REG - British Land Co PLC - Half-year Report
13/11/2023 07:00
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RNS Number : 1621T British Land Co PLC 13 November 2023
13 November 2023
Continued operational momentum & strong rental growth
Simon Carter, CEO said:
"We are pleased with the performance in the first half with underlying profits
increasing 3% on the back of another strong period of leasing and good cost
control. We have seen yields continue to move out, but as we predicted in May,
at a slower pace. Rental growth has accelerated, with lettings 12% ahead of
ERV, and occupancy remains strong at 96% well above levels in the wider
market.
We are benefitting from our decision to pursue a value-add strategy across
campuses, retail parks and London urban logistics. These submarkets have the
strongest occupational fundamentals and highest rental growth within the
office, retail and logistics sectors. We now expect ERV growth at the top end
of our previous guidance for FY24.
Whilst in the past 18 months we have delivered good earnings growth, asset
values have been impacted by the increase in interest rates. The geopolitical
and economic landscape remains uncertain; however, with our portfolio yield
now over 6% and an increased likelihood we are approaching the peak in UK base
rates we expect the strong occupational fundamentals of our submarkets,
together with the differentiated quality of our assets, to reassert themselves
as the primary drivers of performance."
Financial
• Underlying Profit growth of 3.4%
• EPRA cost ratio 14.8% vs 19.5% at FY23
• Underlying earnings per share of 15.2p up 3.4%
• Dividend per share of 12.16p up 4.8%
Balance sheet
• EPRA Net Tangible Assets per share of 565p down 3.9%
• Loan To Value at 36.9% (FY23 36.0%), Group Net Debt to EBITDA 6.0x
(FY23 6.4x)
• Fitch affirmed our Senior Unsecured credit rating at 'A' with stable
outlook
• £1.7bn undrawn facilities and cash
• £600m of financing activity, including £350m new loans post period
end which further increase our capacity
• Debt 99% hedged for the six months to March 2024 and 84% hedged on
average over the next five years
CAPITAL ACTIVITY
• Sale of office and data centre portfolio for £125m(1), 13% above
book value at a NIY of 4.6%
• Surrender of 1 Triton Square lease on 25 September 2023 for £149m
• Acquisition of Thanet Retail Park in April 2023 for £55m at a NIY
of 8.1%
operational metrics
• Portfolio occupancy 96%: Campuses 94%, Retail Parks 99% and London
Urban Logistics 100%
• Leased 1.6m sq ft, 12.2% ahead of ERV and a further 1.1m sq ft under
offer, 16.6% above ERV
• Campus leasing 368,000 sq ft, 7.5% ahead of ERV, 281,000 sq ft under
offer, 9.7% above ERV and 1.8m sq ft in negotiations on 1.0m sq ft of space
(including near term pipeline)
• Retail & London Urban Logistics leasing 1.2m sq ft, 14.2% ahead
of ERV, and 844,000 sq ft under offer, 20.5% ahead of ERV
Portfolio VALUATION
• ERV growth of +3.2%: Campuses +3.2%, Retail Parks +4.0%, London
Urban Logistics +3.1%
• Yields +23bps to 6.1% NEY: Campuses +32bps to 5.3%, Retail Parks
+13bps to 6.7%, London Urban Logistics +9bps to 4.7%
• Values down 2.5%: Campuses -4.0%, Retail Parks up +0.2% and London
Urban Logistics up +0.6%
Sustainability
• GRESB rating of 5* for both standing investments and developments
• 50% of portfolio rated EPC A or B (up from 45% at FY23)
Outlook
• Expecting ERV growth at the top end of our previously guided ranges
for FY24: Campuses 2-4%, Retail Parks 3-5%, London Urban Logistics 4-5%
• Comfortable with current market expectations for FY24 earnings
Summary performance
Period ended 30 September 30 September % Change
2023
2022(2)
INCOME STATEMENT
Underlying Profit(3) £142m £138m 3.4%
Underlying earnings per share(3) 15.2p 14.7p 3.4%
IFRS loss after tax £(61)m £(32)m
IFRS basic earnings per share (6.6)p (3.5)p
Dividend per share(4) 12.16p 11.60p 4.8%
Total accounting return(3) (2.0)% (2.8)%
As at 30 September 31 March
2023
2023
BALANCE SHEET
Portfolio at valuation (proportionally consolidated)(5) £8,704m £8,898m (2.5)%
EPRA Net Tangible Assets per share(3) 565p 588p (3.9)%
IFRS net assets £5,367m £5,525m
Net Debt to EBITDA (Group)(6, 7) 6.0x 6.4x
Loan to value (proportionally consolidated)(7, 8) 36.9% 36.0%
Senior Unsecured credit rating A A
Period ended 30 September 30 September
2023
2022
OPERATIONAL STATISTICS
Lettings and renewals over 1 year 1.3m sq ft 1.1m sq ft
Total lettings and renewals 1.6m sq ft 1.5m sq ft
Committed and recently completed development 1.9m sq ft 1.7m sq ft
SUSTAINABILITY PERFORMANCE
MSCI ESG AAA rating AAA rating
GRESB (Standing Investments / Developments) 5* / 5* 4* / 5*
1. Of which £29m completed post period end.
2. Prior period comparatives have been restated for a change in accounting
policies in respect of rental concessions (as disclosed in Note 1 of the
condensed interim financial statements).
3. See Note 2 to the condensed interim financial statements for definition
and calculation.
4. The growth in the dividend is higher than the Underlying EPS growth due to
the impact of the rental concession restatement in the prior period.
5. Valuation movement during the period (after taking account of capex) of
properties held at the balance sheet date, including developments (classified
by end use), purchases, sales and surrender premium received at 1 Triton
Square.
6. Net Debt to EBITDA on a Group basis excludes non-recourse and joint
venture borrowings and includes distributions from non-recourse companies and
joint ventures.
7. See Note 9 to the condensed interim financial statements for definition,
calculation and reference to IFRS metrics.
8. EPRA Loan to value is disclosed in Table E of the condensed interim
financial statements.
Results Presentation and Investor Conference Call
A presentation of the results will take place at 9.00am on Monday 13 November
2023 at Peel Hunt, 100 Liverpool Street, Broadgate and will be broadcast live
via webcast (www.britishland.com (http://www.britishland.com) ) and conference
call. The details for the conference call and weblink are as follows:
UK Toll Free Number: 0800 260 6466
International: +44 20 3481
4247
Access code: 9857826
Click for access: Audio weblink
(https://streamstudio.world-television.com/927-1254-38320/en)
A dial in replay will be available later in the day for 7 days. The details
are as follows:
Replay number: 020 3433 3849
Passcode:
9857826
Accompanying slides will be made available at Britishland.com just prior to
the event starting.
For Information Contact
Investors
Sandra Moura, British Land
07989 755535
Media
Charlotte Whitley, British Land
07887 802535
Guy Lamming/Gordon Simpson, FGS Global 020 7251 3801
britishland@finsbury.com
CHIEF EXECUTIVE'S REVIEW
Overview
Since we reported our FY23 results in May, market interest rates have risen
further and are expected to stay higher for longer, but the economy has been
more resilient than expected. We have seen yields continue to move out but, as
we predicted, at a slower pace, and our portfolio Net Equivalent Yield (NEY)
of 6.1% is now 180 bps above the 5 year swap rate. Resilience in the UK
economy combined with our low vacancy and improving fundamentals in our
markets meant rental growth accelerated in the first half. Our portfolio
valuation was down 2.5% with yields 23 bps wider, offset by rental growth of
3.2%.
Strong leasing and tight control of costs meant that underlying earnings per
share has grown by 3.4% and the interim dividend is 4.8% higher. Capital
recycling and smart asset management offset the impact of development spend
and a 2.5% decline in values. As a result, our LTV was largely unchanged at
36.9% (FY23: 36.0%) and Group Net Debt to EBITDA improved from 6.4x at FY23 to
6.0x.
Operational update
We delivered a strong operational performance this half, with 1.6m sq ft of
leasing, 12.2% ahead of ERV, and occupancy remained high at 96.2%. Key deals
in the period included LGC - one of the largest life sciences lettings in the
UK this year - Steamship Mutual, Skidmore Owings & Merrill and a regear
with The Bank of Nova Scotia at Broadgate and regears with H&M, Asda and
Marks & Spencer on our retail parks.
We are benefitting from our value-add strategy in campuses, retail parks and
London urban logistics. These segments have the strongest fundamentals within
the London office, retail and logistics sectors, which is reflected in our 370
bps 1 (#_ftn1) total return outperformance vs the market in the period.
Vacancy across our campuses was 4.2% adjusting for the impact of recently
completed asset management initiatives as we take back space to refurbish it
into lab and innovation space at Regent's Place. This compares to 8.0% 2
(#_ftn2) in the wider London office market and reflects the location of our
campuses which are close to major transport nodes, the quality and
sustainability of our buildings, the provision of great amenities and public
realm as well as the ability of our occupiers to cluster close to other
businesses. As a result, ERV growth for our campuses was 3.2% compared to
2.2% 3 (#_ftn3) in the wider market. Recently, we've seen a noticeable
increase in demand, with 1.8m sq ft of deals in negotiations on 1m sq ft of
space (including near term pipeline), reflecting the quality of our portfolio
and growing customer requirements for best in class workspace.
Our retail parks have an underlying vacancy of 0.8% compared to UK retail
market vacancy of 13.9% 4 (#_ftn4) . Retail parks are retailers' preferred
format due to their affordability, adaptability and accessibility. As a
result, we are seeing ERV growth of 4.0% compared to an ERV decline in the
wider market of 1.0%3 for shopping centres and an increase of 0.7%(3) on the
high street.
Our urban logistics portfolio is focused exclusively on densification and
repurposing opportunities in Central London. Demand is driven by the continued
rise of e-commerce, as well as demand for priority delivery services and
growing carbon concerns. Supply is constrained which has resulted in an
underlying vacancy of 0.2% in our assets compared to 6.7% 5 (#_ftn5) for the
UK big box market.
Strategy
Campuses
Many column inches have been written on the future of the office in a hybrid
world. Early in the pandemic, we formed the view that hybrid working was here
to stay and that London would need less office space, but we did not believe
that the office was dead, rather that the type of workspace businesses would
require would change. We could see that Covid had been a catalyst for most
companies to reevaluate what they wanted from their workspace - their
conclusion: higher quality space to attract and retain talent. We captured
this in a simple mantra that London would need "less, but better space".
Alongside this, we identified that science and technology or 'Innovation and
Life Sciences' as we call it, would be a key growth driver of the UK economy
over the next decade, particularly in the Golden Triangle of Oxford, Cambridge
and London. In 2021, we set about reshaping our office business around these
expectations.
At the heart of this was our successful campus model. Our campuses provide the
great amenity, transport connectivity, public realm and high quality
sustainable buildings that businesses are seeking post pandemic and are also
ideal for the clustering and collaboration which is key to science and
technology businesses. We disposed of the majority of our standalone office
assets, upgraded the quality of our campuses via new developments and
committed to a fourth mixed use campus at Canada Water with our JV partner,
AustralianSuper. Two and half years on, campuses now represent 91% of our
office portfolio and we have an innovation and life sciences pipeline of over
2m sq ft (representing 34% of the current campus portfolio) across the Golden
Triangle.
How will hybrid working impact rental growth?
It is sensible to consider whether a reduction in overall demand from hybrid
working will be a barrier to rental growth in London. This is almost certainly
the case for secondary or even average quality offices, particularly those in
inferior locations where rents are probably falling today. However, across our
portfolio we have seen the opposite, with ERV growing 3.2% over the last 6
months. Why is this? We believe it is due to demand polarising to the best
space as businesses upgrade their workspace to reflect the changing way in
which people work in a hybrid world and increasingly see the workplace as a
key tool for attracting and retaining talent. For example, occupiers want
better end of trip facilities to cater for growing numbers of cyclists, more
breakout space for collaboration and better areas for entertaining staff and
customers, with outside terraces particularly in demand. The elevated cost of
housing in London is causing average commute times to increase, so businesses
have a strong preference for central locations in close proximity to key
transport hubs. The flight to quality is amplified by the need to attract and
retain talent, and that talent not only wants a great place to work, but also
to be in an interesting part of town with great restaurants, bars, coffee
shops and retail and they care about the sustainability credentials of the
building in which they work.
UK headquarters represent around 80% of the space occupied at our campuses.
For obvious reasons, headquarter space is where the demand for best in class
is strongest, but the supply of buildings that meet these requirements is very
constrained. For example, only 0.5% 6 (#_ftn6) of the London office stock is
BREEAM Outstanding (our target for all our developments). Our campuses are
benefiting from this imbalance between demand and supply for best in class
space. This is probably most striking at Broadgate, which is located in the
City. Overall City vacancy is 11.5% 7 (#_ftn7) , however at Broadgate,
vacancy has reduced to just 3.0% and ERV has increased 3.7% in the last 6
months. This reflects the high quality of the space, amenities and public
realm as well as Broadgate's location above Liverpool Street station, a key
transport hub at the intersection of London's traditional financial district,
the artisan quarter of Spitalfields, the creative district of Shoreditch and
the Old Street tech belt.
occupational risks
We regularly ask ourselves the question, what might disrupt the favourable
occupational fundamentals for best in class workspace. Here, we think there
are two key risks. Firstly, the risk of a significant increase in London
unemployment, which might reduce our customers' willingness to invest in the
best space as they would no longer face the same challenges in attracting and
retaining talent. In relation to this risk, we share the view of the majority
of forecasters, that London unemployment should remain low. The second risk we
monitor closely is the potential for an increase in new development or
refurbishments in the core markets we operate in. Here we have good visibility
on the development pipeline, which shows that the supply of best in class
space, to be delivered in 2025 and 2026, that is not already let or under
offer, will be around 2.5m sq ft and 1.4m sq ft respectively. 8 (#_ftn8) This
is significantly below the 4.5m sq ft per annum medium term average take up of
new or refurbished space in core central London.
INNOVATION AND LIFE SCIENCES
On our campuses we are also growing our exposure to innovation and life
sciences occupiers. The life sciences subsector has strong occupational
fundamentals. There is 3.5x 9 (#_ftn9) less space per capita in the UK than
the US and the UK has a deep and affordable talent pool. The UK is already a
world leader in life sciences research concentrated primarily in the Golden
Triangle. The government is keen to support this sector further to make the UK
the global hub for life sciences with an unrivalled ecosystem that brings
together business, researchers, clinicians and patients.
An ecosystem with proximity to leading teaching hospitals, universities and
research institutions is incredibly important to occupiers in this sector. Our
campus at Regent's Place in London's Knowledge Quarter is uniquely located in
this regard. In September, we negotiated with Meta a surrender of its lease of
1 Triton Square - one of the two buildings it has leased at Regent's Place -
for a receipt of £149m. Although they had secured an occupier to take over
their lease, we believe there is more value to be created by taking back the
building given that market rents are now significantly higher than the rent
they were paying. We have a flexible plan to add lab space on the bottom
floors whilst retaining best in class office space on upper floors, which will
accelerate our plans to reposition Regent's Place as London's premier
innovation and life sciences campus.
In Cambridge, given the acute shortage of lab and innovation space we were
pleased to have acquired the Peterhouse Technology Park two years ago, and in
this half we committed to the Peterhouse Extension, a 96,000 sq ft lab enabled
and lab fitted building. We also secured one of the largest life sciences
lettings in the UK with a 48,000 sq ft pre-let to LGC, a leading global life
sciences company, at The Priestley Centre in Guildford.
Retail Parks
The second limb of the strategy we set in 2021, was to grow our exposure to
retail parks. We could see from our leasing activity that retail parks had
become the preferred physical retail format for an increasing number of
retailers due to the three "A's" - affordability, adaptability and
accessibility. The affordability of retail property is generally assessed by
reference to the occupancy cost ratio - rent, rates and service charge as a
percentage of total sales. A combination of reduced rents, lower business
rates, already low service charges and robust sales reduced this ratio from
17.7% in 2016 to 9.1% now - at this level a very broad range of retailers can
trade profitably. Retail parks are highly accessible for consumers as they are
typically located on major arterial roads on the outskirts of towns and cities
with ample free carparking. This makes them ideal not only for shopping, but
for click and collect, returning goods to store and increasingly shipping from
store. The adaptability of a retail park unit, which is essentially a basic
steel box, is an important feature for retailers who face significant
challenges in remodeling stores on the high street and in shopping centres.
The occupational fundamentals combined with low capital expenditure
requirements (half that of shopping centres) and pricing below replacement
cost make retail parks an attractive investment. Consequently, we are
increasing our exposure to parks and have invested £410m since 2021 at an
attractive blended yield of 7.8%. Occupancy of our portfolio has increased to
99%, and over the last 2.5 years retail parks have been the best performing
subsector in UK real estate, and we delivered a total property return of 11.3%
per annum outperforming the wider retail park sector by 270bps.
We are sometimes asked whether the footfall and sales outperformance of retail
parks is just a Covid bounce because they are open air and were perceived to
be safer to visit. We believe it is instead a permanent structural shift
driven by the three "A's" above. Affordability is driving incremental demand
from discounters and essential retailers and accessibility and adaptability
are key for the multichannel retailers. This is borne out by statistics on
store closings and openings - since 2016 there have been net closures 10
(#_ftn10) of -3,749 and -1,272 on the high street and within shopping centres
respectively, but +572 net store openings at retail parks reflecting this
incremental demand.
LONDON Urban Logistics
Our urban logistics strategy is to deliver new space in London by repurposing
assets, like the Finsbury Square carpark, or densifying existing industrial
land with multistorey schemes like our scheme in Enfield. Strong demand is
underpinned by the growth of e-commerce and rising customer expectations on
the speed and convenience of deliveries. Occupiers want to optimize their
distribution operations and lower costs, while at the same time reducing their
carbon footprint and pollution by using e-bikes and e-vehicles for the last
mile logistics. Over the last two decades, significant amounts of industrial
space in London has been converted to other uses, which combined with strong
demand has led to very low vacancy of 0.4% 11 (#_ftn11) in inner London. This
backdrop plays well to our planning expertise and track record of delivering
complex developments in London. Our urban logistics development pipeline has a
gross development value of £1.3bn.
Since our full year results in May we have been busy. We have received
planning consents for our schemes at The Box in Paddington, Mandela Way in
Southwark, and Heritage House in Enfield. In the half we also submitted plans
for approval of our schemes in Verney Road in Southwark, and in Thurrock.
Unsurprisingly, the financials of these projects have changed in the last 18
months. Exit yields and construction costs are higher, however, returns still
look good as we have been able to mitigate these headwinds by increasing the
massing of schemes and rents have grown faster than expected. We are pleased
that returns are also attractive when we use the original purchase price /
land value.
CAPITAL ALLOCATIOn
We actively recycle our capital to create value. Since we launched our new
strategy in 2021, we have disposed of £2.6bn of dry office and non core
retail assets at attractive prices, reinvesting in developments, retail parks
and our London urban logistics pipeline. As a result of this capital
recycling, 89% of the portfolio is now in our chosen segments of campuses,
retail parks and London urban logistics.
Since March 2023 we have disposed of £170m 12 (#_ftn12) of non core assets
including an office and data centre portfolio. We expect to continue to
recycle capital and our priorities for capital allocation remain unchanged.
The resilience of our balance sheet is of utmost importance as it gives the
ability to navigate macroeconomic uncertainties and the flexibility to invest
in opportunities as they arise. In August, Fitch affirmed our Senior Unsecured
credit rating at 'A' with stable outlook. Our LTV is 36.9% (FY23 36.0%), Group
Net Debt to EBITDA is 6.0x (FY23 6.4x) and we have £1.7bn of undrawn
facilities and cash at September.
We will continue to buy retail parks opportunistically. They have strong
occupational fundamentals, values below replacement costs, attractive yields
and are earnings accretive upon acquisition. Developments have created
significant value for us over the years. However, the "higher for longer"
interest rate environment has increased exit yields and finance costs. We have
a disciplined approach to developments and have adjusted our return and yield
on cost requirements to reflect this. Our pipeline is focused on campuses and
London urban logistics, both subsectors where supply of new schemes is
constrained. As a result, we are securing higher than expected rents, which
combined with levelling off construction costs, is resulting in returns above
our investment hurdles. In this half, we committed to one new scheme, the
Peterhouse Expansion, a lab enabled building in Cambridge with a forecast IRR
of 12%. The next projects on our radar are 2 Finsbury Avenue, a scheme at
Broadgate where we are having very constructive pre-letting conversations, The
Box, an urban logistics scheme on our Paddington Central campus and Mandela
Way, a multistorey urban logistics scheme in Southwark.
We remain committed to shareholder distributions. Our dividend policy is to
pay 80% of underlying EPS and we consider other shareholder distributions as
and when appropriate.
