1st Quarter Results - Part 1

RNS Number : 7156L

British Land Co PLC

04 August 2011

 



THE BRITISH LAND COMPANY PLC FIRST QUARTER RESULTS

Capital valuations continue to rise, outperforming market benchmarks

·      Q1 underlying PBT 1.6% ahead at £65 million; IFRS PBT +15.8% to £198 million

·      Portfolio valuation up to £9.9 billion: +3.4% over 6 months; +1.5% over 3 months

·      Offices valuation +3.7% and Retail +0.4% in Q1

·      Continued outperformance vs IPD benchmarks: +90 bps on capital returns in Q1

·      NAV¹ per share at 583 pence: +6.4% over 6 months; +2.8% over 3 months

Further rental value growth in retail and offices

·      Total portfolio ERV +1.7% over 6 months; 0.8% over 3 months

·      Q1 Retail ERV +0.4%; UK occupancy up to 98.7%; new lettings 4.3% above ERV

·      Q1 Office ERV +1.7%; occupancy strong at 97.8%; 150,000 sq ft of lease extensions completed/terms agreed

London development programme moving forward at pace

·      On site at 5 of 6 major office development sites: Q1 office development values up 10%

·      Planning granted at 5 Broadgate; on site with demolition starting in mid-August

·      Non-binding Heads of Terms on pre-let for one third of Leadenhall; main construction contract agreed on favourable terms (vs budget and timetable)

·      NEQ office cores nearly complete; strong residential pre-sale and office pre-let interest

Investment activity driving future income and capital growth

·      £326 million of acquisitions since the start of the financial year; £21 million pa long-term income, a 6.8% yield on income generating assets

·      £1.9 billion committed investment in last 18 months with nearly 90% in Central London and retail; estimated £128 million of new income

Chris Grigg, Chief Executive said: We've had an active and positive start to the year. Our focus on high quality retail and London offices continues to drive strong valuation and improvement in rental values. The early decisions we made in undertaking our £1.1billion development programme are having a real impact, accounting for nearly a quarter of our valuation improvement, and the highly selective acquisitions made since the beginning of the quarter will add both incremental income and value for our shareholders.

	Q1 2011	Q1 2010	change
Net Asset Value1 per share	583p	515p	+13.2%
IFRS net assets	£5,056m	£4,322m
Underlying profit before tax2	£65m	£64m	+1.6%
IFRS profit before tax (PBT)	£198m	£171m	+15.8%
Underlying EPS2	7.2p	7.1p	+1.4%
Diluted EPS	22.2p	19.7p
Dividends per share	6.5p	6.5p

¹ EPRA (European Public Real Estate Association) basis - see Note 1 to the accounts

² See Note 1 to the accounts

Investor Conference Call

British Land will host a conference call at 9.00am today, 4 August 2011.  The details for the conference call are as follows:

UK Toll Free Number:                 0800 028 1243

UK Number:                              [phone]

Passcode:                                 6659645

A dial in replay will be available later in the day and the details are:

Replay number:                         0800 358 7735

Passcode:                                 6659645#

For Information Contact

Investor Relations

Sally Jones, British Land                                    020 7467 2942

Media 

Pip Wood, British Land                                       020 7467 2838

Gordon Simpson, Finsbury Group/                       020 7251 3801

Guy Lamming, Finsbury Group

Forward-Looking Statements

This document contains certain "forward-looking" statements reflecting, amongst other things, current views on our markets, activities and prospects. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that may or may not occur and which may be beyond British Land's ability to control or predict (such as changing political, economic or market circumstances). Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of British Land speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Except to the extent required by law, British Land does not 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.

Notes to Editors:

About British Land

British Land is one of Europe's largest Real Estate Investment Trusts (REITs) with total assets, owned or managed, of £15.2 billion (British Land share £9.9 billion), as valued at 30 June 2011. Through our property and finance expertise we attract experienced partners to create properties and environments which are home to over 1,000 different organisations and visited byover 250 million people each year. Our property portfolio is focused on prime retail locations and Central London offices which attract high quality occupiers committed to long leases. Our occupancy rate of 98% and average lease length to first break of 11 years are among the highest of the major UK REITs.

Retail assets account for 64% of our portfolio, over 80% of which are located at prime out-of-town sites. Comprising around 27 million sq ft of retail space across 91 retail warehouse properties, 99 superstores, 12 shopping centres and 10 department stores, the retail portfolio is generally modern, flexible and adaptable to a wide range of formats. Active asset management delivers attractive space to both retailers and consumers.

London offices, located in the City and West End, comprise 33% of the portfolio (rising to an estimated 38% on completion of current developments) amounting to 7 million sq ft of office space including Broadgate, the premier City office campus (50% share) and Regent's Place in the West End. We are investing £1.1 billion to create Central London's largest committed office development programme which will deliver 2.2 million sq ft of high quality space by 2014, including a 700,000 sq ft building at 5 Broadgate, the 610,000 sq ft Leadenhall Building in London's insurance district and the 500,000 sq ft NEQ mixed use scheme at Regent's Place.

Our size and substance demands a responsible approach to business and we focus on five areas which matter most to us and our key stakeholders: managing buildings efficiently; developing sustainable buildings; enhancing biodiversity; exceeding customers' expectations and focusing on local communities. We believe leadership on issues such as sustainability helps drive our performance and is core to our corporate aim of building the best REIT in Europe.

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

BUSINESS REVIEW

British Land's objective is to deliver superior total shareholder returns over time: the business has made a positive start to the year in pursuit of this long-term objective.

Our business performed well with rental and capital values once again outperforming the market benchmarks; we are moving forward at pace with our development projects with the value of our committed office pipeline ahead by 10% in the quarter; we have continued to buy selectively to build income and create incremental value; and we have remained active in the financial markets, raising new capital on attractive terms.

Overall economic growth in the UK remains anaemic and near term prospects subdued. However, as expected, the property market in the UK is becoming ever more polarised. The underlying strength of occupier and investor demand has meant that Central London and high quality retail assets have continued to perform despite the lack of growth in the economy overall. Our focus on these sectors is why our business continues to do well.

