and include commercial, retail
and leisure space as well as 265 homes. A1 and A2 together include 300,000
sq ft of workspace and will target rents of over £50 psf. A1 also includes
186 homes which we are building to sell and will commence marketing closer to
practical completion. The 79 affordable homes in K1 have been pre sold to
the London Borough of Southwark who will manage them upon completion and the
55,000 sq ft leisure centre in A2 has been part-funded by Southwark Council.
Sq ft Workspace Retail & leisure Residential units Total
A1 120,000 9,000 186 272,000
A2 180,000 65,000 - 248,000
K1 - - 79 62,000
Total 300,000 74,000 265 582,000
We have completed the installation of a modular campus for TEDI-London, a
global partnership with King's College London, Arizona State University and
UNSW Sydney. Each module uses lightweight steel frame boxes clad with
insulation and requires no deep piles or concrete. At the end of its life
the building can be reused on-site, relocated in its entirety or stripped and
the materials recycled. The 15,000 sq ft campus opened to the first cohort
of students in September and we are working with TEDI to deliver a permanent
home for around 1,000 students within the Canada Water Masterplan. We see
scope to expand this modular approach which provides a quicker route to market
for businesses looking to expand without the formal commitment of a long term
lease. We are engaged in discussions to deliver a life sciences enabled
modular campus and have interest from other higher education providers. We
are exploring a range of alternative uses across the Campus, uses which align
to our wider strategy to focus the business on growing sectors. Our
permission is deliberately flexible so as we move forward, we can take account
of changes in demand by amending our offices, residential and retail
allocations as appropriate.
The valuation of the Campus was up 10.9% in the period reflecting progress on
the Masterplan including our commitment to Phase 1.
Retail & Fulfilment
Key metrics
As at 31 Mar 2021 30 Sep 2021
Portfolio valuation (BL share) £2,594m £2,937m
- Of which Retail Parks £1,408m £1,732m
- Of which Shopping Centres £856m £814m
- Of which Urban Logistics - £118m
Occupancy1 94.4% 95.9%
Weighted average lease length to first break 5.1 yrs 4.8 yrs
Six months to 30 Sept 20 30 Sept 21
Total property return (12.2)% 6.5%
- Yield shift +33 bps (32) bps
- ERV growth (10.9)% (1.9)%
- Valuation movement (14.9)% 2.7%
Total lettings/renewals (sq ft) 430,000 1,024,000
Lettings/renewals (sq ft) over 1 year 181,000 632,000
Lettings/renewals over 1 year vs ERV (8.8)% +0.2%
Like-for-like income(2) (6.4)% +1.5%
On a proportionally consolidated basis including the Group's share of joint
ventures and funds
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 95.9% to 93.1%
2. Like-for-like excludes the impact of surrender premia, CVAs & admins
and provisions for debtors and tenant incentives
Retail operational and financial highlights
- Retail & Fulfilment portfolio value at £2.9bn, up 2.7%,
with Retail Parks rebounding strongly (up 7.1%), more than offsetting decline
in Shopping Centres (down 4.2%)
- Yield compression of 32bps overall, driven by Retail Parks
down 54bps with yield expansion decelerating in Shopping Centres to +8bps
compared to 143 bps for the year to March 2021
- ERVs down 1.9%; weighted towards Shopping Centres, which are
down 3.8%; Retail Parks down 1.1%
- Like-for-like income up 1.5%. Including the impact of CVAs and
administrations, like-for-like income was down 7.6%.
- Leasing activity ahead of last year with 632,000 sq ft deals
greater than one year; in line with March 2021 ERV and 18.5% below previous
passing rent
- Total lettings and renewals at 1,024,000 sq ft
- Strong pipeline with 571,000 sq ft under offer, 6.6% above
March 2021 ERV and 25% below passing rent
- Further 381,000 sq ft of rent reviews agreed 0.3% below
passing rent
- Good occupancy levels, improving to 95.9%
- Footfall since re-opening of indoor hospitality on 17 May 89%
of same period in 2019; like-for-like sales 98% of the same period in 2019
- 93% of HY22 rent collected
- Limited impact of CVAs and administrations in the first half
with none in the second quarter; ten units impacted of which six were
unaffected
Retail & Fulfilment operational review
Operational performance
Despite continued challenges in retail, this has been one of our strongest six
months for leasing activity in recent years, with total activity of more than
1m sq ft. Deals over one year totalled 632,000 sq ft and were in line with
ERV. Retail Parks are performing significantly better, with long term deals
1.8% ahead of ERV while deals at Shopping Centres were 2.7% below.
Overall, transactions were 18.5% below previous passing rent in the half.
This reflects our pragmatic and proactive approach focused on maintaining
occupancy; accepting lower rents where appropriate and are more sustainable
long term. Reflecting this, occupancy levels have improved to 95.9%. With
all Covid-19 restrictions now relaxed the outlook is more encouraging and we
have a strong pipeline of deals, with 571,000 sq ft under offer, of which
354,000 sq ft is at our Retail Parks.
Retail Parks, which account for 59% of the Retail & Fulfilment portfolio
proved resilient throughout the pandemic. They are well connected and
affordable to retailers meaning they play an important role in a successful
online retail strategy facilitating click and collect, returns and ship from
store. Their lower occupancy cost also makes them attractive to discount
retailers whose business models are more resilient to online. For example,
we have let space to discount operator The Range at Crown Point Shopping Park
in Denton and Elk Mill Shopping Park in Oldham (15,000 sq ft each). We have
also re-geared leases to M&S at Fort Kinnaird, Edinburgh (51,000 sq ft)
and Asda at Glasgow Fort (18,000 sq ft) and Stafford Queens (19,000 sq ft).
M&S is an example of an operator whose strategy includes relocating out of
high street units and into retail parks reflecting their stronger performance.
Shopping Centres now account for 28% of our Retail & Fulfilment portfolio,
with open air covered schemes comprising 8% and traditional covered centres
20%. Many of our open air schemes were deliberately acquired for their
development potential, including Ealing Broadway which has campus potential.
Our near term focus for our Shopping Centres will be on actively managing this
space to drive occupancy and deliver more sustainable cash flows and once
stabilised, we will decide whether to continue to hold or exit these centres
based on expected returns.
Following the acquisition of Heritage House, Enfield and the Finsbury Square
Car Park and including urban logistics opportunities on our existing
portfolio, Urban Logistics now accounts for 4% of Retail & Fulfilment.
Including opportunities on our portfolio, the estimated gross development
value of our urban logistics opportunities is c.£600m with a blended forecast
IRR from acquisition of c.15%.
Footfall and sales have recovered strongly since the reopening of indoor
hospitality on 17 May 2021, and are close to pre-pandemic levels, as set out
below:
16 May 2021 - 30 October 2021
% of 2019(1) Benchmark outperformance2
Footfall
- Portfolio 89.0% +879bps
- Retail parks 97.0% +107bps
Sales
- Portfolio 97.5% n/a
- Retail parks 98.4% n/a
1. Compared to the equivalent weeks in 2019
2. Footfall benchmark: Springboard
With most Covid-19 related restrictions lifted before or during the first
quarter our occupiers have been able to operate as normal for most of the
period. This is reflected in our improved rent collection. We have
collected 93% of rent for the half year, with 92% collected in the March
quarter and 95% collected in the June quarter (see Supplementary Tables for
full disclosure).
CVAs and administrations
There have been relatively few new CVAs or administrations in the period with
just ten units impacted, of which six were unaffected, three saw rent
reductions and one store closed. This resulted in £2.2m in lost contracted
rent of which £2m related to the Virgin Active restructuring in May 2021.
Developments
At 30 September 2021 Sq ft Current Value Cost to complete ERV ERV
'000
£m
£m
£m
Let & under offer
£m
Recently completed 369 514 - 24.3 23.9
Committed 1,597 351 831 66.4 13.7
Near term 1,125 140 393 34.6 -
Medium term 7,161
On a proportionally consolidated basis including the Group's share of joint
ventures and funds (except area which is shown at 100%)
Portfolio
Progressing value accretive development is one of the four priorities for our
business and we have made excellent progress in the half with 718,000 sq ft of
new commitments at Phase 1 of Canada Water and Phase 2 of Aldgate Place.
Recently completed and committed developments now total 2.0m sq ft and are 41%
pre let or under offer, securing £38m of future rent. Excluding build to sell
residential and retail space which we will let closer to completion, we are
46% pre-let or under offer on committed office space. Total development
exposure is now 8.9% of portfolio gross asset value with speculative exposure
at 8.4% (which is based on ERV and includes space under offer), within our
internal risk parameter of 12.5%.
The majority of space in our development pipeline is either income producing
or held at low cost, enhancing our flexibility, so we have attractive options
we can progress as and when appropriate.
The construction market has changed over the first half of 2021, with initial
increases in raw material costs due to constrained supply and increased global
demand. The primary causes were Covid-19 related with manufacturing
closures, reduced production and shipping provision, combined with increased
demand for raw materials, such as iron ore and timber, from China and the
USA. Input cost increases were initially sheltered by contractors keen to
secure pipeline; however, the levels of workload and magnitude of cost
increases have inevitably pushed up tender pricing. Buoyant public sector
spending and infrastructure projects, together with a strong bounce back from
the private sector, has meant construction output is higher than pre
Covid-19. Wholesale energy cost increases, shortage of labour, increased
cost of materials, elongated supply programmes and an increase in construction
activity has resulted in inevitable inflation.
Our inflation forecast (based on tender price inflation) for H2 2021 has
increased to 4%, with 3% in 2022 and 3.5% for 2023 & 2024. This is
frequently under review to ensure our contingencies and cost plans are robust
to deal with the market fluctuations. Having maintained momentum on our
development programme through Covid, we have been able to place contracts
competitively. We have fixed 95% of costs on Phase 1 at Canada Water,
Norton Folgate and Phase 2 at Aldgate Place and we are well progressed to
place the contract at 1 Broadgate.
Completed developments
We reached practical completion of 1 Triton Square (369,000 sq ft) in May.
Embodied carbon was low at 436 kg CO(2)e per sqm and we offset residual
embodied carbon through certified schemes making this our second net zero
carbon development. The offices space is now fully let to Facebook.
Committed developments
Our committed pipeline now stands at 1.6m sq ft following recent commitments
at Canada Water and Phase 2 at Aldgate Place. At Canada Water, we have
committed to the first three buildings, altogether covering 582,000 sq ft.
Demolition is underway and all three main build contracts have now been
placed. A1 is the most significant with total costs to come of £186m;
practical completion is targeted for Q3 2024. Total costs to come for A2 and
K1 (affordable housing) are £101m and £29m respectively. The London
Borough of Southwark are not participating in Phase 1 but will take ownership
of the affordable housing on completion and have part-funded the leisure
centre in A2. We also expect to sell the 186 residential units in A1 closer
to practical completion.
Phase 2 at Aldgate Place is our first build to rent residential scheme. It
comprises 159 premium apartments with 19,000 sq ft of best-in-class office
space and 8,000 sq ft of retail and leisure space. It is well located,
adjacent to Aldgate East and between the Crossrail stations at Liverpool
Street and Whitechapel. Works have now started on site with completion
expected in Q2 2024.
These additions follow existing commitments at Norton Folgate and 1
Broadgate. At 1 Broadgate (543,000 sq ft) we are fully pre-let or under
option on the office space to JLL and Allen & Overy. Norton Folgate is a
336,000 sq ft scheme, comprising 302,000 sq ft of office space, alongside
retail and leisure space creating a mixed use development in keeping with the
historic fabric of the area. Benefitting from its location, close to
Shoreditch High Street and Spitalfields market, this building is ideally
suited to technology and creative firms and we are encouraged by the interest
we are seeing.
Recently Completed and Committed Developments
As at 30 September 2021 Sector BL Share 100% sq ft PC Calendar Year ERV Forecast IRR
%
'000
£m(1)
%
1 Triton Square Office 100 369 Q2 2021 24.3 12
Total Recently Completed 369 24.3
Norton Folgate Office 100 336 Q3 2023 23.1 12
1 Broadgate Office 50 543 Q2 2025 20.2 10
Aldgate Place, Phase 2 Residential 100 136 Q2 2024 6.0 11
Canada Water, Plot A12 Mixed Use 100 272 Q3 2024 6.7 11
blended
Canada Water, Plot A22 Mixed use 100 248 Q3 2024 10.4
Canada Water, Plot K12 Residential 100 62 Q2 2023 -
Total Committed 1,597 66.4
1. Estimated headline rental value net of rent payable under head leases
(excluding tenant incentives)
2. The London Borough of Southwark has confirmed they will not be investing in
Phase 1. The BL ownership share will change over time as costs are incurred
and is expected to be c.98-99% by PC
Near Term pipeline
Our near term pipeline covers just over 1m sq ft. More than half of that is
focused on logistics opportunities at Meadowhall, where we have existing
outline planning permission on development plots separate from the shopping
centre covering 571,000 sq ft and would expect to submit a reserved matters
application this financial year. At 5 Kingdom Street we have consent for a
438,000 sq ft office-led scheme. We also have an attractive opportunity to
substantially refurbish the Priestley Centre in Guildford, which we acquired
for £12m in the half year. The existing lease to BOC expires in early 2022
and demand from emerging technology and innovation businesses including
satellite technology, life sciences and digital technologies is strong.
Medium Term Pipeline
The further phases at Canada Water account for 4.5m sq ft of our 7.2m sq ft
pipeline. We have two other significant campus developments in the pipeline
- 2-3 Finsbury Avenue (718,000 sq ft) where we have consent for an office
scheme and Euston Tower (574,000 sq ft) where we are working up plans for
substantial redevelopment, targeting life sciences and other innovation
business leveraging its location in London's Knowledge Quarter.
We have added two logistics opportunities to the pipeline. At Teesside, we
have identified a 299,000 sq ft opportunity on land outside the retail park
which we are working up primarily for logistics use and the Finsbury Square
car park acquired in the period has the potential to deliver 47,000 sq ft of
urban logistics space right in the centre of London.