SUSTAINABILITY
Our sustainability strategy has three pillars and we have delivered further
good progress against each in the half. Our Greener Spaces pillar is centered
around our commitment to achieving a net zero carbon portfolio by 2030. We
have a pathway and set of targets to reduce both the embodied carbon in our
developments and the operational carbon across our portfolio. In addition, we
have a plan in place to improve the EPC ratings of the portfolio to A or B to
be fully MEES 13 (#_ftn13) compliant by 2030. In the first half of FY24 we
continued to make good progress. We increased the percentage of the portfolio
which is rated EPC A or B to 50%, up from 45% at FY23, and we expect to be
around 60% at FY24. We estimate the total cost to improve the standing
portfolio to EPC A or B to be around £100m, of which two thirds will be
recovered through the service charge. By the end of FY24, we will have spent a
total of £20m on these initiatives, 70% of which will be recovered via the
service charge. We have continued to make good progress reducing the
operational energy and carbon intensity of our portfolio, often in
collaboration with our customers.
Our Thriving Places pillar focuses on our Social Impact strategy. Highlights
in the half included achieving Living Wage accreditation. We recognize that
people are key to the success of our business and have always paid at least
the real Living Wage to our direct employees and across our developments. The
accreditation reflects the work we have done in recent years to encourage our
supply chain to do the same. We also celebrated 10 years of Broadgate connect,
our employment and training scheme that, in partnership with the East London
Business Alliance, connects Broadgate businesses with local talent. Over the
last ten years, £8.9m of social value has been added by the program.
Against our Responsible Choices pillar, we achieved a GRESB rating of 5*, up
from 4* in FY23, for our standing investments and for developments we are a
global leader, retaining our 5* rating and achieving a score of 99/100 14
(#_ftn14) .
Outlook
Macroeconomic and geopolitical uncertainty remains elevated given persistently
high inflation and the wars in the Ukraine and the Middle East. In the near
term, property performance is likely to continue to be dominated by movements
in market interest rates. However, with the portfolio NEY now at 6.1%, 180 bps
higher than the 5 year swap, and an increased likelihood we are approaching
the peak in base rates, we expect the strong occupational fundamentals of our
submarkets to reassert themselves as the primary driver of medium term
performance.
In May, we guided to rental growth in FY24 of 2-4% for campuses and retail
parks and 4-5% in London urban logistics. In September, we upgraded our retail
park rental growth guidance to 3-5%. Taking account of the performance in the
first half and the strong occupational fundamentals, we expect full year
performance to be at the top end of the guidance ranges. In terms of earnings,
we remain comfortable with current market expectations for FY24.
Whilst the economic and geopolitical environment remains uncertain, we expect
to deliver 8-10% total accounting return per annum over the medium term given
our value-add approach and the attractive fundamentals of campuses, retail
parks and London urban logistics.
MARKET
Macro-economic backdrop
Despite the uncertain UK macroeconomic outlook, we are seeing an improvement
in some leading indicators. While GDP forecasts continue to adjust from
quarter to quarter, the UK has thus far avoided a recession, consumer
confidence has been resilient and labour markets have remained robust with
unemployment at 4%.
London office market
In the wake of the mini budget, searches for London office space paused,
impacting take up in the first three quarters of 2023 (calendar year), which
was 25% below the ten year average 15 (#_ftn15) . However, the forward
looking indicators in Q3 are very encouraging with the volume of space under
offer 8% above the 10 year average and active demand 27% higher(15). Demand
remains focused on core markets, with location a critical criteria for
occupiers. The City is performing particularly well with take up in Q3
exceeding the long term average by 5%. The banking and financial sectors
continue to drive activity in both the City and West End, with most larger
deals and under offers, originating from these sectors. We are also seeing
increased demand for larger requirements. There are now 24 active requirements
over 100,000 sq ft, compared with 11 at the start of the year. 16 (#_ftn16)
Furthermore, most of this demand is for best in class space, which is shown in
the high proportion of take up for new buildings, reaching 71% in
September 17 (#_ftn17) . Supply is also constrained, with very low levels of
best in class space being delivered beyond 2025. The result is that we are
seeing strong rental growth for best in class space, particularly new space in
the development pipeline.
Investment markets were subdued in the first half of the year with investors
continuing to exercise caution in a high interest rate environment with
ongoing macroeconomic and geopolitical uncertainty. Total volumes were £2.9bn
across the City and West End compared to £6.6bn in the same period last
year.
Life sciences market
The Golden Triangle remains the focus for innovation and life sciences
occupiers and the current demand supply imbalance for lab space continues to
drive rents in these locations. Take up volumes of life sciences space across
the Golden Triangle remains subdued due to limited supply, with availability
in Cambridge and Oxford being particularly acute. Volumes in the third quarter
of 2023 are 38% below the five year average. 18 (#_ftn18) Demand for space in
the sector is very strong. Active requirements for science and innovation
space in the Golden Triangle totals 2.7m sq ft, far outweighing the existing
supply and space under construction.
Investment volumes in the first half of the year were quiet with debt pricing
impacting transaction volumes across all sectors, including life sciences.
Volumes in the half were £153m across the Golden Triangle compared to £1.9bn
in the same period last year.
Retail market
Occupational markets have been strong in the half as the consumer remained
resilient. Retail parks continue to perform very well with 510 new unit
openings recorded in the first half of 2023 (calendar year), meaning the
market is poised to exceed the long term full year average total of 843 new
openings. 19 (#_ftn19) Retail park vacancy rates remain very low due to
increased demand from retailers who prefer the format and limited supply
coming through.
Investment volumes in the first half were £1.1bn down from £2.3bn in the
same period last year. However, investment volumes are increasing quarter on
quarter, due to the strong occupational fundamentals combined with low capital
expenditure requirements and pricing below replacement cost making them an
attractive investment. Shopping centre volumes in the half were £297m, down
from £661m in the same period last year.
Logistics market
In London, take up in the first half of 2023 (calendar year) was 0.5m sq ft,
tracking slightly below 2022, as businesses have taken more time to consider
larger capital investment in new properties. However, agents report that there
is now significant pent up demand, as excess capacity acquired during 2021 and
2022 is now full. Rents continue to grow, reflecting the strength of demand
for very centrally located space driven by the growth of e-commerce and
increased expectations for priority delivery and lack of available stock,
particularly in London. As a result, inner London vacancy is 0.4%. 20
(#_ftn20)
Investment volumes in the first half were £2.9bn, down from £5.5bn in the
same period last year.
BUSINESS REVIEW
Key metrics
Period ended 30 September 31 March
2023
2023
Portfolio valuation £8,704m £8,898m
Occupancy(1) 96.2% 96.7%
Weighted average lease length to first break 5.0 yrs 5.7 yrs
Six months to: 30 September 30 September
2023 2022
Total property return (0.2)% (1.0%)
- Yield shift +23 bps +17 bps
- ERV movement 3.2% 1.2%
- Valuation movement (2.5)% (3.0%)
Lettings/renewals (sq ft) over 1 year 1.3m 1.1m
Lettings/renewals over 1 year vs ERV +12.2% +14.7%
Gross capital activity £457m £894m
- Acquisitions £55m £47m
- Disposals(2) £(170)m £(694)m
- Capital investment £232m £153m
Net investment/(divestment) £117m £(494)m
On a proportionally consolidated basis including the Group's share of joint
ventures and excluding non-controlling interests
1. Where occupiers have entered CVA or administration but are still liable
for rates, these are treated as occupied. If units in administration are
treated as vacant, then the occupancy rate would reduce from 96.2% to 95.7%.
2. Of which £37m completed post period end.
Portfolio performance
At 30 September 2023 Valuation Valuation movement ERV movement Yield shift Total property return Net equivalent yield
£m
%
%
bps
%
%
Campuses 5,382 (4.0) 3.2 +32 (2.5) 5.3
Central London 4,790 (3.6) 3.3 +32 (2.1) 5.3
Canada Water & other Campuses 474 (9.2) 0.0 +21 (8.4) 5.7
Retail & London Urban Logistics 3,322 0.1 3.3 +12 3.7 6.9
Retail Parks 2,060 0.2 4.0 +13 3.5 6.7
Shopping Centres 751 0.0 2.6 +10 5.1 8.0
London Urban Logistics 270 0.6 3.1 +9 2.0 4.7
Total 8,704 (2.5) 3.2 +23 (0.2) 6.1
See supplementary tables for detailed breakdown
The value of the portfolio was down 2.5% driven by further yield expansion of
23 bps across the portfolio. This was partly offset by positive ERV growth of
3.2%.
Campus valuations were down 4.0%, with our West End portfolio down 2.5% and
City portfolio down 4.6%, reflecting yield expansion of 27 bps and 38 bps
respectively. While investment markets continue to be impacted by
macroeconomic and geopolitical uncertainty, occupational demand has remained
robust, particularly for new, best in class buildings, located next to
transport hubs with strong sustainability credentials. We saw ERV growth of
3.2% across campuses, with 3.5% and 3.2% ERV growth in our City and West End
office portfolio respectively, reflecting leasing activity and limited supply.
The value of our retail park portfolio is marginally up 0.2% in the period,
with strong ERV growth of 4.0%, driven by occupier demand and high occupancy
on our parks, offsetting marginal outward yield shift of 13 bps. The value of
our shopping centres was flat, with a 2.6% increase in ERV offsetting a 10 bps
yield expansion. Transaction volumes remained low, albeit with investor
interest continuing for best in class assets. In London urban logistics,
values increased marginally by 0.6%, with an increase in ERV of 3.1%
offsetting an outward yield shift of 9 bps.
Campus offices outperformed the MSCI benchmark for All Offices and Central
London Offices by 380 bps and 340 bps respectively on a total return basis for
the six months to 30 September 2023. Retail outperformed the MSCI All Retail
benchmark on a total return basis by 330 bps due to our outperformance across
the subsectors, as well as our weighting towards retail parks, which was the
strongest performing retail subsector. Despite the continued strength of
Industrials, our portfolio overall outperformed the MSCI All Property total
return index by 30 bps over the period and by 370 bps on a reweighted basis.
Capital activity
From 1 April 2023 Campuses Retail & London Urban Logistics Total
£m
£m
£m
Purchases - 55 55
Sales(1) (144) (26) (170)
Development Spend 188 3 191
Capital Spend 16 25 41
Net Investment 60 57 117
Gross Capital Activity 348 109 457
On a proportionally consolidated basis including the Group's share of joint
ventures and excluding non-controlling interests
1. Of which £37m completed post period end
The total gross value of our capital activity since 1 April 2023 was £457m.
The most significant transaction was the sale of six office and data centres
from the Cable and Wireless portfolio for £125m 21 (#_ftn21) , reflecting a
net initial yield (NIY) of 4.6%, 13% ahead of book value.
We continue to be disciplined in our approach to capital recycling within the
retail portfolio. Since April 2023, we've disposed of non core assets
including superstores in Burton on Trent and Coleraine for £8m and £10m. We
also completed the purchase of Westwood Retail Park in Thanet for £55m (NIY
8.1%). This is a dominant retail park within the catchment area, which
benefits from excellent accessibility and is let to a strong mix of retailers.
At Peterhouse in Cambridge, we've committed to a 96,000 sq ft office and lab
building, on the land adjacent to the Peterhouse Arm Headquarters. Start on
site commenced in July 2023 with PC targeted for January 2025 and we are
having encouraging discussions with potential occupiers to pre-let this space.
Campuses
Key metrics
Period ended 30 September 31 March
2023
2023
Portfolio valuation £5,382m £5,650m
Occupancy 93.8% 96.2%
Weighted average lease length to first break 5.8 yrs 7.2 yrs
Six months to 30 September 30 September
2023 2022
Total property return (2.5)% (1.3)%
- Yield shift +32 bps +18 bps
- ERV growth 3.2% 1.6%
- Valuation movement (4.0)% (2.7)%
Total lettings/renewals (sq ft) 368,000 494,000
Lettings/renewals (sq ft) over 1 year 265,000 433,000
Lettings/renewals over 1 year vs ERV +7.5% +18.4%
Like-for-like income(1) +0.6% +4.0%
On a proportionally consolidated basis including the Group's share of joint
ventures and excluding non-controlling interests
1. Like-for-like excludes the impact of surrender premia, CVAs & admins,
provisions for debtors and tenant incentives, and Storey. Including Storey
like-for-like income would be -2.1% in H1 FY24 and +9.2% for H1 FY23
Campus operational review
Campuses were valued at £5.4bn, down 4.0%. This was driven by yield expansion
of 32 bps, which was partly offset by ERV growth of 3.2%. Lettings and
renewals totalled 368,000 sq ft, 7.5% ahead of ERV and 19.4% above previous
passing rent. Weighted average lease length is 5.8 years. Across our campuses,
we are under offer on a further 281,000 sq ft, 9.7% ahead of ERV.
Campus like-for-like income growth was +0.6% in the period driven by strong
leasing and asset management activity, particularly at Broadgate and
Paddington, which added £5m. The timing of lease events can create
fluctuations to our income and we saw £4m of like-for-like campus expiries in
the period. This was the case at Storey and even more evident at Regent's
Place, where, as leases have expired, we have taken the opportunity to convert
space for innovation and life sciences. As a result, occupancy was 93.8%,
slightly down compared to March 2023. If we adjust for the recently completed
asset management initiatives at Regent's Place, occupancy across the portfolio
was 95.8%.
Our campuses provide the great amenity, transport connectivity, public realm
and high quality sustainable buildings that businesses are seeking post
pandemic. Across our standing portfolio, we benefit from a diverse group of
high quality customers across financial, corporate, science, health,
technology and media sectors.
Broadgate
Broadgate saw a valuation decline of 4.9% predominantly driven by outward
yield shift of 35 bps, partially offset by ERV growth of 3.7%. Occupancy has
increased to 97.0% from 94.9% six months ago, reflecting the high quality of
the space, amenities and public realm as well as its location next to
Liverpool Street station, a key transport hub at the intersection of London's
financial district, the artisan quarter of Spitalfields, the creative district
of Shoreditch and the Old Street tech belt. Leasing activity at Broadgate
(excluding Storey) covered 135,000 sq ft, of which 124,000 sq ft were long
term deals, 1.8% ahead of ERV. The most significant deal was a regear to the
Bank of Nova Scotia at Broadgate Tower, covering 39,000 sq ft, extending their
lease to 2035. There is a further 155,000 sq ft under offer, 8.3% ahead of
ERV. We are seeing strong demand for developments at Broadgate and are in
discussions on a potential pre-let at 2 Finsbury Avenue.
We are making good progress on asset management initiatives to improve the
sustainability credentials of several buildings on the campus. At 10 Exchange
Square, LED lighting has been installed bringing the building's EPC rating to
B and at 201 Bishopsgate, the installation of all electric heating has
improved the building's EPC rating to B. Looking ahead to the next six months,
we are targeting an EPC B rating at 199 Bishopsgate, where we have taken the
opportunity to incorporate energy efficient interventions at little
incremental cost since they are part of the wider refurbishment.
Our social impact initiatives continue to focus on forging connections between
our occupiers and local communities and we were pleased to have run a
successful pilot of the Social Mobility Business Partnership's Insights and
Skills Programme alongside one of our occupiers. Through the Young Readers
Programme, in partnership with the National Literacy Trust, 190 school
children participated in activities across the campus.
Regent's Place
Regent's Place saw valuation declines of 1.6%, driven by outward yield shift
of 28 bps, which has been offset by ERV growth of 2.0%. Occupancy at the
campus is 87.6% due to the timing of recently completed asset management
initiatives, as we take back space on the campus to refurbish it into lab and
innovation space. If we adjust for this, occupancy is 93.9%. We currently have
122,000 sq ft of space under offer and in negotiations at Regent's Place
across 20 Triton Street and 350 Euston Road.
In September, we negotiated with Meta a surrender of its lease of 1 Triton
Square - one of the two buildings it has leased at Regent's Place - for a
receipt of £149m. Although Meta had secured an occupier to take over their
lease, we believed there was more value to be created by taking back the
building given that market rents are now significantly higher than the rent
they were paying. We have a flexible plan to add a mix of fitted and lab
enabled space and Storey, our flexible office product, on the bottom floors
whilst retaining best in class office space on upper floors. Our Innovation
Advisory Council, established in May, which is formed of five leading research
scientists and executives, is working with us on this initiative.
Regent's Place continues to gain momentum as a life sciences and innovation
hub. In the half, we have signed an Agreement for Lease with Impact Hub
London, the incubator behind innovation and life science organisations in the
Knowledge Quarter, to take the affordable workspace at 1 Triton Square. As
part of this agreement, the Knowledge Quarter HQ will be located there. This
builds on the Memorandum of Understanding we signed with UCL in May, which
will give our occupiers access to their technical services and facilities. It
will also mean we are in partnership with an organisation that is a very
effective incubator for spin out businesses and the next generation of
occupiers.
Our social programmes at Regent's Place include partnering with Hypha Studios,
a charity matching creatives with empty spaces across London. The organisation
has opened at a vacant retail unit in Euston Tower, which will feature
exhibitions from local artists. In addition, Little Village, a baby bank, will
open on the campus. Through the Young Readers Programme, in partnership with
the National Literacy Trust, 150 school children participated in activities
across the campus.
Paddington Central
Paddington Central saw valuation declines of 8.9% driven by outward yield
shift of 50 bps. This has been partially offset by ERV growth of 9.3%. With
occupancy at the campus very high at 99.7%, leasing activity (excluding
Storey) covered 95,000 sq ft, 6.9% ahead of ERV. We are under offer on a
further 27,000 sq ft to a life sciences occupier at 3 Sheldon Square, which is
currently under refurbishment. The building is already 65% pre-let to Virgin
Media O2 and this deal would take it to 86% pre-let four months ahead of
completion.
As part of our social impact initiatives, we continue to provide affordable
space to the Ukrainian Institute to run their English language courses. To
date, the classes have benefitted 1,020 displaced Ukrainians, with 760
individuals gaining English qualifications. In partnership with occupiers on
the campus, we hosted Mastering My Future insight days for 26 young people to
experience different careers at Paddington Central. Through the Young Readers
Programme, in partnership with the National Literacy Trust, 196 school
children participated in activities across the campus.
Storey: our flexible workspace offer
Storey is part of our campus proposition and provides occupiers with the
flexibility to expand and contract depending on their requirements. The
quality of the space, central location and access to campus amenities make the
space appealing to scale up businesses for their HQ's. Customers on our
campuses also benefit from access to ad hoc meeting and events space at Storey
Club and this service is an increasingly important factor when making
workspace decisions.
Storey is currently operational across 300,000 sq ft, with a further 44,000 sq
ft in the pipeline, including 35,500 sq ft at 201 Bishopsgate on our Broadgate
campus, which is due to complete in Q2 2024 and 7,500 sq ft at 2 Kingdom
Street on our Paddington campus completing in May 2024.
Leasing activity covered 71,000 sq ft in the half. Storey rents (after
property operating expenses) command an average premium over traditional net
effective rents of 18% across the stabilised portfolio. Storey occupancy is at
87% due to timings of expiries.
Canada Water
The valuation of Canada Water declined 10.1%, driven by a 35 bps outward yield
shift on the offices. The first phase of the Canada Water development, which
comprises a mix of workspace, retail, leisure and residential is progressing
well and is on programme. Roberts Close (K1), which consists of 79 affordable
homes is on track to complete at the end of the calendar year. 1-3 Deal
Porters Way (A1), which is a mix of 186 residential units (The Founding) and
workspace and The Dock Shed (A2), workspace with a leisure centre on the
ground floors is due to complete in Q4 2024.
We are targeting rents on the workspace from £50 psf. Residential sales for
The Founding launched in February and current sales are above targeted pricing
levels, achieving in excess of £1,250 psf, which is attractive relative to
competing schemes.
The London Borough of Southwark held an initial 20% interest in the scheme and
has the ability to participate in the development up to a maximum of 20% with
returns pro-rated accordingly. Although it has elected not to fully
participate in Phase 1, Southwark has pre-purchased the 79 affordable homes at
Roberts Close and have part funded the 55,000 sq ft leisure centre in The Dock
Shed.
In the period, we achieved planning consent for Zone G of the Masterplan,
which includes a replacement Tesco store, 384 homes of which 42% are
affordable housing, some smaller flexible retail space and a new 3.5 acre
public park. We are intending to submit our revised plans for a cultural and
office scheme at the Printworks, in Zone H of the Masterplan shortly which
together with the planning permissions received in July 2022 for Zones L and
F, represent the next phases of the Canada Water Masterplan.
Building on the success of the TEDI modular campus we recently completed the
build of a 33,000 sq ft modular innovation campus on the site. We have
completed our first letting to CheMastery, a startup aiming to increase the
efficiency of chemical research and manufacturing. We are under offer on
additional space to a clean energy tech business with good interest from other
life science and innovation businesses for the remainder. Canada Water is well
located to cater to innovation and life sciences businesses, due to its
proximity to three leading teaching and research hospitals including Guy's
Hospital in London Bridge, St Thomas' Hospital in Waterloo and King's College
Hospital in Denmark Hill.