The London market remains buoyant, benefiting from its position as a global City and attracting business and investment capital from around the world. The first quarter saw good demand from international and domestic investors for the right kind of property in the capital including residential, while office rental values continued to benefit from the shortage of high quality Grade A space.

The substantial long-term changes taking place in the UK retail market are only being accelerated by weakening consumer demand. While strong retailers are successfully adapting and are looking to expand their businesses, some weaker retailers are struggling, with the result that since the start of the year administrations have been rising. From an occupational point of view, this means it has been more important than ever to own not only the best retail schemes in any given locality but also ones where retailers can trade profitably and efficiently.  

As we expected, the volume of properties being marketed since the beginning of the year has increased significantly. While much of this is poorer quality, attractive opportunities are emerging for those who have the strong balance sheets and property and financing expertise to be able to release value from more complex situations.

Delivering superior total shareholder returns

Our objective is to deliver superior total returns for our shareholders generated through both income and capital return. We measure our performance by looking at the returns generated through the income we pay out as dividends combined with the growth in our net asset value. We also look over time at how our total property returns, as measured by IPD, compare to the market as a whole.

Our total accounting returns were 4.0% for the quarter and 18.3% on an annual basis, a return which compares favourably with long-term market returns. The quarterly accounting return was made up of the dividend, which was maintained, as previously announced, at 6.5 pence (1.2% return) and a 2.8% growth in Net Asset Value per share to 583 pence. At a property level our capital returns outperformed the IPD benchmark by 90 bps, continuing the trend of outperformance.

This outperformance reflects our focus on the right sectors and assets, our ability to add value through active management of our properties and our early decision to invest in the cyclical upturn in development returns in Central London.

Over the last eighteen months, we have significantly increased the pace of our investment activity to increase our exposure not only to Central London development, but also to the restructuring of distressed portfolios, principally within the banks. We expect this to generate significant income and capital value growth over the coming years. Our ability to secure attractive investments is a measure of the quality of our contacts, expertise and strength of our balance sheet.

Including our development programme, which is principally in Central London, new committed investment in the business over the last eighteen months stands at £1.9 billion. Investments in Central London and UK retail account for nearly 90% of the total investment with the balance made up of assets which we expect to generate above average returns and create significant incremental value. We expect our committed investments to generate gross rental income of £128 million over the coming years based on actual or current estimated rental values. The volume of properties coming to the market has increased and we have been selectively acquiring where we can see value.

In pursuit of our objective of delivering superior total shareholder returns, we focus on five strategic priorities.

1.  Creating sustainable and growing rental income

The core of our business consists of high-quality assets capable of generating secure and growing rental income. This is important because it enables us not only to pay a high dividend but also to fund the business and its growth. We focus on those sectors and assets where we expect demand from occupiers will be the strongest and seek to grow our income over time through asset management, development and acquisitions.

Net rental income was £132 million for the quarter, 3.1% ahead of last year benefiting from acquisitions. On the standing portfolio, organic like for like rental growth of just under 1% was offset by the impact of tenant failures. Rental values for the portfolio as a whole rose by 0.8% over the quarter and 2.9% annually, significantly ahead of the market and reflecting our focus on strongly performing sectors and assets.

Our Retail portfolio performed well in a difficult market where overall rental values continued to fall. Rental values across our portfolio grew for the fourth quarter in a row, up 0.4%, with annual growth now running at 1.3%. At a time when retailers are restructuring their portfolios and reducing store numbers, the quality and resilience of our portfolio is reflected in our footfall numbers, which are flat year on year, and our occupancy rate which rose to 98.7% in the UK. We now have less than 200,000 sq ft of empty space across our entire UK retail portfolio.

Despite the tougher environment, retail occupiers in administration across our portfolio remain low at 0.5% of total income.  The strength of our schemes and asset management skills means that we are successfully managing the small number of administrations we have experienced.  Of the recent retailer failures, our five Focus stores and six Jane Norman stores either remain occupied or are under offer at or above the previous passing rent.

Strong active asset management remains key to our success with activity spread across a broad range of occupiers and locations. We completed £12.8 million of income initiatives on over 736,000 sq ft (around 3% of our retail portfolio) adding £2.9 million of new rent.  New lettings during the quarter were agreed on 222,000 sq ft of space at 4.3% above ERV (excluding the beneficial impact of advertising space lettings) with an additional 450,000 sq ft of space currently under offer.

Meadowhall had another good quarter with footfall ahead by 2.7% year on year, benefiting from the successful attraction of new more aspirational brands to the scheme.  The £7 million refurbishment of the Oasis food court remains on schedule for completion in October 2011. Elsewhere, at our major 460,000 sq ft retail park at Stockton-on-Tees, ERVs were nearly 3% ahead benefiting from recent lettings to Marks & Spencer and H&M.

In Offices, rental values grew 1.7% in the quarter, ahead of the market, continuing the trend of outperformance, with the annual growth now running at 6.9%. We have limited vacant accommodation in our office investment portfolio although we are still seeing good levels of enquiries for existing space as well as for our developments.  Existing occupiers are now more willing to make commitments on lease renewals and so, in recent months, more of our activity has been focused on extending leases and securing certainty of lease term both at Broadgate and Regent's Place.  

During the quarter, we agreed terms to let Level 17 at Broadgate Tower and the remaining office space at 201 Bishopsgate and signed a 74,000 sq ft extension of term certain with UBS at 3 Finsbury Avenue. Along with the activity last year, this has maintained the average lease length of the office portfolio at over 9 years to first break and reduced the rent subject to break or expiry over the next 3 years to 6.5%. We expect this to be further strengthened by lease extensions agreed in the West End after the quarter end and the 755,000 sq ft of re-gears agreed as part of our agreement with UBS to develop 5 Broadgate. 

2.  Protecting and growing capital value

We continually renew and upgrade the assets within our portfolio to ensure that it retains its quality, security of income and attraction to investors.

The value of the portfolio continues to increase at a steady pace, ending the quarter at £9.9 billion, an increase of 7.0% over the year since 30 June 2010 and an increase of 1.5% in the quarter since 31 March 2011. From a sector perspective, our Office portfolio was the main driver in the quarter with value up by 3.7% (11.6% over 12 months) while the value of our retail portfolio was modestly ahead by 0.4% in the quarter (4.8% over 12 months). Asset management and development were strong contributors to performance with Central London offices also benefiting from the strength of the investment markets. Development contributed nearly a quarter of the overall valuation uplift.

