British Land : Half Year 2017/18 Results

16 Nov 2017

Highlights

• A strong first half of successful leasing activity:
  • 1.3m sq ft of lettings and renewals 6.8% ahead of ERV, securing £32m of additional future rent
  • At 98%, portfolio is effectively full on both sides of the business
  • Secured the largest West End pre-let in over 20 years at 1 Triton Square
• Good financial performance:
  • Profit maintained at £198m despite £1.5bn of sales since March 2016
  • NAV up 2.6% to 939p, with valuations up 1.4%
  • Half year dividend increase of 3% to 15.04p
• A balanced approach to development risk; well positioned for future growth:
  • Committed pipeline, representing £55m ERV, increased by 760,000 sq ft in the half
  • Speculative exposure at 4%, with 57% of committed pipeline pre-let or under offer
  • 1.8m sq ft of planning approvals including Paddington Gateway, Meadowhall Leisure extension
• Continued focus on capital discipline and further diversifying our sources of finance:
  • LTV reduced by 300 bps to 26.9% with WAIR at 3.0%
  • Successfully issued £300m Sterling Bond
  • £156m of £300m share buyback undertaken: on track for completion by end of financial year

Chris Grigg, Chief Executive said: 'British Land has delivered a strong first half performance as a result of our high level of successful activity and firm capital discipline. Net asset value is up 2.6%; profit and EPS remain steady despite considerable recent disposals; and we've increased the size of our committed development pipeline while reducing LTV further.

'Our strategic focus on creating outstanding environments is driving healthy demand for our space in a market that continues to polarise. Leasing activity was strong at good pricing, in spite of external uncertainty, and we secured the largest West End office pre-let in 22 years at 1 Triton Square. In development, we have maintained speculative exposure at 4% while extending the committed pipeline to 1.5 million sq ft, supported by continued leasing success.

'This pace is mirrored in our financing activity, where we reduced costs by another £12 million and further diversified our sources of debt. We further reduced LTV and extended average debt maturity to almost nine years. Our balance sheet is well positioned, providing flexibility as we create new lettable space through development.

'We have deliberately created a portfolio consisting of the high-quality assets and development opportunities required to succeed in today's environment. As a result we continue to achieve valuable leasing success and strong pricing, enabling us to increase the dividend by 3%, while progressing our unique development opportunities to create long-term value for shareholders.'

Summary

Results Presentation and Investor Conference Call
A presentation of the results will take place at 9.30am today, 16 November 2017, and will be broadcast live via webcast (www.britishland.com) and conference call. The details for the conference call are as follows:

Forward-looking statements

This Press Release contains certain 'forward-looking' statements. Such statements reflect current views on, among other things, our markets, activities, projections, objectives and prospects. Such 'forward-looking' statements can sometimes, but not always, be identified by their reference to a date or point in the future or the use of 'forward-looking' terminology, including terms such as 'believes', 'estimates', 'anticipates', 'expects', 'forecasts', 'intends', 'due', 'plans', 'projects', 'goal', '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 risks, assumptions and uncertainties because they relate to future events and depend on circumstances which may or may not occur and may be beyond our ability to control or predict. Forward-looking statements should be regarded with caution as actual results may differ materially from those expressed in or implied by such statements.

Important factors that could cause actual results, 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: (a) general business and political, social and economic conditions globally, (b) the consequences of the referendum on Britain leaving the EU, (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) changes in government and other regulation, including in relation to the environment, 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 and work stoppages, (i) natural disasters and adverse weather conditions, (j) terrorism and 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) reliable and secure IT infrastructure, (n) changes in occupier demand and tenant default, (o) changes in financial and equity markets including interest and exchange rate fluctuations, (p) changes in accounting practices and the interpretation of accounting standards and (q) the availability and cost of finance. The Company's principal risks are described in greater detail in the section of this Press Release headed Risk Management and Principal Risks. 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. 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 or the basis on which they were prepared.

Other than in accordance with our legal and regulatory obligations (including under the UK Financial Conduct Authority's Listing Rules and Disclosure Rules, Transparency Rules, and the Market Abuse Regulation), British Land does not intend or undertake to update or revise 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.

Presentation of financial information

The Group financial statements are prepared under IFRS where the Group's interests in joint ventures and funds are shown as a single line item on the income statement and balance sheet and all subsidiaries are consolidated at 100%.

Management considers the business principally on a proportionally consolidated basis when setting the strategy, determining annual priorities, making investment and financing decisions and reviewing performance. This includes the Group's share of joint ventures and funds on a line-by-line basis and excludes non-controlling interests in the Group's subsidiaries. The financial key performance indicators are also presented on this basis. Refer to the Financial Review for a discussion of the IFRS results.

Notes to Editors:

About British Land
Our portfolio of high quality UK commercial property is focused on Retail around the UK and London Offices. We own or manage a portfolio valued at £18.1 billion (British Land share: £13.5 billion) as at 30 September 2017 making us one of Europe's largest listed real estate investment companies.

Our strategy is to provide places which meet the needs of our customers and respond to changing lifestyles - Places People Prefer. We do this by creating great environments both inside and outside our buildings and use our scale and placemaking skills to enhance and enliven them. This expands their appeal to a broader range of occupiers, creating enduring demand and driving sustainable, long term performance.

Our Retail portfolio is focused on Regional and Local multi-let centres, and accounts for 49% of our portfolio. Our Offices portfolio comprises three office-led campuses in central London as well as high quality standalone buildings and accounts for 49% of our portfolio. Increasingly our focus is on providing a mix of uses and this is most evident at Canada Water, our 46 acre redevelopment opportunity where we have plans to create a new neighbourhood for London.

Sustainability is embedded throughout our business. Our places, which are designed to meet high sustainability standards, become part of local communities, provide opportunities for skills development and employment and promote wellbeing. Our industry-leading sustainability performance led to British Land being awarded a five star rating in the 2017 Global Real Estate Sustainability Benchmark for the second year running.

In April 2016 British Land received the Queen's Award for Enterprise: Sustainable Development, the UK's highest accolade for business success for economic, social and environmental achievements over a period of five years.

Further details can be found on the British Land website at www.britishland.com.

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