Retail & London Urban Logistics
Key metrics
Period ended 30 September 31 March
2023
2023
Portfolio valuation £3,322m £3,248m
- Of which Retail Parks £2,060m £1,976m
- Of which Shopping Centres £751m £746m
- Of which London Urban Logistics £270m £263m
Occupancy(1) 98.4% 97.3%
Weighted average lease length to first break 4.5 yrs 4.6 yrs
Six months to 30 September 30 September
2023 2022
Total property return 3.7% (0.3)%
- Yield shift +12 bps +17 bps
- ERV growth 3.3% 0.6%
- Valuation movement 0.1% (3.6)%
Total lettings/renewals (sq ft) 1,225,000 1,017,000
Lettings/renewals (sq ft) over 1 year 1,049,000 698,000
Lettings/renewals over 1 year vs ERV +14.2% +10.3%
Like-for-like income(2) +5.2% +0.8%
On a proportionally consolidated basis including the Group's share of joint
ventures and excluding non-controlling interests
1. Where occupiers have entered CVA or administration but are still liable
for rates, these are treated as occupied. If units in administration are
treated as vacant, then the occupancy rate for Retail would reduce from 98.4%
to 97.5%.
2. Like-for-like excludes the impact of surrender premia, CVAs & admins
and provisions for debtors and tenant incentives.
Retail & London Urban Logistics operational review
Valuations in these subsectors have stabilised in the half. Retail park and
London urban logistics values were up 0.2% and 0.6% respectively, slightly
outperforming shopping centres, which were flat. Average rental growth across
the three subsectors was 3.3% in the half, exceeding the 3% growth delivered
in 12 months to March 2023, and offsetting marginal yield increase of 12 bps,
as the impact of rising interest rates have largely now fed through.
Occupationally, retail ERVs continue to grow with retail parks performing
strongly in the half. ERVs were up 4.0% and 2.6% for retail parks and shopping
centres respectively.
We continue to lease well, with 1.2m sq ft of deals signed in the period, of
which half were at our retail parks. Deals completed over the period were
14.2% ahead of ERV and 9.5% below previous passing rent. Occupancy across the
three subsectors remains high at 98.4%. Like-for-like income was up £6m
(5.2%) as we kept our retail parks full and filled vacant space in our
shopping centres.
Weighted average lease length is 4.5 years. We had 344,000 sq ft of rent
reviews that were agreed 0.2% above previous passing rent. In total, we have
844,000 sq ft of deals under offer, 20.5% above March 2023 ERV.
Retail Parks
We continue to see significant leasing momentum across our retail parks with
629,000 sq ft of deals signed in the half, 14.9% above ERV and 8.3% below
previous passing rent. We have a further 697,000 sq ft under offer, 19.3%
above ERV and 8.9% below previous passing rent. Occupancy remains high at 99%,
reflecting strong demand and limited supply. Retail parks are the preferred
format for a wide range of customers due to the format's affordability,
adaptability and accessibility, which in September, led us to upgrade ERV
growth guidance from 2-4% to 3-5%.
Key deals in the half include five deals with Frasers Group totaling 72,000 sq
ft, including Sports Direct doubling in size at Teesside Park and Wheatley
Retail Park and a new letting to FLANNELS at Teesside Park. At Glasgow Fort,
fashion retailer Primark took 23,000 sq ft of new space and ZARA opened their
37,000 sq ft flagship store. At Teesside Park, we've exchanged on 165,000 sq
ft of leasing in the half, including 43,000 sq ft to value retailer B&M,
with a further 55,000 sq ft under offer. We have also agreed four lease
renewals with Asda totaling 88,000 sq ft and 3 deals with Hotel Chocolat
covering 11,000 sq ft.
Shopping Centres
We continue to actively manage our shopping centres improving occupancy and
driving rents forward. We have completed 500,000 sq ft of deals, on average
13.1% ahead of ERV and 12.7% below previous passing rent. This activity
improved occupancy which is now at 96.8%. Notable recent deals include 124,000
sq ft to Frasers Group in the former Debenhams at Meadowhall and 43,000 sq ft
to Inditex (Zara) also at Meadowhall.
LONDON URBAN LOGISTICS
In London urban logistics we've assembled a 2.9m sq ft pipeline with a GDV of
£1.3bn. We continue to make good progress, with planning consent achieved at
The Box in Paddington, Mandela Way in Southwark and Heritage House in Enfield,
in the half. We have also submitted planning for a second multi-storey scheme
at Verney Road in Southwark and we expect to commit to The Box and Mandela Way
shortly.
Retail Footfall and Sales
02 April 2023 - 30 September 2023
% of 2022(1) Benchmark
outperformance(2,3)
Footfall
- Portfolio 101.0% n/a
- Retail Parks 99.6% n/a
Sales
- Portfolio 106.3% 270 bps
- Retail Parks 107.6% 395 bps
1. Compared to the equivalent weeks in 2022
2. Footfall benchmark: Springboard Overall & Springboard Retail Parks
only
3. Sales benchmark: BRC UK Total Instore retail sales
Developments
At 30 September 2023 Sq ft Current Value Cost to complete ERV ERV
'000
£m
£m
£m
Let & under offer
£m
Committed 1,916 783 417 70.8 27.2
Near term 1,872 528 742 96.9 -
Medium term 8,235 - - - -
Total pipeline 12,023 1,311 1,159 167.7 27.2
On a proportionally consolidated basis including the Group's share of joint
ventures (except area which is shown at 100%)
Development Pipeline
Developments are a key driver of long term value creation for British Land.
Altogether, we expect our development pipeline to deliver profits of around
£1.4bn. Against a backdrop of higher interest rates, which have pushed yields
out and impacted funding costs, we have increased the return hurdles for our
new developments. We now target IRRs of 12-14% on our campuses and mid teens
on our London urban logistics developments. Because we are in the right parts
of our markets with good supply demand tension, we are securing higher rents.
Higher funding costs have resulted in limited new supply coming on stream and
construction cost inflation appears to be levelling off.
We are currently on site with 1.9m sq ft of space, which will target BREEAM
Outstanding (for offices) and Excellent (for retail), delivering £70.8m of
ERV, with 38% already pre-let or under offer. Excluding build to sell
residential and retail space, which we will let closer to completion, we are
43% pre-let or under offer by ERV. Total development exposure is now 4.9% of
portfolio gross asset value. Speculative exposure, which is based on ERV and
includes space under offer, is 7.7% and within our internal risk parameter of
12.5%.
Against a backdrop of rising inflation and given broader market uncertainty,
development valuations were down 2.6% driven primarily by outward yield shift.
Committed Developments
Our committed pipeline stands at 1.9m sq ft and in the period we have
committed to the Peterhouse Expansion in Cambridge, delivering a 96,000 sq ft
office and lab building, into a highly constrained market.
The development of 1 Broadgate is progressing on programme and the office
space is fully pre-let or under option to JLL and Allen & Overy,
demonstrating the strong demand for best in class, sustainable buildings.
Norton Folgate is on track to complete later this year. We have let over a
third of the office space to Reed Smith, and are having good discussions with
a range of occupiers on the rest of the space.
3 Sheldon Square is currently undergoing a full refurbishment, significantly
minimising the embodied carbon of the development by retaining and reusing the
existing structure and materials. The building is already 65% let to Virgin
Media O2, which signed 83,000 sq ft for their UK Headquarters in February 2023
and we are in negotiations on a further 27,000 sq ft of space, which will take
the building to 86% let ahead of completion in Q1 2024.
We are making good progress on the development of the first phase of Canada
Water, which comprises of three buildings covering 578,000 sq ft. We are
targeting BREEAM Outstanding on all the commercial space, BREEAM Excellent on
retail and a minimum of HQM One 4(* 22 (#_ftn22) ) for private residential.
The development of phase 2 at Aldgate Place is progressing to plan. The scheme
comprises 159 premium rental apartments with 19,000 sq ft of office space and
8,000 sq ft of retail and leisure space. It is well located, adjacent to
Aldgate East and between Liverpool Street and Whitechapel stations. Completion
is expected in Q2 2024.
We are also on site with an 84,000 sq ft development at The Priestley Centre
in Guildford, which will be a mix of innovation and lab enabled space. The
building is already 62% pre-let to LGC, a leading global life sciences
company, ahead of completion in Q1 2024.
Committed Developments
As at 30 September 2023 Sector BL Share 100% sq ft PC Calendar Year ERV Gross Yield on Cost(2) %
%
'000
£m(1)
The Priestley Centre Life Sciences 100 84 Q1 2024 3.3 8.1
Norton Folgate Office 100 335 Q4 2023 24.4 5.4
3 Sheldon Square Office 25 140 Q1 2024 2.6 6.4
Aldgate Place, Phase 2 Residential 100 138 Q2 2024 6.7 5.0
Peterhouse Western Expansion Life Sciences 100 96 Q1 2025 4.7 6.4
1 Broadgate Office 50 545 Q2 2025 20.0 6.0
Canada Water(3)
Roberts Close (Plot K1) Residential 50 62 Q4 2023 - blended
7.0
1-3 Deal Porters Way (Plot A1) Mixed use 50 270 Q4 2024 3.6
The Dock Shed (Plot A2) Mixed use 50 246 Q4 2024 5.5
Total Committed 1,916 70.8
1. Estimated headline rental value net of rent payable under head leases
(excluding tenant incentives).
2. Gross yield on cost is calculated by dividing the ERV of the project by the
total development costs, including the land value at the point of commitment,
and any actual / estimated capitalisation of interest.
3. The London Borough of Southwark has confirmed they will not be investing
in Phase 1, but retain the right to participate in the development of
subsequent plots up to a maximum of 20% with their returns pro-rated
accordingly.
Reflecting the higher interest rate environment exit yields are c.100 bps
higher than when we committed to Norton Folgate, 1 Broadgate, Aldgate and
Canada Water Phase 1, which has reduced their IRRs to c.3% (compared to a
negative total return for MSCI over this period 23 (#_ftn23) ). There is
c.£70m of profit to come on these schemes. We expect the IRRs and profit to
come to improve given the strong rental growth we are seeing in our markets.
On the remaining projects we committed to after summer 2022, the outward shift
in yields has been less (c.50 bps) and they are forecast to make c.12% IRRs
off the original land values.
Near Term Pipeline
Our near term pipeline covers 1.9m sq ft. The largest scheme is 2 Finsbury
Avenue, where we have planning consent for a 747,000 sq ft best in class,
sustainable office building at Broadgate. We are already having very positive
pre-let discussions on the building and although the development is not
committed, we have commenced demolition and basement works to improve
optionality. 1 Triton Square is now part of our near term pipeline, where we
have the opportunity to repurpose the building for innovation and life
sciences occupiers. We have a flexible plan to add lab space and Storey on the
bottom floors whilst retaining best in class office space on upper floors.
Our near term pipeline also includes our first three London urban logistics
developments, The Box at Paddington, Mandela Way in Southwark and Verney Road
also in Southwark. In the half, we achieved planning consent for Mandela Way
and The Box, and we have submitted planning for a multi-storey scheme at
Verney Road in Southwark. We expect to commit to The Box and Mandela Way
shortly. These schemes have IRRs of around 20% and will provide flexible space
for a range of customers.
Medium Term Pipeline
Our medium term pipeline covers 8.2m sq ft, the largest of which are the
future phases of the Canada Water Masterplan, which accounts for 4.2m sq ft
and Euston Tower, where we have an exciting opportunity to deliver a highly
sustainable innovation and lab enabled building in London's Knowledge Quarter.
London urban logistics opportunities account for 2.4m sq ft of medium term
opportunities. This includes Thurrock, where we have submitted plans for a
644,000 sq ft two-storey logistics scheme east of London; Heritage House,
Enfield where we have achieved planning for a two-storey logistics scheme
totalling 437,000 sq ft and Hannah Close in Wembley, where there is potential
to deliver 668,000 sq ft of well located, multi-storey urban logistics space,
within the M25.
FINANCE REVIEW
Six months to 30 September 30 September
2023 2022(1)
Underlying Profit(2,3) £142m £138m
Underlying earning per share(2,3) 15.2p 14.7p
IFRS (loss) after tax £(61)m £(32)m
Dividend per share 12.16p 11.60p
Total accounting return(2) (2.0)% (2.8)%
As at 30 September 31 March
2023 2023
EPRA Net Tangible Assets per share(2,3) 565p 588p
EPRA Net Disposal Value per share(2,3) 594p 606p
IFRS net assets £5,367m £5,525m
LTV(4,5,6) 36.9% 36.0%
Net Debt to EBITDA (Group)(4,7) 6.0x 6.4x
Net Debt to EBITDA (proportionally consolidated)(4,5) 8.0x 8.4x
Weighted average interest rate(5) 3.4% 3.5%
Senior Unsecured credit rating A A
1. Prior period comparatives have been restated for a change in accounting
policies in respect of rental concessions and tenant deposits (as disclosed in
Note 1 of the condensed interim financial statements).
2. See Note 2 to condensed interim financial statements for definition and
calculation.
3. See Table B within supplementary disclosures for reconciliations to IFRS
metrics.
4. See Note 9 to condensed interim financial statements for definition,
calculation and reference to IFRS metrics.
5. On a proportionally consolidated basis including the Group's share of
joint ventures and excluding non-controlling interests.
6. EPRA Loan to value is disclosed in Table E of the condensed interim
financial statements.
7. Net Debt to EBITDA on a Group basis excludes non-recourse and joint venture
borrowings, and includes distributions from non-recourse companies and joint
ventures.
Overview
Operational momentum continued in the period driven by like-for-like rental
growth, a tight grip on costs and collection of historic Covid arrears.
Underlying Profit and Underlying earnings per share (EPS) were up 3.4% at
£142m and 15.2p respectively. Based on our policy of setting the dividend at
80% of Underlying EPS, the Board has proposed an interim dividend of 12.16p
per share, up 4.8%. The growth in the dividend is higher than Underlying EPS
growth due to the impact of the rental concession restatement in the prior
period.
IFRS loss after tax for the period to 30 September 2023 was £61m, compared
with a loss after tax for the prior period to 30 September 2022 of £32m. The
movement period on period primarily reflects a larger downward valuation
movement on the Group's properties and those of its joint ventures, lower net
capital finance income from mark-to-market gains on the derivatives hedging
the interest rate on our debt, which is offset by the capital uplift from the
surrender premium received at 1 Triton Square.
Overall valuations have fallen by 2.5% on a proportionally consolidated basis
resulting in a decrease in EPRA NTA per share of 3.9%. Including dividends of
11.04p per share paid during the period, total accounting return was -2.0%.
Group Net Debt to EBITDA improved by 0.4x to 6.0x, and Net Debt to EBITDA on a
proportionally consolidated basis also improved by 0.4x to 8.0x, driven by the
growth in Underlying earnings and capital activity in the period.
Loan to value (LTV) on a proportionally consolidated basis has increased
marginally by 90 bps from 36.0% at 31 March 2023 to 36.9% at 30 September
2023. This reflects the valuation declines noted above and capital expenditure
on our committed development pipeline, largely offset by the sale of an office
and data centre portfolio and the 1 Triton Square surrender receipt, both of
which completed in September 2023.
Our financial position remains strong with £1.7bn of undrawn facilities and
cash as at 30 September 2023. Based on our current commitments and facilities,
we have no requirement to refinance until mid-2026.
We continue to have good access to finance markets. Since March we completed
£600m of financing activity for the Group. This included the extension of
£250m in two existing RCFs by an additional year to 2028, and post period end
we completed four new 5 year term loans totalling £350m, also maturing 2028,
on favourable terms.
Our weighted average interest rate at 30 September 2023 was 3.4%, a 10 bps
decrease from 31 March 2023. The impact of increased rates on our interest
costs is limited by our hedging which includes fixed rate debt, interest rate
swaps to fixed rate and caps where the strike rates are below current SONIA.
The interest rate on our debt is 99% hedged for the six months to March 2024
and, 84% hedged on average over the next five years.
We have an advantageous debt structure with access to diverse sources of
finance through debt raised by British Land for the Group and in our joint
ventures. Debt in British Land (except for the legacy debentures) is unsecured
with no interest cover covenants. We retain significant headroom to our
unsecured debt covenants; at September 2023 the Group could withstand a fall
in asset values across the portfolio of 45% before reaching the covenant
limits, prior to taking any mitigating actions. Joint venture debt is secured
on the assets of the relevant entity, non-recourse to the Group, and the
majority is "covenant light" with no LTV default covenants.
Fitch Ratings, as part of their annual review in August 2023, affirmed all our
credit ratings with a stable outlook, including the Senior Unsecured rating at
'A'.
Underlying Profit
£m
Underlying Profit for the six months ended 30 September 2022 138
Disposals (7)
Acquisitions 3
Developments (7)
Like-for-like net rent 4
CVAs, administrations and provisions for debtors and tenant incentives 9
Net finance costs, administrative costs & fee income 2
Underlying Profit for the six months ended 30 September 2023 142
1. Prior year comparatives have been restated for a change in accounting
policy in respect of rental concessions (as disclosed in Note 1 of the
condensed interim financial statements).
Underlying Profit increased by £4m, with like-for-like net rental growth,
strong cost control, improved fee income, and the collection of historic Covid
arrears offsetting the impacts of net divestment and properties going into
development and the incremental finance costs associated with our development
pipeline.
Underlying Profit for the period reduced by £7m as a result of the £0.9bn
disposal of mature assets (primarily the sale of a 75% interest in the
majority of our assets in Paddington Central) over the last 18 months. This
was offset by the £0.2bn of acquisitions in Retail Parks, London Urban
Logistics and innovation opportunities which resulted in a £3m increase to
Underlying Profit.
Proceeds from sales have been deployed into our development pipeline and value
accretive acquisitions. Our committed schemes are expected to generate an ERV
of £70.8m, of which 38% is already pre-let or under offer. In the period
developments reduced Underlying Profit by £7m as properties have moved into
development and finance costs increased due to incremental spend. Interest on
development expenditure is capitalised at the Group's weighted average
interest rate at 30 September 2023 of 2.6% (30 September 2022: 3.0%) which is
currently below the Group's marginal cost of borrowing.
Like-for-like net rental growth across the portfolio was 2.1% in the period,
adding £4m to net rents.
CVAs, administrations and provisions made against debtors and tenant
incentives improved by £9m compared to the prior period. This improvement is
primarily due to the one-off collection of Covid arrears relating to Arcadia
in the period of £12m.
Administrative costs were £1m lower period on period as we continue to focus
on cost control, whilst fee income from our joint ventures increased £2m.
Finance costs were £1m higher.
Presentation of financial information and alternative performance measures
The Group financial statements are prepared under IFRS (UK-adopted
International Accounting Standards) where the Group's interests in joint
ventures are shown as a single line item on the income statement and balance
sheet and all subsidiaries are consolidated at 100%.
Management considers the business principally on a proportionally consolidated
basis when setting the strategy, determining annual priorities, making
investment and financing decisions and reviewing performance. This includes
the Group's share of joint ventures on a line-by-line basis and excludes
non-controlling interests in the Group's subsidiaries. The financial key
performance indicators are also presented on this basis.
A summary income statement and summary balance sheet which reconcile the Group
income statement and balance sheet to British Land's interests on a
proportionally consolidated basis are included in Table A within the
supplementary disclosures.
Management uses a number of performance metrics in order to assess the
performance of the Group and allow for greater comparability between periods,
however, does not consider these performance measures to be a substitute for
IFRS measures.
Management monitors Underlying Profit as it is an additional informative
measure of the underlying recurring performance of our core property rental
activity and excludes the non-cash valuation movement on the property
portfolio when compared to IFRS metrics. It is based on the Best Practices
Recommendations of the European Public Real Estate Association (EPRA) which
are widely used alternate metrics to their IFRS equivalents, with additional
Company adjustments when relevant (see Note 2 in the condensed interim
financial statements for further detail).
Management monitors EPRA NTA as this provides a transparent and consistent
basis to enable comparison between European property companies. Linked to
this, the use of Total Accounting Return allows management to monitor return
to shareholders based on movements in a consistently applied metric, being
EPRA NTA, and dividends paid.
Loan to value (proportionally consolidated) and Net Debt to EBITDA (Group and
proportionally consolidated) are monitored by management as key measures of
the level of debt employed by the business to meet its strategic objectives,
along with a measurement of risk. It also allows comparison to other property
companies who similarly monitor and report these measures. The definitions and
calculations of Loan to value and Net Debt to EBITDA are shown in Note 9 of
the condensed interim financial statements.
Income statement
1.1 Underlying Profit
Underlying Profit is the measure that we use to assess income performance.
This is presented below on a proportionally consolidated basis. In the period
to 30 September 2023, £25m of rent receivable, £149m of surrender premia
receivable, and £54m of tenant incentive impairment were excluded from the
calculation of Underlying Profit(1) (see Note 2 of the condensed interim
financial statements for further details). No company adjustments were made in
the period to 30 September 2022.
Six months to Section 30 September 30 September
2023 2022(2)
£m
£m
Gross rental income 246 253
Property operating expenses (15) (24)
Net rental income 1.3 231 229
Net fees and other income 11 9
Administrative expenses 1.4 (43) (44)
Net financing costs 1.5 (57) (56)
Underlying Profit 142 138
Underlying tax (1) (1)
Non-controlling interests in Underlying Profit 1 1
EPRA and Company adjustments(3) (203) (170)
IFRS (loss)/profit after tax 2 (61) (32)
Underlying EPS 1.2 15.2p 14.7p
IFRS basic EPS 2 (6.6)p (3.5)p
Dividend per share 3 12.16p 11.60p
1. On 25 September 2023, the Group completed a deed of surrender in relation
to an in-force lease of one of its investment properties. The consideration
for the surrender was a £149m premium paid by the tenant on the completion
date. In line with the requirements of IFRS 16, the surrender transaction
was treated as a modification to the lease, with the surrender premium
received recognised in full through the income statement at the point of
completion, which represented the modified termination date of the lease. At
the point of modification, the lease had associated tenant incentive balances
of £54m, and as the right to receive these amounts was extinguished through
the lease modification, with an impairment recognised in full through the
income statement at the point of completion. Also at the point of
modification, the lease had an associated deferred lease premium balance of
£25m, which in line with the surrender premium received, was recognised in
full through the income statement at the point of completion. Owing to the
unusual and significant size and nature of this transaction, and in line with
the Group's accounting policies, all elements of the transaction have been
included within the Capital and other column of the income statement.
2. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions (as disclosed in Note 1 of the
condensed interim financial statements).
3. EPRA adjustments consist of investment and development property
revaluations, gains/losses on investment and trading property disposals,
changes in the fair value of financial instruments, associated close out costs
and related deferred tax. Company adjustments consist of items which are
considered to be unusual and/or significant by virtue of their size or nature.
These items are presented in the 'capital and other' column of the
consolidated income statement.
1.2 Underlying EPS
Underlying EPS was 15.2p, up 3.4%. This reflects the Underlying Profit
increase of 3.4%, and the £1m tax charge in the period.
1.3 Net rental income
£m
Net rental income for the six months ended 30 September 2022 229
Disposals (12)
Acquisitions 6
Developments (5)
Like-for-like net rent 4
CVAs, administrations and provisions for debtors and tenant incentives 9
Net rental income for the six months ended 30 September 2023 231
1. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions (as disclosed in Note 1 of the
condensed interim financial statements).
Disposals of income producing assets over the last 18 months reduced net rents
by £12m in the period, primarily relating to the sale of a 75% interest in
the majority of our assets in Paddington Central. The proceeds from sales are
being reinvested into value accretive acquisitions and developments.
Acquisitions have increased net rents by £6m, primarily as a result of the
purchase of nearly £0.2bn retail parks in Farnborough, Preston, and Thanet.
Developments have decreased net rents by £5m, driven by 3 Sheldon Square
going into development and a one-off rate rebate received on Euston Tower in
the prior period, where we de-rated it for development. The committed
development pipeline is expected to deliver £70.8m of ERV in future years.
Like-for-like net rental growth across the portfolio was 2.1% in the period,
adding £4m to net rents.
Campus like-for-like net rental growth was driven by strong leasing and asset
management activity, adding £5m to net rents in the period, offset by
expiries which reduced net rent by £4m. Storey like-for-like rent declined by
£2m, impacted by the timing of expiries. Like-for-like net rental growth for
Retail & London Urban Logistics was £6m, reflecting good leasing in
Shopping Centres and continued high occupancy on our Retail Parks.
CVAs, administrations and provisions made against debtors and tenant
incentives improved by £9m compared to the prior period. This improvement is
primarily due to the collection of Covid arrears relating to Arcadia in the
period of £12m. We also continue make good progress on prior year debtors
with cash collection now in line with pre-pandemic levels.
1.4 Administrative expenses
Administrative expenses of £43m in the period are marginally lower period on
period, despite the inflationary environment, at £43m as a result of our
continued focus on cost control. The Group's EPRA operating cost ratio
decreased to 14.8% (September 2022: 19.5%) through our cost control, higher
fee income from our joint ventures and by the one-off collection of historic
Covid arrears.
1.5 Net financing costs
£m
Net financing costs for the six months ended 30 September 2022 (56)
Net divestment 2
Developments (2)
Market rates (1)
Net financing costs for the six months ended 30 September 2023 (57)
Net financing costs increased by £1m period on period. Net divestment reduced
financing costs by £2m; disposals of £0.9bn over the last 18 months reduced
costs by £5m, partially offset by acquisitions made over the same period. A
further £2m increase in financing costs was from spend on our committed
development pipeline and other maintenance capex.
Despite the significant increase in market rates over the last 18 months
(rates at March 2022 were 0.75%), our hedging has limited the impact on our
financing costs, to the £1m increase.
The interest rate on our debt is 99% hedged for the six months to 31 March
2024 and 84% hedged on average over the next five years, with a gradually
declining profile.
2. IFRS loss after tax
The main differences between IFRS loss after tax and Underlying Profit are
that IFRS includes the valuation movements on investment properties, fair
value movements on financial instruments and associated deferred tax, capital
financing costs and any Company adjustments. In addition, the Group's
investments in joint ventures are equity accounted in the IFRS income
statement but are included on a proportionally consolidated basis within
Underlying Profit.
The IFRS loss after tax for the six months to 30 September 2023 was £(61)m,
compared with a loss after tax for the prior period of £(32)m. IFRS basic EPS
was (6.6)p, compared to (3.5)p in the prior period. The IFRS loss after tax
for the period primarily reflects the downward valuation movement on the
Group's properties of £(201)m, the capital and other loss from joint ventures
of £(123)m, the capital and other gain from surrender of 1 Triton Square of
£120m (as disclosed in Note 3 of the condensed interim financial statements),
and the Underlying Profit of £142m. The Group valuation movement and capital
and other income profit from joint ventures was driven principally by outward
yield shift of 23 bps offset by ERV growth of 3.2% in the portfolio resulting
in a valuation loss of 2.5%.
The basic weighted average number of shares in issue during the year was 927m
(H1 2022/23: 927m).
3. Dividends
Our dividend is semi-annual and calculated at 80% of Underlying EPS based on
the most recently completed six-month period. Applying this policy, the Board
has announced an interim dividend for the six months ended 30 September 2023
of 12.16p per share. Payment will be made on Friday 5 January 2024 to
shareholders on the register at close of business on Friday 24 November 2024.
The dividend will be a Property Income Distribution and no SCRIP alternative
will be offered.
Balance sheet
As at Section 30 September 31 March
2023 2023
£m
£m
Property assets 8,713 8,907
Other non-current assets 78 141
8,791 9,048
Other net current liabilities (282) (348)
Adjusted net debt 6 (3,231) (3,221)
Other non-current liabilities - (50)
EPRA Net Tangible Assets 5,278 5,487
EPRA NTA per share 4 565p 588p
Non-controlling interests 13 13
Other EPRA adjustments(1) 76 25
IFRS net assets 5 5,367 5,525
Proportionally consolidated basis
1. EPRA Net Tangible Assets NTA is a proportionally consolidated measure
that is based on IFRS net assets excluding the mark-to-market on derivatives
and related debt adjustments, the carrying value of intangibles as well as
deferred taxation on property and derivative valuations. The metric includes
the valuation surplus on trading properties and is adjusted for the dilutive
impact of share options. Details of the EPRA adjustments are included in Table
A within the supplementary disclosures.
4. EPRA Net Tangible Assets per share
pence
EPRA NTA per share at 31 March 2023 588
Valuation performance (36)
Surrender at 1 Triton Square 13
Underlying Profit 15
Dividend (11)
Other (4)
EPRA NTA per share at 30 September 2023 565
The 3.9% decrease in EPRA NTA per share reflects a valuation decrease of 2.5%,
including the uplift from the surrender of 1 Triton Square, compounded by the
Group's gearing. The decrease in valuations was as a result of further yield
expansion as interest rates continued to rise in the period.
Campus valuations were down 4.0%, driven by yields moving out 32 bps, but
offset by ERV growth of 3.2% reflecting our successful leasing activity and
the premium customers are placing on the amenity, transport connections,
sustainability and location.
Valuations in Retail & London Urban Logistics were up 0.1% overall, with
outward yield shift of 12 bps and ERV growth of 3.3%. Retail Parks increased
by 0.2% in the period, driven by strong ERV growth of 4.0% offsetting yield
expansion of 13 bps. Shopping Centres yields expanded by 10 bps whilst ERVs
growth was 2.6%. London Urban Logistics saw yield expansion of 9 bps but the
continued strong occupational demand and acute undersupply of space has driven
ERV growth of 3.1%.
On 19 October 2023 the RICS published guidelines on a new time-limited,
mandatory rotation cycle for regulated purpose valuations. Rules are effective
from 1 May 2024 and require, after a 2 year transition period, a valuation
firm to be rotated after 10 consecutive years of valuing a given asset. This
matches our existing voluntary policy of 10 yearly valuer rotation, therefore
our planned valuer rotation cycle remains unchanged.
5. IFRS net assets
IFRS net assets at 30 September 2023 were £5,367m, a decrease of £158m from
31 March 2023. This was primarily due to the IFRS loss after tax of £61m and
dividends paid in the period of £102m.
Cash flow, net debt and financing
6. Adjusted net debt(1)
£m
Adjusted net debt at 31 March 2023 (3,221)
Disposals 131
1 Triton Square surrender premium receipt 149
Acquisitions (58)
Developments (191)
Capex (asset management initiatives) (41)
Net cash from operations 104
Dividend (102)
Other (2)
Adjusted net debt at 30 September 2023 (3,231)
1. Adjusted net debt is a proportionally consolidated measure. It represents
the principal amount of gross debt, less cash, short term deposits and liquid
investments and is used in the calculation of proportionally consolidated LTV
and Net Debt to EBITDA. A reconciliation between the Group net debt as
disclosed in Note 9 to the condensed interim financial statements and adjusted
net debt is included in Table A within the supplementary disclosures.
Disposals and the 1 Triton Square surrender premium receipt decreased net debt
by £280m whilst retail park acquisitions increased net debt by £58m and
development spend totalled £191m with a further £41m on capital expenditure
related to asset management on the standing portfolio. Net cash from
operations offset by the dividend payment reduced net debt by £2m.
7. Financing
Group Proportionally consolidated
30 September 2023 31 March 2023 30 September 2023 31 March 2023
Net debt / adjusted net debt(1,2) £2,019m £2,065m £3,231m £3,221m
Principal amount of gross debt £2,255m £2,250m £3,462m £3,448m
Loan to value(2) 28.0% 27.4% 36.9% 36.0%
Net Debt to EBITDA(2,3) 6.0x 6.4x 8.0x 8.4x
Weighted average interest rate 2.6% 2.9% 3.4% 3.5%
Interest cover 5.8x 5.4x 3.5x 3.4x
Weighted average maturity of drawn debt 5.6 years 5.6 years 5.7 years 5.9 years
1. Group data as presented in Note 9 of the condensed interim financial
statements. The proportionally consolidated figures include the Group's share
of joint ventures' net debt and represents the principal amount of gross debt,
less cash, short term deposits and liquid investments.
2. Note 9 of the condensed interim financial statements sets out the
calculation of the Group and proportionally consolidated LTV and Net Debt to
EBITDA.
3. Net Debt to EBITDA on a Group basis excludes non-recourse and joint
venture borrowings, and includes distributions from non-recourse companies and
joint ventures.
At 30 September 2023, our proportionally consolidated LTV was 36.9%,
marginally up from 36.0% at 31 March 2023. Disposals in the period, primarily
the office and data centre portfolio and 1 Triton Square surrender premium
receipt decreased LTV by 270 bps. This was offset by the impact of valuation
movements which added 140 bps, development spend which added 170 bps and
acquisitions in the period which added 40 bps.
Since March 2023, driven by growth in Underlying earnings and capital activity
in the period, Net Debt to EBITDA for the Group improved from 6.4x to 6.0x; on
a proportionally consolidated basis the ratio improved to 8.0x.
Our weighted average interest rate at 30 September 2023 was 3.4%, down 10 bps
from 3.5% at March 2023, primarily due to changes in our mix of hedging, with
net divestment and development spend overall offsetting.
We maintain good long term relationships, and seek to develop new
relationships, with debt providers across the markets. The strength of these
enabled us to continue to raise funds on good terms, despite volatile market
conditions. During the year to date our total financing activity was £600m.
For British Land, during the half year, we extended two bilateral unsecured
revolving bank credit facilities (RCF) totalling £250m by a further year to
mature in 2028. Since 30 September 2023, we have agreed four new bilateral 5
year term loans totalling £350m with existing relationship banks on
favourable terms in line with other facilities and including our unsecured
financial covenants.
Sustainability targets apply to the majority of these new loans and extended
RCFs, aligned with our other ESG linked RCFs and to our sustainability
strategy. In British Land and our joint ventures we have a total £1.7bn
(£1.5bn BL Share) of 'Green' and sustainability/ESG linked loans and
facilities.
At 30 September 2023, we had £1.7bn of undrawn facilities and cash from a
total of £2.1bn of facilities. The term loans agreed since September add
further capacity. Based on our current commitments and facilities, the Group
has no requirement to refinance until mid-2026.
We have an advantageous debt structure with access to diverse sources of
finance through debt raised by British Land and in our joint ventures. Our
debt in British Land (except for the legacy debentures) is unsecured with no
interest cover covenants. At 30 September 2023 we retain significant headroom
to our debt covenants, meaning the Group could withstand a fall in asset
values across the portfolio of 45%, prior to taking any mitigating actions.
Joint venture debt is secured on the assets of the relevant entity,
non-recourse to the Group, and the majority is "covenant light" with no LTV
default covenants.
Fitch Ratings, as part of their annual review in August 2023 affirmed all our
credit ratings, with a stable outlook; Senior Unsecured 'A', long term IDR
'A-' and short term IDR 'F1'.
Our strong balance sheet, established lender relationships, access to
different sources of finance and liquidity enable us to deliver on our
strategy.
Bhavesh Mistry
Chief Financial Officer
About British Land
Our portfolio of high quality UK commercial property is focused on London
Campuses and Retail & London Urban Logistics assets throughout the UK. We
own or manage a portfolio valued at £12.7bn (British Land share: £8.7bn) as
at 30 September 2023 making us one of Europe's largest listed real estate
investment companies.
We create Places People Prefer, delivering the best, most sustainable places
for our customers and communities. Our strategy is to leverage our best in
class platform and proven expertise in development, repositioning and active
management, investing behind two key themes: Campuses and Retail & London
Urban Logistics.
Our three campuses at Broadgate, Paddington Central and Regent's Place are
dynamic neighbourhoods, attracting growth customers and sectors, and offering
some of the best connected, highest quality and most sustainable space in
London. We are delivering our fourth Campus at Canada Water, where we have
planning consent to deliver 5m sq ft of residential, commercial, retail and
community space over 53 acres. Our Campuses account for 62% of our portfolio.
Retail & London Urban Logistics accounts for 38% of the portfolio and is
focused on retail parks which are aligned to the growth of convenience, online
and last mile fulfilment. We are complementing this with urban logistics
primarily in London, focused on development-led opportunities.
Sustainability is embedded throughout our business. Our approach is focused on
three key pillars where British Land can create the most benefit: Greener
Spaces, making our whole portfolio net zero carbon by 2030, Thriving Places,
partnering to grow social value and wellbeing in the communities where we
operate and Responsible Choices, advocating responsible business practices
across British Land and throughout our supply chain, and maintaining robust
governance structures. Further details can be found on the British Land
website at www.britishland.com
Risk management and principal risks
At British Land, effective risk management is fundamental to how we do
business. We have an established risk management and control framework that
enables us to effectively identify, assess and manage the range of financial
and non-financial risks facing our business, including those principal risks
that could threaten solvency and liquidity, as well as identifying emerging
risks. Our approach is not intended to eliminate risk entirely, but instead to
manage our risk exposures within our appetite for each risk, whilst at the
same time making the most of our opportunities.
Our integrated risk management approach combines a top-down strategic view
with a complementary bottom-up operational process. Whilst ultimate
responsibility for risk rests with the Board, the effective day to day
management of risk is integral to the way the Group conducts business. In
summary, our approach to risk management is centred on being risk-aware,
clearly defining our risk appetite, responding quickly to changes in our risk
profile and having a strong risk management culture amongst all employees with
clearly defined roles and accountability. The Group's risk appetite, our
integrated approach to managing risk, and our governance framework are
unchanged from that set out in the Managing Risk section of the 2023 Annual
Report on pages 46 - 50.
We remain focused on the risk of continued challenges to the UK economy,
including the prevailing higher interest rate and inflation levels along with
the geopolitical uncertainty stemming from the wars in the Ukraine and the
Middle East. Encouragingly, the economy has been more resilient than expected
and recent data indicates a decline in the inflation rate, albeit the
macroeconomic outlook remains uncertain. The Board and key committees have
been overseeing the Group's response to the impact of these challenges on our
business, as well as their wider impacts on our markets, portfolio strategy,
development programme and our customers, with business resilience and risk
management at the core of our approach. We are proactively employing a
risk-focused approach in managing our business, especially with regards to
capital allocation decisions and focussing on maintaining a strong financial
position.
The Board has performed a robust assessment of the principal and emerging
risks facing the Group and considers that whilst some risks have reduced or
are showing initial signs of improving in the period (as set out in the table
over the page), all principal risks and uncertainties presented on pages 51 to
60 of our 2023 Annual Report, remained valid during the period and we believe
will continue to be relevant for the remainder of the year. Our comprehensive
risk management process, coupled with the Group's continued ability to be
flexible to adjust and respond to our principal risks and emerging risks as
they evolve, will be pivotal to the future performance of our business.
External Principal Risks
Principal Risk Status at Change since Commentary
year end
year end
Macroeconomic High Stable The UK's macroeconomic outlook remains uncertain, and inflation and interest
rate risks persist, which could potentially impact our portfolio strategy, our
markets and our customers. We're proactively managing our business by
strategically allocating capital, maintaining financial strength, and
effectively mitigating development and financing risks. With a strong balance
sheet and experienced leadership, we're well-prepared to tackle challenges and
capitalise on opportunities, including potential strategic investments.
Political, Legal and Regulatory Medium to High Stable The political, legal, and regulatory risks remain uncertain and elevated,
primarily due to macroeconomic conditions, ongoing geopolitical tensions
arising from the wars in Ukraine and the Middle East, and increased government
regulations. This uncertainty has the potential to impact various aspects,
including interest rates, supply chains, security, cyber threats, compliance,
and reputation. The Board and key committees are closely monitoring these
external risks and their potential impact on both the UK economy and our
operations to ensure we are taking appropriate mitigating actions.
Property Markets
(a) Campuses Medium Stable The prime London office occupier market remains robust supported by a limited
new development pipeline and good rental growth. However, rising interest
rates have affected investor sentiment and structural challenges remain from
increased remote working practices. That said, our Campus model offers
well-connected, sustainable buildings with amenities, attracting occupiers as
they focus on the best-in-class space for their business.
(b) Retail Medium to High Reducing Despite the challenges facing the retail market from both increased costs and
reduced consumer disposable income, the occupational market has shown
improvement, with a growing number of retailers reporting positive footfall
and sales levels. The retail park investment market remains in line with
historical norms, while shopping centres continues to lag behind long term
averages. Our Retail portfolio focuses on retail parks, aligning with
convenience trends and omni-channel strategies. As a result, our leasing
remains strong. We continue to seek acquisition opportunities in retail parks
to leverage our scale and asset expertise for value creation.
(c) London Low Stable London's urban logistics occupational fundamentals are strong due to
Urban e-commerce shifts and limited space supply. However, rising interest rates
Logistics have softened investment pricing. Our Urban Logistics portfolio, driven by
development and repurposing, capitalises on high demand and scarce supply.
Major Events/ Business Disruption Medium Stable The heightened global and political uncertainties, further intensified by the
wars in the Ukraine and the Middle East, still have the potential to affect
the Group's operations and stakeholders. The challenges faced in recent years
due to the Covid pandemic have highlighted the strength of our business model
and robust crisis management plans. We remain vigilant regarding continued
risks posed by external threats.
Internal Principal Risks
Principal Risk Status at Change since Commentary
year end
year end
Portfolio Strategy Medium Stable Our portfolio strategy has faced ongoing challenges due to macroeconomic
conditions and more difficult investment markets. The impact of rising
interest rates has been felt on our strategy and portfolio valuations,
however, there are signs that upward yield pressure is diminishing,
particularly for retail parks and London urban logistics. Our operational
performance remains strong, reinforcing our confidence in our core markets:
campuses, retail parks, and London urban logistics. Additionally, we foresee
more favourable rental growth prospects across our portfolio. We will maintain
a disciplined approach to capital allocation and remain flexible in looking to
take advantage of opportunities.
Development Medium Stable Despite ongoing inflationary pressures in construction supply chains,
amplified by the Ukraine conflict, we are observing more encouraging trends.
Construction cost inflation is easing, aligning with our projections of 3-4%
this year and marking a significant decrease from the 10% peak in 2022. Our
committed pipeline is progressing well, and our development exposure at 4.9%
of our portfolio's gross asset value, is well within our risk tolerance.
Progressing value accretive development is a key priority to driving the
performance of our business and our strong balance sheet, contractor
relationships, and management experience position us well to move forward with
our pipeline while mitigating the associated risks. Prior to committing to
future developments, we will continue to evaluate their impact against
specific criteria, subject to approval from the Investment Committee. This
assessment will consider returns, prevailing interest rates and our balance
sheet capacity.
Financing Low to Medium Stable Despite the sharp rise in market interest rates over the past 18 months,
current forecasts suggest an increased likelihood that interest rates are
approaching their peak, albeit they may remain elevated for an extended period
of time. We have continued to actively manage our financing risk and maintain
access to a diverse range of sources of finance with a spread of repayment
dates, along with the use of hedging to mitigate interest rate risk. Our
strong balance sheet, coupled with continued capital recycling, provides us
with the liquidity to effectively support our business needs and respond to
opportunities. We have no requirement to refinance until mid-2026.