The value of our development portfolio was £443 million at the quarter end, an increase (net of capital spend) of 8.3% over the quarter and 29.3% over the last year. The increase in development values in the quarter primarily reflects granting of planning, notably at 5 Broadgate, forward sales of residential units at Regent's Place and the continued strength of the Central London market.  The pre-let agreement with Aon, which has yet to be completed, and the successful contract tender at the Leadenhall Building, are not yet reflected in our valuation numbers.

3.  Creating incremental value through developing, repositioning assets and exploiting market anomalies

Over time, our aim is to create incremental value and enhance our returns through investing in assets where we believe we can generate above average returns.

Our development projects continued to move forward at pace. We made significant progress on our 2.2 million sq ft Central London development programme, achieving a number of key milestones, and we remain on schedule to deliver our first project, the refurbishment of the 142,000 sq ft building at 199 Bishopsgate, in autumn 2012. 

In the City, with full planning permission granted, we are on site at the new UBS building at 5 Broadgate and on schedule to complete in 2014. We are delighted that Aon, the global insurance giant, has chosen the Leadenhall Building for its UK headquarters and we expect the agreement for a 191,000 sq ft pre-let to close soon with options on a further 85,000 sq ft.  With the basement works nearing completion and the construction contract agreed on favourable terms (vs budget and timeframe), we expect the main construction works to start in September.

In the West End, at Regent's Place, the cores of the new NEQ office building are nearly complete and we have already had good levels of pre-let interest. Construction of the residential units is now underway and we continue to see active demand for the remaining units with sales values significantly ahead of expectations. Construction at Baker Street is progressing well and we expect to complete the purchase and start on site at Marble Arch House later this year.

In Retail, we have 1.1 million sq ft of projects in our development pipeline in the UK and would expect to have started a number of new projects by the end of the year.  To date, most of our activity has been focused on superstores, where we have just over 175,000 sq ft of extensions in our pipeline with 73,000 sq ft underway or just completed.  We have started demolition at our Whiteley Village scheme, are making good progress with pre-lets to major occupiers and expect to fully commit to build out the scheme in the next few months. We are also working to conclude planning agreements shortly with construction of a 45,000 sq ft leisure expansion of our 393,000 sq ft Glasgow Fort shopping park expected to start before the end of the year. This will further add to the scheme's appeal as a prime retail destination for the area.

In Europe, construction is now underway to complete the 1.4 million sq ft shopping and leisure centre at Puerto Venecia, Zaragoza, Spain's fifth largest city, following Orion Capital's acquisition of a 50% interest from our previous joint venture partner. 39% of the space is now pre-let or under offer.

Since the beginning of our new financial year, we have acquired £326 million of properties, at an average net initial yield of 6.8% on the income producing assets.  Our largest purchase, in July 2011, was a portfolio of 17 premium racquet clubs let to Virgin Active. On new 25 year leases, the portfolio generates strong, long-term income underpinned by quality property, most of which is in the south east, at a value which is significantly below its replacement cost. Our second largest purchase, Grenfell Island, an office-led building in Maidenhead let mainly to Hutchison 3G with an attractive 10.7 year average lease, also generates strong, long term income with the capital value underpinned both by Crossrail (Maidenhead is the western terminus) and growing institutional investor demand in prime offices in key towns just outside the M25.

Our purchases also included Wardrobe Court acquired in July 2011, a recently refurbished residential investment property in the heart of the City of London.  At an average capital value of £800 per sq ft, the property compares favourably to other residential properties in the area and complements our residential activities in the West End.

4.  Controlling our costs to maximise our profit generation

Controlling our costs so that we maximise the profit generation from our rental activities and retain our cost competitiveness is a key focus for the business.

Our cost base remains the most competitive among the major REITs. Our cost to income ratio in the quarter was ahead at 15.2% with the increase mainly due to a credit in the prior year but also reflecting investment in increasing skills in key areas of the business.

5.  Exploiting our scale and financial strength

Scale is becoming increasingly important in the sector, both in terms of the ability to secure long-term competitive funding and commit to large projects. The strength and quality of our properties and their rental income continue to underpin our ability to finance our business expansion on competitive terms.

Despite the heightened financial instability in recent months, the debt market, like the property market, is continuing to polarise. British Land, with its scale, quality assets and income longevity from strong covenants, is able to exploit attractive financing opportunities.

Over the past eighteen months, we have been active in the financing markets to extend debt maturities and further broaden our sources of finance. During the quarter we completed a £560 million unsecured facility, and a $480 million US private placement. With a loan to value ratio (proportionally consolidated) of 45%, an average debt maturity of over 9.6 years and £1.5 billion of revolving facilities with maturities of over three years, the strength of the group's finances remains a competitive advantage.

Sustainability

Sustainability is a key part of our business, is inherent in our brand and of increasing importance to both current and potential occupiers.

During the quarter we received a number of acknowledgements of our sustainability performance. We were recognised by the Sunday Times as one of the best green companies in the UK, moving up 29 places to number 22 in the Top 60 Best Green Companies in Britain List 2011, which is widely seen as a benchmark for sustainability leadership. We were also recognised in the Guardian Sustainable Business Awards for our work at Regent's Place and our approach to biodiversity and energy management, winning two out of only ten awards and achieving a commendation for the energy award.

In July, we launched our first Community Charter in which we have made ten commitments to the communities in which our major UK properties and developments are located.  These set out our approach to key local issues, such as training, employment and education; local sourcing of goods and services; providing clean and green environments, and community engagement throughout the development process.  The Charter also sets out what these commitments mean in practice.  While the approach is not new to British land, the Charter provides a framework for a more consistent approach across our portfolio. 

Outlook

We are confident that British Land will continue to benefit from the strong performance attributable to our high quality retail and London office assets.  These are the assets which dominate our property portfolio and lie at the heart of our strategy of focussing on both capital and sustainable income growth.  We believe that demand for these assets will continue to exceed supply in the investment and occupational markets, as they have done over the last two years.