Beyond the Medium Term Pipeline, we have opportunities to redevelop Heritage
House in Enfield to deliver a multi-storey urban logistics warehouse and at
Thurrock Retail Park, acquired in the half year, we are targeting a partial
conversion to urban logistics, given its location just off the M25.
Finance review
Six months to 30 September 2020 30 September 2021
Underlying Profit1,2 £107m £120m
Underling earning per share1,2 10.5p 12.9p
IFRS profit/(loss) after tax £(730)m £370m
Dividend per share 8.40p 10.32p
Total accounting return1,3 (10.3%) 6.1%
As at 31 March 2021 30 September 2021
EPRA Net Tangible Assets per share1,2 648p 681p
IFRS net assets £5,983m £6,249m
LTV1,4,5 32.0% 33.4%
Weighted average interest rate5 2.9% 2.7%
1. See Glossary on website for definitions.
2. See Table B within supplementary disclosure for reconciliations to IFRS
metrics.
3. See Note 2 within condensed interim financial statements for calculation.
4. See Note 11 within condensed interim financial statements for calculation
and reconciliation to IFRS metrics.
5. On a proportionally consolidated basis including the Group's share of joint
ventures and funds.
Overview
Financial performance has improved significantly following the easing of
Covid-19 restrictions. Underlying Profit is up 12.1% at £120m, while
underlying earnings per share (EPS) is up 22.9% at 12.9p. Based on our policy
of setting the dividend at 80% of Underlying EPS, the Board have proposed an
interim dividend of 10.32p per share.
Underlying Profit
£m
Underlying Profit for the six months ended 30 September 2020 107
Like-for-like net rent (incl. CVA and administrations) (8)
Provisions for debtors and tenant incentives(1) 47
Net divestment (14)
Developments (6)
Administrative & finance costs (6)
Underlying Profit for the six months ended 30 September 2021 120
1. The period on period impact of provisions for debtors and tenant incentives
was £47m. This reflects the difference between the nil charge to the income
statement in the six-month period to 30 September 2021 (as disclosed in Note
7 and 10 of condensed interim financial statements) and the £47m charge in
the six-month period to 30 September 2020.
Underlying Profit increased by £13m, primarily due to the significant
reduction in provisions for debtors and tenant incentives, following improved
rent collection driven by proactive engagement with occupiers and the lifting
of Covid-related restrictions. This was partially offset by a reduction in
like-for-like rents and the impact of net divestment made over the last 18
months.
Net divestment decreased earnings by £14m in the period. Proceeds from sales
have been deployed into our value accretive acquisitions and our development
pipeline. The recently completed and committed schemes are expected to
generate an ERV of £91m, of which 41% is already pre-let or under offer.
IFRS profit after tax for the period was £370m, compared with a loss after
tax for the prior period of £730m. The significant movement period-on-period
primarily reflects the upward valuation movement on the Group's properties and
those of its joint ventures and funds.
Overall valuations have increased by 2.9% on a proportionally consolidated
basis resulting in an overall EPRA NTA per share increase of 5.1%. Including
the FY21 final dividend of 6.64p per share, we have delivered a total
accounting return of 6.1%.
Financing activity included the refinance of 100 Liverpool Street, completed
in June, with the Broadgate joint venture raising a new £420m 5 year 'Green
Loan' secured by the property at an initial LTV of c.50%. As part of the
refinance, this BREEAM Outstanding and net zero carbon development was
released from the Broadgate securitisation alongside the redemption of £107m
of bonds.
LTV has increased by 140bps during the period to 33.4%. The primary drivers of
the movement were acquisitions net of disposals which added 140bps as well as
development spend adding 100bps . This was partially offset by positive
valuation movements reducing LTV by 100bps.
Our weighted average interest rate remains low at 2.7% a 20bps decrease from
31 March 2021.
Our financial position remains strong with £1.5bn of undrawn facilities and
cash and no requirement to refinance until late 2024. We retain significant
headroom to our debt covenants, meaning the Group could withstand a fall in
asset values across the portfolio of 43% prior to taking any mitigating
actions.
Fitch Ratings, as part of their annual review in August 2021, affirmed all our
credit ratings with a Stable Outlook, including the senior unsecured rating at
'A'.
Presentation of financial information
The Group financial statements are prepared under IFRS where the Group's
interests in joint ventures and funds 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 and funds 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 monitors Underlying Profit as this more accurately reflects the
underlying recurring performance of our core property rental activity, as
opposed to IFRS metrics which include the non-cash valuation movement on the
property portfolio. 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) is also monitored by management as
a key measure of the level of debt employed by the Group to meet its strategic
objectives, along with a measurement of risk. It also allows comparison to
other property companies who similarly monitor and report this measure.
Income statement
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 2021, a £29m surrender premium payment was excluded from the
calculation of Underlying Profit (see Note 3 of the condensed interim
financial statements). There was no tax effect of this Company adjusted
item. No Company adjustments were made in the prior period to 30 September
2020.
Six months to Section 30 Sep 2020 30 Sep 2021
£m
£m
Gross rental income 268 241
Property operating expenses (77) (31)
Net rental income 1.2 191 210
Net fees and other income 6 5
Administrative expenses 1.3 (38) (44)
Net financing costs 1.4 (52) (51)
Underlying Profit 107 120
Underlying tax charge (9) -
Non-controlling interests in Underlying Profit 3 1
EPRA and Company adjustments(1) (831) 249
IFRS profit (loss) after tax 2 (730) 370
Underlying EPS 1.1 10.5p 12.9p
IFRS basic EPS 2 (78.7)p 39.9p
Dividend per share 3 8.40p 10.32p
1. 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 and associated close out
costs. Company adjustments consist of items which are considered to be unusual
and/or significant by virtue to their size or nature. These items are
presented in the 'capital and other' column of the consolidated
income statement.
1.1 Underlying EPS
Underlying EPS is 12.9p, up 22.9%. This reflects the Underlying Profit
increase of 12.1% and an underlying tax charge of £9m recognised in the prior
period. Following the resumption of the dividend in November 2020, our REIT
property income distribution requirements have been satisfied and therefore no
underlying tax charge has been recognised in the period.
1.2 Net rental income
£m
Net rental income for the six months ended 30 September 2020 191
Disposals (26)
Acquisitions 10
Developments (4)
Like-for-like net rent (1)
CVA and administrations (7)
Provisions for debtors and tenant incentives(1) 47
Net rental income for the six months ended 30 September 2021 210
1. The period on period impact of provisions for debtors and tenant incentives
was £47m. This reflects the difference between the nil charge to the income
statement in the six months to 30 September 2021 (as disclosed in Note 7 and
10 of condensed interim financial statements) and the £47m charge in the six
months to 30 September 2020.
Disposed of income producing assets over the last 18 months reduced net rents
by £26m in the period, where the proceeds from sales are being reinvested
into value accretive acquisitions and developments. Acquisitions have
increased net rents by £10m, primarily this relates to the purchase of the
remaining 22% interest of HUT and Retail Park acquisitions at Biggleswade and
Thurrock. Developments have reduced net rents by 4m, driven by the vacant
possession of Euston Tower as it moves into redevelopment. The completed and
committed development pipeline is expected to deliver £91m of ERV in future
years.
Campus like-for-like net rental growth was 1.4% in the period. This was driven
by letting activity, including Monzo at Broadwalk House, and rent reviews with
dentsu international at 20 Triton St. Excluding the impact of CVAs and Admins,
like-for-like net rental growth for Retail & Fulfilment was 1.5%. This
reflects the leasing performance in period, improved occupancy and is
partially offset by deals transacting at lower passing rents. The impact of
CVA and administrations primarily relates to various retail CVAs that occurred
midway through 2020. When including the impact of CVAs and administrations,
like-for-like net rents for Retail & Fulfilment decreased 7.6%.
Provisions made against debtors and tenant incentives decreased by £47m
compared to the prior period, with a net nil charge recognised in the period,
as prior period provision releases were offset by provisions on new debtors
and tenant incentives . We've made good progress on prior period debtors; the
£119m of tenant debtors and accrued income relating to the period ending 31
March 2021 now stands at £60m, primarily driven by cash collection and
negotiations with occupiers. As of 30 September 2021, tenant debtors and
accrued income totalled £107m of which £75m (or 70%) is provided for. This
is a key judgement and area of estimation, and we are mindful of the ongoing
risks, including potential Covid-19 variants, which could impact future
recoverability (for further detail, see our risk management and principal risk
disclosure).
1.3 Administrative expenses
Administrative expenses have increased by £6m in the period to £44m. This
increase is primarily the result of the added lease depreciation on our
offices at York House, following its partial sale in January 2021, as well as
the recognition of a credit in the prior period following the closure of the
Group's defined benefit pension scheme to future accrual.
The Group's EPRA operating cost ratio decreased to 26.2% (H1 2020/21: 38.7%)
as a result of a significant decrease in property outgoing expenses due to
provisions made in respect of debtors and tenant incentives. Excluding
provisions made in respect of debtors and tenant incentives, the Group's
operating cost ratio remains at 26.2% (H1 2020/21: 20.3%) and the increase
from the prior period is a result of lower rental income following sales
activity and the increase in administrative costs noted above.
1.4 Net financing costs
£m
Net financing costs for the six months ended 30 September 2020 (52)
Financing activity 1
Lower market rates 1
Net divestment 2
Developments (2)
Other (1)
Net financing costs for the six months ended 30 September 2021 (51)
Financing activity undertaken in the period has reduced costs by £1m,
including the impact of the 100 Liverpool Street refinance and associated
securitisation bonds redemption.
The impacts of net divestment and developments have been offset, with proceeds
from sales being used to repay revolving credit facilities, while expenditure
on our value accretive developments were funded by redrawing these facilities.
We have a balanced approach to interest rate risk management. At 30 September
2021, the interest rate on our debt was fully hedged, with 51% fixed
(including swaps) and the balance capped. On average over the next five years
we have interest rate hedging on 67% of our projected debt including 45%
fixed. Our finance costs are affected by market rates which apply to debt
which is either unhedged or where the cap strike rates are above the current
rate. Our use of interest rate caps as part of our hedging means we do not
incur mark to market costs on any repayment of debt which is capped, or on a
floating rate, and the cost of this debt benefits while market rates remain
low. Compared to the prior period, we've seen a further £1m reduction in
finance costs from the impact of lower market rates.
Our debt and interest rate management approach has resulted in a lower
weighted average interest rate of 2.7%. The 20bps decrease from 31 March 2021
is due to the use of our lower cost revolving credit facilities to fund our
developments and acquisitions, and the refinance of 100 Liverpool Street.
The transition across our debt and derivatives portfolio from LIBOR to
replacement with SONIA as the reference rate for Sterling is in progress, in
line with market practice. We expect no impact on our financing costs as a
result of this change in reference rate.
2. IFRS profit after tax
The main differences between IFRS profit after tax and Underlying Profit are
that IFRS includes the valuation movements on investment and trading
properties, fair value movements on financial instruments, capital financing
costs and any Company adjustments. In addition, the Group's investments in
joint ventures and funds are equity accounted in the IFRS income statement but
are included on a proportionally consolidated basis within Underlying Profit.
The IFRS profit after tax for the period was £370m, compared with a period
loss after tax for the prior period of £730m. IFRS basic EPS was 39.9p per
share, compared to a (78.7)p per share in the prior period. The IFRS profit
after tax for the period primarily reflects the upward valuation movement on
the Group's properties of £219m, the capital and other income profit from
joint ventures and funds of £47m and the Underlying profit of £120m. The
Group valuation movement and capital and other income profit from joint
ventures and funds was driven principally by inward yield shift of 15bps and
ERV decline of 1.0% in the portfolio resulting in a valuation increase of
2.9%.
The basic weighted average number of shares in issue during the period was
927m (H1 2020/21: 927m).
3. Dividends
In October 2020, we announced our new dividend policy, setting the dividend as
semi-annual and calculated at 80% of Underlying EPS based on the most recently
completed six-month period. Applying this policy, the Board are proposing an
interim dividend for the six-month period ended 30 September 2021 of 10.32p
per share. Payment will be made on Friday 7 January 2022 to shareholders on
the register at close of business on Friday 26 November 2021. The dividend
will be a Property Income Distribution and no SCRIP alternative will be
offered.
Balance sheet
As at Section 31 Mar 2021 30 Sep 2021
£m
£m
Property assets 9,140 9,850
Other non-current assets 51 68
9,191 9,918
Other net current liabilities (203) (276)
Adjusted net debt 6 (2,938) (3,296)
Other non-current liabilities - -
EPRA Net Tangible Assets 6,050 6,346
EPRA NTA per share 4 648p 681p
Non-controlling interests 59 15
Other EPRA adjustments1 (126) (112)
IFRS net assets 5 5,983 6,249
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, the
mark-to-market on the convertible bonds, 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 B within the
supplementary disclosures.
4. EPRA Net Tangible Assets per share
pence
EPRA NTA per share at 31 March 2021 648
Valuation performance 30
Underlying Profit 13
Dividend (7)
Finance liability management (1)
Other (2)
EPRA NTA per share at 30 September 2021 681
The 5.1% increase in EPRA NTA per share reflects a valuation increase of 2.9%
compounded by the Group's gearing.
Campus valuations were up 3.0%, driven by our actions with strong leasing and
development activity at Regent's Place and Broadgate in particular generating
uplifts of more than 3%. Yields moved in 6bps and ERV was marginally down.
Developments again outperformed the standing portfolio and saw a valuation
gain of 6.3%.
Valuations in Retail & Fulfilment were up 2.7% overall, with inward yield
shift of 32bps and ERV decline of 1.9%. There is a significant variance at a
sub-sector level, with Retail Park valuations showing a strong performance of
7.1%, driven by inward yield shift of 54 bps underpinned by strong investment
markets. Shopping Centres valuations were down 4.2% in the period with
ERVs down 3.8%; yields have continued to move outwards although the rate of
expansion is more muted than in previous periods with investment markets
remaining relatively subdued.
Our external valuers have included an explanatory note in relation to Covid-19
in their valuation reports, recognising that it continues to affect real
estate markets globally. However, their opinions are not subject to "material
valuation uncertainty" (as defined by VPS 3 and VPGA 10 of the RICS Valuation
- Global Standards), concluding that there was an adequate quantum of market
evidence upon which to base their opinions of value.