Environmental Sustainability Medium Stable The importance of environmental sustainability risks and their connection to
our business, customers and other stakeholders is increasing. Concurrently,
regulatory requirements and expectations are on the rise. Our targets for 2030
are centred on attaining a carbon net-zero portfolio and demonstrating
environmental leadership, and we have already made significant strides in this
direction. Our achievements have been recognised in various international
benchmarks including GRESB, where we were delighted to achieve a GRESB 5*
rating in the period.
People Medium Stable The competition for talent, which was until recently very intense, has eased
and Culture off in light of recent economic uncertainties. Our focus will continue to
ensure we have the right resources and skills in place to support our
strategic priorities. Our goal remains to foster a diverse, inclusive and
ambitious culture so we can develop, attract and inspire the best people to
deliver our strategy. Additionally, we will take a proactive approach to
oversee and enhance the wellbeing of our staff.
Customer Medium to High Stable Our overall customer risk is showing signs of decreasing, yet it remains
elevated with an uncertain outlook and mixed indicators with a number of
retailer CVAs and administrations in the period. We are fully aware of the
challenges posed by higher input prices, particularly within the retail
sector, and the potential implications for customer profitability and
associated risks. To address these challenges, we take a proactive approach to
maintaining a robust and resilient customer base and focus on providing
affordable space with lower overall occupancy costs. It is pivotal that our
strategic positioning across our Campuses, Retail Parks and London Urban
Logistics portfolios, coupled with our strong focus on collaborative
relationships with our customers, enables us to provide high quality spaces at
sustainable occupancy costs, which in turn attracts high quality occupiers.
This is demonstrated by our 96% occupancy rate and 99% rent collection rate.
Operational and Compliance Medium Stable Key areas of risk encompass Technology and Cyber Security, Health &
Safety, Third Party Relationships and Internal Controls and Compliance. We
maintain a vigilant stance regarding these key operational risks within our
business, and we are pleased to report no significant issues have arisen
during the first half of the year. We remain committed to ongoing monitoring
and are actively implementing strategies to fortify our cyber security, IT
infrastructure and related key controls, as well as enhancing our overall
internal control framework.
DIRECTORS' RESPONSIBILITIES STATEMENT
The Directors confirm that these condensed interim financial statements have
been prepared in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the United Kingdom and that the
interim management report includes a fair review of the information required
by DTR 4.2.7R and DTR 4.2.8R, namely:
· An indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· Material related party transactions in the first six months and
any material changes in the related-party transactions described in the last
annual report.
The Directors of British Land plc are listed on the company website
www.britishland.com
By order of the Board.
Bhavesh Mistry
Chief Financial Officer
12 November 2023
Independent review report to The
British Land Company PLC
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed The British Land Company PLC's condensed consolidated interim
financial statements (the "interim financial statements") in the Half-Year
Results of The British Land Company PLC for the 6 month period ended 30
September 2023 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
• the Consolidated Balance Sheet as at 30 September 2023;
• the Consolidated Income Statement and the Consolidated Statement of
Comprehensive Income for the period then ended;
• the Consolidated Statement of Cash Flows for the period then ended;
• the Consolidated Statement of Changes in Equity for the period then
ended; and
• the explanatory notes to the interim financial statements.
The interim financial statements included in the Half-Year Results of The
British Land Company PLC have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Half-Year Results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half-Year Results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Half-Year Results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Half-Year Results, including the
interim financial statements, the directors are responsible for assessing the
group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Half-Year Results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
12 November 2023
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 September 2023
Six months ended 30 September 2023 Restated(1)
Unaudited
Six months ended 30 September 2022
Unaudited
Note Underlying(2) Capital Total Underlying(2) Capital Total
and other
£m
and other
£m
£m
£m £m
£m
Revenue 3 212 174 386 216 - 216
Costs(3) 3 (46) (54) (100) (51) - (51)
3 166 120 286 165 - 165
Joint ventures (see also below) 7 49 (123) (74) 48 (97) (49)
Administrative expenses (42) - (42) (43) - (43)
Valuation movement 4 - (201) (201) - (189) (189)
Profit (loss) on disposal of investment properties and revaluation of - 2 2 - (20) (20)
investments
Net financing (charges) income
financing income 5 - 10 10 4 147 151
financing charges 5 (30) - (30) (35) - (35)
(30) 10 (20) (31) 147 116
(Loss) profit before taxation 143 (192) (49) 139 (159) (20)
Taxation (1) (11) (12) (1) (11) (12)
(Loss) profit for the period after taxation 142 (203) (61) 138 (170) (32)
Attributable to non-controlling interests 1 (1) - 1 (1) -
Attributable to shareholders of the Company 141 (202) (61) 137 (169) (32)
Earnings per share:
basic 2 (6.6)p (3.5)p
diluted 2 (6.6)p (3.5)p
All results derive from continuing operations.
Six months ended 30 September 2023 Restated(1)
Unaudited
Six months ended 30 September 2022
Unaudited
Note Underlying(2) Capital Total Underlying(2) Capital Total
and other
£m
and other
£m
£m
£m £m
£m
Results of joint ventures accounted
for using the equity method
Underlying Profit 49 - 49 48 - 48
Valuation movement 4 - (126) (126) - (126) (126)
Capital financing income - 3 3 - 30 30
Taxation - - - - (1) (1)
7 49 (123) (74) 48 (97) (49)
1. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions. Refer to Note 1 for
further information.
2. See definition in Note 2 and a reconciliation between Underlying Profit and
IFRS profit in Note 11.
3. Included within 'Costs' is a credit relating to provisions for impairment
of tenant debtors, accrued income, tenant incentives and contracted rent
increases of £11m (six months ended 30 September 2022: credit of £2m).
Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2023
Six months ended Restated(1)
30 September 2023
Unaudited Six months ended
£m
30 September 2022
Unaudited
£m
Loss for the period after taxation (61) (32)
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Gains on cash flow hedges
- Joint ventures 6 4
6 4
Reclassification of foreign exchange differences to the income statement (2) -
Other comprehensive income for the period 4 4
Total comprehensive loss for the period (57) (28)
Attributable to non-controlling interests - -
Attributable to shareholders of the Company (57) (28)
1. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions. Refer to Note 1 for
further information.
Consolidated Balance Sheet
As at 30 September 2023
Note 30 September 2023 31 March
Unaudited
2023
£m
Audited
£m
ASSETS
Non-current assets
Investment and development properties 6 5,495 5,677
5,495 5,677
Other non-current assets
Investments in joint ventures 7 2,157 2,206
Other investments 56 58
Property, plant and equipment 22 22
Interest rate and currency derivative assets 9 144 144
7,874 8,107
Current assets
Trading properties 6 22 22
Debtors 8 47 34
Corporation tax - 2
Cash and cash equivalents 9 152 125
221 183
Total assets 8,095 8,290
LIABILITIES
Current liabilities
Short term borrowings and overdrafts 9 (297) (402)
Creditors (290) (282)
(587) (684)
Non-current liabilities
Debentures and loans 9 (1,940) (1,865)
Other non-current liabilities (117) (145)
Deferred tax liabilities (6) (4)
Interest rate and currency derivative liabilities 9 (78) (67)
(2,141) (2,081)
Total liabilities (2,728) (2,765)
Net assets 5,367 5,525
EQUITY
Share capital 234 234
Share premium 1,309 1,308
Merger reserve 213 213
Other reserves 19 15
Retained earnings 3,579 3,742
Equity attributable to shareholders of the Company 5,354 5,512
Non-controlling interests 13 13
Total equity 5,367 5,525
EPRA Net Tangible Assets per share(1) 2 565p 588p
1. See definition in Note 2.
Consolidated Statement of Cash Flows
For the six months ended 30 September 2023
Note Six months ended Restated(1)
30 September 2023
Unaudited Six months ended
£m
30 September 2022
Unaudited
£m
Income received from tenants 183 190
Surrender premia received(2) 3 178 -
Fees and other income received 24 26
Operating expenses paid to suppliers and employees (106) (101)
Cash generated from operations 279 115
Interest paid (31) (37)
Corporation tax payments (3) -
Distributions and other receivables from joint ventures 7 37 34
Net cash inflow from operating activities 282 112
Cash flows from investing activities
Development and other capital expenditure (141) (128)
Sale of investment properties 131 4
Purchase of investment properties (58) (24)
Sale of investment properties to Paddington Central Joint Venture - 685
Purchase of investments (2) (14)
Investment in and loans to joint ventures (65) (59)
Loan repayments from joint ventures - 125
Indirect taxes (paid) received in respect of investing activities (8) 3
Net cash (outflow) inflow from investing activities (143) 592
Cash flows from financing activities
Dividends paid (102) (106)
Dividends paid to non-controlling interests - (1)
Capital payments in respect of interest rate derivatives (12) -
Decrease in lease liabilities (3) (3)
Decrease in bank and other borrowings (166) (584)
Drawdown on bank and other borrowings 171 34
Net cash outflow from financing activities (112) (660)
Net increase in cash and cash equivalents 27 44
Cash and cash equivalents at 1 April 125 105
Cash and cash equivalents at 30 September 152 149
Cash and cash equivalents consists of:
Cash and short-term deposits 124 118
Tenant deposits 28 31
1. Prior period comparatives have been restated for a change in accounting
policy in respect of tenant deposits. Refer to Note 1 for further information.
2. Surrender premia received includes £149m (six months ended 30 September
2022: £nil) of the consideration for the surrender of 1 Triton Square and
£29m (six months ended 30 September 2022: £nil) of related VAT. Refer to
Note 3 for further information.
Consolidated Statement of Changes in Equity
For the six months ended 30 September 2023
Six month movements in equity (unaudited)
Share Share premium Hedging Revaluation reserve Merger reserve Retained earnings Total Non-controlling interests Total
capital
£m
and translation reserve
£m
£m
£m
£m
£m
equity
£m
£m
£m
Balance at 1 April 2023 234 1,308 2 13 213 3,742 5,512 13 5,525
Total comprehensive (expense) income for the period - - (2) 6 - (61) (57) - (57)
Share issues - 1 - - - - 1 - 1
Dividends paid in period - - - - - (102) (102) - (102)
(11.04p per share)
Balance at 30 September 2023 234 1,309 - 19 213 3,579 5,354 13 5,367
Balance at 1 April 2022 as published 234 1,307 2 3 213 4,994 6,753 15 6,768
Total comprehensive (expense) income for the period (restated(1)) - - - 4 - (32) (28) - (28)
Share issues - 1 - - - - 1 - 1
Fair value of share and share - - - - - 3 3 - 3
option awards
Dividends paid in period - - - - - (108) (108) - (108)
(11.60p per share)
Dividends paid to non-controlling interests - - - - - - - (1) (1)
Balance at 30 September 2022 (restated(1)) 234 1,308 2 7 213 4,857 6,621 14 6,635
1. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions. Refer to Note 1 for
further information.
Prior year movements in equity (audited)
Share Share premium Hedging Revaluation reserve Merger reserve Retained earnings Total Non-controlling interests Total
capital
£m
and translation reserve
£m
£m
£m
£m
£m
equity
£m
£m
£m
Balance at 1 April 2022 234 1,307 2 3 213 4,994 6,753 15 6,768
Total comprehensive (expense) income for the year - - - 10 - (1,038) (1,028) (1) (1,029)
Shares issued in the year - 1 - - - - 1 - 1
Fair value of share and share - - - - - 1 1 - 1
option awards
Dividends payable in year - - - - - (215) (215) - (215)
(23.20p per share)
Dividends payable by subsidiaries - - - - - - - (1) (1)
Balance at 31 March 2023 234 1,308 2 13 213 3,742 5,512 13 5,525
Notes to the Accounts
For the six months ended 30 September 2023
1 Basis of preparation
The financial information for the period ended 30 September 2023 does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. A copy of the statutory accounts for the year ended 31 March 2023 has
been delivered to the Registrar of Companies. The auditors' report on those
accounts was not qualified, did not include a reference to matters to which
the auditor drew attention by way of emphasis without qualifying the report,
and did not contain statements under section 498(2) or (3) of the Companies
Act 2006.
The condensed consolidated interim financial statements for the half-year
reporting period ended 30 September 2023 included in this announcement has
been prepared on a Going Concern basis using accounting policies consistent
with UK-adopted international accounting standards, in accordance with
UK-adopted IAS 34 'Interim Financial Reporting', and in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
The condensed consolidated interim financial statements do not include all the
notes of the type normally included in the annual report and accounts.
Accordingly, this report is to be read in conjunction with the annual report
and accounts for the year ended 31 March 2023, which has been prepared in
accordance with both UK-adopted International Accounting Standards in
conformity with the requirements of the Companies Act 2006, and any public
announcements made by the Group during the interim reporting period. The same
accounting policies are followed in the condensed consolidated interim
financial statements as applied in the Group's audited financial statements
for the year ended 31 March 2023.
A number of new standards and amendments to standards and interpretations have
been issued for the current accounting period. The IASB issued narrow-scope
amendments to IAS 12 that are yet to be adopted by the UK endorsement board,
as part of the Pillar Two model implementation. The Group is currently
assessing the impact of Pillar Two and the associated IAS 12 amendments. The
following standards and interpretations which have been issued but are not yet
effective include IAS 1 'Presentation of Financial Statements' on the
classification of liabilities and non-current liabilities with covenants, IFRS
16 'Leases' on sale and leaseback arrangements, and limited scope amendments
to both IFRS 10 'Consolidated Financial Statements' and IAS 28 'Investments in
Associates and Joint Ventures' in respect of sale or contribution of assets
between an investor and its associates or joint ventures. These amendments to
standards that are not yet effective are not expected to have a material
impact on the Group's results.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of these interim financial statements requires management to
make critical accounting judgements and assess key sources of estimation
uncertainty, that affect the application of accounting policies and the
reported amounts of assets and liabilities, income and expense. Actual results
might differ from these estimates.
Critical accounting judgements
The Group's critical accounting judgements are consistent with those disclosed
in the Group's audited financial statements for the year ended 31 March
2023.
Key sources of estimation uncertainty
As outlined in the Group's audited financial statements for the year ended 31
March 2023, the valuation of investment, development and trading properties,
and impairment provisioning of tenant debtors (including accrued income) and
tenant incentives were identified as key sources of estimation uncertainty.
As at 30 September 2023, the Group no longer identifies the impairment
provisioning of tenant debtors and tenant incentives as a key source of
estimation uncertainty as, in the Group's view, the inherent uncertainty
related to these balances, which was driven by the Covid-19 pandemic, no
longer has the potential to materially impact the carrying amount of these
assets within the next financial year.
Going concern
The interim financial statements are prepared on a Going Concern basis. The
balance sheet shows the Group is in a net current liability position of
£366m, predominantly due to short term borrowings and overdrafts of £297m
and deferred income of £50m (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 £1.7bn of undrawn
facilities and cash, which provides the Directors with a reasonable
expectation that the Group will be able to meet these current liabilities as
they fall due. In making this assessment the Directors also took into account
the headroom on Group debt covenants, equivalent to a 45% fall in property
values as at 30 September 2023 (and a 33% fall in property values on a
committed look forward basis), and the absence of interest cover covenants on
the unsecured facilities. Before factoring in any income receivable, the
facilities and cash would be sufficient to cover forecast capital expenditure,
property operating costs, administrative expenses, maturing debt and interest
over the next 12 months from the approval date of these interim financial
statements.
Having assessed the Principal Risks, the Directors believe that the Group is
well placed to manage its financing and other business risks satisfactorily
despite the current economic climate, and have a reasonable expectation that
the Company and the Group have adequate resources to continue in operation for
at least 12 months from the signing date of these interim financial
statements. They therefore consider it appropriate to adopt the Going Concern
basis of accounting in preparing the interim financial statements. The interim
financial statements were approved by the Board on 12 November 2023.
Change in accounting policies
Rental concessions
The Group changed its accounting policy in respect of concessions (or rental
forgiveness) granted to tenants as outlined in the Group's audited financial
statements for the year ended 31 March 2023 in response to the IFRS
Interpretations Committee (IFRIC) Agenda Decision in relation to Lessor
Forgiveness of Lease Payments (IFRS 9 and IFRS 16). This change of accounting
policy has led to a restatement of the 30 September 2022 comparatives
disclosed in these condensed consolidated interim financial statements. The
restatement arises due to the reversal of previously recognised amortisation
(of the concessions previously granted to tenants) in the six-month period to
30 September 2022. The overall restatement quantum is £2m and results in a
decrease to the loss for the period after taxation from £34m to £32m. Within
the condensed consolidated interim financial statements, the restatement has
resulted in a change to the following balances:
• Gross rental income; and
• Joint venture result.
The quantitative impact on each balance has been outlined in the table below.
Tenant deposits
The Group changed its accounting policy in relation to tenant deposits as
detailed in the Group's audited financial statements for the year ended 31
March 2023 in response to the IFRIC Agenda Decision in relation to Demand
Deposits with Contractual Restrictions in Use. This change of accounting
policy has led to a restatement of the 30 September 2022 comparatives
disclosed in the consolidated statement of cash flows. The restatement has led
to the Group recognising £5m of rental deposits and a further £26m of
service charge deposits within cash and cash equivalents as at 30 September
2022. Additionally, the Group will also recognise service charge income and
expense related cash flows leading to a restatement of the 30 September 2022
comparatives for income received from tenants and operating expenses paid to
suppliers and employees of £27m respectively.
The quantitative impact on each balance has been outlined in the table below.
30 September 2022 Rental Tenant deposits 30 September 2022
Published
concessions Restatement
Restatement
Restated
£m
£m
£m
£m
Consolidated income statement (extract)
Revenue 215 1 - 216
Joint ventures (50) 1 - (49)
Loss for the period after taxation (34) 2 - (32)
Consolidated statement of cash flows (extract)
Income received from tenants 163 - 27 190
Operating expenses paid to suppliers and employees (74) - (27) (101)
Cash and cash equivalents at 1 April 74 - 31 105
Cash and cash equivalents at 30 September 118 - 31 149
Cash and cash equivalents consist of:
Tenant deposits - - 31 31
Performance measures (Note 2)
Underlying Profit (Table A) 136 2 - 138
Underlying diluted earnings per share (pence) 14.5 0.2 - 14.7
2 Performance measures
Earnings per share
The Group measures financial performance with reference to Underlying earnings
per share, the European Public Real Estate Association ('EPRA') earnings per
share and IFRS earnings per share. The relevant earnings and weighted average
number of shares (including dilution adjustments) for each performance measure
are shown below, and a reconciliation between these is shown within the
supplementary disclosures (Table B).
EPRA earnings per share is calculated using EPRA earnings, which is the IFRS
profit after taxation attributable to shareholders of the Company excluding
investment and development property revaluations, gains/losses on investing
and trading property disposals, changes in the fair value of financial
instruments and associated close-out costs and their related taxation.
Underlying earnings per share is calculated using Underlying Profit adjusted
for Underlying taxation, with the dilutive measure being the primary
disclosure measure used. Underlying Profit is the pre-tax EPRA earnings
measure, with additional Company adjustments for items which are considered to
be unusual and/or significant by virtue of their size and nature. In the
current period to 30 September 2023, £25m of rent receivable, £149m of
surrender premia receivable, and £54m of tenant incentive impairment were
excluded from the calculation of Underlying Profit (see Note 3 for further
details). No Company adjustments were made in the prior period to
30 September 2022.
Six months ended 30 September 2023 Restated(1)
Six months ended 30 September 2022
Earnings per share Relevant earnings Relevant number Earnings Relevant earnings Relevant number Earnings
£m
of shares
per share
£m
of shares
per share
million
pence
million
pence
Underlying
Underlying basic 141 927 15.2 137 927 14.8
Underlying diluted 141 929 15.2 137 930 14.7
EPRA
EPRA basic 261 927 28.2 137 927 14.8
EPRA diluted 261 929 28.1 137 930 14.7
IFRS
Basic (61) 927 (6.6) (32) 927 (3.5)
Diluted (61) 927 (6.6) (32) 927 (3.5)
1. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions. Refer to Note 1 for
further information.
Net asset value
The Group measures financial position with reference to EPRA Net Tangible
Assets ('NTA'), Net Reinvestment Value ('NRV') and Net Disposal Value ('NDV').
The net assets and number of shares for each performance measure is shown
below. A reconciliation between IFRS net assets and the three EPRA net asset
valuation metrics, and the relevant number of shares for each performance
measure, is shown within the supplementary disclosures (Table B). EPRA NTA is
a measure that is based on IFRS net assets excluding the mark-to-market on
derivatives and related debt adjustments, the carrying value of intangibles,
as well as deferred taxation on property and derivative valuations. The metric
includes the valuation surplus on trading properties and is adjusted for the
dilutive impact of share options.
