British Land : Full Year Results 2018

17 May 2018

Chris Grigg, Chief Executive said: 'This has been another good year for British Land. Our financial performance has been robust following significant asset sales and we have made further strategic and operational progress. Leasing activity has been strong across our business. In London Offices, our unique campus offering is driving demand for our space, and we successfully launched Storey, our flexible workspace offer. In Retail, we remained focused on delivering best-in-class customer service and the highest quality modern space, and this drove another year of good leasing and operational outperformance. We completed over £1 billion of sales in the year and continued to make smart use of our capital. This included significant but low risk investment in our development pipeline, selective acquisitions and a £300 million share buyback, while further reducing net debt, with LTV now at 28%.

Looking forward, we are mindful of the uncertainties. In retail, market conditions are likely to remain challenging. In offices, demand for our space is healthy, with a range of businesses continuing to commit to London and the supply of high quality new space relatively constrained in the short term. As the ways in which businesses and people use space evolves, our strong and flexible balance sheet means we can capitalise on the opportunities we have created, which broaden the type of space we offer and further enhance the mix of uses and occupiers at our places to deliver enduring growth and returns.'

Highlights

• Robust financial performance
  • EPRA NAV 967 pence, up 5.7%; valuation up 2.2% with buyback contributing 15 pence
  • Underlying Profit £380 million, down 2.6% following £1.5 billion net sales of income producing assets, in the last two financial years
  • Full year dividend 30.08 pence, up 3.0% with a payout ratio of 80%; final dividend of 7.52 pence
  • Total accounting return of +8.9% (2016/17: +2.7%)
• London Offices: strong leasing activity driven by campus strategy and good market demand
  • Portfolio value up 4.5% reflecting quality of our assets and leasing success
  • 1.2 million sq ft of leasing activity; up four times on last year; 5.6% ahead of ERV
  • Under offer or in negotiations on a further 548,000 sq ft, to a wide range of occupiers
  • Storey successfully launched across all campuses, with 77% of space now let
• Retail: quality space driving operational outperformance in polarising markets
  • Portfolio value up 0.3%, with ERV growth offsetting yield expansion
  • 1.2 million sq ft of leasing activity; 10.3% ahead of ERV with incentives unchanged
  • 90% of leases reaching expiry were either retained or replaced; occupancy maintained at 98%
  • Continued operational outperformance vs benchmarks: footfall 340bps ahead; retailer sales 130bps ahead
  • £419 million disposals; £2.3 billion over the last four years as we proactively reshape the portfolio
• Strong progress on developments to drive future growth, with risk carefully managed
  • Committed pipeline doubled to 1.6 million sq ft with speculative exposure low at 4.5%
  • Generating estimated future rent of £63 million, of which 55% pre-let or under offer
  • Committed construction costs to come substantially covered by Clarges residential receipts
  • 1.9 million sq ft of planning consents in the year including Meadowhall Leisure extension
• Canada Water Master Development Agreement signed and planning application submitted
• Strong performance on sustainability indices, including DJSI, FTSE4Good, GRESB and MSCI

Summary

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