5. IFRS net assets
IFRS net assets at 30 September 2021 were £6,249m, an increase of £266m from
31 March 2021. This was primarily due to IFRS profit after tax of £370m,
offset by the interim dividend paid in the period of £62m and the purchase of
the remaining 21.9% units in the Hercules Unit Trust from non-controlling
interests of £38m.
Cash flow, net debt and financing
6. Adjusted net debt1
£m
Adjusted net debt at 31 March 2021 (2,938)
Disposals 169
Acquisitions (390)
Development and capex (132)
Net cash from operations 107
Dividend (64)
Other (48)
Adjusted net debt at 30 September 2021 (3,296)
1. Adjusted net debt is a proportionally consolidated measure. It represents
the Group net debt as disclosed in Note 11 to the condensed interim financial
statements and the Group's share of joint venture and funds' net debt
excluding the mark-to-market on derivatives, related debt adjustments and
non-controlling interests. A reconciliation between the Group net debt and
adjusted net debt is included in Table A within the supplementary disclosures.
Acquisitions net of disposals increased debt by £221m whilst development
spend totalled £115m with a further £17m on capital expenditure related to
asset management on the standing portfolio. The value of recently completed
and committed developments is £865m, with £831m costs to come. Speculative
development exposure is 8.4% of ERV (includes space under offer). There are
1.1m sq ft of developments in our near term pipeline with anticipated cost of
£393m.
7. Financing
Group Proportionally consolidated
31 Mar 2021 30 Sep 2021 31 Mar 2021 30 Sep 2021
Net debt / adjusted net debt1 £2,249m £2,388m £2,938m £3,296m
Principal amount of gross debt £2,291m £2,361m £3,183m £3,457m
Loan to value 25.1% 26.0% 32.0% 33.4%
Weighted average interest rate 2.2% 2.1% 2.9% 2.7%
Interest cover 4.3 5.3 3.0 3.4
Weighted average maturity of drawn debt 7.0 years 6.5 years 7.6 years 7.0 years
1. Group data as presented in Note 11 of the condensed interim financial
statements. The proportionally consolidated figures include the Group's share
of joint venture and funds' net debt and exclude the mark-to-market on
derivatives and related debt adjustments and non-controlling interests.
At 30 September 2021, our proportionally consolidated LTV was 33.4%, up from
32.0% at 31 March 2021. The impact of positive valuation movements decreased
LTV by 100 bps. This was offset by acquisitions net of disposals which added
140bps, as well as development spend which added 100 bps. Note 11 of the
condensed interim financial statements sets out the calculation of the Group
and proportionally consolidated LTV.
In June we completed the refinance of 100 Liverpool Street with the Broadgate
joint venture raising a new £420m 5 year 'Green Loan' secured by the
property. As part of the refinance, this BREEAM Outstanding and net zero
carbon development was released from the Broadgate securitisation alongside
the redemption of £107m of bonds. There was strong interest from lenders for
the new loan, reflecting the quality of the property, at an initial LTV of
c.50%.
In September our £138m US Private Placement matured and was repaid as
planned, using committed bank facilities.
As a result of this activity, and the £1.6bn of financing completed during
the previous year, at 30 September 2021, we had £1.5bn of undrawn facilities
and cash. Based on our current committed and available facilities, the group
has no requirement to refinance until late 2024.
Our debt and interest rate management approach has enabled us to maintain a
low weighted average interest rate of 2.7%. A 20bps decrease from 31 March
2021 is due to the use of our lower cost revolving credit facilities to fund
our developments and acquisitions, and the refinance of 100 Liverpool Street.
Fitch Ratings, as part of their annual review in August 2021 affirmed our
ratings, with a Stable Outlook; senior unsecured credit rating 'A', long term
IDR 'A-' and short term IDR 'F1'.
Our strong balance sheet enables 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 & Fulfilment assets throughout the UK. We own or
manage a portfolio valued at £13.3bn (British Land share: £9.8bn) as at 30
September 2021 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 &
Fulfilment.
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 70% of our portfolio.
Retail & Fulfilment accounts for 30% 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. In 2020, we set out our
sustainability strategy which focuses on two time-critical areas where British
Land can create the most benefit: making our whole portfolio net zero carbon
by 2030, and partnering to grow social value and wellbeing in the communities
where we operate.
Further details can be found on the British Land website at
www.britishland.com (http://www.britishland.com)
Risk management and principal risks
At British Land, effective risk management is fundamental to how we do
business and represents a cornerstone of executing strategy and positioning
our business for growth, whilst delivering positive outcomes on a long term,
sustainable basis. Our approach to risk management is centred on being
risk-aware, clearly defining our risk appetite, responding to changes to our
risk profile quickly and having a strong risk management culture among
employees with clear roles and accountability. The Group's risk appetite,
integrated approach to managing risk, and governance framework are unchanged
from that set out in the Managing Risk section of the 2021 Annual Report on
pages 78-81.
The adverse impact and challenges caused by the Covid-19 pandemic on the Group
were a key factor when determining the heightened risk assessment of the
majority of our principal risks at March 2021 (see Risk Heat Map on page 81 of
the 2021 Annual Report). During the six months to 30 September 2021, the UK's
successful vaccination programme enabled Covid-19 restrictions to be eased and
has meant the overall external risk environment in which we operate has
improved. However, we remain cognisant to the risks posed by the emergence of
future Covid-19 variants and any associated restrictions which could be
reintroduced. There are also several evolving macroeconomic headwinds such
as supply chain disruption, material and labour shortages which increase
inflationary pressures and may give rise to interest rate rises and in turn
serve to dampen UK economic growth. The challenges of the last eighteen months
have demonstrated the resilience of our business, our robust risk management
and our ability to be flexible to adapt to changes in the external environment
as they evolve.
The Board believes that since the publication of the Annual Report and
Accounts published in May 2021 there has been no material change to the
Group's principal risks and the existing mitigating factors and actions remain
appropriate. However, our current assessment is that the risk of a
Catastrophic Business Event has lessened reflecting the improved Covid-19
environment, whilst our Development Strategy risks have increased following
our development commitments at Canada Water and Aldgate Place and emerging
inflationary pressures. A summary of the Group's principal risks, including an
update for changes during the period and expected impacts during the second
half of the financial year, is provided below.
Principal External Risks
Economic outlook - The UK economic climate and future movements in interest
rates present risks and opportunities in property and financing markets as
well as in the businesses of our occupiers which can impact delivery of our
strategy and financial performance.
Update: The UK economy strengthened significantly in the period following the
reopening of the economy with consumer confidence improving over the summer,
however, rising fuel and food prices have affected confidence more recently.
Whilst the UK economic outlook remains uncertain reflecting the on-going
Covid-19 risk and several macroeconomic headwinds including inflationary
pressures, the recovery is expected to continue well into 2022. The Board and
executive team will continue to actively monitor the economic and political
outlook and help us navigate through these near term challenges.
Political and regulatory outlook - Significant political events and regulatory
changes, including the UK's decision to leave the EU, or potential Government
policy response to the pandemic, bring risks both in terms of uncertainty
until the outcome is known, and the impact of policies introduced. This could
impact the businesses of our occupiers as well as our own business.
Update: The political risk outlook remains high, dictated by the ongoing
national and global response to Covid-19, potential tax rises for businesses,
and Government intervention including the rent moratorium and the introduction
of a binding arbitration scheme for certain arrears built up during lockdown.
Commercial property investor demand - Reduction in investor demand for UK real
estate may result in falls in asset valuations and could arise from variations
in the health of the UK economy, the attractiveness of investment in the UK,
availability of finance and the relative attractiveness of other asset
classes.
Update: Investment market activity was encouraging in the period for London
Offices (within our Campus sector) and Retail Parks and Logistics (within our
Retail & Fulfilment sector) driving yield compression, and the outlook is
positive given travel restrictions have eased enabling assets to be inspected
in person. In Retail, investment activity has been dominated by retail parks
whilst shopping centre demand remains subdued.
Occupier demand and tenant default - Underlying income, rental growth and
capital performance could be adversely affected by weakening occupier demand
and occupier failures resulting from variations in the health of the UK
economy and corresponding weakening of consumer confidence, business activity
and investment. Changing consumer and business practices including the growth
of online retailing, flexible working practices and demand for energy
efficient buildings and new technologies may result in earlier than
anticipated obsolescence of our buildings should evolving occupier and
regulatory requirements not be met. Some or all of these trends could be
accelerated by the pandemic.
Update: Whilst the occupational markets remain challenging with overall market
take-up in both London Offices and Retail below the long term average,
Covid-19 has accelerated both a focus on quality for Office space and a shift
in demand by retailers towards retail parks which support an online offer.
We have been encouraged by the strength of leasing activity across our
portfolio in the period.
Availability and cost of finance - Reduced availability of finance may
adversely impact British Land's ability to refinance debt and/or drive up
cost. These factors may also result in weaker investor demand for real estate.
Regulation and capital costs of lenders may increase cost of finance, as could
increased risk in terms of the UK outlook.
Update: Market interest rates have remained relatively low over recent months
and there remains good lender appetite for the right sponsor and property.
Catastrophic business event - An external event such as a civil emergency,
including a large-scale terrorist attack, cyber crime, pandemic disease,
extreme weather occurrence, environmental disaster or power shortage could
severely disrupt global markets (including property and finance) and cause
significant damage and disruption to British Land's portfolio, operations,
customers and people.
Update: This risk has partially reduced since last year as the restrictions
imposed by the pandemic were eased enabling the reopening of our assets and
the return to the office of our people, whilst ensuring appropriate mitigating
procedures are in place. We remain mindful of the risk of any reintroduction
of restrictions should new Covid-19 variants emerge, or infections increase
significantly. Also, we are continuing to monitor and are executing our plans
to strengthen our cyber security and IT infrastructure and associated key
controls.
Principal Internal Risks
Investment strategy - In order to meet our strategic objectives, we aim to
invest in and exit from the right properties at the right time.
Underperformance could result from changes in market sentiment as well as
inappropriate determination and execution of our property investment strategy,
including: sector selection and weighting; timing of investment and divestment
decisions; exposure to developments; asset, tenant, region concentration; and
co-investment arrangements.
Update: Whilst investment markets are increasingly competitive in certain
subsectors, we continue to actively crystallise value from mature and off
strategy assets into value accretive acquisitions and development.
Development strategy - Development provides an opportunity for outperformance
but usually brings with it elevated risk. This is reflected in our
decision-making process around which schemes to develop, the timing of the
development, as well as the execution of these projects. Key development risks
that could adversely impact underlying income and capital performance include:
development letting exposure; construction timing and costs (including
construction cost inflation); major contractor failure; and adverse planning
judgements.
Update: This risk has increased slightly in the period reflecting our
development commitments at Canada Water and Aldgate Place increasing our
speculative development exposure from 6.6% to 8.4% (which includes space under
offer), albeit within our internal risk parameters and we expect this to
reduce following pre-lets. We have continued to work with our contractors to
ensure Covid-19 compliant work practices are in place at all sites and ensure
they are operating effectively and efficiently. During the period, there is a
heightened concern of inflationary price increases in the construction supply
chain for certain materials and labour, and whilst these have not yet caused
undue delay or significant cost increases we will continue to proactively work
alongside our contractors to manage such issues as they arise.
Capital structure - leverage - Our capital structure recognises the balance
between performance, risk and flexibility. Leverage magnifies capital returns,
both positive and negative. An increase in leverage increases the risk of a
breach of covenants on borrowing facilities and may increase finance costs.
Update: We continue to actively manage our LTV and retain significant headroom
to our Group debt covenants.
Finance strategy - Our finance strategy addresses risks both to solvency and
ongoing profitability. Failure to manage refinancing requirements may result
in a shortage of funds to sustain the operations of the business or repay
facilities as they fall due.
Update: We continue to have good access to financial markets as seen by our
funding activity in the half year leaving us in a strong financial position
with £1.5bn of undrawn facilities and cash.
Environmental Sustainability - A failure to anticipate and prepare for (i)
environmental risks and (ii) preventative steps taken by government and
society represent a principal and emerging risk. This risk category includes
the increased exposure of assets to environmental hazards driven by climate
change; policy risk from the cost of complying with new climate regulations
with specific performance and/or technology requirements; compliance
requirements from existing and emerging environmental regulation and leasing
risk as sustainable buildings become increasingly important to occupiers
Update: We continue to work towards full TCFD alignment in climate risk
disclosures and have recently undertaken a portfolio-wide transitional risk
assessment in the period. We are progressing our net zero audit programme that
will enable us to identify initiatives and the retrofit costs to improve the
energy efficiency and deliver A and B ratings by 2030 in line with expected
MEES compliance.
People - A number of critical business processes and decisions lie in the
hands of a few people. Failure to recruit, develop and retain staff and
Directors with the right skills and experience may result in significant
underperformance or impact the effectiveness of operations and decision
making, in turn impacting business performance.
Update: Following the easing of lockdown restrictions we have successfully
transitioned our people back to the office, whilst supporting individuals with
more flexible working arrangements. Across the marketplace, there are general
rising wage expectations and an increase in employee mobility. Our staff
turnover remains low, and we have a well rounded employee proposition and a
good employer brand, but we will continue to keep under review and in
particular to actively monitor and promote wellbeing.
Income sustainability - We are mindful of maintaining sustainable income
streams which could be adversely affected by non-payment of rent, occupier
failures, inability to re-let space on equivalent terms and potential
structural changes to lease obligations. We also consider income
sustainability in the execution of our investment strategy.
Update: We work closely with our customers to maximise occupancy and rent
collection and actively monitor covenant strength. We have been encouraged by
the progress on year to date rent collection at 96%, and expect rent
collection levels will normalise over time.
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 4.2.7 and DTR 4.2.8, 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 (http://www.britishland.com)
By order of the Board.
Bhavesh Mistry
Chief Financial Officer
16 November 2021
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 for the six months ended 30 September 2021 of The British Land Company
PLC for the 6 month period ended 30 September 2021 (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.