30 September 2023 31 March 2023
Net asset value per share Relevant Relevant number Net asset value Relevant Relevant number Net asset value
of shares
per share
of shares
per share
net assets
million
pence net assets
million
pence
£m
£m
EPRA
EPRA NTA 5,278 934 565 5,487 933 588
EPRA NRV 5,809 934 622 6,029 933 646
EPRA NDV 5,549 934 594 5,658 933 606
IFRS
Basic 5,367 927 579 5,525 927 596
Diluted 5,367 934 575 5,525 933 592
Total accounting return
The Group also measures financial performance with reference to total
accounting return. This is calculated as the movement in EPRA NTA per share
and dividend paid in the period as a percentage of the EPRA NTA per share at
the start of the period.
Six months ended 30 September 2023 Six months ended 30 September 2022
Movement in NTA per share Dividend per share paid Total accounting return Movement in NTA per share Dividend per share paid Total accounting return
pence
pence
pence
pence
Total accounting return (23) 11.04 (2.0%) (32) 11.60 (2.8%)
3 Revenue and costs
Six months ended 30 September 2023 Restated(1)
Six months ended 30 September 2022
Underlying Capital and other(2) Total Underlying Capital and other Total
£m
£m
£m
£m
£m
£m
Rent receivable(2) 152 25 177 160 - 160
Spreading of tenant incentives and contracted
rent increases 5 - 5 8 - 8
Surrender premia(2) 1 149 150 - - -
Gross rental income 158 174 332 168 - 168
Service charge income 33 - 33 30 - 30
Management and performance fees
(from joint ventures) 9 - 9 6 - 6
Other fees and commissions 12 - 12 12 - 12
Revenue 212 174 386 216 - 216
Service charge expenses (28) - (28) (26) - (26)
Property operating expenses (19) - (19) (18) - (18)
Release of impairment of trade debtors 11 - 11 3 - 3
and accrued income
Provisions for impairment of tenant incentives and contracted rent - (54) (54) (1) - (1)
increases(2)
Other fees and commissions expenses (10) - (10) (9) - (9)
Costs (46) (54) (100) (51) - (51)
166 120 286 165 - 165
1. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions. Refer to Note 1 for
further information.
2. On 25 September 2023, the Group completed a deed of surrender in relation
to an in-force lease of one of its investment properties. The consideration
for the surrender was a £149m premium paid by the tenant on the completion
date. In line with the requirements of IFRS 16, the surrender transaction
was treated as a modification to the lease, with the surrender premium
received recognised in full through the income statement at the point of
completion, which represented the modified termination date of the lease. At
the point of modification, the lease had associated tenant incentive balances
of £54m, and as the right to receive these amounts was extinguished through
the lease modification, with an impairment recognised in full through the
income statement at the point of completion. Also at the point of
modification, the lease had an associated deferred lease premium balance of
£25m, which in line with the surrender premium received, was recognised in
full through the income statement at the point of completion. Owing to the
unusual and significant size and nature of this transaction, and in line with
the Group's accounting policies, all elements of the transaction have been
included within the Capital and other column of the income statement.
4 Valuation movements on property
Six months ended Six months ended
30 September 2023
30 September 2022
£m
£m
Revaluation of properties (201) (189)
Revaluation of properties held by joint ventures accounted for using the (126) (126)
equity method
(327) (315)
5 Net financing
Six months ended Six months ended
30 September 2023
30 September 2022
£m
£m
Underlying
Financing charges
Facilities and overdrafts (27) (12)
Derivatives 26 11
Other loans (37) (38)
Obligations under head leases (2) (2)
(40) (41)
Development interest capitalised 10 6
(30) (35)
Financing income
Deposits, securities and liquid investments - 4
Net financing charges - Underlying (30) (31)
Capital and other
Financing income
Valuation movement on translation of foreign currency debt and investments - 3
Valuation movement on fair value hedge accounted debt (10) 26
Valuation movement on fair value hedge accounted derivatives 5 (22)
Valuation movement on non-hedge accounted derivatives 15 140
10 147
Net financing income - Capital and other 10 147
Total financing income 10 151
Total financing charges (30) (35)
Net financing (charges) income (20) 116
Interest on development expenditure is capitalised at the Group's weighted
average interest rate at 30 September 2023 of 2.6% (30 September 2022: 3.0%).
The weighted average interest rate on a proportionately consolidated basis at
30 September 2023 was 3.4% (30 September 2022: 3.5%).
6 Property
Property reconciliation
Six months ended 30 September 2023 Year ended 31 March 2023
Investment and development properties Trading Total Investment and development properties Trading Total
Level 3
properties
£m
Level 3
properties
£m
£m
£m
£m
£m
Carrying value at the start of the period/year 5,677 22 5,699 7,032 18 7,050
Additions
- property purchases 58 - 58 158 - 158
- development expenditure 91 - 91 152 4 156
- capitalised interest and staff costs 9 - 9 13 - 13
- capital expenditure on asset management initiatives 31 - 31 62 - 62
189 - 189 385 4 389
Disposals (120) - (120) (945) - (945)
Revaluations included in income statement (201) - (201) (798) - (798)
Movement in tenant incentives and contracted (50) - (50) 3 - 3
rent uplift balances
Carrying value at the end of the period/year 5,495 22 5,517 5,677 22 5,699
Lease liabilities (101) (102)
Less surplus on right-of-use assets(1) (9) (9)
Valuation surplus on trading properties 6 7
Group property portfolio valuation at the end of the period/year 5,413 5,595
Non-controlling interests (13) (13)
Group property portfolio valuation at the end of the period/year attributable 5,400 5,582
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 £5,413m (31 March 2023:
£5,595m) above.
Additions include capital expenditure in response to climate change, in line
with our Sustainability Strategy to reduce both the embodied carbon in our
developments and the operational carbon across the Group's standing property
portfolio.
The Group's total property portfolio was valued by external valuers on the
basis of fair value, in accordance with the RICS Valuation - Global Standards
2022, published by The Royal Institute of Chartered Surveyors. The information
provided to the valuers, and the assumptions and valuation models used by the
valuers are reviewed by the property portfolio team, the Head of Real Estate,
the Chief Financial Officer and the Chief Executive Officer. The valuers meet
with the external auditors and also present directly to the Audit Committee on
a half yearly basis.
Property valuations are inherently subjective as they are made on the basis of
assumptions made by the valuer which may not prove to be accurate. For these
reasons, and consistent with EPRA's guidance, we have classified the
valuations of our property portfolio as level 3 as defined by IFRS 13. The
inputs to the valuations are defined as 'unobservable' by IFRS 13. These key
unobservable inputs are net equivalent yield and estimated rental values for
investment properties, and costs to complete for development properties.
Further analysis and sensitivity disclosures of these key unobservable inputs
have been included below. There were no transfers between levels in the
current period nor in the prior year comparative.
There has been no change in the valuation methodology used for investment
property.
Information about the impact of changes in unobservable inputs (Level 3) on
the fair value of the Group's property portfolio valuation for the six months
ended 30 September 2023
Fair value at Impact on valuations Impact on valuations Impact on valuations
30 September 2023
£m
+5% ERV -5% ERV -25bps NEY +25bps NEY -5% costs +5% costs
£m
£m
£m
£m
£m
£m
Campuses(1) 1,570 65 (60) 81 (75) - -
Retail & London Urban Logistics 2,641 105 (104) 106 (100) - -
Developments 1,202 102 (100) 106 (97) 36 (37)
Group property portfolio valuation 5,413 272 (264) 293 (272) 36 (37)
1. Includes trading properties at fair value.
Information about fair value measurements using unobservable inputs (Level 3)
for the six months ended 30 September 2023
Investment Fair value at Valuation technique ERV per sq ft Equivalent yield Costs to complete per sq ft
30 September 2023
£m
Min Max Average Min Max Average Min Max Average
£
£
£
%
%
%
£
£
£
Campuses 1,542 Investment methodology 20 136 62 4 8 6 - 158 30
Retail & London Urban Logistics 2,641 Investment methodology 2 31 19 4 23 7 - 33 5
Developments 1,202 Residual methodology 29 106 74 5 7 5 145 1,503 725
Total 5,385
Trading properties
at fair value 28
Group property portfolio valuation 5,413
All other factors being equal:
• a higher equivalent yield or discount rate would lead to a decrease
in the valuation of an asset;
• an increase in the current or estimated future rental stream would
have the effect of increasing the capital value; and
• an increase in the costs to complete would lead to a decrease in the
valuation of an asset.
However, there are interrelationships between the unobservable inputs which
are partially determined by market conditions, which would impact on these
changes.
Additional property covenant information
Properties valued at £1,124m (31 March 2023: £1,135m) were subject to a
security interest and other properties of non-recourse companies amounted to
£638m (31 March 2023: £612m), totalling £1,762m (31 March 2023: £1,747m).
7 Joint ventures
Summary movement for the period of the investments in joint ventures
Equity Loans Total
£m
£m
£m
At 1 April 2023 1,419 787 2,206
Additions 21 57 78
Disposals (23) 1 (22)
Share of (loss) profit after taxation (92) 18 (74)
Distributions and dividends:
- Revenue (36) (1) (37)
Hedging and exchange movements 6 - 6
At 30 September 2023 1,295 862 2,157
Summary income statement for the period of the investments in joint ventures
Six months ended Restated(1)
30 September 2023
Six months ended
30 September 2022
£m £m £m £m
100%
BL Share
100%
BL Share
Revenue 242 111 216 104
Costs (76) (34) (63) (30)
166 77 153 74
Administrative expenses (3) (1) (3) (1)
Net financing charges (62) (27) (53) (25)
Underlying Profit 101 49 97 48
Net valuation movement (272) (126) (285) (126)
Capital financing income 11 3 89 30
Loss before taxation (160) (74) (99) (48)
Taxation - - (4) (1)
Loss after taxation (160) (74) (103) (49)
Loss split between controlling and
non-controlling interests
Attributable to non-controlling interests - - - -
Attributable to shareholders of the Company (160) (74) (103) (49)
1. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions. Refer to Note 1 for
further information.
8 Debtors
30 September 31 March
2023
2023
£m
£m
Trade and other debtors 28 22
Prepayments and accrued income 19 12
47 34
9 Net debt
9.1 Fair value and book value of net debt
30 September 2023 31 March 2023
Fair value Book value Difference Fair value Book value Difference
£m
£m
£m
£m
£m
£m
Debentures and unsecured bonds 1,392 1,506 (114) 1,533 1,627 (94)
Bank debt and other floating rate debt 736 731 5 645 640 5
Gross debt 2,128 2,237 (109) 2,178 2,267 (89)
Interest rate and currency derivative liabilities 78 78 - 67 67 -
Interest rate and currency derivative assets (144) (144) - (144) (144) -
Cash and cash equivalents (152) (152) - (125) (125) -
Total net debt 1,910 2,019 (109) 1,976 2,065 (89)
Net debt attributable to non-controlling interests 1 1 - 1 1 -
Net debt attributable to shareholders 1,911 2,020 (109) 1,977 2,066 (89)
of the Company
Total net debt 1,910 2,019 (109) 1,976 2,065 (89)
Amounts payable under leases 122 122 - 126 126 -
Net debt (including lease liabilities) 2,032 2,141 (109) 2,102 2,191 (89)
Net debt attributable to non-controlling interests (including lease 1 1 - 1 1 -
liabilities)
Net debt attributable to shareholders of the Company (including lease 2,033 2,142 (109) 2,103 2,192 (89)
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 have been excluded from the disclosures on the basis that the fair
value is equivalent to the book value.
9.2 Loan to value ('LTV')
LTV is the ratio of principal value of gross debt less cash, short term
deposits and liquid investments to the aggregate value of properties and
investments, excluding non-controlling interests.
EPRA LTV has been disclosed in Table E.
Group LTV
30 September 2023 31 March
£m
2023
£m
Group LTV 28.0% 27.4%
Principal value of gross debt 2,255 2,250
Less debt attributable to non-controlling interests - -
Less cash and short term deposits (statement of cash flows)(1) (124) (99)
Plus cash attributable to non-controlling interests 1 1
Total net debt for LTV calculation 2,132 2,152
Group property portfolio valuation (Note 6) 5,413 5,595
Investments in joint ventures (Note 7) 2,157 2,206
Other investments and property, plant and equipment (balance sheet)(2) 60 61
Less property and investments attributable to non-controlling interests (13) (13)
Total assets for LTV calculation 7,617 7,849
1. Cash and short term deposits exclude tenant deposits of £28m (31 March
2023: £26m).
2. The £18m (31 March 2023: £19m) difference between other investments and
plant, property and equipment per the balance sheet totalling £78m (31 March
2023: £80m), relates to a right-of-use asset recognised under a lease which
is classified as property, plant and equipment which is not included within
Total assets for the purposes of the LTV calculation.
Proportionally consolidated LTV
30 September 2023 31 March
£m
2023
£m
Proportionally consolidated LTV 36.9% 36.0%
Principal value of gross debt 3,462 3,448
Less attributable to non-controlling interests - -
Less cash and short term deposits(1) (232) (228)
Plus cash attributable to non-controlling interests 1 1
Total net debt for proportional LTV calculation 3,231 3,221
Group property portfolio valuation (Note 6) 5,413 5,595
Share of property of joint ventures 3,304 3,316
Other investments and property, plant and equipment (balance sheet)(2) 60 61
Less property attributable to non-controlling interests (13) (13)
Total assets for proportional LTV calculation 8,764 8,959
1. Cash and short term deposits exclude tenant deposits of £51m (31 March
2023: £49m).
2. The £18m (31 March 2023: £19m)
difference between other investments and plant, property and equipment per the
balance sheet totalling £78m (31 March 2023: £80m), relates to a
right-of-use asset recognised under a lease which is classified as property,
plant and equipment which is not included within Total assets for the purposes
of the LTV calculation.
9.3 Net Debt to EBITDA
Net Debt to EBITDA is the ratio of principal amount of gross debt less cash,
short term deposits and liquid investments to earnings before interest, tax,
depreciation and amortisation (EBITDA).
The Group ratio excludes non-recourse and joint venture borrowings and
includes distributions and other receivables from non-recourse companies and
joint ventures.
Group Net Debt to EBITDA
30 September 2023 31 March
£m
2023
£m
Group Net Debt to EBITDA 6.0x 6.4x
Principal amount of gross debt 2,255 2,250
Less non-recourse borrowings (297) (298)
Less cash and short term deposits (statement of cash flows)(1) (124) (99)
Plus cash attributable to non-recourse companies 24 37
Total net debt for group Net Debt to EBITDA calculation 1,858 1,890
Underlying Profit (Table A) 142 264
Plus Net financing charges (Note 5) 30 60
Less Underlying Profit due to joint ventures and non-recourse companies(2) (76) (144)
Plus distributions and other receivables from joint ventures and non-recourse 57 107
companies(3)
Plus depreciation and amortisation (Table A) 3 7
Total EBITDA for group Net Debt to EBITDA calculation 156 294
Annualisation adjustment x2 -
Annualised EBITDA for group Net Debt to EBITDA calculation 312 294
1. Cash and short term deposits exclude tenant deposits of £28m (31 March
2023: £26m).
2. Underlying Profit due to joint ventures £49m (31 March 2023: £92m) as
disclosed in the consolidated income statement and Underlying Profit due to
non-recourse companies £27m (31 March 2023: £52m).
3. Distributions and other receivables from joint ventures £37m (31 March
2023: £73m) as disclosed in the consolidated statement of cash flows and
distributions and other receivables from non-recourse companies £20m (31
March 2023: £34m).
Proportionately consolidated Net Debt to EBITDA
30 September 2023 31 March
£m
2023
£m
Proportionally consolidated Net Debt to EBITDA 8.0x 8.4x
Principal amount of gross debt 3,462 3,448
Less cash and short term deposits(1) (232) (228)
Plus cash attributable to non-controlling interests 1 1
Total net debt for proportional Net Debt to EBITDA calculation 3,231 3,221
Underlying Profit (Table A) 142 264
Plus Net financing charges (Table A) 57 111
Plus depreciation and amortisation (Table A) 3 7
Total EBITDA for proportional Net Debt to EBITDA calculation 202 382
Annualisation adjustment x2 -
Annualised Total EBITDA for proportional Net Debt to EBITDA calculation 404 382
1. Cash and short term deposits exclude tenant deposits of £51m (31 March
2023: £49m).
9.4 British Land Unsecured Financial Covenants
The two financial covenants applicable to the Group unsecured debt are shown
below:
30 September 2023 31 March
£m
2023
£m
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves 39% 38%
Principal amount of gross debt 2,255 2,250
Less the relevant proportion of borrowings of the partly-owned subsidiary/ - -
non-controlling interests
Less cash and short term deposits (statement of cash flows)(1) (124) (99)
Plus the relevant proportion of cash and deposits of the partly-owned 1 1
subsidiary/
non-controlling interests
Net Borrowings 2,132 2,152
Share capital and reserves (balance sheet) 5,367 5,525
Deferred tax liabilities (Table A) 8 6
Trading property surpluses (Table A) 1 7
Exceptional refinancing charges (see below) 154 161
Fair value adjustments of financial instruments (Table A) (94) (44)
Less reserves attributable to non-controlling interests (balance sheet) (13) (13)
Adjusted Capital and Reserves 5,423 5,642
1. Cash and short term deposits exclude tenant deposits of £28m (31 March
2023: £26m).
In calculating Adjusted Capital and Reserves for the purpose of the unsecured
debt financial covenants, there is an adjustment of £154m (31 March 2023:
£161m) to reflect the cumulative net amortised exceptional items relating to
the refinancings in the years ended 31 March 2005, 2006 and 2007.
30 September 2023 31 March
£m
2023
£m
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets 33% 32%
Principal amount of gross debt 2,255 2,250
Less cash and deposits not subject to a security interest (being £124m less (117) (86)
cash subject to a security interest of £7m)
Less principal amount of secured and non-recourse borrowings (932) (933)
Net Unsecured Borrowings 1,206 1,231
Group property portfolio valuation (Note 6) 5,413 5,595
Investments in joint ventures (Note 7) 2,157 2,206
Other investments and property, plant and equipment (balance sheet)(1) 60 61
Less investments in joint ventures (Note 7) (2,157) (2,206)
Less encumbered assets (Note 6) (1,762) (1,747)
Unencumbered Assets 3,711 3,909
1. The £18m (31 March 2023: £19m) difference between other investments and
plant, property and equipment per the balance sheet totalling £78m (31 March
2023: £80m), relates to a right-of-use asset recognised under a lease which
is classified as property, plant and equipment which is not included within
Unencumbered Assets for the purposes of the covenant calculation.
9.5 Fair value hierarchy
The table below analyses financial instruments carried at fair value, by the
valuation method. The different levels are defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The fair value of interest rate and currency derivatives are determined using
the present value of estimated future cash flows and discounted based on the
applicable yield curves derived from quoted interest rates and the appropriate
exchange rate at the balance sheet date.
30 September 2023 31 March 2023
Level 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 - (144) - (144) - (144) - (144)
Other investments - fair value through profit and loss - - (48) (48) - - (48) (48)
Assets - (144) (48) (192) - (144) (48) (192)
Interest rate and currency derivative liabilities - 78 - 78 - 67 - 67
Liabilities - 78 - 78 - 67 - 67
Total - (66) (48) (114) - (77) (48) (125)
There have been no transfers between levels in the period.
10 Dividend
The Interim dividend payment for the six months ended 30 September 2023 will
be 12.16p. Payment will be made on 5 January 2024 to shareholders on the
register at close of business on 24 November 2023. The Interim dividend will
be a Property Income Distribution (PID) and no SCRIP alternative will be
offered.
The 2023 Final dividend of 11.04p pence per share, totalling £102m was paid
on 28 July 2023. The whole of the 2023 Final dividend was a PID and no scrip
alternative was offered. £87m was paid to shareholders, and £15m of
withholding tax was retained.
11 Segment information
Operating segments
The Group allocates resources to investment and asset management according to
the sectors it expects to perform over the medium term.
The relevant gross rental income, net rental income, operating result and
property assets, being the measures of segment revenue, segment result and
segment assets used by the management of the business, are set out below.
Management reviews the performance of the business principally on a
proportionally consolidated basis, which includes the Group's share of joint
ventures on a line-by-line basis and excludes non-controlling interests in the
Group's subsidiaries. The chief operating decision maker for the purpose of
segment information is the Executive Committee.
Gross rental income is derived from the rental of buildings. Operating result
is the net of net rental income, fee income and administrative expenses. No
customer exceeded 10% of the Group's revenues in either period.
From 1 April 2023 the Group renamed the Retail & Fulfilment operating
segment to Retail & London Urban Logistics, in line with our evolving
strategy. There have been no changes in the allocation of the segment results
or assets as a consequence of this change.
Segment result
Six months ended 30 September
Campuses Retail & London Unallocated Total
Urban Logistics
2023 2022 2023 Restated(1) 2023 2022 2023 Restated(1)
£m
£m
£m
£m
£m
£m
2022 2022
£m
£m
Gross rental income
British Land Group 48 65 109 101 - - 157 166
Share of joint ventures 55 54 29 29 - - 84 83
Total 103 119 138 130 - - 241 249
Net rental income
British Land Group 42 63 109 88 - - 151 151
Share of joint ventures 49 49 26 24 - - 75 73
Total 91 112 135 112 - - 226 224
Operating result
British Land Group 51 58 108 92 (26) (28) 133 122
Share of joint ventures 43 54 25 19 (2) (1) 66 72
Total 94 112 133 111 (28) (29) 199 194
Reconciliation to Underlying Profit before taxation Restated(1)
Six months ended Six months ended
30 September 2023
30 September 2022
£m
£m
Operating result - proportionately consolidated (Table A) 199 194
Net financing charges - proportionately consolidated (Table A) (57) (56)
Underlying Profit 142 138
Reconciliation to loss before taxation
Underlying Profit 142 138
Capital and other (192) (159)
Underlying Profit attributable to non-controlling interests 1 1
Total loss before taxation (49) (20)
1. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions. Refer to Note 1 for
further information.