The decision we took last year, to embark on a substantial London office development programme, will continue to add substantially to our net asset value as we move towards completion of these projects.  We will deliver over two million square feet of high quality office and residential space between 2012 and 2014. In addition, the selective acquisitions we have made in the last few months will help us to grow rental income, capturing incremental value for shareholders in the months and years ahead.

We do expect the British consumer to remain under real pressure for some time, putting pressure on all retailers.  Indeed, this situation appears to have worsened in recent months.  However, the most successful retailers will also continue to differentiate themselves, gaining market share and influence.  As a result, we expect the speed and extent of "polarisation" to continue and probably to increase right across UK property markets.  We also expect that British Land will remain a beneficiary of such polarisation.

Supplementary tables in addition to the condensed financial statements can be found after the Financial Review.

FINANCIAL REVIEW

Highlights

·       Underlying profit before tax up 1.6% to £65 million

·       REIT Income Return 7.2 pence (first quarter 2010: 7.1 pence)

·       REIT Capital Return 15.3 pence (first quarter 2010: 10.4 pence)

·       4.0% REIT Total Return per share at 22.5 pence (first quarter 2010: 17.5 pence)

·       EPRA Net Asset Value per share at 583 pence, 2.8% ahead of 31 March 2011 (567 pence) 

Income Statement (data presented on a proportionally consolidated basis - Table A)

The group financial statements are prepared under IFRS where the after tax results of joint ventures and funds are shown as a single line item on the income statement, and the net investment in joint ventures and funds is shown as a single line on the balance sheet. 

Management reviews the performance of the business principally on a proportionally consolidated basis (i.e. on a line-by-line basis) and the comments on movements in the income statement provided in the financial review below are made on this basis. Income statements and balance sheets which show British Land's interests on this basis are also included in Table A within the supplementary disclosures.

3 months to 30 June	2011			2010
	Group	JVs &   Funds	Prop Consol	Group	JVs &   Funds	Prop Consol
	£m	£m	£m	£m	£m	£m
Gross rental income	70	68	138	64	71	135
Property outgoings	(3)	(3)	(6)	(3)	(4)	(7)
Net rental income	67	65	132	61	67	128
Fees & other income	4		4	3	1	4
JVs & Funds underlying profit	27			31
Administrative expenses	(17)	(2)	(19)	(13)	(2)	(15)
Profit before interest and tax			117			117
Net financing costs	(16)	(36)	(52)	(18)	(35)	(53)
JVs & Funds underlying profit		27			31
Group underlying profit	65		65	64		64

Net rental income for the three months ended 30 June 2011 increased by 3.1% to £132 million (including our share of joint ventures and funds), with growth from lettings at Regent's Place and the acquisition of Drake Circus in December 2010 adding £6 million - this increase was partially offset by determinations taken on assets being prepared for development which has decreased income by £2 million.

On the standing portfolio, net rents were flat with organic like for like rental growth over the period of just under 1%, offset by an increase in the impact of bad debts and administrations. Nearly all stores affected by administrations remain occupied or are under offer.  Net rental income for the current quarter excludes the recently announced acquisitions which completed or exchanged after 30 June 2011.  

As expected, net operating costs (representing property outgoing and administrative expenses, net of fees and other income) increased by £3 million to £21 million compared to the previous year, with the prior year flattered by a release of £3 million arising from variable pay and share incentives which did not vest.  The ratio of net operating costs to gross rental income was 15.2% (first quarter 2011: 13.3%).

As a result, first quarter underlying profit before tax increased by 1.6% to £65 million compared with £64 million in the comparative quarter. 

Underlying earnings per share for the first quarter increased by 1.4% to 7.2 pence (first quarter 2010: 7.1 pence), with the diluted weighted average number of shares for the current quarter being 893 million (first quarter 2010: 873 million).

Balance Sheet

EPRA net asset value per share at 30 June 2011 was 583 pence representing an increase of 2.8% on 31 March 2011.

	As at 30 June 2011			As at 31 March 2011
	Group	JVs & Funds	Prop Consol	Group	JVs & Funds	Prop Consol
	£m	£m	£m	£m	£m	£m
Properties at valuation	4,997	4,860	9,857	4,783	4,789	9,572
Investment in JVs & Funds	2,121			2,066
Other non-current assets	51		51	51		51
	7,169	4,860	9,908	6,900	4,789	9,623
Other net current liabilities	(186)	(4)	(190)	(205)	(4)	(209)
Net debt	(1,880)	(2,709)	(4,589)	(1,714)	(2,697)	(4,411)
Other non-current liabilities	(47)	(26)	(73)	(51)	(22)	(73)
JVs & Funds net assets		2,121			2,066
IFRS net assets	5,056		5,056	4,930		4,930
EPRA adjustments	206		206	171		171
EPRA net assets1	5,262		5,262	5,101		5,101
EPRA NAV per share	583p		583p	567p		567p

¹ EPRA net assets exclude mark-to-market on effective cashflow hedges and related debt adjustments, as well as deferred taxation on revaluations

Property and other investments at the end of the first quarter were £9.9 billion, up from £9.6 billion in March largely due to a net valuation movement of £135 million and net additions made of £150 million in the quarter.

Net debt at 30 June 2011 was £4,589 million (31 March 2011: £4,411 million). During the quarter, net debt increased by £178 million, principally due to the purchases of Grenfell Island, Maidenhead and the Luton Power Court retail development site and capital expenditure. 

The loan to value (LTV) ratio was 45% (including the Group's share of joint ventures and funds), consistent with 31 March 2011 and 1% lower than the same quarter in the prior year reflecting the impact of revaluation surpluses.  Interest cover for the 3 months to 30 June 2011 has increased from 2.2 to 2.3 times when compared with the prior year period.

The Group LTV ratio was 26%, following draw downs to fund acquisitions (31 March 2011: 24%). The Group average debt maturity is 9.7 years, or 9.6 years on a proportionally consolidated basis - this compares to the proportionally consolidated weighted average lease length to first break of 11.4 years.