What we have reviewed
The interim financial statements comprise:
- the Consolidated Balance Sheet as at 30 September 2021;
- the Consolidated Income Statement and 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 for the six
months ended 30 September 2021 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.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half year results for the six months ended 30 September 2021, 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 for the six months ended 30 September 2021 in accordance
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial
statements in the Half year results for the six months ended 30 September 2021
based on our review. 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.
What a review of interim financial statements involves
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. 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 for the
six months ended 30 September 2021 and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the
interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
16 November 2021
Consolidated Income Statement
For the six months ended 30 September 2021
Six months ended 30 September 2021 Six months ended 30 September 2020
Unaudited
Unaudited
Note Underlying Capital Total Underlying Capital Total
pre-tax1
and other
£m
pre-tax1
and other
£m
£m
£m
£m
£m
Revenue 3 211 (20) 191 255 - 255
Costs2 3 (64) (9) (73) (105) - (105)
3 147 (29) 118 150 - 150
Joint ventures and funds (see also below) 8 45 47 92 29 (250) (221)
Administrative expenses (43) - (43) (38) - (38)
Valuation movement 4 - 219 219 - (625) (625)
Profit on disposal of investment properties and investments - 3 3 - 19 19
Net financing costs
financing income 5 - 17 17 - - -
financing charges 5 (28) (5) (33) (31) (11) (42)
(28) 12 (16) (31) (11) (42)
Profit (loss) on ordinary activities before taxation 121 252 373 110 (867) (757)
Taxation 6 - (2) (2) (9) 3 (6)
Profit (loss) for the period after taxation 121 250 371 101 (864) (763)
Attributable to non-controlling interests 1 - 1 3 (36) (33)
Attributable to shareholders of the Company 120 250 370 98 (828) (730)
Earnings per share:
basic 2 39.9p (78.7)p
diluted 2 39.8p (78.7)p
All results derive from continuing operations.
Six months ended 30 September 2021 Six months ended 30 September 2020
Unaudited
Unaudited
Note Underlying Capital Total Underlying Capital Total
pre-tax1
and other
£m
pre-tax1
and other
£m
£m
£m
£m
£m
Results of joint ventures and funds accounted for using the equity method
Underlying Profit 45 - 45 29 - 29
Valuation movement 4 - 60 60 - (250) (250)
Capital financing costs - (13) (13) - - -
8 45 47 92 29 (250) (221)
1. See definition in Note 2 and a reconciliation between Underlying Profit and
IFRS profit in Note 13.
2. Included within 'Costs' is a charge relating to the provisions for
impairment of tenant debtors, accrued income, tenant incentives and guaranteed
rent increases of £2m (Six months ended 30 September 2020: £40m). This is
disclosed in further detail in Note 3, Note 7 and Note 10.
Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2021
Six months ended Six months ended
30 September
30 September
2020
2021
Unaudited
Unaudited
£m
£m
Profit (loss) for the period after taxation 371 (763)
Other comprehensive income (expense):
Items that will not be reclassified subsequently to profit or loss:
Net actuarial loss on pension scheme - (12)
Valuation movements on owner-occupied properties - (2)
- (14)
Items that may be reclassified subsequently to profit or loss:
Gains on cash flow hedges
- Group - 2
- Joint ventures and funds 1 -
1 2
Deferred tax on items of other comprehensive income - (1)
Other comprehensive income (expense) for the period 1 (13)
Total comprehensive income (expense) for the period 372 (776)
Attributable to non-controlling interests 1 (33)
Attributable to shareholders of the Company 371 (743)
Consolidated Balance Sheet
As at 30 September 2021
Note 30 September 2021 31 March
Unaudited
£m 2021
Audited
£m
ASSETS
Non-current assets
Investment and development properties 7 6,809 6,326
Owner-occupied property 7 5 2
6,814 6,328
Other non-current assets
Investments in joint ventures and funds 8 2,079 2,120
Other investments 9 30 20
Property, plant and equipment 28 30
Interest rate and currency derivative assets 11 102 135
Debtors - 6
9,053 8,639
Current assets
Trading properties 7 18 26
Debtors 10 58 56
Cash and short term deposits 11 72 154
148 236
Total assets 9,201 8,875
LIABILITIES
Current liabilities
Short term borrowings and overdrafts 11 (2) (161)
Creditors (227) (219)
Corporation tax (7) (7)
(236) (387)
Non-current liabilities
Debentures and loans 11 (2,451) (2,249)
Other non-current liabilities(1) (156) (128)
Interest rate and currency derivative liabilities 11 (109) (128)
(2,716) (2,505)
Total liabilities (2,952) (2,892)
Net assets 6,249 5,983
EQUITY
Share capital 234 234
Share premium 1,307 1,307
Merger reserve 213 213
Other reserves 17 16
Retained earnings 4,463 4,154
Equity attributable to shareholders of the Company 6,234 5,924
Non-controlling interests 15 59
Total equity 6,249 5,983
EPRA Net Tangible Assets (NTA) per share2 2 681p 648p
1. See footnote 1 in Note 3.
2. See definition in Note 2.
Consolidated Statement of Cash Flows
For the six months ended 30 September 2021
Note Six months ended Six months ended
30 September 2021
30 September 2020
Unaudited
Unaudited
£m
£m
Rental income received from tenants 175 138
Fees and other income received 13 17
Operating expenses paid to suppliers and employees (81) (64)
Sale of trading properties 9 -
Cash generated from operations 116 91
Interest paid (31) (38)
Corporation tax payments (2) (1)
Distributions and other receivables from joint ventures and funds 8 24 10
Net cash inflow from operating activities 107 62
Cash flows from investing activities
Development and other capital expenditure (120) (74)
Sale of investment properties 169 142
Purchase of investment properties (293) -
Sale of investments - 108
Purchase of investments (4) (2)
Purchase of non-controlling interest in Hercules Unit Trust (38) -
Investment in and loans to joint ventures and funds (29) (52)
Loan repayments from joint ventures and funds 133 -
Capital distributions from joint ventures and funds - 4
Indirect taxes paid in respect of investing activities (5) (4)
Net cash (outflow) inflow from investing activities (187) 122
Cash flows from financing activities
Dividends paid (64) (10)
Dividends paid to non-controlling interests (5) -
Decrease in lease liabilities (3) (3)
Capital payments in respect of interest rate derivatives - (1)
Decrease in bank and other borrowings (182) (475)
Drawdown on bank and other borrowings 252 308
Net cash outflow from financing activities (2) (181)
Net (decrease) increase in cash and cash equivalents (82) 3
Cash and cash equivalents at 1 April 154 193
Cash and cash equivalents at 30 September 72 196
Cash and cash equivalents consists of:
Cash and short-term deposits 72 196
Consolidated Statement of Changes in Equity
For the six months ended 30 September 2021
Six month movements in equity (unaudited)
Share capital Share premium £m Hedging Re- valuation reserve Merger reserve Retained earnings Total Non-controlling interests Total
£m
and translation reserve
£m
£m
£m
£m
£m
equity
£m
£m
Balance at 1 April 2021 234 1,307 14 2 213 4,154 5,924 59 5,983
Total comprehensive income for the period - - - 1 - 370 371 1 372
Fair value of share and share option awards - - - - - (1) (1) - (1)
Purchase of units from non-controlling interests1
- - - - - 2 2 (40) (38)
Dividends paid in period (6.64p per share) - - - - - (62) (62) - (62)
Dividends paid to non-controlling interests - - - - - - - (5) (5)
Balance at 30 September 2021 234 1,307 14 3 213 4,463 6,234 15 6,249
Balance at 1 April 2020 234 1,307 12 26 213 5,243 7,035 112 7,147
Total comprehensive income (expense) for the period - - 2 (3) - (742) (743) (33) (776)
Fair value of share and share option awards - - - - - 3 3 - 3
Dividends paid to non-controlling interests - - - - - - - (1) (1)
Balance at 30 September 2020 234 1,307 14 23 213 4,504 6,295 78 6,373
Prior year movements in equity (audited)
Share capital Share premium £m Hedging Re- valuation reserve Merger reserve Retained earnings Total Non-controlling interests Total
£m
and translation reserve
£m
£m
£m
£m
£m
equity
£m
£m
Balance at 1 April 2020 234 1,307 12 26 213 5,243 7,035 112 7,147
Total comprehensive income (expense) for the year - - 2 (24) - (1,014) (1,036) (52) (1,088)
Fair value of share and share option awards - - - - - 3 3 - 3
Dividends payable in year (8.40p per share) - - - - - (78) (78) - (78)
Dividends paid to non-controlling interests - - - - - - - (1) (1)
Balance at 31 March 2021 234 1,307 14 2 213 4,154 5,924 59 5,983
1. On 5 July 2021, the Group completed the acquisition of the remaining 21.9%
units of Hercules Unit Trust that the Group did not already own for a
consideration of £38m. Whilst the transaction was completed on 5 July 2021,
the Group obtained the risks and rewards of ownership of the 21.9% of Hercules
Unit Trust on 1 April 2021 and therefore the change in ownership percentage
and resulting non-controlling interests were reflected at this date in the
interim financial statements. The book value of the net assets purchased at 1
April 2021 were £40m and consequently £40m has been transferred from
non-controlling interests to shareholders equity.
Notes to the Accounts
For the six months ended 30 September 2021
1 Basis of preparation
The financial information for the period ended 30 September 2021 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 2021 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 report for the half-year
reporting period ended 30 September 2021, 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 IAS 34
Interim Financial Reporting, and in accordance with the Disclosure Guidance
and Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority. On 31 December 2020 EU-adopted IFRS was brought into UK law and
became UK-adopted international accounting standards, with future changes to
IFRS being subject to endorsement by the UK Endorsement Board. The Group
transitioned to UK-adopted International Accounting Standards in its
consolidated financial statements on 1 April 2021. This change constitutes a
change in accounting framework however, there is no impact on recognition,
measurement or disclosure. The current period financial information presented
in this document has been reviewed, not audited.
The interim report does not include all of the notes of the type normally
included in an annual financial report. Accordingly, this report is to be read
in conjunction with the annual report for the year ended 31 March 2021, which
has been prepared in accordance with both International Accounting Standards
in conformity with the requirements of the Companies Act 2006 and
International Financial Reporting Standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union, and any public
announcements made by the Group during the interim reporting period.
The same accounting policies are followed in the half year report as applied
in the Group's latest annual audited financial statements. During the period,
in line with the Group's accounting policies, a Company adjustment was made in
the calculation of Underlying Profit in relation to a £29m surrender premium
payment (see Note 2 for further details). Surrender premia payable relating to
investment properties are recognised in the income statement, through the
Underlying column, except where the surrender premia payable is deemed to be
unusual or significant by virtue of their size or nature, where they are
recognised through the capital and other column. Surrender premia payable
relating to development properties are capitalised as a property addition
providing they are a directly attributable and necessary development expense.
The Group has considered amendments to standards endorsed by the UK
Endorsement Board effective for the current accounting period and determined
that these do not have a material impact on the consolidated financial
statements of the Group in the period ended 30 September 2021. These
amendments are as follows: References to Conceptual Framework in IFRSs
(amended); IFRS 16 (amended) - Covid-19 related Rent Concessions; IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16 (amended) - Interest Rate Benchmark Reform -
Phase 2.
A number of new standards and amendments to standards and interpretations have
been issued but are not yet effective for the current accounting period. None
of these are expected to have a material impact on the consolidated financial
statements of the Group. The new standards and amendments are as follows:
IFRS 17 - Insurance Contracts; IAS 1 (amended) - Classification of liabilities
as current or non-current; IAS 1 and IFRS Practice Statement 2 (amended) -
Disclosure of Accounting Policy; IAS 8 (amended) - Definition of Accounting
Estimate; and IAS 12 (amended) - exception to the Initial Recognition
Exemption.
The general risk environment in which the Group operates has remained
heightened in the period due to the continued level of uncertainty associated
with the impact of Covid-19 and challenges in the UK retail market. That said
it is considered to have improved during the period, with the lifting of
lockdown restrictions resulting in improvement in activity across the Group's
segments, rents stabilising, improved rental collection rates and footfall and
sales in retail parks returning close to pre-pandemic levels, however a degree
of future uncertainty remains due to the pandemic.
Significant judgements and sources of estimation uncertainty
The Group's key sources of estimation uncertainty are consistent with those
disclosed in the Group's latest audited financial statements.
Provisions for impairment of tenant debtors (including accrued income) and
lease incentives, which are presented within investment properties, continue
to be an area of significant estimation. The ongoing impact of Covid-19
continues to give rise to an elevated level of lease debtors due from tenants
along with associated higher loss rates. The Group continues to calculate
provisions for impairment against these balances using the expected credit
loss model under IFRS 9, with the same key assumptions as disclosed in the
Group's latest audited financial statements, updated for market conditions as
at 30 September 2021. This includes adjusting risk ratings for the current and
potential impact of Covid-19 on each tenant's business and industry. Following
these adjustments, the Group's exposure to credit risk has not changed
significantly since the year end. Given the ongoing nature of this key source
of estimation uncertainty, the table on the following page is provided to
disclose further detail on the ageing and related provisions for impairment on
the tenant debtors (including accrued income) as at the 30 September 2021.
Provisions for impairment against bad debts
Further detail on the provisions for impairment, including sensitivity
disclosures, is provided relating to lease debtors in Note 10 and lease
incentives in Note 7.
30 September 2021
Group Proportionally consolidated
< 90 days 90 - 190 days 190 - 365 days past due > 365 days Total Total Percentage provided
past due
past due
£m
past due
£m
£m
£m
£m
£m %
Lease debtors 23 11 15 22 71 95
Provisions for impairment against lease debtors (6) (10) (15) (22) (53) (69)
Net lease debtors 17 1 - - 18 26 73%
Accrued income1 8 - - - 8 12
Provisions for impairment against accrued income (5) - - - (5) (6)
Net accrued income 3 - - - 3 6 50%
1. Accrued income relates to rental income which has not yet been invoiced and
is recognised on an accruals basis in accordance with the underlying lease.
Accrued income which relates to concessions offered to tenants in the form of
the deferral of rental payments accounts for £5m of the Group £8m accrued
income balance above, with an associated provision of £4m.