Of the operating result above, £199m (six months ended 30 September 2022:
£194m restated) was derived from within the UK.
Segment assets
Campuses Retail & London Urban Logistics Total
30 September 2023 31 March 30 September 2023 31 March 30 September 2023 31 March
£m
2023
£m
2023
£m
2023
£m
£m
£m
Property assets
British Land Group 2,728 2,972 2,681 2,619 5,409 5,591
Share of joint ventures 2,663 2,687 641 629 3,304 3,316
Total 5,391 5,659 3,322 3,248 8,713 8,907
Reconciliation to net assets
British Land Group 30 September 2023 31 March
£m
2023
£m
Property assets 8,713 8,907
Other non-current assets - proportionately consolidated 78 141
Non-current assets 8,791 9,048
Other net current liabilities - proportionately consolidated (360) (384)
EPRA net debt (Table A) (3,153) (3,127)
Other non-current liabilities - (50)
EPRA NTA 5,278 5,487
Non-controlling interests 13 13
EPRA adjustments (Table A) 76 25
IFRS net assets 5,367 5,525
12 Related party transactions
There have been no material changes in the related party transactions
described in the last annual report.
13 Contingent liabilities
The Group and joint ventures have contingent liabilities in respect of legal
claims, guarantees and warranties arising in the ordinary course of business.
It is not anticipated that any material liabilities will arise from contingent
liabilities.
14 Share capital and reserves
£m Ordinary shares of 25p each
Issued, called and fully paid
At 1 April 2023 234 938,334,977
Share issues - 181,601
At 30 September 2023 234 938,516,578
At 30 September 2023, of the issued 25p ordinary shares, 7,376 shares were
held in the ESOP trust (31 March 2023: 7,376), 11,266,245 shares were held as
treasury shares (31 March 2022: 11,266,245) and 927,242,957 shares were in
free issue (31 March 2023: 926,997,041). No treasury shares were acquired by
the ESOP trust during the period. All issued shares are fully paid.
15 Subsequent events
There have been no significant subsequent events post the balance sheet date.
Supplementary Disclosures
Table A: Summary income statement and balance sheet
Summary income statement based on proportional consolidation for the six
months ended 30 September 2023
The following pro forma information is unaudited and does not form part of the
consolidated primary statements or the notes thereto. It presents the results
of the Group, with its share of the results of joint ventures included on a
line by line basis and excluding non-controlling interests.
Six months ended 30 September 2023 Restated(1)
Six months ended 30 September 2022
Group Joint ventures Less non-controlling interests Proportionally consolidated Group Joint ventures Less non-controlling interests Proportionally consolidated
£m
£m
£m
£m
£m
£m
£m
£m
Gross rental income(2) 163 85 (2) 246 172 83 (2) 253
Property operating expenses(3) (8) (8) 1 (15) (16) (9) 1 (24)
Net rental income 155 77 (1) 231 156 74 (1) 229
Administrative expenses(4) (42) (1) - (43) (43) (1) - (44)
Net fees and other income 11 - - 11 9 - - 9
Ungeared Income Return 124 76 (1) 199 122 73 (1) 194
Net financing charges (30) (27) - (57) (31) (25) - (56)
Underlying Profit 94 49 (1) 142 91 48 (1) 138
Underlying taxation (1) - - (1) (1) - - (1)
Underlying Profit after taxation 141 90 48 (1) 137
Valuation movement (327) (315)
Other capital and taxation (net)(5) 129 150
Result attributable to shareholders of the Company (57) (28)
1. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions. Refer to Note 1 for
further information.
2. Group gross rental income includes £5m (six months ended 30 September
2023: £4m) of all inclusive rents relating to service charge income and
excludes the £25m (six months ended 30 September 2023: £nil) of rent
receivable and £149m (six months ended 30 September 2023: £nil) of surrender
premia received within the Capital and other column of the income statement
(see Note 3).
3. Group property operating expenses excludes £54m (six months ended 30
September 2023: £nil) of provisions for impairment of tenant incentives and
contracted rent increases within the Capital and other column of the income
statement (see Note 3).
4. Administrative expenses includes £3m (six months ended 30 September
2023: £4m) of depreciation and amortisation.
5. Includes other comprehensive income, movement in dilution of share
options and the movement in items excluded for EPRA NTA.
Summary balance sheet based on proportional consolidation as at 30 September
2023
The following pro forma information is unaudited and does not form part of the
consolidated primary statements or the notes thereto. It presents the results
of the Group, with its share of the results of joint ventures included on a
line-by-line basis and excluding non-controlling interests.
Group Share of joint ventures Less non-controlling interests Share options Mark-to-market on derivatives and related debt adjustments Head leases Valuation surplus on trading properties Intangibles and Deferred tax EPRA NTA EPRA NTA
£m
£m
£m
£m
£m
£m
£m
£m
30 September 2023
31 March
£m
2023
£m
Campuses properties 2,773 2,695 - - - (78) 1 - 5,391 5,659
Retail & London Urban Logistics properties 2,744 631 (13) - - (40) - - 3,322 3,248
Total properties(1) 5,517 3,326 (13) - - (118) 1 - 8,713 8,907
Investments in 2,157 (2,157) - - - - - - - -
joint ventures
Other investments 56 - - - - - - (8) 48 50
Other net (liabilities) assets (338) (128) 1 17 - 118 - - (330) (343)
Deferred tax liability (6) (2) - - - - - 8 - -
Net debt (2,019) (1,039) (1) - (94) - - - (3,153) (3,127)
Net assets 5,367 - (13) 17 (94) - 1 - 5,278 5,487
EPRA NTA per share (Note 2) 565p 588p
1. Included within the total property value of £8,713m (31 March 2023:
£8,907m) are right-of-use assets net of lease liabilities of £9m (31 March
2023: £9m), which in substance, relates to properties held under leasing
agreements. The fair value of the right-of-use asset is determined by
calculating the present value of net rental cashflows over the term of the
lease agreements.
EPRA Net tangible assets movement
30 September 2023 31 March 2023
£m Pence per share £m Pence per share
Opening EPRA NTA 5,487 588 6,806 730
Income return 141 15 263 28
Capital return (248) (27) (1,367) (147)
Dividend paid (102) (11) (215) (23)
Closing EPRA NTA 5,278 565 5,487 588
Table B: EPRA Performance measures
EPRA Performance measures summary table
Six months ended Restated(1)
30 September 2023
Six months ended
30 September 2022
£m Pence per share £m Pence per share
EPRA Earnings - basic 261 28.2 137 14.8
- diluted 261 28.1 137 14.7
Percentage Percentage
EPRA Net Initial Yield 5.4% 4.5%
EPRA 'topped-up' Net Initial Yield 6.0% 5.2%
EPRA Vacancy Rate 6.7% 6.1%
EPRA Cost Ratio (including direct vacancy costs) 14.8% 19.5%
EPRA Cost Ratio (excluding direct vacancy costs) 7.0% 13.7%
1. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions. Refer to Note 1 for
further information.
30 September 2023 31 March 2023
£m Pence per share £m Pence per share
EPRA NTA 5,278 565 5,487 588
EPRA NRV 5,809 622 6,029 646
EPRA NDV 5,549 594 5,658 606
Percentage Percentage
EPRA LTV 39.9% 39.5%
Calculation and reconciliation of Underlying/EPRA/IFRS Earnings and
Underlying/EPRA/IFRS Earnings per share
Six months ended Restated(1)
30 September 2023
£m Six months ended
30 September 2022
£m
Loss attributable to the shareholders of the Company (61) (32)
Exclude:
Group - Underlying taxation 1 -
Group - Capital and other taxation 11 11
Group - valuation movement 201 189
Group - (profit) loss on disposal of investment properties and revaluation of (2) 20
investments
Group - Capital and other revenue and costs (see Note 3) (120) -
Joint ventures - valuation movement (including result on disposals) 126 126
Joint ventures - capital financing income (3) (30)
Joint ventures - deferred tax - 1
Changes in fair value of financial instruments and associated close-out costs (10) (147)
Non-controlling interests in respect of the above (1) -
Underlying Profit 142 138
Group - Underlying current taxation (1) (1)
Underlying Earnings - basic and diluted 141 137
Group - Capital and other revenue and costs (see Note 3) 120 -
EPRA Earnings - basic and diluted 261 137
Loss attributable to the shareholders of the Company (61) (32)
IFRS Earnings - basic and diluted (61) (32)
1. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions. Refer to Note 1 for
further information.
Six months ended Six months ended
30 September 2023
30 September 2022
Number million
Number million
Weighted average number of shares 938 938
Adjustment for Treasury shares (11) (11)
IFRS/EPRA/Underlying weighted average number of shares (basic) 927 927
Dilutive effect of share options - -
Dilutive effect of ESOP shares 2 3
EPRA/Underlying weighted average number of shares (diluted) 929 930
Remove anti-dilutive effect (2) (3)
IFRS weighted average number of shares (diluted) 927 927
Net assets per share
30 September 2023 31 March 2023
£m Pence per share £m Pence per share
IFRS net assets 5,367 5,525
Deferred tax arising on revaluation of derivatives 8 6
Mark-to-market on derivatives and related debt adjustments (94) (44)
Dilution effect of share options 17 14
Surplus on trading properties 1 7
Intangible assets (8) (8)
Less non-controlling interests (13) (13)
EPRA NTA 5,278 565 5,487 588
Intangible assets 8 8
Purchasers' costs 523 534
EPRA NRV 5,809 622 6,029 646
Deferred tax arising on revaluation movements (8) (7)
Purchasers' costs (523) (534)
Mark-to-market on derivatives and related debt adjustments 94 44
Mark-to-market on debt 177 126
EPRA NDV 5,549 594 5,658 606
EPRA NTA is the Group's primary measure of net assets and assumes that
entities buy and sell assets, thereby crystallising certain levels of
unavoidable deferred tax. Due to the Group's REIT status, deferred tax is only
provided at each balance sheet date on properties outside the REIT regime. As
a result deferred taxes are excluded from EPRA NTA for properties within the
REIT regime. For properties outside of the REIT regime, deferred tax is
included to the extent that it is expected to crystallise, based on the
Group's track record and tax structuring. EPRA NRV reflects what would be
needed to recreate the Group through the investment markets based on its
current capital and financing structure. EPRA NDV reflects shareholders' value
which would be recoverable under a disposal scenario, with deferred tax and
financial instruments recognised at the full extent of their liability.
30 September 2023 31 March
Number million
2023
Number million
Number of shares at period/year end 938 938
Adjustment for treasury shares (11) (11)
IFRS/EPRA number of shares (basic) 927 927
Dilutive effect of share options 5 3
Dilutive effect of ESOP shares 2 3
IFRS/EPRA number of shares (diluted) 934 933
EPRA Net Initial Yield and 'topped-up' Net Initial Yield
30 September 2023 30 September 2022
£m
£m
Investment property - wholly-owned 5,400 5,942
Investment property - share of joint ventures 3,304 3,701
Less developments, residential and land (1,817) (1,358)
Completed property portfolio 6,887 8,285
Allowance for estimated purchasers' costs 473 589
Gross up completed property portfolio valuation (A) 7,360 8,874
Annualised cash passing rental income 430 435
Property outgoings (33) (33)
Annualised net rents (B) 397 402
Rent expiration of rent-free periods and fixed uplifts(1) 41 59
'Topped-up' net annualised rent (C) 438 461
EPRA Net Initial Yield (B/A) 5.4% 4.5%
EPRA 'topped-up' Net Initial Yield (C/A) 6.0% 5.2%
Including fixed/minimum uplifts received in lieu of rental growth 6 4
Total 'topped-up' net rents (D) 444 465
Overall 'topped-up' Net Initial Yield (D/A) 6.0% 5.2%
'Topped-up' net annualised rent 438 461
ERV vacant space 32 30
Reversions 5 (4)
Total Estimated Rental Value (E) 475 487
Net Reversionary Yield (E/A) 6.5% 5.5%
1. The weighted average period over which rent-free periods expire is 1 year
(30 September 2022: 1 year).
EPRA Net Initial Yield ('NIY') basis of calculation
EPRA NIY is calculated as the annualised net rent (on a cash flow basis),
divided by the gross value of the completed property portfolio. The valuation
of our completed property portfolio is determined by our external valuers as
at 30 September 2023, plus an allowance for estimated purchaser's costs.
Estimated purchaser's costs are determined by the relevant stamp duty
liability, plus an estimate by our valuers of agent and legal fees on notional
acquisition. The net rent deduction allowed for property outgoings is based on
our valuers' assumptions on future recurring non-recoverable revenue
expenditure.
In calculating the EPRA 'topped-up' NIY, the annualised net rent is increased
by the total contracted rent from expiry of rent-free periods and future
contracted rental uplifts were defined as not in lieu of growth. Overall
'topped-up' NIY is calculated by adding any other contracted future uplift to
the 'topped-up' net annualised rent.
The net reversionary yield is calculated by dividing the total estimated
rental value (ERV) for the completed property portfolio, as determined by our
external valuers, by the gross completed property portfolio valuation.
The EPRA Vacancy Rate is calculated as the ERV of the un-rented, lettable
space as a proportion of the total rental value of the completed property
portfolio.
EPRA Vacancy Rate
30 September 2023 30 September 2022
£m
£m
Annualised potential rental value of vacant premises 32 30
Annualised potential rental value for the completed property portfolio 483 489
EPRA Vacancy Rate 6.7% 6.1%
EPRA Cost Ratios
Six months ended Restated(1)
30 September 2023
£m Six months ended
30 September 2022
£m
Property operating expenses 7 15
Administrative expenses 42 43
Share of joint ventures expenses 9 10
Less: Performance & management fees (from joint ventures) (9) (6)
Net other fees and commissions (2) (3)
Ground rent costs and operating expenses de facto included in rents (13) (12)
EPRA Costs (including direct vacancy costs) (A) 34 47
Direct vacancy costs (18) (14)
EPRA Costs (excluding direct vacancy costs) (B) 16 33
Gross rental income less ground rent costs and operating expenses de facto 152 159
included in rents
Share of joint ventures (Gross Rental Income less ground rent costs) 78 82
Total Gross rental income (C) 230 241
EPRA Cost Ratio (including direct vacancy costs) (A/C) 14.8% 19.5%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C) 7.0% 13.7%
Reversal of impairment of tenant debtors, tenant incentives and accrued income (10) (1)
(D)
Adjusted Cost Ratio (including direct vacancy costs and excluding impairment 19.1% 19.9%
of tenant debtors, tenant incentives and accrued income) (A-D)/C
Adjusted Cost Ratio (excluding direct vacancy costs and excluding impairment 11.3% 14.1%
of tenant debtors, tenant incentives and accrued income) (B-D)/C
Overhead and operating expenses capitalised (including share of joint 5 3
ventures)
1. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions. Refer to Note 1 for
further information.
In the current and prior periods employee costs in relation to staff time on
development projects are capitalised into the base cost of relevant
development assets. In addition to the standard EPRA Cost Ratios (both
including and excluding direct vacancy costs), adjusted versions of these
ratios have also been presented which remove the impact of the reversal of
impairment of tenant debtors, tenant incentives and accrued income which are
exceptional items in the current period, to show the impact of these items on
the ratios.
Table C: Gross rental income
Six months ended Restated(1)
30 September 2023
£m Six months ended
30 September 2022
£m
Rent receivable 239 232
Spreading of tenant incentives and contracted rent increases 4 19
Surrender premia 3 2
Gross rental income 246 253
1. Prior period comparatives have been restated for a change in accounting
policy in respect of rental concessions. Refer to Note 1 for
further information.
The current and prior period information is presented on a proportionally
consolidated basis, excluding non-controlling interests.
Table D: Property related capital expenditure
Six months ended 30 September 2023 Year ended 31 March 2023
Group Joint ventures Total Group Joint ventures Total
£m
£m
£m
£m
£m
£m
Acquisitions 58 - 58 158 - 158
Development 91 100 191 156 106 262
Investment properties
Incremental lettable space - - - - - -
No incremental lettable space 30 11 41 60 26 86
Tenant incentives 1 3 4 2 1 3
Other material non-allocated types 2 2 4 3 3 6
of expenditure
Capitalised interest 7 3 10 10 3 13
Total property related capex 189 119 308 389 139 528
Conversion from accrual to cash basis 10 (3) 7 (50) (6) (56)
Total property related capex on cash basis 199 116 315 339 133 472
The above is presented on a proportionally consolidated basis, excluding
non-controlling interests and business combinations. The 'Other material
non-allocated types of expenditure' category contains capitalised staff costs
of £4m (31 March 2023: £6m).