The proportionally consolidated weighted average interest rate at 30 June 2011 was 4.8%, compared to 5.2% at 30 June 2010, the improvement being due to the Group benefiting from utilising its committed banking facilities to fund acquisitions.

Although we had no immediate requirement for funds, we have taken the opportunity to successfully arrange additional financings for the Group.

In May, we finalised a £560 million unsecured revolving bank facility. The margin is 125 bps, with a term of five years. We launched at £350 million and were oversubscribed. The syndicate involves 11 banks, with a broad geographical spread, and includes four banks which are new additions to our unsecured book.

In addition, with favourable cross currency swap economics and historic structural underinvestment, we have also accessed the unsecured US Private Placement market on attractive terms. We launched at $200 million and due to strong demand upsized to $480 million with maturities ranging from 7 to 15 years, an average life of 11 years. This financing, which will be drawn on 1 September, is swapped from US Dollars at a fixed interest rate to £300 million at an average margin of 146 basis points over LIBOR.

At a time of heightened global financial instability, we have arranged in total over £1 billion of finance in the last 12 months with the additional benefits of further diversifying the debt investor base and extending maturities at attractive margins. The Group currently retains £2.5 billion of available committed banking facilities of which £1.5 billion have a maturity of more than 3 years, as well as £300 million of cash, short-term deposits and liquid investments.

Financing statistics	Group	Prop Consol
IFRS Net debt	£1,880m	£4,589m
Weighted average debt maturity	9.7 years	9.6 years
Weighted average interest rate	4.4%	4.8%
% of debt at fixed/capped rates	72%	90%
Interest cover1	3.4 times	2.3 times
Loan to value2	26%	45%

¹ underlying profit before interest and tax / net interest

² debt to property and investments

Cash Flow

Net cash inflow from operating activities for the quarter was £54 million including receipts from joint ventures and funds of £18 million.

Investing activity absorbed a net £162 million, of which £125 million was spent on income earning investments and £18 million on development expenditure.  Acquisitions included the purchase of Grenfell Island, Maidenhead for £74 million and Luton Power Court for £11 million.

Dividends

The 2011 fourth quarter dividend of 6.5 pence per share, totalling £58 million, is payable on 12 August 2011.

The first quarter dividend of 6.5 pence per share, totalling £58 million, is payable on 11 November 2011 to shareholders on the register at close of business on 7 October 2011.

Having regard to share price volatility the Board will announce the availability of the Scrip Alternative via the Regulatory News Service and on the group's website (www.britishland.com), no later than 48 hours before the ex-dividend date of 5 October 2011. The Board expects to announce the split between PID and non-PID income at that time.

SUPPLEMENTARY TABLES (Data includes Group's share of Joint Ventures and Funds)

Valuation Movement by Sector

At 30 June 2011	Group	JVs & Funds	Total	Portfolio	Change1	Change1	Change1
	£m	£m	£m	%	3 mths %	6 mths %	12 mths %
Retail2:
Retail warehouses	1,865	804	2,669	27.1	0.6	3.2	4.9
Superstores	143	1,197	1,340	13.6	0.4	0.8	4.2
Shopping centres	504	1,007	1,511	15.3	0.2	0.5	5.8
Department stores	448	-	448	4.5	0.1	2.9	4.8
UK Retail	2,960	3,008	5,968	60.5	0.4	1.9	4.9
Europe Retail	-	373	373	3.8	0.2	1.2	2.7
All Retail	2,960	3,381	6,341	64.3	0.4	1.9	4.8
Offices3:
City	508	1,465	1,973	20.0	4.0	6.5	10.6
West End	1,229	-	1,229	12.5	3.6	7.7	14.6
Provincial	90	8	98	1.0	(1.9)	(1.7)	(1.7)
All Offices	1,827	1,473	3,300	33.5	3.7	6.7	11.6
Other	210	6	216	2.2	0.5	1.5	6.7
Total	4,997	4,860	9,857	100.0	1.5	3.4	7.0

 

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 including developments of £79 million, up 0.8% in the 3 months to June 2011 

³ including developments of £364 million, up 10.0% in the 3 months to June 2011 

Portfolio Yield Profile

Excluding developments	EPRA net initial yield %1	EPRA topped up net initial yield %1,2	Overall topped-up net initial yield %1	Net reversionary yield %1	Net equivalent yield %1
Retail:
Retail warehouses	5.4	5.6	5.7	5.7	5.7
Superstores	5.0	5.0	5.0	5.1	5.1
Shopping centres	5.4	5.7	5.8	5.6	5.9
Department stores	5.8	5.9	8.4	4.6	6.5
UK Retail	5.4	5.5	5.8	5.4	5.7
Europe Retail	6.9	6.9	6.9	7.2	7.9
All Retail	5.4	5.6	5.8	5.5	5.8
Offices:
City	4.6	6.2	6.2	6.0	5.7
West End	3.8	5.5	5.8	6.0	5.5
Provincial	7.1	7.1	7.1	5.4	6.3
Offices	4.4	6.0	6.1	6.0	5.7
Other	8.5	8.6	10.7	5.8	9.5
Total	5.2	5.8	6.0	5.7	5.8

¹ including notional purchaser's costs

²including rent contracted from expiration of rent free periods and fixed uplifts

Portfolio Yield and ERV Movements

(excluding developments)			Net equivalent yield compression 3 mth bps1	ERV Growth 3 mths %2
Retail:
Retail warehouses			(3)	0.3
Superstores			(1)	0.2
Shopping centres			(3)	0.7
Department stores			1	-
UK Retail			(2)	0.4
Europe Retail			3
All Retail			(2)
Offices:
City			(10)	1.9
West End			(6)	1.3
Provincial			(10)	-
Offices			(9)	1.7
Other			2	-
Total			(4)	0.8