31 March 2021
Group Proportionally consolidated
< 90 days 90 - 190 days 190 - 365 days past due > 365 days Total Total Percentage provided
past due
past due
£m
past due
£m
£m
£m
£m
£m %
Lease debtors 33 17 24 8 82 109
Provisions for impairment against lease debtors (12) (13) (24) (8) (57) (72)
Net lease debtors 21 4 - - 25 37 66%
Accrued income1 9 - - - 9 10
Provisions for impairment against accrued income (5) - - - (5) (6)
Net accrued income 4 - - - 4 4 60%
1. Accrued income relates to concessions offered to tenants in the form of the
deferral of rental payments. Rental income which has not yet been invoiced, is
recognised on an accruals basis in accordance with the underlying lease.
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,
predominantly due to £70m of deferred income (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 £1.5bn 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 43% fall in property
values as at 30 September 2021, and the absence of interest cover covenants on
the unsecured facilities. Before factoring in any income receivable, the
undrawn 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 the interim
financial statements at 30 September 2021.
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 information was approved by the Board on 16 November
2021.
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 (see Note 6). 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 period to 30 September 2021, a £29m surrender premium payment
was excluded from the calculation of Underlying Profit (see Note 3 for further
details). There was no tax effect of this Company adjusted item. No Company
adjustments were made in the prior period to 30 September 2020.
Six months ended 30 September 2021 Six months ended 30 September 2020
Relevant earnings Relevant Earnings Relevant Relevant Earnings
£m
number
per share
earnings
number
per share
of shares
pence
£m
of shares
pence
million
million
Underlying
Underlying basic 120 927 12.9 98 927 10.6
Underlying diluted 120 930 12.9 98 930 10.5
EPRA
EPRA basic 91 927 9.8 98 927 10.6
EPRA diluted 91 930 9.8 98 930 10.5
IFRS
Basic 370 927 39.9 (730) 927 (78.7)
Diluted 370 930 39.8 (730) 927 (78.7)
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, the
mark-to-market on the convertible bonds, 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 2021 31 March 2021
Relevant Relevant Net asset Relevant Relevant Net asset
net assets
number
value per
net assets
number
value per
£m
of shares
share
£m
of shares
share
million
pence
million
pence
EPRA
EPRA NTA 6,346 932 681 6,050 933 648
EPRA NRV 6,942 932 745 6,599 933 707
EPRA NDV 5,959 932 639 5,678 933 609
IFRS
Basic 6,249 927 674 5,983 927 645
Diluted 6,249 932 670 5,983 933 641
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 September 2021 Six months ended 30 September 2020
Increase in Dividend per share paid Total Decrease in NTA per share Dividend per share paid Total
pence
accounting return
pence
pence
accounting
NTA per share
return
pence
Total accounting return 33 6.64 6.1% (80) - (10.3%)
3 Revenue and costs
Six months ended 30 September 2021 Six months ended 30 September 2020
Underlying Capital Total Underlying Capital Total
£m
and other
£m
£m
and other
£m
£m
£m
Rent receivable 158 - 158 200 - 200
Spreading of tenant incentives and guaranteed 6 - 6 1 - 1
rent increases
Surrender premia(1) 1 (29) (28) 1 - 1
Gross rental income 165 (29) 136 202 - 202
Trading property sales proceeds - 9 9 - - -
Service charge income 32 - 32 40 - 40
Management and performance fees
(from joint ventures and funds) 3 - 3 4 - 4
Other fees and commissions 11 - 11 9 - 9
Revenue 211 (20) 191 255 - 255
Trading property cost of sales - (9) (9) - - -
Service charge expenses (30) - (30) (38) - (38)
Property operating expenses (23) - (23) (20) - (20)
Provisions for impairment of trade debtors and accrued income - - - (38) - (38)
Provisions for impairment of tenant incentives and guaranteed rent increases (2) - (2) (2) - (2)
Other fees and commissions expenses (9) - (9) (7) - (7)
Costs (64) (9) (73) (105) - (105)
147 (29) 118 150 - 150
1. On 31 August 2021, the Group undertook a leasing transaction with two
unrelated parties in relation to one of its investment properties. The
transaction was commercially beneficial and resulted in an overall increase in
the net assets of the Group. It involved a £29m payment to one party for the
surrender of an agreement for lease, with a subsequent premium of £29m
received for the grant of a new agreement for lease for the same property with
another party meaning the transaction was cash neutral. In line with the
requirements of IFRS 16, and due to the two unrelated parties in the
transaction, the Group is required to account for the elements of the
transaction separately, and as such an associated £29m surrender premium
payment was recognised in full through the income statement in the period.
Owing to the unusual and significant size and nature of the payment and in
line with the Group's accounting policies the payment has been included within
the capital and other column of the income statement. The £29m premium
received was recognised as deferred income on the balance sheet as at 30
September 2021 within other non-current liabilities.
Further detail on the provisions for impairment of trade debtors, accrued
income, tenant incentives and guaranteed rent increases is disclosed in Note 7
and Note 10.
4 Valuation movements on property
Six months ended Six months ended
30 September
30 September
2021
2020
£m
£m
Consolidated income statement
Revaluation of properties 220 (625)
Revaluation of owner-occupied property (1) -
Revaluation of properties held by joint ventures and funds accounted for using 60 (250)
the equity method
279 (875)
Consolidated statement of comprehensive income
Revaluation of owner-occupied properties - (2)
279 (877)
5 Net financing costs
Six months ended Six months ended
30 September
2021 30 September 2020
£m
£m
Underlying
Financing charges
Bank loans and overdrafts (9) (12)
Derivatives 15 17
Other loans (36) (38)
Obligations under head leases (1) (2)
(31) (35)
Development interest capitalised 3 4
(28) (31)
Financing income
Deposits, securities and liquid investments - -
Net financing charges - Underlying (28) (31)
Capital and other
Financing charges
Valuation movement on fair value debt 25 19
Valuation movement on fair value derivatives (30) (18)
Close-out of derivatives - (1)
Fair value movement on convertible bonds - (3)
Fair value movement on non-hedge accounted derivatives - (8)
(5) (11)
Financing income
Fair value movement on non-hedge accounted derivatives 17 -
17 -
Net financing income - Capital and other 12 (11)
Total financing income 17 -
Total financing charges (33) (42)
Net financing costs (16) (42)
Interest on development expenditure is capitalised at the Group's weighted
average interest rate of 2.1% (30 September 2020: 1.9%). The weighted average
interest rate on a proportionately consolidated basis at 30 September 2021 was
2.7% (30 September 2020: 2.5%).
6 Taxation
Six months ended Six months ended
30 September 30 September 2020
2021
£m
£m
Taxation expense
Current taxation
Underlying Profit
Current period UK corporation taxation (30 September 2021: 19%; 30 September (1) (5)
2020: 19%)
Underlying Profit adjustments in respect of prior periods 1 (4)
Total current Underlying Profit taxation expense - (9)
Capital and other profit:
Current period UK corporation taxation (30 September 2021: 19%; 30 September - -
2020: 19%)
Capital profit adjustments in respect of prior periods (2) 3
Total current Capital and other profit taxation (expense) income (2) 3
Total current taxation expense (2) (6)
Deferred taxation on revaluations and derivatives - (1)
Group total taxation (2) (7)
Attributable to joint ventures and funds - -
Total taxation expense (2) (7)
Taxation expense attributable to Underlying Profit for the six months ended 30
September 2021 was £nil (Six months ended 30 September 2020: £9m). Taxation
expense attributable to Capital and other profit was £2m (Six months ended
30 September 2020: income of £3m).
7 Property
Property reconciliation
Six months ended 30 September 2021 Year ended 31 March 2021
Investment and development properties Level 3 Trading properties Owner-occupied Level 3 Total Investment and development properties Level 3 Trading properties Owner-occupied Total
£m
£m
£m
£m
£m
£m
Level 3
£m
£m
Carrying value at the start of the period/year 6,326 26 2 6,354 8,188 20 68 8,276
Additions
- property purchases 291 - - 291 52 - - 52
- development expenditure 96 4 4 104 101 - 3 104
- capitalised interest and staff costs 6 - - 6 11 - - 11
- capital expenditure on asset 10 - - 10 34 34
management initiatives
- -
- right of use assets - - - - 2 - - 2
403 4 4 411 200 - 3 203
Disposals (155) (9) - (164) (1,130) - (66) (1,196)
Right-of-use asset disposals - - - - (36) - - (36)
Reclassifications - - - - (6) 6 - -
Revaluations included in income statement 223 (3) (1) 219 (886) - (2) (888)
Revaluations included in OCI - - - - - - (1) (1)
Movement in tenant incentives and contracted rent uplift balances 12 - - 12 (4) - (4)
-
Carrying value at the end of the period/year 6,809 18 5 6,832 6,326 26 2 6,354
Lease liabilities (108) (108)
Less surplus on right of use assets1 (10) (8)
Valuation surplus on trading properties 9 9
Group property portfolio valuation at the end of the period/year 6,723 6,247
Non-controlling interests (14) (137)
Group property portfolio valuation at the end of the period/year attributable 6,709 6,110
to shareholders
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 £6,723m above.
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
2019, 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
and the Chief Financial 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
significant unobservable inputs, including 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. There were no transfers between levels in
the period. Inputs to the valuation, including equivalent yields, rental
values and costs to complete, are 'unobservable' as defined by IFRS 13 and
these are analysed in a table on the following page.
The general risk environment in which the Group operates has remained
heightened during the period due to the continued level of uncertainty
associated with the impact of Covid-19 and challenges in the UK retail market.
This environment has had, and may continue to have, a significant impact upon
property valuations. That said the general risk environment is considered to
have improved during the period, with the lifting of lockdown restrictions
resulting in improvement in activity across the Group's segments, rents
stabilising, improved rental collection rates and footfall and sales in retail
parks returning close to pre-pandemic levels.
The Covid-19 pandemic has continued to impact many aspects of daily life and
the global economy, with some real estate markets having experienced lower
levels of transactional activity and liquidity compared to pre Covid-19
levels. In some cases, 'lockdowns' have been applied - in varying degrees - to
reflect further 'waves' of Covid-19. While these may imply a new stage of the
crisis, they are not unprecedented in the same way as the initial impact. As
at the valuation date property markets are mostly functioning again, with
transaction volumes and other relevant evidence returning to levels which our
valuers consider to be an adequate quantum of market evidence upon which to
base their opinions of value. Accordingly, and for the avoidance of doubt, our
valuers have not reported their valuations as being subject to 'material
valuation uncertainty' as defined by VPS 3 and VPGA 10 of the RICS Valuation -
Global Standards 2019. Our valuers have, however, highlighted the market
context under which their opinions have been prepared and, in recognition of
the potential for market conditions to move rapidly in response to changes in
the control or future spread of Covid-19, the importance of the valuation
date.
In preparing their valuations, our valuers have considered the impact of
concessions agreed with tenants at the balance sheet date, which mainly relate
to rent deferrals and rent free periods, on valuations, primarily of retail
assets. They have also given consideration to occupiers in higher risk
sectors, and those assumed to be at risk of default, in determining the
appropriate yields to apply.
In light of market conditions we include sensitivity tables, below, to
illustrate the impact of changes in unobservable inputs on the fair value of
the Group's property portfolio.
There has been no change in the valuation methodology used for investment
property as a result of Covid-19.
Information about the impact of changes in unobservable inputs (Level 3) on
the fair value of the Group's property portfolio including share of joint
ventures and funds for the six months ended 30 September 2021
Fair value at Impact on valuations Impact on valuations Impact on valuations
30 September 2021
£m
+5% ERV -5% ERV -25bps NEY +25bps NEY -5% costs +5% costs
£m
£m
£m
£m
£m
£m
Campuses1 5,743 241 (238) 389 (352) 11 (11)
Retail & Fulfilment 2,921 114 (113) 115 (105) 2 (1)
Developments 1,176 151 (142) 194 (165) 114 (118)
Group property portfolio valuation including share of joint ventures and funds 9,840 506 (493) 698 (622) 127 (130)
1. Includes trading properties at fair value.
Information about fair value measurements using unobservable inputs (Level 3) for the six months ended 30 September 2021
Investment Fair value at Valuation ERV per sq ft Equivalent yield Costs to complete per sq ft
31 September 2021
technique
£m
Min Max Average Min Max Average Min Max Average
£
£
£
%
%
%
£
£
£
Campuses 3,353 Investment methodology 9 159 17 4 7 4 - 364 39
Retail & Fulfilment 2,280 Investment methodology 2 31 55 2 13 7 - 45 7
Developments1 1,063 Residual methodology 68 88 79 4 5 5 394 1,007 483
Total 6,696
Trading properties 27
at fair value
Group property 6.723
portfolio valuation
1. Includes owner-occupied.
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.
Provisions for impairment of tenant incentives and guaranteed rent increases
A provision of £23m (31 March 2021: £23m) has been made for impairment of
tenant incentives and contracted rent uplift balances (guaranteed rents). The
charge to the income statement in relation to write-offs and provisions for
impairment for tenant incentives and guaranteed rents was £2m (Six months
ended 30 September 2020: £2m) (see Note 3). The Directors consider that the
carrying amount of tenant incentives is approximate to their fair value.
A 10% increase/decrease in the loss rates assumed for each credit risk rating
would result in a £2m increase/decrease to provisions for impairment of
tenant incentives. This sensitivity analysis has been performed on medium and
high risk tenants and tenants in CVA or Administration only, as the
significant estimation uncertainty is wholly related to tenants with these
risk ratings. A 10% increase/decrease in the percentage share of high and low
risk Retail & Fulfilment tenants incentives only, i.e. assuming 10% of
tenant incentives move from medium to high risk and 10% of tenant incentives
move from low to medium risk and vice versa, would result in a £4m
increase/decrease in provisions for impairment of tenant incentives. A
movement in the share of Campuses tenant incentives within each credit risk
rating has not been considered as management believes there is less
uncertainty associated to the assumption on Campuses tenants' credit risk
ratings. A 10% increase or decrease represents management's assessment of the
reasonable possible change in loss rates and movement in the percentage share
of tenant incentives within each credit risk rating.