Table E: EPRA LTV
30 September 2023 31 March 2023
Proportionately consolidated Proportionately consolidated
Group Share of Joint Ventures Non-controlling interests Total Group Share of Joint Ventures Non-controlling interests Total
£m
£m
£m
£m
£m
£m £m £m
Include:
Gross debt 2,255 1,207 - 3,462 2,250 1,198 - 3,448
Net payables 213 101 - 314 271 93 - 364
Exclude:
Cash and cash equivalents (152) (131) 1 (282) (125) (152) 1 (276)
EPRA Net Debt (a) 2,316 1,177 1 3,494 2,396 1,139 1 3,536
Include:
Property portfolio valuation 5,413 3,304 (13) 8,704 5,595 3,316 (13) 8,898
Other financial assets 48 - - 48 50 - - 50
Intangibles 8 - - 8 8 - - 8
EPRA Total Property Value (b) 5,469 3,304 (13) 8,760 5,653 3,316 (13) 8,956
EPRA LTV (a/b) 42.3% 39.9% 42.4% 39.5%
Supplementary Tables
Data includes Group's share of Joint Ventures
HY24 rent collection
Rent due between 25 March 2023 and 28 September 2023 Offices Retail Total
Received 99% 98% 99%
Outstanding 1% 2% 1%
Total 100% 100% 100%
£94m £133m £227m
September quarter 2023 rent collection
Rent due between 29 September 2023 and 8 November 2023 Offices Retail Total
Received 97% 93% 95%
Outstanding 3% 7% 5%
Total 100% 100% 100%
£42m £51m £93m
Purchases
Since 1 April 2023 Sector Price Price Annualised
(100%)
(BL Share)
Net Rents
£m
£m
£m(1)
Completed
Westwood Retail Park, Thanet Retail Park 55 55 4
Total 55 55 4
Sales
Since 1 April 2023 Sector Price Price Annualised
(100%)
(BL Share)
Net Rents
£m
£m
£m(1)
Completed
Burton Upon Trent, Sainsburys Other Retail 8 8 1
Riverside Retail Park, Coleraine Retail Park 10 10 1
126-134 Baker Street Office 17 17 1
Vodafone Portfolio Office 96 96 5
Exchanged
Vodafone Portfolio (Addison House)(3) Office 29 29 1
Other(2) Residential/Retail 13 10 1
Total 173 170 10
1. BL share of annualised rent topped up for rent frees
2. Of which £8m completed post period end
3. Completed post period end
Portfolio Valuation by Sector
Change(1)
At 30 September 2023 Group Joint ventures Total % £m
£m
£m
£m
West End 1,994 330 2,324 (2.5) (60)
City 439 2,027 2,466 (4.6) (124)
Canada Water & other Campuses 170 304 474 (9.2) (48)
Residential(2) 116 2 118 0.8 1
Campuses 2,719 2,663 5,382 (4.0) (231)
Retail Parks 1,877 183 2,060 0.2 4
Shopping Centre 311 440 751 0.0 0
London Urban Logistics 261 10 271 0.6 2
Other Retail 232 8 240 (0.8) (2)
Retail & London Urban Logistics 2,681 641 3,322 0.1 4
Total 5,400 3,304 8,704 (2.5) (227)
Standing Investments 4,198 2,699 6,897 (2.5) (179)
Developments 1,202 605 1,807 (2.6) (48)
On a proportionally consolidated basis including the Group's share of joint
ventures and excluding non-controlling interests
1. Valuation movement during the period (after taking account of capital
expenditure) of properties held at the balance sheet date, including
developments (classified by end use), purchases and sales
2. Standalone residential
Gross Rental Income(1)
6 months to 30 September 2023 Annualised as at 30 September 2023
Accounting Basis £m Group Joint ventures Total Group Joint ventures Total
West End 41 8 49 56 16 72
City 7 45 52 9 90 99
Other Campuses 5 2 7 9 4 13
Campuses 53 55 108 74 110 184
Retail Parks 74 8 82 138 14 152
Shopping Centre 21 21 42 39 41 80
London Urban Logistics 4 - 4 7 - 7
Other Retail 10 - 10 18 1 19
Retail & London Urban Logistics 109 29 138 202 56 258
Total 162 84 246 276 166 442
On a proportionally consolidated basis including the Group's share of joint
ventures and excluding non-controlling interests
Residential consists of only developments and ground rents, thereby excluded
from gross rental income analysis
1. Gross rental income will differ from annualised valuation rents due to
accounting adjustments for fixed & minimum contracted rental uplifts and
lease incentives
Portfolio Net Yields(1,2)
As at 30 September 2023 EPRA net EPRA topped Overall topped up net Net Net equivalent yield movement bps Net ERV Growth
initial yield
up net
initial yield
equivalent
reversionary yield
%
initial yield
yield
%(5) %(6)
%(4)
%
%(3)
West End 3.7 4.5 4.5 5.3 27 5.9 3.2
City 4.4 5.0 5.0 5.3 38 6.1 3.5
Other Campuses 5.6 5.6 6.0 5.7 21 6.5 0.0
Campuses 4.1 4.8 4.8 5.3 32 6.0 3.2
Retail Parks 6.7 7.3 7.4 6.7 13 6.8 4.0
Shopping Centre 8.0 8.5 8.6 8.0 10 8.0 2.6
London Urban Logistics 3.2 3.2 3.3 4.7 9 5.0 3.1
Other Retail 6.8 7.0 7.1 7.0 6 6.2 0.5
Retail & London Urban Logistics 6.8 7.3 7.4 6.9 12 6.9 3.3
Total 5.4 6.0 6.0 6.1 23 6.5 3.2
On a proportionally consolidated basis including the Group's share of joint
ventures and excluding non-controlling interests
Residential consists of only developments and ground rents, thereby excluded
from yield analysis
1. Including notional purchaser's costs
2. Excluding committed developments, assets held for development and
residential assets
3. Including rent contracted from expiry of rent-free periods and fixed
uplifts not in lieu of rental growth
4. Including fixed/minimum uplifts (excluded from EPRA definition)
5. Net reversionary yield is the anticipated yield to which the initially
yield will rise (or fall) once the rent reaches the estimated rental value,
assuming 100% occupancy
6. As calculated by MSCI
Total Property Return (as calculated by MSCI)
6 months to 30 September 2023 Offices Retail Total
% British Land(2) MSCI British Land(2) MSCI British Land MSCI
Capital Return (3.8) (8.1) 0.2 (2.5) (2.3) (2.7)
ERV Growth 3.2 1.4 3.3 0.5 3.2 1.8
Yield Movement(1) 32 bps 56 bps 12 bps 17 bps 23 bps 22 bps
Income Return 1.3 1.9 3.5 2.9 2.1 2.3
Total Property Return (2.5) (6.3) 3.7 0.4 (0.2) (0.5)
On a proportionally consolidated basis including the Group's share of joint
ventures and excluding non-controlling interests
1. Net equivalent yield movement
2. British Land Offices reflects Campuses; British Land Retail reflects
Retail & London Urban Logistics
Top 20 Occupiers by Sector
As at 30 September 2023 % of As at 30 September 2023 % of
Retail & London Urban Logistics rent
Campuses rent
Retail & London Urban Logistics Campuses
Next 4.8 Meta 12.8
Walgreens (Boots) 4.2 dentsu 6.3
M&S 3.7 Herbert Smith Freehills 3.9
Currys Plc 2.9 SEFE Energy 3.5
TJX (TK Maxx) 2.8 Sumitomo Mitsui 3.0
JD Sports 2.7 Deutsche Bank 2.6
Frasers Group 2.6 Janus Henderson 2.3
DFS Furniture 2.1 TP ICAP Plc 2.1
Tesco Plc 2.0 The Interpublic Group 2.1
TGI Friday's 2.0 Softbank Group 2.1
Kingfisher 1.9 Reed Smith(1) 2.0
Asda Group 1.8 Bank of Montreal 1.9
Hutchison Whampoa 1.8 Mayer Brown 1.9
Sainsbury 1.7 Mimecast Plc 1.7
Homebase 1.7 Milbank LLP 1.7
River Island 1.4 Credit Agricole 1.6
Primark 1.4 Accor 1.6
Pets at Home 1.4 Visa International 1.5
H&M 1.3 Dimensional Fund Advisors 1.2
Smyths Toys 1.1 Government 1.1
Total top 20 45.3 Total top 20 56.9
1. Taking into account their pre-let of 114,000 sq ft at Norton Folgate, %
contracted rent would rise to 6.3%
Major Holdings
As at 30 September 2023 BL Share Sq ft Rent (100%) Occupancy Lease
%
'000(5)
£m pa(1,4)
rate %(2,4)
length yrs(3,4)
Broadgate 50 4,468 191 97.0 5.9
Regent's Place 100 1,052 62 87.6 5.4
Paddington Central 25 958 13 99.7 8.3
Meadowhall, Sheffield 50 1,500 71 99.4 3.4
Glasgow Fort, Glasgow 100 510 36 98.3 4.9
Teesside, Stockton 100 569 29 97.6 3.4
Hannah Close, Wembley 100 246 4 100.0 2.3
Ealing Broadway, London 100 540 12 98.8 3.4
Drake's Circus, Plymouth 100 1,190 32 93.4 5.1
Giltbrook, Nottingham 100 198 13 100.0 6.3
1. Annualised EPRA contracted rent including 100% of joint ventures
2. Includes accommodation under offer or subject to asset management
3. Weighted average to first break
4. Excludes committed and near term developments
5. Owned and managed
Lease Length & Occupancy
Average lease length yrs Occupancy rate %
As at 30 September 2023 To expiry To break EPRA Occupancy(1,2,3)
Occupancy
West End 6.4 5.7 89.7 90.0
City 7.2 5.9 90.0 96.7
Other Campuses 10.6 7.6 100.0 100.0
Residential(4) 12.3 12.3 100.0 100.0
Campuses 6.9 5.8 90.1 93.8
Retail Parks 6.0 4.5 97.1 99.2
Shopping Centre 5.3 4.0 93.6 96.8
London Urban Logistics 3.2 1.8 99.8 99.8
Other Retail 8.2 7.6 96.4 97.4
Retail & London Urban Logistics 5.9 4.5 96.2 98.4
Total 6.3 5.0 93.3 96.2
1. EPRA Occupancy vs Occupancy: Occupancy includes space under offer or
subject to asset management
2. Space allocated to Storey is shown as occupied where there is a Storey
tenant in place otherwise it is shown as vacant. Total occupancy for Campuses
would rise from 93.8% to 94.4% if Storey space was assumed to be fully let
3. Where occupiers have entered administration or CVA but are still liable
for rates, these are treated as occupied. If units in administration are
treated as vacant, then the occupancy rate for Retail & London Urban
Logistics would reduce from 98.4% to 97.5%, and total occupancy would reduce
from 96.2% to 95.7%
4. Standalone residential
Portfolio Weighting
As at 30 September 2023 2023 2022
%
£m
%
West End 26.7 2,324 29.4
City 28.3 2,466 29.3
Canada Water & other Campuses 5.5 474 4.8
Residential(1) 1.3 118 1.1
Campuses 61.8 5,382 64.6
Of which London 97 5,234 98
Retail Parks 23.7 2,060 21.2
Shopping Centre 8.6 751 8.2
London Urban Logistics 3.1 271 3.3
Other Retail 2.8 240 2.7
Retail & London Urban Logistics 38.2 3,322 35.4
Total 100 8,704 100
Of which London 68 5,901 71
On a proportionally consolidated basis including the Group's share of joint
ventures and excluding non-controlling interests
1. Standalone residential
Annualised Rent & Estimated Rental Value (ERV)
Annualised rent (valuation basis) ERV Average rent
£m(1)
£m
£psf
As at 30 September 2023 Group Joint ventures Total Total Contracted(2) ERV
West End(3) 56 15 71 104 67.7 77.7
City(3) 5 83 88 121 56.6 65.3
Other Campuses 6 - 6 8 27.8 35.1
Campuses 67 98 165 233 55.5 62.9
Retail Parks 143 14 157 154 22.7 20.8
Shopping Centre 40 42 82 79 25.8 23.7
London Urban Logistics 8 - 8 12 14.0 21.9
Other Retail 17 1 18 17 14.3 12.8
Retail & London Urban Logistics 208 57 265 262 22.3 20.8
Total 275 155 430 495 29.4 30.4
On a proportionally consolidated basis including the group's share of joint
ventures and funds and excluding non-controlling interests, and excluding
committed, near term and assets held for development
Residential consists of only developments and ground rents, thereby excluded
from rent analysis
1. Gross rents plus, where rent reviews are outstanding, any increases to ERV
(as determined by the Group's external valuers), less any ground rents payable
under head leases, excludes contracted rent subject to rent free and future
uplift
2. Annualised rent, plus rent subject to rent free
3. £psf metrics shown for office space only
Rent Subject to Open Market Rent Review
For year to 31 March 2024 2025 2026 2027 2028 2024-26 2024-28
As at 30 September 2023
£m
£m
£m
£m
£m
£m
£m
West End 3 14 9 - 2 26 28
City 13 8 26 4 1 47 52
Other Campuses - 1 - - - 1 1
Campuses 16 23 35 4 3 74 81
Retail Parks 6 10 9 10 5 25 40
Shopping Centre 2 4 2 3 2 8 13
London Urban Logistics - 1 - - - 1 1
Other Retail 2 1 - 1 1 3 5
Retail & London Urban Logistics 10 16 11 14 8 37 59
Total 26 39 46 18 11 111 140
On a proportionally consolidated basis including the Group's share of joint
ventures and excluding non-controlling interests, and excluding committed,
near term and assets held for development
Residential consists of only developments and ground rents, thereby excluded
from open market rent analysis
1. Standalone residential
Rent Subject to Lease Break or Expiry
For year to 31 March 2024 2025 2026 2027 2028 2024-26 2024-28
As at 30 September 2023
£m
£m
£m
£m
£m
£m
£m
West End 2 8 14 4 7 24 35
City 8 10 13 5 3 31 39
Other Campuses 1 - - - 1 1 2
Campuses 11 18 27 9 11 56 76
Retail Parks 20 20 25 22 14 65 101
Shopping Centre 10 10 16 9 13 36 58
London Urban Logistics 1 1 4 - 2 6 8
Other Retail 1 3 1 1 - 5 6
Retail & London Urban Logistics 32 34 46 32 29 112 173
Total 43 52 73 41 40 168 249
% of contracted rent 9 11 16 9 8 36 53
On a proportionally consolidated basis including the Group's share of joint
ventures and excluding non-controlling interests excluding committed and near
term, and assets held for development
Residential consists of only developments and ground rents, thereby excluded
from lease break or expiry analysis
Committed Developments
As at 30 September 2023 Sector BL Share 100% sq ft PC Calendar Year Current Value Cost to come ERV Pre-let & under offer Gross Yield on Cost
%
'000
£m
%
£m(1) £m(2) £m(4)
Norton Folgate Office 100 335 Q4 2023 346 77 24.4 9.2 5.4
The Priestley Centre Life Science 100 84 Q1 2024 30 12 3.3 2.0 8.1
3 Sheldon Square Office 25 140 Q1 2024 39 4 2.6 2.2 6.4
Aldgate Place, Phase 2 Residential 100 138 Q2 2024 111 28 6.7 0.1 5.0
Peterhouse Expansion Life Science 100 96 Q1 2025 20 44 4.7 - 6.4
1 Broadgate(4) Office 50 545 Q2 2025 158 166 20.0 13.7 6.0
Canada Water
Robert's Close, K1(3) Residential 50 62 Q4 2023 4 - - - Blended 7
The Dock Shed, A2(3) Mixed Use 50 246 Q4 2024 25 29 5.5 -
1-3 Deal Porters Way, A1(3) Mixed Use 50 270 Q4 2024 50 57 3.6 -
Total Committed 1,916 783 417 70.8 27.2
On a proportionally consolidated basis including the group's share of joint
ventures (except area which is shown at 100%)
1. From 30 September 2023. Cost to come excludes notional interest as
interest is capitalised individually on each development at our
capitalisation rate
2. Estimated headline rental value net of rent payable under head leases
(excluding tenant incentives)
3. The London Borough of Southwark has confirmed they will not be investing
in Phase 1, but retain the right to participate in the development of
subsequent plots up to a maximum of 20% with their returns pro-rated
accordingly
4. Pre-let & under offer excludes 114,000 sq ft of office space under
option
5. Gross yield on costs is calculated by dividing the ERV of the project by
the total development costs, including the land value at the point of
commitment, and any actual /estimated capitalisation of interest
Near Term Development Pipeline
As at 30 September 2023 Sector BL Share% 100% sq ft Earliest Start Current Value Cost to come ERV Planning Status
'000
on Site
£m
£m(1) £m(2)
Mandela Way, Southwark London Urban Logistics 100 144 Q1 2024 19 53 4.7 Consented
1 Triton Square Life Science 100 318 Q2 2024 353 85 34.0 Pre-submission
The Box, Paddington London Urban Logistics 100 152 Q2 2024 35 47 6.5 Consented
Verney Road, Southwark London Urban Logistics 100 200 Q4 2024 27 76 7.4 Submitted
2 Finsbury Avenue Office 50 747 Q1 2024 94 376 35.7 Consented
Canda Water
Printworks, H1 & H2 Mixed Use 50 311 Q4 2024 - 105 8.6 Consented
Total Near Term 1,872 528 742 96.9
On a proportionally consolidated basis including the group's share of joint
ventures (except area which is shown at 100%)
1. From 30 September 2023. Cost to come excludes notional interest as
interest is capitalised individually on each development at our
capitalisation rate
2. Estimated headline rental value net of rent payable under head leases
(excluding tenant incentives)
Medium Term Development Pipeline
As at 30 September 2023 Sector BL Share 100% Sq ft Planning Status
%
'000
1 Appold Street Office 50 397 Consented
International House, Ealing Office 100 165 Consented
Euston Tower Office 100 539 Pre-submission
5 Kingdom Street Office 100 112 Consented
Finsbury Square London Urban Logistics 100 81 Pre-submission
Thurrock London Urban Logistics 100 644 Submitted
Enfield, Heritage House London Urban Logistics 100 437 Consented
Hannah Close, Wembley London Urban Logistics 100 668 Pre-submission
Meadowhall London Urban Logistics 50 611 Outline Consented
West One Development Mixed Use 25 72 Consented
Ealing - 10-40, The Broadway Mixed Use 100 318 Consented
Canada Water
Plot H3 Office 50 313 Outline Consented
Zone L Residential 50 200 Consented
Plot F2 Mixed Use 50 448 Consented
Future phases(1) Mixed Use 50 3,230 Outline Consented
Total Medium Term 8,235
On a proportionally consolidated basis including the group's share of joint
ventures (except area which is shown at 100%)
1. The London Borough of Southwark has the right to invest in up to 20% of the
completed development. The ownership share of the joint venture between
British Land and AustralianSuper will change over time depending on the level
of contributions made, but will be no less than 80%
Forward-looking statements
This Press Release contains certain (and we may make other verbal or written)
'forward-looking' statements. These forward-looking statements include all
matters that are not historical fact. Such statements reflect current views,
intentions, expectations, forecasts and beliefs of British Land concerning,
among other things, our markets, activities, projections, strategy, plans,
initiatives, objectives, performance, financial condition, liquidity, growth
and prospects, as well as assumptions about future events and developments.
Such 'forward-looking' statements can sometimes, but not always, be identified
by their reference to a date or point in the future, the future tense, or the
use of 'forward-looking' terminology, including terms such as 'believes',
'considers', 'estimates', 'anticipates', 'expects', 'forecasts', 'intends',
'continues', 'due', 'potential', 'possible', 'plans', 'seeks', 'projects',
'budget', 'goal', 'ambition', 'mission', 'objective', 'guidance', 'trends',
'future', 'outlook', 'schedule', 'target', 'aim', 'may', 'likely to', 'will',
'would', 'could', 'should' or similar expressions or in each case their
negative or other variations or comparable terminology. By their nature,
forward-looking statements involve inherent known and unknown risks,
assumptions and uncertainties because they relate to future events and
circumstances and depend on circumstances which may or may not occur and may
be beyond our ability to control, predict or estimate. Forward-looking
statements should be regarded with caution as actual outcomes or results may
differ materially from those expressed in or implied by such statements.
Recipients should not place reliance on, and are cautioned about relying on,
any forward-looking statements.
Important factors that could cause actual results (including the payment of
dividends), performance or achievements of British Land to differ materially
from any outcomes or results expressed or implied by such forward-looking
statements include, among other things, changes and/or developments as
regards: (a) general business and political, social and economic conditions
globally, (b) the United Kingdom's withdrawal from, and evolving relationship
with, the European Union, (c) industry and market trends (including demand in
the property investment market and property price volatility), (d)
competition, (e) the behaviour of other market participants, (f) government,
law or regulation including in relation to the environment, landlord and
tenant law, health and safety and taxation (in particular, in respect of
British Land's status as a Real Estate Investment Trust), (g) inflation and
consumer confidence, (h) labour relations, work stoppages and increased costs
for, or shortages of, talent, (i) climate change, natural disasters and
adverse weather conditions, (j) terrorism, conflicts or acts of war, (k)
British Land's overall business strategy, risk appetite and investment choices
in its portfolio management, (l) legal or other proceedings against or
affecting British Land, (m) cyber-attacks and other disruptions and
reliability and security of IT infrastructure, (n) occupier demand and tenant
default, (o) financial and equity markets including interest and exchange rate
fluctuations, (p) accounting practices and the interpretation of accounting
standards (q) the availability and cost of finances, including prolonged
higher interest rates, (r) public health crises, and (s) changes in
construction supplies and labour availability or cost inflation. The Company's
principal risks are described in greater detail in the section of this Press
Release headed "Risk Management and Principal Risks" and in the Company's
latest annual report and accounts (which can be found at www.britishland.com).
Forward-looking statements in this Press Release, or the British Land website
or made subsequently, which are attributable to British Land or persons acting
on its behalf, should therefore be construed in light of all such factors.
Information contained in this Press Release relating to British Land or its
share price or the yield on its shares are not guarantees of, and should not
be relied upon as an indicator of, future performance, and nothing in this
Press Release should be construed as a profit forecast or profit estimate, or
be taken as implying that the earnings of British Land for the current year or
future years will necessarily match or exceed the historical or published
earnings of British Land. Any forward-looking statements made by or on behalf
of British Land speak only as of the date they are made. Such forward-looking
statements are expressly qualified in their entirety by the factors referred
to above and no representation, assurance, guarantee or warranty is given in
relation to them (whether by British Land or any of its associates, directors,
officers, employees or advisers), including as to their completeness,
accuracy, fairness, reliability, the basis on which they were prepared, or
their achievement or reasonableness.
Other than in accordance with our legal and regulatory obligations (including
under the UK Financial Conduct Authority's Listing Rules, Disclosure Guidance
and Transparency Rules, the UK Market Abuse Regulation, and the requirements
of the Financial Conduct Authority and the London Stock Exchange), British
Land does not intend or undertake any obligation to update or revise publicly
forward-looking statements to reflect any changes in British Land's
expectations with regard thereto or any changes in information, events,
conditions or circumstances on which any such statement is based. This
document shall not, under any circumstances, create any implication that there
has been no change in the business or affairs of British Land since the date
of this document or that the information contained herein is correct as at any
time subsequent to this date.
Nothing in this document shall constitute, in any jurisdiction, an offer or
solicitation to sell or purchase any securities or other financial
instruments, nor shall it constitute a recommendation, invitation or
inducement, or advice, in respect of any securities or other financial
instruments or any other matter.
1 (#_ftnref1) MSCI performance is reweighted to match the British Land
portfolio composition at a sector level
2 (#_ftnref2) CBRE, Q3 23
3 (#_ftnref3) MSCI, 6 months to September 23
4 (#_ftnref4) British Retail Consortium, May 23
5 (#_ftnref5) Savills: +100,000 sq ft UK
6 (#_ftnref6) Costar
7 (#_ftnref7) CBRE, Q3 23
8 (#_ftnref8) CBRE and company estimates
9 (#_ftnref9) Savills, U.S. Department of Energy: Office of Scientific and
Technical Information, UK Government: Office for Life Sciences
10 (#_ftnref10) LDC
11 (#_ftnref11) Savills: inner London
12 (#_ftnref12) Of which £37m completed post period end
13 (#_ftnref13) Minimum Energy Efficiency Standard
14 (#_ftnref14) 2023 GRESB Development Benchmark Report: score for Northern
Europe/ Diversified - Office/ Residential
15 (#_ftnref15) CBRE, Q3 23
16 (#_ftnref16) JLL, Q3 23
17 (#_ftnref17) Cushman & Wakefield, September 23
18 (#_ftnref18) Cushman & Wakefield, Q3 23
19 (#_ftnref19) Savills, August 23
20 (#_ftnref20) Savills, Q3 23
21 (#_ftnref21) Of which £29m completed post period end
22 (#_ftnref22) The Home Quality Mark is an independently assessed
certification scheme for new homes, with a simple star rating based on a
home's design, construction and sustainability. Every home with an HQM
certificate meets standards that are significantly higher than minimum
standards such as Building Regulations
23 (#_ftnref23) MSCI 2 year All Property total return, which was -1.7% per
annum
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