¹ including notional purchaser's costs

² like for like (as calculated by IPD), excluding Europe

Annualised Gross Rental Income and Annualised Rent

Excluding developments	Annualised gross rental income (accounting basis)1			Annualised rent (cash flow basis)2			ERV
	Group £m	JVs & Funds £m	Total £m	Group £m	JVs & Funds £m	Total £m	Total £m
Retail:
Retail warehouses	106	42	148	108	44	152	158
Superstores	8	62	70	8	63	71	72
Shopping centres	34	60	94	34	57	91	99
Department stores	33	-	33	28	-	28	22
UK Retail	181	164	345	178	164	342	351
Europe Retail	-	24	24	-	24	24	28
All Retail	181	188	369	178	188	366	379
Offices:
City	25	83	108	5	83	88	112
West End	55	-	55	43	-	43	67
Provincial	6	-	6	6	-	6	5
Offices	86	83	169	54	83	137	184
Other	16	-	16	14	-	14	10
Total	283	271	554	246	271	517	573

¹ gross rental income will differ from annualised rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives

² gross rents plus, where rent reviews are outstanding, any increases to ERV (as determined by the Group's external valuers), less any grounds rents payable under head leases, excludes contracted rent subject to rent free and future uplift

Average Rent, Lease Lengths and Occupancy Rate

Excluding developments	Average rent		Average lease length		Occupancy rate
	Contracted £psf	ERV £psf	To expiry yrs	To first break, yrs	Occupancy %1	Total occupancy%
Retail:
Retail warehouses	23	23	11.2	10.3	99.1	98.5
Superstores	21	21	16.6	16.6	100.0	100.0
Shopping centres	26	27	10.4	9.7	96.8	95.3
Department stores	12	9	29.2	25.7	100.0	100.0
UK Retail	21	22	13.5	12.6	98.7	98.0
Europe Retail	10	11	11.4	4.4	89.8	89.8
All Retail	20	20	13.4	12.1	98.1	97.4
Offices:
City	46	44	11.6	9.6	97.1	96.5
West End	42	44	11.0	8.5	98.7	98.2
Provincial	21	16	11.5	11.3	100.0	100.0
Offices	43	41	11.4	9.3	97.8	97.2
Other	21	14	21.3	21.2	98.3	98.3
Total	24	24	12.9	11.4	97.9	97.3

¹ including accommodation under offer or subject to asset management

Rent Subject to Lease Break or Expiry

12 months to 30 June	2012	2013	2014	2015	2016	2012-14	2012-16
Excluding developments	£m	£m	£m	£m	£m	£m	£m
Retail:
Retail warehouses	2	5	4	8	6	11	25
Superstores	-	-	-	-	-	-	-
Shopping centres	4	4	6	4	5	14	23
Department stores	-	-	-	-	-	-	-
UK Retail	6	9	10	12	11	25	48
Europe Retail	2	5	3	3	2	10	15
All Retail	8	14	13	15	13	35	63
Offices:
City	1	3	-	10	9	4	23
West End	4	4	1	4	1	9	14
Provincial	-	-	-	-	-	-	-
Offices	5	7	1	14	10	13	37
Other	-	1	-	-	-	1	1
Total	13	22	14	29	23	49	101
% of contracted rent	2.3%	3.6%	2.3%	4.8%	4.0%	8.2%	17.0%

Rent Subject to Open Market Rent Review

12 months to 30 June	2012	2013	2014	2015	2016	2012-14	2012-16
Excluding developments	£m	£m	£m	£m	£m	£m	£m
Retail:
Retail warehouses	18	28	22	20	19	68	107
Superstores	4	4	10	20	16	18	54
Shopping centres	21	12	9	6	16	42	64
Department stores	-	-	-	-	5	-	5
UK Retail	43	44	41	46	56	128	230
Europe Retail	-	-	-	-	-	-	-
All Retail	43	44	41	46	56	128	230
Offices:
City	8	17	28	32	16	53	101
West End	8	6	3	1	13	17	31
Provincial	-	-	-	1	5	-	6
Offices	16	23	31	34	34	70	138
Other	-	-	-	1	1	-	2
Total	59	67	72	81	91	198	370
Potential uplift at current ERV	2	2	1	4	2	5	11

Top 10 Properties by British Land Share of value

Excluding developments	Sq ft	BL Share	Rent	Occupancy	Lease length
	'000	%	£m pa1	rate %2	yrs3
Broadgate	4,436	50	173.0	97.2	8.0
Regent's Place	1,210	100	52.0	98.3	9.3
Meadowhall Shopping Centre	1,376	50	81.0	97.0	10.3
Ropemaker Place	594	100	27.3	100.0	15.3
Teesside Shopping Park	460	100	13.5	100.0	9.5
Drake Circus Shopping Centre	560	100	15.3	98.7	8.1
Debenhams, Oxford Street	367	100	13.9	100.0	27.7
York House, Seymour Street	132	100	4.8	100.0	6.3
St Stephen's Shopping Centre	410	100	8.1	98.8	9.0
Glasgow Fort	393	39	15.7	98.9	7.7

¹ annualised contracted rent including 100% of Joint Ventures & Funds

² includes accommodation under offer or subject to asset management

³ to first break

Acquisitions Announced (since 1 April 2011)

Since 1 April 2011	Completed	Gross Price £m	British Land Share £m	Contracted Rent £m
Acquisitions
17 Virgin Active Racquet Clubs1	21 July 11	179	179	13
Grenfell Island, Maidenhead	24 June 11	74	74	5
Wardrobe Court, EC41	7 July 11	57	57	3
Other1	exchanged	16	16	-
Total Acquisitions		326	326	21

¹ exchanged or completed post quarter end

Committed and Prospective Retail Developments

	BL Share	Sq ft '000	PC	Current Value £m		Cost to complete £m	Notional interest1 £m	ERV2 £m	Pre-let £m
Committed:
Puerto Venecia, Zaragoza	50%	1,360	2012	34		62	4	8.4	3.2
Four superstore extensions	50%	73	2011/12	-		10	-	0.6	0.6
Total committed		1,433		34		72	4	9.0	3.8
Prospective:
Whiteley Village, Fareham	50%	302	Detailed planning consent
Glasgow Fort Shopping Park	39%	175	Detailed planning consent
Glasgow Fort Shopping Park (leisure)	39%	45	Detailed planning consent
Fort Kinnaird, Edinburgh	19%	133	Detailed planning consent
Surrey Quays Shopping Centre	50%	103	Planning pending
Deepdale Retail Park, Preston	19%	76	Planning pending
Broughton Park, Chester	39%	58	Planning pending
Power Court Luton	100%	100-200	Planning pending
Superstore extensions	50%	103	Planning pending
Kingston Centre, Milton Keynes	50%	21	Detailed planning consent
Total prospective		1,116-1,216
Total committed/prospective		2,549-2,649

Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%)

¹ from 1 July 2011 to Practical Completion based on a notional cost of finance of 6%

² estimated headline rental value (excluding tenant incentives)

Committed and Prospective Office Development

	BL Share	Sq ft '000	PC		Current Value £m	Cost to complete £m	Notional interest1 £m	ERV2 £m	Pre-let £m	Sales3 £m
Committed:
5 Broadgate, EC2	50%	700	Q3 2014		90	166	34	19.1	19.1	-
The Leadenhall Building, EC34	50%	610	Q3 2014		55	159	26	18.6	-	-
NEQ, Regent's Place, NW1	100%	500	Q2 2013		104	198	24	18.5	-	107
Baker Street, W1	100%	158	Q1 2013		65	58	8	8.2	-	17
199 Bishopsgate, EC2	50%	142	Q3 2012		27	16	3	3.5	-	-
Marble Arch House, W15	100%	86	Q2 2013		-	54	4	3.7	-	11
Total committed		2,196			341	651	99	71.6	19.1	135
Prospective:
6-9 Eldon Street, EC2	100%	33		Pre submission
Colmore Row, Birmingham	100%	280		Detailed planning consent
Meadowhall Metropolitan	100%	2,200		Outline planning consent - mixed use
New Century Park	50%	1,000		Outline planning consent - mixed use

Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%)

¹ from 1 July 2011 to Practical Completion based on a notional cost of finance of 6%

² estimated headline rental value net of rent payable under head leases (excluding tenant incentives)

³ parts of development expected to be sold, no rent allocated

⁴ non-binding Heads of Terms agreed with Aon Limited for a 191,000 sq ft pre-let with an option to let a further 85,000 sq ft

⁵ agreement to purchase and re-develop site subject to receipt of vacant possession

Occupiers Representing Over 0.5% of Rent

At 30 June 2011	% of total rent		% of total rent
Tesco	7.2	Argos	0.8
Sainsbury's	6.3	Gazprom	0.8
Debenhams	4.3	Deutsche Bank	0.8
UBS	3.7	Mayer Brown	0.8
Homebase	2.3	Cable & Wireless	0.8
Kingfisher (B&Q)	2.2	KESA (Comet)	0.8
HM Government	2.1	Mothercare	0.8
Next (inc. Next at Home)	2.0	British Home Stores	0.7
Spirit Pub Company	1.7	ICAP	0.7
Bank of Tokyo-Mitsubishi UFJ	1.7	Lend Lease	0.7
Macquarie Group	1.5	Burton/Dorothy Perkins/Wallis/Evans	0.6
Herbert Smith	1.4	Markit Group	0.6
Alliance Boots	1.3	SportsDirect	0.6
RBS	1.3	Credit Lyonnais	0.6
Hutchison 3G	1.1	Henderson Global Investors	0.6
Asda (inc. Asda Living)	1.1	Pets at Home	0.6
Currys	1.1	Carpetright	0.5
Marks & Spencer	1.1	Carlson	0.5
House of Fraser	1.1	JD Sports (inc. Bank Fashion)	0.5
New Look	0.9	Atos	0.5
TK Maxx	0.9	H&M	0.5
Aegis Group	0.9
JP Morgan	0.9
Reed Smith	0.9

GLOSSARY

ABOUT REITS

The Government established the REIT status in the UK in 2007 to remove tax inequalities between different real estate investors and with the aim of improving overall investor access to real estate. Real Estate Investment Trusts (REIT) are companies which are exempt from corporate taxation on profits from property rental income and capital gains on the sale of investment properties.

REITs must distribute 90% of UK rental income in the form of property income dividends (PIDs). The consequence of this is to make the tax implications of investing in REITs similar to that of investing directly in property. REITs are also required to meet certain conditions including the proportion of total profits and assets accounted for by their property rental businesses. They remain liable to corporation tax on non-property investment businesses e.g. management fees and interest receivable.

The UK has had a tax exempt real estate regime since 1 January 2007. A number of other countries, notably the US, Australia and France also have tax exempt REIT regimes. British Land has been a REIT since 1 January 2007.

The government is looking to encourage the growth of the REIT sector. The 2011 budget proposals are looking to relax qualifying conditions to encourage new entrants, including the abolition of the entry charge.

Property Income Distributions (PIDs)

Profits distributed as PIDs are subject to tax in the hands of the shareholders as property income. PIDs are normally paid net of withholding tax currently at 20% which the REIT pays to the tax authorities on behalf of the shareholder. Certain types of shareholder (i.e. pension funds) are tax exempt and receive PIDs without withholding tax.

Property companies also pay out normal dividends, called non-PIDs, which are treated as normal dividends and not subject to withholding tax.

RENTS

Headline rent is the contracted gross rent receivable which becomes payable after all the tenant incentives in the letting have expired.

Net effective rent is the contracted gross rent receivable taking into account any rent free period or other tenant incentive. The incentives are treated as a cost to rent and spread over the lease to the earliest termination date.

Rack rented is the term used to describe when the contracted rent is in line with the estimated rental value (ERV), implying a nil reversion.

Under rented is the term used to describe when the contracted rent is below the estimated rental value (ERV), implying a positive reversion (see below).  Over rented is the inverse of this.

Reversion is the increase in rent estimated by the external valuers, where the passing rent is below the estimated rental value. The increases to rent arise on rent reviews and lettings.

LEASES AND LETTINGS

Lettings and Lease Renewals are divided between short-term (less than two years lease length) and long-term (over two years lease length). Lettings and renewals are compared both to the previous passing rent as at the start of the financial year; and the ERV immediately prior to letting. Both comparisons are made on a net effective basis.

Rent reviews are compared to the previous passing rent.

Tenant (or lease) incentives are any incentives offered to occupiers to enter into a lease. Typically the incentive will be an initial rent-free period, or a cash contribution to fit-out. Under accounting rules the value of lease incentives given to tenants is amortised through the income statement on a straight-line basis to the earliest lease termination date.