The table below shows the movement in provisions for impairment of tenant
incentives during the six months ended 30 September 2021 on a Group and on a
proportionally consolidated basis.
Movement in provisions for impairment of tenant incentives Group Proportionally consolidated
£m
£m
Provisions for impairment of tenant incentives as at 31 March 2021 (1) 23 26
Increase in provisions for impairment of tenant incentives due to acquisition - 5
on 1 April 2021 (1)
Provisions for impairment of tenant incentives as at 1 April 2021 (1) 23 31
Write-offs of tenant incentives (2) (2)
Movements in provisions for impairment of tenant incentives 2 3
Total provision charge recognised in income statement 2 3
Provisions for impairment of tenant incentives as at 30 September 2021 23 32
1. The provisions for impairment of tenant incentives as at 1 April 2021 on a
proportionally consolidated basis is £5m higher than the proportionally
consolidated provision recognised at 31 March 2021. This is as a result of the
acquisition of the remaining 21.9% units of Hercules Unit Trust on 1 April
2021. See the Statement of Changes in Equity for further details.
Additional property covenant information
Properties valued at £1,181m (year ended 31 March 2021: £1,017m) were
subject to a security interest and other properties of non-recourse companies
amounted to £591m (year ended 31 March 2021: £575m), totalling £1,772m
(year ended 31 March 2021: £1,592m).
8 Joint ventures and funds
Summary movement for the period of the investments in joint ventures and funds
Joint Funds Total Equity Loans Total
ventures
£m
£m
£m
£m
£m
£m
At 1 April 2021 1,997 123 2,120 1,459 661 2,120
Additions 39 - 39 1 38 39
Disposals (149) - (149) (16) (133) (149)
Share of profit (loss) after taxation 83 9 92 93 (1) 92
Distributions and dividends:
- Revenue (19) (5) (24) (24) - (24)
Hedging and exchange movements 1 - 1 1 - 1
At 30 September 2021 1,952 127 2,079 1,514 565 2,079
Summary income statement for the period of the investments in joint ventures
and funds
Six months ended Six months ended
30 September 2021
30 September 2020
£m £m £m £m
100%
BL Share
100%
BL Share
Revenue 193 93 191 94
Costs (52) (24) (85) (42)
141 69 106 52
Administrative expenses (2) (1) - -
Net financing costs (46) (23) (46) (23)
Underlying Profit before taxation 93 45 60 29
Valuation movement 117 60 (515) (250)
Capital financing costs (26) (13) - -
Profit (loss) on ordinary activities before taxation 184 92 (455) (221)
Taxation - - - -
Profit (loss) on ordinary activities after taxation 184 92 (455) (221)
Profit (loss) split between controlling and non-controlling interests
Attributable to non-controlling interests - (4)
Attributable to shareholders of the Company 92 (217)
Operating cash flows of joint ventures and funds (Group share)
Six months ended Six months ended
30 September 2021 30 September 2020
£m
£m
Rental income received from tenants 73 52
Operating expenses paid to suppliers and employees (11) (13)
Cash generated from operations 62 39
Interest paid (23) (23)
UK corporation tax received (paid) 1 (1)
Cash inflow from operating activities 40 15
Cash inflow from operating activities deployed as:
Cash surplus following revenue distributions 16 5
Revenue distributions per consolidated statement of cash flows 24 10
Revenue distributions split between controlling and non-controlling interests
Attributable to non-controlling interests 5 -
Attributable to shareholders of the Company 19 10
9 Other investments
30 September 31 March
2021 2021
£m
£m
Fair value through profit or loss 15 6
Amortised cost 4 2
Intangible assets 11 12
30 20
The amount included in the fair value through profit or loss relates to
private equity/venture capital investments of £15m (31 March 2021:
£6m) which are categorised as Level 3 in the fair value hierarchy. The fair
values of private equity/venture capital investments are determined by the
Directors.
10 Debtors
30 September 31 March
2021 2021
£m
£m
Trade and other debtors 36 38
Prepayments and accrued income 18 14
Rental deposits 4 4
58 56
Trade and other debtors are shown after deducting a provision for impairment
against tenant debtors of £53m (31 March 2021: £57m). Accrued income is
shown after deducting a provision for impairment of £5m (31 March 2021:
£5m). The provisions for impairment is calculated as an expected credit loss
on trade and other debtors in accordance with IFRS 9, with the same key
assumptions as disclosed in the Group's latest audited financial statements,
updated for market conditions as at 30 September 2021.
The charge to the income statement in relation to provisions for impairment of
trade receivables and accrued income for the six months ended 30 September
2021 was £nil (Six months ended 30 September 2020: £38m), as disclosed in
Note 3. Within this charge, £4m (Six months ended 30 September 2020: £5m)
represents provisions for impairment made against receivable balances related
to billed rental income due on 29 September rent quarter day.
The decrease in provisions for impairment of trade debtors and accrued income
of £4m (Six months ended 30 September 2020: £34m) is equal to the charge to
the income statement of £nil (Six months ended 30 September 2020: £38m),
less write-offs of trade debtors of £4m (Six months ended 30 September 2020:
£4m).
The Directors consider that the carrying amount of trade and other debtors is
approximate to their fair value.
A 10% increase/decrease in the loss rates assumed for each credit risk rating
would result in a £2m increase and a £3m decrease to provisions for
impairment of tenant debtors and accrued income. This sensitivity analysis has
been performed on medium and high risk tenants and tenants in CVA or
Administration only, as the significant estimation uncertainty is wholly
related to tenants with these risk ratings. A 10% increase/decrease in the
percentage share of high and low risk Retail & Fulfilment tenant debtors,
i.e. assuming 10% of debtors move from medium to high risk and 10% of debtors
move from low to medium risk and vice versa, would result in a £5m increase
and a £4m decrease in provisions for impairment of tenant debtors and accrued
income. A movement in the share of Campuses debtors and accrued income within
each credit risk rating has not been considered as management believes there
is less uncertainty associated to the assumption on Campuses tenants' credit
risk ratings. A 10% increase or decrease represents management's assessment of
the reasonable possible change in loss rates and movement in the percentage
share of tenant incentives within each credit risk rating.
The table below summarises the movement in provisions for impairment of tenant
debtors and accrued income during the six months ended 30 September 2021.
Movement in provisions for impairment of tenant debtors and accrued income Group Proportionally consolidated
£m
£m
Provisions for impairment of tenant debtors and accrued income as at 31 March 62 78
20211
Increase in provisions for impairment of tenant debtors and accrued income due - 5
to acquisition on 1 April 2021 (1)
Provisions for impairment of tenant debtors and accrued income as at 1 April 62 83
2021 (1)
Write-offs of tenant debtors (4) (5)
Movement in provisions for impairment of tenant debtors - (3)
Movement in provisions for impairment of accrued income - -
Total provision charge recognised in income statement - (3)
Provisions for impairment of tenant debtors and accrued income as at 30 58 75
September 2021
1. The provisions for impairment of tenant debtors and accrued income as at 1
April 2021 on a proportionally consolidated basis is £5m higher than the
proportionally consolidated provision recognised at 31 March 2021. This is as
a result of the acquisition of the remaining 21.9% units of Hercules Unit
Trust on 1 April 2021. See the Statement of Changes in Equity for
further details.
11 Net debt
11.1 Fair value and book value of net debt
30 September 2021 31 March 2021
Fair value Book value Difference Fair value Book value Difference
£m
£m
£m
£m
£m
£m
Debentures and unsecured bonds 1,838 1,705 133 1,978 1,871 107
Bank debt and other floating rate debt 754 748 6 546 539 7
Gross debt 2,592 2,453 139 2,524 2,410 114
Interest rate and currency derivative liabilities 109 109 - 128 128 -
Interest rate and currency derivative assets (102) (102) - (135) (135) -
Cash and short term deposits (72) (72) - (154) (154) -
Total net debt 2,527 2,388 139 2,363 2,249 114
Net debt attributable to non-controlling interests 1 1 - (70) (70) -
Net debt attributable to shareholders of the Company 2,528 2,389 139 2,293 2,179 114
Total net debt 2,527 2,388 139 2,363 2,249 114
Amounts payable under leases 131 131 - 133 133 -
Net debt (including lease liabilities) 2,658 2,519 139 2,496 2,382 114
Net debt attributable to non-controlling interests (including lease 1 1 - (75) (75) -
liabilities)
Net debt attributable to shareholders of the Company (including lease 2,659 2,520 139 2,421 2,307 114
liabilities)
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 (see note 9) have been excluded from the disclosures on the
basis that the fair value is equivalent to the book value.
11.2 Loan to value
Group loan to value (LTV)
30 September 31 March
2021
2021
£m
£m
Group loan to value (LTV) 26.0% 25.1%
Principal value of gross debt 2,361 2,291
Less debt attributable to non-controlling interests - (79)
Less cash and short term deposits (balance sheet) (72) (154)
Plus cash attributable to non-controlling interests 1 8
Total net debt for LTV calculation 2,290 2,066
Group property portfolio valuation (Note 7) 6,723 6,247
Investments in joint ventures and funds (Note 8) 2,079 2,120
Other investments and property, plant and equipment (balance sheet) 1 35 26
Less property and investments attributable to non-controlling interests (14) (163)
Total assets for LTV calculation 8,823 8,230
1. The £23m difference between other investments and plant, property and
equipment per the balance sheet totalling £58m, 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 loan to value (LTV)
30 September 31 March
2021
2021
£m
£m
Proportionally consolidated loan to value (LTV) 33.4% 32.0%
Principal value of gross debt 3,457 3,262
Less attributable to non-controlling interests - (79)
Less cash and short term deposits (162) (258)
Plus cash attributable to non-controlling interests 1 10
Total net debt for proportional LTV calculation 3,296 2,935
Group property portfolio valuation (Note 7) 6,723 6,247
Share of property of joint ventures and funds 3,131 3,048
Other investments and property, plant and equipment (balance sheet) 1 35 26
Less property attributable to non-controlling interests (14) (163)
Total assets for proportional LTV calculation 9,875 9,158
1. The £23m difference between other investments and plant, property and
equipment per the balance sheet totalling £58m, 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.
11.3 British Land Unsecured Financial Covenants
The two financial covenants applicable to the Group unsecured debt including
convertible bonds are shown below:
30 September 2021 31 March
£m
2021
£m
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves 35% 33%
Principal amount of gross debt 2,361 2,291
Less the relevant proportion of borrowings of the partly-owned - (79)
subsidiary/non-controlling interests
Less cash and deposits (balance sheet) (72) (154)
Plus the relevant proportion of cash and deposits of the partly-owned 1 8
subsidiary/non-controlling interests
Net Borrowings 2,290 2,066
Share capital and reserves (balance sheet) 6,249 5,983
EPRA deferred tax adjustment (EPRA Table A) - -
Trading property surpluses (EPRA Table A) 9 9
Exceptional refinancing charges (see below) 182 188
Fair value adjustments of financial instruments (EPRA Table A) 103 115
Less reserves attributable to non-controlling interests (balance sheet) (15) (59)
Adjusted Capital and Reserves 6,528 6,236
In calculating Adjusted Capital and Reserves for the purpose of the unsecured
debt financial covenants, there is an adjustment of £182m (31 March 2021:
£188m) to reflect the cumulative net amortised exceptional items relating to
the refinancings in the years ended 31 March 2005, 2006 and 2007.
30 September 2021 31 March
£m
2021
£m
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets 26% 25%
Principal amount of gross debt 2,361 2,291
Less cash and deposits not subject to a security interest (being £72m less (62) (139)
cash subject to a security interest of £10m)
Less principal amount of secured and non-recourse borrowings (985) (998)
Net Unsecured Borrowings 1,314 1,154
Group property portfolio valuation (Note 7) 6,723 6,247
Investments in joint ventures and funds (Note 8) 2,079 2,120
Other investments and property, plant and equipment (balance sheet) 1 35 26
Less investments in joint ventures (Note 8) (2,079) (2,120)
Less encumbered assets (Note 7) (1,772) (1,592)
Unencumbered Assets 4,986 4,681
1. The £23m difference between other investments and plant, property and
equipment per the balance sheet totalling £58m, 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.
11.4 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 2021 31 March 2021
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£m
£m
£m
£m
£m
£m
£m
£m
Interest rate and currency derivative assets (102) - (102) - (135) - (135)
-
Other investments - fair value through profit and loss - (15) (15) - - (6) (6)
-
Assets - (102) (15) (117) - (135) (6) (141)
Interest rate and currency derivative liabilities 109 - 109 - 128 - 128
-
Liabilities - 109 - 109 - 128 - 128
Total - 7 (15) (8) - (7) (6) (13)
There have been no transfers between levels in the period. Further disclosures
in relation to the valuation of the other investments are included within note
9.
12 Dividend
The Interim dividend payment for the six months ended 30 September 2021 will
be 10.32p. Payment will be made on 7 January 2022 to shareholders on the
register at close of business on 26 November 2021. The Interim dividend will
be a Property Income Distribution and no SCRIP alternative will be offered.
The 2021 Final dividend of 6.64 pence per share, totalling £62m was paid on 6
August 2021. The whole of the 2021 Final dividend was a PID and no scrip
alternative was offered. £53m was paid to shareholders, and £9m of
withholding tax was retained.
13 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 Group previously
reported under three principal sectors, being Offices, Retail and Canada
Water. As noted in the Group's Annual Report and Accounts for the year ended
31 March 2021, from 1 April 2021, the Group changed its reporting, to report
under two principal sectors, Campuses and Retail & Fulfilment. The
Campuses sector includes residential properties. These changes are in line
with our revised strategy and how management now reviews the performance of
the business. Due to the changes in the segments, the comparative figures have
been restated in the below segmental disclosures.
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 and funds 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.
Segment result
Six months ended 30 September
Campuses Retail & Fulfilment Unallocated Total
2021 Restated 2021 Restated 2021 Restated 2021 Restated
£m
£m
£m
£m
2020 2020 2020 2020
£m
£m
£m
£m
Gross rental income
British Land Group 66 89 97 105 - - 163 194
Share of joint ventures and funds 46 40 28 32 - - 74 72
Total 112 129 125 137 - - 237 266
Net rental income
British Land Group 56 75 81 62 - - 137 137
Share of joint ventures and funds 37 32 32 20 - - 69 52
Total 93 107 113 82 - - 206 189
Operating result
British Land Group 54 71 77 62 (28) (24) 103 109
Share of joint ventures and funds 37 32 31 18 - - 68 50
Total 91 103 108 80 (28) (24) 171 159
Reconciliation to Underlying Profit before taxation Six months ended 30 September Six months ended 30 September
2021
2020
£m
£m
Operating result 171 159
Net financing costs (51) (52)
Underlying Profit 120 107
Reconciliation to profit on ordinary activities before taxation
Underlying Profit 120 107
Capital and other 252 (867)
Underlying Profit attributable to non-controlling interests 1 3
Total profit (loss) on ordinary activities before taxation 373 (757)
Of the operating result above, £171m (six months ended 30 September 2020:
£159m) was derived from within the UK.
Segment assets
Campuses Retail & Fulfilment Unallocated Total
30 September Restated 30 September Restated 30 September Restated 30 September Restated
2021
2021
2021
2021
£m 31 March
£m 31 March
£m 31 March
£m 31 March
2021
2021
2021
2021
£m
£m
£m
£m
Property assets
British Land Group 4,446 4,130 2,273 1,988 - - 6,719 6,118
Share of funds and joint ventures 2,467 2,418 664 604 - - 3,131 3,022
Total 6,913 6,548 2,937 2,592 - - 9,850 9,140
Reconciliation to net assets
British Land Group 30 September 31 March
2021
2021
£m
£m
Property assets 9,850 9,140
Other non-current assets 68 51
Non-current assets 9,918 9,191
Other net current liabilities (276) (203)
Adjusted net debt (3,296) (2,938)
EPRA NTA 6,346 6,050
Non-controlling interests 15 59
EPRA adjustments (112) (126)
Net assets 6,249 5,983
14 Related party transactions
There have been no material changes in the related party transactions
described in the last annual report.
15 Contingent liabilities
The Group, joint ventures and funds 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.
16 Share capital and reserves
£m Ordinary shares
of 25p each
Issued, called and fully paid
At 1 April 2021 234 937,938,097
Issues - 28,947
At 30 September 2021 234 937,967,044
At 30 September 2021, of the issued 25p ordinary shares, 7,376 shares were
held in the ESOP trust (31 March 2021: 7,376), 11,266,245 shares were held as
treasury shares (31 March 2021: 11,266,245) and 926,693,423 shares were in
free issue (31 March 2021: 926,708,371). No treasury shares were acquired by
the ESOP trust during the year. All issued shares are fully paid.
17 Subsequent events
There have been no significant events since the period end.
Supplementary Disclosures
Unaudited
Table A: Summary income statement and balance sheet
Summary income statement based on proportional consolidation for the six months ended 30 September 2021
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 and funds
included on a line by line basis and excluding non-controlling interests.
Six months ended 30 September 2021 Six months ended 30 September 2020
Group Joint ventures and funds Less Proportionally consolidated £m Group Joint ventures and funds Less Proportionally consolidated
£m
£m
non-controlling interests
£m
£m
non-controlling interests
£m
£m
£m
Gross rental income1 169 74 (2) 241 204 72 (8) 268
Property operating expenses (27) (5) 1 (31) (60) (20) 3 (77)
Net rental income 142 69 (1) 210 144 52 (5) 191
Administrative expenses (43) (1) - (44) (38) - - (38)
Net fees and other income 5 - - 5 6 - - 6
Ungeared Income Return 104 68 (1) 171 112 52 (5) 159
Net financing costs (28) (23) - (51) (31) (23) 2 (52)
Underlying Profit 76 45 (1) 120 81 29 (3) 107
Underlying taxation - - - - (9) - - (9)
Underlying Profit after taxation 76 45 (1) 120 72 29 (3) 98
Valuation movement 279 (875)
Other capital and taxation (net)2 (29) 145
Result attributable to shareholders of the Company 370 (730)
1. Group gross rental income includes £4m of all inclusive rents relating to
service charge income and excludes the £29m surrender premium payable within
the Capital and other column of the income statement.
2. 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 2021
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 and funds
included on a line-by-line basis and excluding non-controlling interests.
Group Share of Less Share Mark-to-market on derivatives and related debt adjustments £m Head Valuation surplus on trading properties Intangibles EPRA EPRA
joint
non-controlling interests
options
leases
£m
£m
NTA
NTA
£m
ventures & funds
£m
£m
£m
30 September
31 March
£m
2021
2021
£m
£m
Retail & Fulfilment properties 2,592
2,346 680 (14) - - (75) - - 2,937
Campuses properties 4,012 2,470 - - - (52) 9 - 6,439 6,161
Canada Water properties 474 - - - - - - - 474 387
Total properties1 6,832 3,150 (14) - - (127) 9 - 9,850 9,140
Investments in joint ventures and funds -
2,079 (2,079) - - - - - - -
Other investments 30 - - - - - - (11) 19 38
Other net (liabilities) assets (304) (61) - 11 - 127 - - (227) (190)
Net debt (2,388) (1,010) (1) - 103 - - - (3,296) (2,938)
Net assets 6,249 - (15) 11 103 - 9 (11) 6,346 6,050
EPRA NTA per share (Note 2) 681p 648p
1. Included within the total property value of £9,850m (31 March 2021:
£9,140m) are right-of-use assets net of lease liabilities of £10m (31 March
2021: £8m), 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.
30 September 2021 31 March 2021
£m Pence per share £m Pence per share
Opening EPRA NTA 6,050 648 7,202 773
Income return 120 13 175 19
Capital return 238 27 (1,249) (136)
Dividend paid (62) (7) (78) (8)
Closing EPRA NTA 6,346 681 6,050 648
Table B: EPRA Performance measures
EPRA Performance measures summary table
Six months ended Six months ended
30 September 2021
30 September 2020
£m Pence per share £m Pence per share
EPRA Earnings - basic 91 9.8 98 10.6
- diluted 91 9.8 98 10.5
EPRA Net Initial Yield 4.4% 4.5%
EPRA 'topped-up' Net Initial Yield 5.0% 5.0%
EPRA Vacancy Rate 7.9% 8.0%
30 September 2021 31 March 2021
Net assets Net assets Net assets Net assets
£m
£m
per share pence per share pence
EPRA NTA 6,346 681 6,050 648
EPRA NRV 6,942 745 6,599 707
EPRA NDV 5,959 639 5,678 609
Calculation and reconciliation of Underlying/EPRA/IFRS Earnings and
Underlying/EPRA/IFRS Earnings per share
Six months ended Six months ended
30 September 2021 30 September 2020
£m
£m
Profit (loss) attributable to the shareholders of the Company 370 (730)
Exclude:
Group - non-underlying taxation 2 (3)
Group - valuation movement (219) 625
Group - profit on disposal of investment properties and investments (3) (19)
Group - capital and other surrender premia payable (see Note 3) 29 -
Joint ventures and funds - valuation movement (including result on disposals) (60) 250
Joint ventures and funds - capital financing costs 13 -
Changes in fair value of financial instruments and associated close-out costs (12) 11
Non-controlling interests in respect of the above - (36)
Underlying Earnings - basic and diluted 120 98
Group - capital and other surrender premia payable (see Note 3) (29) -
EPRA Earnings - basic and diluted 91 98
Profit (loss) attributable to the shareholders of the Company 370 (730)
IFRS Earnings - basic and diluted 370 (730)
Six months ended Six months ended
30 September
2021 30 September 2020
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 3 3
EPRA/Underlying weighted average number of shares (diluted) 930 930
Remove anti-dilutive effect - (3)
IFRS weighted average number of shares (diluted) 930 927
Net assets per share
30 September 2021 31 March 2021
£m Pence £m Pence
per share
per share
Balance sheet net assets 6,249 5,983
Mark-to-market on derivatives and related debt adjustments 103 115
Dilution effect of share options 11 14
Surplus on trading properties 9 9
Intangible assets (11) (12)
Less non-controlling interests (15) (59)
EPRA NTA 6,346 681 6,050 648
Intangible assets 11 12
Purchasers' costs 585 537
EPRA NRV 6,942 745 6,599 707
Deferred tax arising on revaluation movements (2) (1)
Purchasers' costs (585) (537)
Mark-to-market on derivatives and related debt adjustments (103) (115)
Mark-to-market on debt (293) (268)
EPRA NDV 5,959 639 5,678 609
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
2021
2021
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 3 3
Dilutive effect of ESOP shares 2 2
IFRS/EPRA number of shares (diluted) 932 932
EPRA Net Initial Yield and 'topped-up' Net Initial Yield
30 September 30 September
2021
2020
£m
£m
Investment property - wholly-owned 6,719 6,791
Investment property - share of joint ventures and funds 3,131 3,524
Less developments, residential and land (1,181) (801)
Completed property portfolio 8,669 9,514
Allowance for estimated purchasers' costs 649 684
Gross up completed property portfolio valuation (A) 9,318 10,198
Annualised cash passing rental income 448 485
Property outgoings (39) (27)
Annualised net rents (B) 409 458
Rent expiration of rent-free periods and fixed uplifts1 58 50
'Topped-up' net annualised rent (C) 467 508
EPRA Net Initial Yield (B/A) 4.4% 4.5%
EPRA 'topped-up' Net Initial Yield (C/A) 5.0% 5.0%
Including fixed/minimum uplifts received in lieu of rental growth 6 8
Total 'topped-up' net rents (D) 473 516
Overall 'topped-up' Net Initial Yield (D/A) 5.1% 5.1%
'Topped-up' net annualised rent 467 508
ERV vacant space 41 47
Reversions 7 24
Total Estimated Rental Value (E) 515 579
Net Reversionary Yield (E/A) 5.5% 5.7%
1. The weighted average period over which rent-free periods expire is 1 year
(30 September 2020: 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 2021, 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 where 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
2021
2020
£m
£m
Annualised potential rental value of vacant premises 41 47
Annualised potential rental value for the completed property portfolio 519 586
EPRA Vacancy Rate 7.9% 8.0%
EPRA Cost Ratios
Six months ended Six months ended
30 September
30 September 2020
2021
£m
£m
Property operating expenses 26 57
Administrative expenses 44 38
Share of joint ventures and funds expenses 5 20
Less: Performance & management fees (from joint ventures and funds) (3) (4)
Net other fees and commissions (2) (2)
Ground rent costs and operating expenses de facto included in rents (10) (10)
EPRA Costs (including direct vacancy costs) (A) 60 99
Direct vacancy costs (18) (17)
EPRA Costs (excluding direct vacancy costs) (B) 42 82
Gross rental income less ground rent costs and operating expenses de facto 155 184
included in rents
Share of joint ventures and funds (Gross Rental Income less ground rent costs) 74 72
Total Gross rental income (C) 229 256
EPRA Cost Ratio (including direct vacancy costs) (A/C) 26.2% 38.7%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C) 18.3% 32.0%
Impairment of tenant debtors, tenant incentives and accrued income (D) - 47
Adjusted Cost Ratio (including direct vacancy costs and excluding impairment 26.2% 20.3%
of tenant debtors, tenant incentives and accrued income) (A-D)/C
Adjusted Cost Ratio (excluding direct vacancy costs and excluding impairment 18.3% 13.7%
of tenant debtors, tenant incentives and accrued income) (B-D)/C
Overhead and operating expenses capitalised (including share of joint ventures 3 3
and funds)
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 impairment of
tenant debtors, tenant incentives and accrued income which are exceptional
items in the prior year, to show the impact of these items on the ratios.
Table C: Gross rental income
Six months ended Six months ended
30 September 2021 30 September 2020
£m
£m
Rent receivable 230 262
Spreading of tenant incentives and guaranteed rent increases 10 2
Surrender premia 1 4
Gross rental income(1) 241 268
1. Gross rental income excludes the £29m surrender premium payable that has
been included within the Capital and other column of the income statement.
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 September 2021 Year ended 31 March 2021
Group Joint ventures Total Group Joint Total
and funds
ventures
and funds
Acquisitions 291 - 291 52 - 52
Development 88 6 94 104 25 129
Investment properties
Incremental lettable space 1 - 1 1 - 1
No incremental lettable space 9 13 22 31 28 59
Tenant incentives 16 2 18 2 5 7
Other material non-allocated types of expenditure 3 - 3 5 1 6
Capitalised interest 3 - 3 6 2 8
Total property related capex 411 21 432 201 61 262
Conversion from accrual to cash basis 2 5 7 34 14 48
Total property related capex on cash basis 413 26 439 235 75 310
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 £3m (31 March 2021: £6m).
Supplementary Tables
Data includes Group's share of Joint Ventures and Funds
HY22 rent collection1
Rent due between 25 March and 28 September Offices Retail2 Total
Received 100% 93% 96%
Rent forgiven - 2% 1%
Outstanding - 5% 3%
Total 100% 100% 100%
£94m £137m £231m
September quarter 2021 rent collection1
Rent due between 29 September and 9 November Offices Retail2 Total
Received 99% 87% 93%
Rent forgiven - - -
Customer paid monthly - 4% 2%
Outstanding 1% 9% 5%
Total 100% 100% 100%
£48m £52m £100m
1. As at 9 November
2. Includes non-office customers located within our London campuses
Purchases
Since 1 April 2021 Sector Price Price Annual
Purchases
(100%)
(BL Share)
Passing Rent
£m
£m
£m1
Completed
Hercules Unit Trust units Retail 148 148 12
Thurrock Retail Park Retail 82 82 5
Blackwater Shopping Park(2) Retail 38 38 2
B&Q, Cambridge(2) Retail 24 24 1
Heritage House, Enfield Logistics 87 87 2
Finsbury Square Carpark Logistics 20 20 1
Peterhouse Technology Park, Cambridge Campuses 75 75 3
Waterside House, Guildford(2) Campuses 15 15 1
The Priestley Centre, Guildford Campuses 12 12 -
Total 501 501 27
1. BL share of annualised rent topped up for rent frees
2. Exchanged and completed post period end
Sales
Since 1 April 2021 Sector Price Price Annual
Sales
(100%)
(BL Share)
Passing Rent
£m
£m
£m1
Completed
Virgin Active, Chiswick Retail 54 54 2
Woodfields Retail Park, Bury (part-sale) Retail 36 36 2
Beaumont Leys (Fletcher Mall) Retail 9 9 1
Wardrobe Court Residential 70 70 -
St Anne's, Regents Place3 Residential 6 6 -
Clarges, Mayfair Residential 3 3 -
Exchanged
Virgin Active, Brighton2 Retail 14 14 2
Debenhams, Plymouth2 Retail 4 4 -
Total 196 196 7
1. BL share of annualised rent topped up for rent frees
2. Exchanged post period end
3. Exchanged prior to 1 April 2021
Portfolio Valuation by Sector
H1 Change1
At 30 September 2021 Group JVs & Total % £m
£m
Funds
£m
£m
West End 3,409 128 3,537 2.8 98
City 369 2,339 2,708 2.6 70
Canada Water & other Campuses 600 - 600 6.9 38
Residential(2) 58 - 58 (0.8) (1)
Campuses 4,436 2,467 6,903 3.0 205
Retail Parks 1,461 271 1,732 7.1 117
Shopping Centre 341 473 814 (4.2) (36)
Other Retail 257 16 273 (0.4) (1)
Urban Logistics 114 4 118 (0.9) (1)
Retail & Fulfilment 2,173 764 2,937 2.7 79
Total 6,609 3,231 9,840 2.9 284
Standing Investments 5,546 3,118 8,664 2.2 183
Developments 1,063 113 1,176 6.3 101
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. Stand-alone residential
Gross Rental Income1
6 months to 30 September 2021 Annualised as at 30 September 2021
Accounting Basis £m Group JVs & Funds Total Group JVs & Funds Total
West End 57 3 60 122 5 127
City 6 42 48 6 74 80
Canada Water & other Campuses 5 - 5 7 - 7
Residential(2) 1 - 1 1 - 1
Campuses 69 45 114 136 79 215
Retail Parks 40 32 72 74 63 137
Shopping Centre 21 20 41 37 39 76
Other Retail 13 - 13 17 1 18
Urban Logistics 1 - 1 3 - 3
Retail & Fulfilment 75 52 127 131 103 234
Total 144 97 241 267 182 449
1. Gross rental income will differ from annualised valuation rents due to
accounting adjustments for fixed & minimum contracted rental uplifts and
lease incentives
2. Stand-alone residential
Portfolio Net Yields1,2
As at 30 September 2021 EPRA net EPRA topped up net initial yield Overall topped up net initial yield Net equivalent yield Net equivalent yield movement Net reversionary yield ERV Growth
initial yield
%3
%4
%
bps
%
%5
%
West End 3.2 4.0 4.0 4.4 (6) 4.7 (0.4)
City 2.9 3.7 3.7 4.4 (7) 4.8 (0.1)
Other Campuses 2.7 2.9 2.9 5.3 1 7.0 (0.2)
Residential 3.8 3.8 3.8 4.0 - 3.1 (11.7)
Campuses 3.1 3.8 3.9 4.4 (6) 4.8 (0.3)
Retail Parks 7.2 7.6 7.8 6.9 (54) 6.8 (1.1)
Shopping Centre 7.4 7.9 8.1 7.6 8 7.9 (3.8)
Other Retail 5.0 5.4 5.7 6.6 (15) 6.8 0.5
Urban Logistics 2.6 2.6 2.6 3.2 (26) 3.3 -
Retail & Fulfilment 6.9 7.3 7.4 6.9 (32) 7.0 (1.9)
Total 4.4 5.0 5.1 5.2 (15) 5.5 (1.0)
On a proportionally consolidated basis including the Group's share of joint
ventures and funds
Canada Water is excluded from the standing investment analysis as it is valued
as a development asset on a residualised basis
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. As calculated by MSCI
Total Property Return (as calculated by MSCI)
6 months to 30 September 2021 Offices Retail Total
% British Land MSCI British Land MSCI British Land MSCI
Capital Return 3.3 1.2 2.9 2.4 3.1 5.4
- ERV Growth (0.3) 0.5 (1.9) (1.6) (1.0) 0.8
- Yield Movement1 (6) bps (14) bps (32) bps (33) bps (15) bps (32) bps
Income Return 1.3 1.9 3.8 2.9 2.0 2.1
Total Property Return 4.6 3.1 6.8 5.4 5.1 7.6
On a proportionally consolidated basis including the Group's share of joint
ventures and funds
1. Net equivalent yield movement
Top 20 Tenants by Sector
As at 30 September 2021 % of % of
Retail & Fulfilment rent Campuses rent
Retail & Fulfilment Campuses
Next 5.4 Meta (Facebook) 17.6
Walgreens (Boots) 4.9 dentsu international 4.5
M&S 4.3 Visa 4.1
JD Sports 3.2 Herbert Smith Freehills 3.4
J Sainsbury 3.0 Gazprom 2.7
Frasers Group 2.8 Microsoft Corp 2.5
TJX (TK Maxx) 2.7 SMBC 2.3
Dixons Carphone 2.6 Vodafone 2.0
Asda Group 2.3 Deutsche Bank 1.9
Tesco 2.1 Henderson 1.8
DFS Furniture 1.9 Reed Smith 1.7
Hutchison Whampoa 1.9 TP ICAP 1.6
TGI Fridays 1.8 The Interpublic Group (McCann) 1.6
River Island 1.6 Mayer Brown 1.5
Homebase 1.5 Softbank Group 1.5
Primark 1.5 Ctrip.com (Skyscanner) 1.3
H&M 1.4 Mimecast Ltd 1.3
Wilkinson 1.3 Credit Agricole 1.2
Kingfisher 1.3 Kingfisher 1.2
Pets at Home 1.3 Milbank LLP 1.1
Major Holdings
As at 30 September 2021 BL Share Sq ft Rent (100%) Occupancy Lease
%
'000
£m pa1,4
rate %2,4
length yrs3,4
Broadgate 50 4,468 180 95.3 6.8
Regent's Place 100 1,740 86 96.1 9.0
Paddington Central 100 958 47 99.7 4.7
Meadowhall, Sheffield 50 1,500 70 97.0 4.1
Glasgow Fort 100 510 17 94.3 5.3
Teesside, Stockton 100 569 14 94.2 3.0
Ealing Broadway 100 540 11 93.6 3.8
Drake's Circus, Plymouth 100 1,190 17 90.7 5.1
New Mersey, Speke 88 502 13 96.1 4.6
Fort Kinnaird, Edinburgh 50 560 17 93.9 5.4
1. Annualised EPRA contracted rent including 100% of Joint Ventures &
Funds
2. Includes accommodation under offer or subject to asset management
3. Weighted average to first break
4. Excludes committed and near term developments
Lease Length & Occupancy
Average lease length yrs Occupancy rate %
As at 30 September 2021 To expiry To break EPRA Occupancy Occupancy1,2,3
West End 7.9 7.3 96.7 97.1
City 8.0 6.9 85.1 93.8
Other Campuses 6.9 5.5 82.0 82.6
Residential 17.0 16.7 100.0 100.0
Campuses 7.9 7.1 91.3 95.1
Retail Parks 6.3 4.7 92.8 96.5
Shopping Centre 5.5 4.3 93.1 94.7
Other Retail 8.5 8.2 93.5 95.2
Urban Logistics 6.3 6.2 99.6 99.6
Retail & Fulfilment 6.2 4.8 93.1 95.9
Total 7.1 6.0 92.1 95.5
Canada Water is excluded from the standing investment analysis as it is valued
as a development asset on a residualised basis
1. Space allocated to Storey is shown as occupied where there is a Storey
tenant in place otherwise it is shown as vacant. Total occupancy would rise
from 95.1% to 96.3% if Storey space were assumed to be fully let
2. Includes accommodation under offer or subject to asset management
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 & Fulfilment would reduce
from 95.9% to 93.1%, and total occupancy would reduce from 95.5% to 94.2%
Portfolio Weighting
As at 30 September 2020 2021 2021
%
%
£m
West End 39.5 35.9 3,537
City 24.6 27.5 2,708
Canada Water & other Campuses 3.5 6.1 600
Residential(1) 1.3 0.6 58
Campuses 68.9 70.1 6,903
Retail Parks 14.7 17.6 1,732
Shopping Centre 12.2 8.3 814
Other Retail 4.1 2.8 273
Urban Logistics 0.1 1.2 118
Retail & Fulfilment 31.1 29.9 2,937
Total 100.0 100.0 9,840
London Weighting 74% 74% 7,319
1. Stand-alone residential
Annualised Rent & Estimated Rental Value (ERV)
Annualised rent (valuation basis) ERV £m Average rent
£m1
£psf
As at 30 September 2021 Group JVs & Funds Total Total Contracted2 ERV
West End(3) 114 5 119 160 64.5 68.8
City(3) 6 71 77 124 54.0 56.8
Canada Water & other Campuses 7 - 7 12 20.1 36.6
Residential(4) 1 - 1 1 41.7 30.9
Campuses 128 76 204 297 51.7 56.6
Retail Parks 117 27 144 131 22.5 19.4
Shopping Centre 39 41 80 77 24.6 22.8
Other Retail 17 - 17 20 9.3 10.4
Urban Logistics 3 - 3 5 11.2 15.0
Retail & Fulfilment 176 68 244 233 20.7 18.8
Total 304 144 448 530 29.4 30.0
Canada Water is excluded from the standing investment analysis as it is valued
as a development asset on a residualised basis
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. £psf metrics shown for office space only
4. Stand-alone residential
Rent Subject to Open Market Rent Review
For period to 31 March 2022 2023 2024 2025 2026 2022-24 2022-26
As at 30 September 2021
£m
£m
£m
£m
£m
£m
£m
West End 5 22 5 14 9 32 55
City - 2 15 8 27 17 52
Canada Water & other Campuses - - - 1 - - 1
Residential 1 - - - - 1 1
Campuses 6 24 20 23 36 50 109
Retail Parks 5 9 8 9 7 22 38
Shopping Centre 3 7 3 3 1 13 17
Other Retail - 1 1 1 1 2 4
Urban Logistics - - - 1 - - 1
Retail & Fulfilment 8 17 12 14 9 37 60
Total 14 41 32 37 45 87 169
On a proportionally consolidated basis including the Group's share of joint
ventures and funds
Reflects standing investment only
Rent Subject to Lease Break or Expiry
For period to 31 March 2022 2023 2024 2025 2026 2022-24 2022-26
As at 30 September 2021
£m
£m
£m
£m
£m
£m
£m
West End 9 16 13 10 14 38 62
City 4 2 15 4 16 21 41
Other Campuses 2 1 2 - - 5 5
Residential - - - - - - -
Campuses 15 19 30 14 30 64 108
Retail Parks 10 20 27 15 19 57 91
Shopping Centre 10 14 10 8 13 34 55
Other Retail 1 3 1 1 1 5 7
Urban Logistics - - 1 - 2 1 3
Retail & Fulfilment 21 37 39 24 35 97 156
Total 36 56 69 38 65 161 264
% of contracted rent 7.1 11.2 13.5 7.5 12.9 31.8 52.2
On a proportionally consolidated basis including the Group's share of joint
ventures and funds
Canada Water is excluded from the standing investment analysis as it is valued
as a development asset on a residualised basis
Reflects standing investment only
Recently Completed and Committed Developments
As at 30 September 2021 Sector BL Share 100% sq ft PC Calendar Year Current Value Cost to come ERV Pre-let & under offer Forecast IRR %
%
'000
£m
£m1
£m2
£m
1 Triton Square Office 100 369 Q2 2021 514 - 24.3 23.9 12
Total Recently Completed 369 514 - 24.3 23.9
Norton Folgate Office 100 336 Q3 2023 171 201 23.1 - 12
1 Broadgate Office 50 543 Q2 2025 104 220 20.2 13.7 10
Aldgate Place, Phase 2 Residential 100 136 Q2 2024 30 94 6.0 - 11
Canada Water, Plot A13 Mixed Use 100 272 Q3 2024 25 186 6.7 - 11 Blended
Canada Water, Plot A23 Mixed use 100 248 Q3 2024 16 101 10.4 -
Canada Water, Plot K13 Residential 100 62 Q2 2023 5 29 - -
Total Committed 1,597 351 831 66.4 13.7
Other Capital Expenditure4 55
1. From 1 October 2021. 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. The BL ownership share will change over time as costs are incurred
and is expected to be c.98-99% by PC
4. Capex committed and underway within our investment portfolio relating to
leasing, infrastructure and asset management
Near Term Development Pipeline
As at 30 September 2021 Sector BL Share 100% sq ft Earliest Start on Site Current Value Cost to come ERV Let & Under Offer Planning Status
%
'000
£m
£m1
£m2
£m
5 Kingdom Street Office 100 438 Q4 2022 122 350 30.0 - Consented
Meadowhall, Logistics Logistics 50 571 Q4 2022 6 27 2.0 - Consented
The Priestley Centre Office 100 116 Q2 2022 12 16 2.6 - Pre-submission
Total Near Term 1,125 140 393 34.6 -
Other Capital Expenditure3 97
1. From 1 October 2021. 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. Forecast capital commitments within our investment portfolio over the next
12 months relating to leasing and asset enhancement
Medium Term Development Pipeline
As at 30 September 2021 Sector BL Share 100% Sq ft Planning Status
%
'000
2-3 Finsbury Avenue Office 50 718 Consented
Eden Walk Retail & Residential Mixed Use 50 452 Consented
Ealing - 10-40 The Broadway Mixed Use 100 303 Pre-submission
Ealing - International House Office 100 165 Consented
Gateway Building Leisure 100 105 Consented
Finsbury Square Carpark Urban Logistics 100 47 Pre-submission
Teesside, Logistics Urban Logistics 100 299 Pre-submission
Euston Tower Office 100 574 Pre-submission
Canada Water - Future phases1 Mixed Use 100 4,498 Consented
Total Medium Term 7,161
1. The London Borough of Southwark has the right to invest in up to 20% of the
completed development. The BL ownership share will change over time depending
on the level of contributions made, but will be no less than 80%
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