Turnover rents is where all or a portion of the rent is linked to the sales or turnover of the occupier.

Rents with fixed and minimum uplifts are either where rents are subject to contracted uplifts at a level agreed at the time of letting; or where the rent is subject to an agreed minimum level of uplift at the specified rent review.

Capped rents are subject to a maximum level of uplift at the specified rent reviews as agreed at the time of letting.

Collar rents are subject to a minimum level of uplift at the specified rent reviews as agreed at the time of letting.

RENTAL INCOME

Gross rental income is the gross accounting rent receivable (quoted either for the period or on an annualised basis) prepared under IFRS which requires that rental income from fixed/minimum guaranteed rent reviews and tenant incentives is spread on a straight line basis over the entire lease to first break.  This can result in income being recognised ahead of cash flow.

Net rental income is the rental income receivable in the period after payment of direct property outgoings which typically comprise ground rents payable under head leases, void costs, net service charge expenses, and other direct irrecoverable property expenses. Net rental income is quoted on an accounting basis. Net rental income will differ from annualised net cash rents and passing rent due to the effects of income from rent reviews, net property outgoings and accounting adjustments for fixed and minimum contracted rent reviews and lease incentives.

Annualised rent is the gross rent receivable on a cash basis as at the reporting date. Additionally where rent reviews are outstanding, any increases to applicable estimated rental value (as determined by the Group's external valuers), less any ground rents payable under head leases.

Estimated rental value (ERV) is the external valuers' opinion as to the open market rent which, on the date of valuation, could reasonably be expected to be obtained on a new letting or rent review of a property.

Like-for-like ERV growth is the change in ERV over a period on the standing investment properties expressed as a percentage of the ERV at the start of the period. Like for like ERV growth is calculated monthly and compounded to the period subject to measurement.

Like-for-like rental income growth is the growth in gross rental income on properties owned throughout the current and previous periods under review.  This growth rate includes revenue recognition and lease accounting adjustments but excludes properties held for development in either period, properties with guaranteed rent reviews, asset management determinations and surrender premiums.

Passing rent is the gross rent, less any ground rent payable under head leases.

PROPERTY YIELDS

EPRA Net Initial yield is the annualised rents generated by the portfolio, after the deduction of an estimate of annual recurring irrecoverable property outgoings, expressed as a percentage of the portfolio valuation (after notional purchaser's costs), excluding development properties.

EPRA Topped-Up Net Initial Yield is the annualised rents generated by the portfolio, after the deduction of an estimate of annual recurring irrecoverable property outgoings, plus rent contracted from expiry of rent free periods and uplifts agreed at the balance sheet date which are not intended to compensate for future inflation, expressed as a percentage of the portfolio valuation (after notional purchaser's costs), excluding development properties.

Overall Topped-up Net Initial Yield is the EPRA Topped-Up Net Initial Yield adding guaranteed fixed uplifts to the annualised rents.

Net Equivalent yield is the weighted average income return (after deducting notional purchaser's costs) a property will produce based upon the timing of the income received. In accordance with usual practice, the equivalent yields (as determined by the external valuers) assume rent is received annually in arrears. The British Land definition excludes Europe, where leases are linked to annual indexation.

Net Reversionary yield is the anticipated yield, which the initial yield will rise to once the rent reaches the estimated rental value.

Yield shift is a movement (usually expressed in basis points) in the yield of a property asset, or like for like portfolio, over a given period. Yield compression is a commonly used term for a reduction in yields.

LEASE LENGTH AND OCCUPANCY

Occupancy rate is the estimated rental value of let units expressed as a percentage of the total estimated rental value of the portfolio, excluding development properties. It includes accommodation under offer or subject to asset management (where they have been taken back for refurbishment and are not available to let as at the balance sheet date).

Total occupancy rate is the occupancy rate excluding accommodation under offer or subject to asset management.

Weighted average lease term is the average lease term remaining to first break, or expiry, across the portfolio weighted by contracted rental income (including rent frees). The calculation excludes short-term lettings, residential leases and properties allocated as developments.

Virtual freehold represents a long leasehold tenure for a period up to 999 years. A 'peppercorn', or nominal, rental is paid annually.

PLANNING

The 1947 Town and Country Planning Act requires all proposals, with a few exclusions, to secure planning permission from the local authority. The requirement to obtain planning permission extends not only to new construction, but also to substantive changes of use of a property. There are various 'use classes'. Change of use to a different use class generally requires Planning consent.

Planning consent gives consent for a development, and covers matters such as use and design. Full details of the development scheme must be provided in an application for full planning consent, including detailed design, external appearance and landscaping before a project can proceed. Outline planning consent establishes the broad outline of the scheme and is subject to the later approval of the details of the design.

Retail planning consents are separated between A1, A2 and A3 - as set out in The Town and Country Planning (Use Classes) Order 2005. Within the A1 consent category, an Open A1 consent grants planning for any type of retail, while Restricted A1 consent places limits on the types of retail that can operate from the site (this is typically a restriction that only bulky goods operators are allowed to trade at that site).

Class	Description	Use for all/any of the following purposes
A1	Shops	Retail sale of goods other than hot food; post office; sale of tickets or as a travel agency; sale of sandwiches or other cold food off the premises; hairdressing; direction of funerals; display of goods for sale; hiring out of domestic or personal goods/articles; the reception of goods to be washed, cleaned or repaired; a retail warehouse club being a retail club where goods are sold, or displayed for sale, only to persons who are members of that club; or as a night club
A2	Financial and professional services	Financial services; professional services professional services (other than health or medical); or other services (including betting) appropriate for a shopping area
A3	Restaurants and cafés	Sale of food/drink (i.e. restaurants)
A4	Drinking establishments	Pub, wine bar or other drinking establishment
A5	Hot food takeaways	Sale of hot food for consumption off premises

PROPERTY VALUATION

Property valuation In accordance with usual practice, the Group's external valuers report valuations net, after the deduction of the prospective purchaser's costs, including stamp duty land tax, agent and legal fees.

Market value in relation to property assets is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion (as determined by the Group's external valuers). In accordance with usual practice, the Group's external valuers report valuations net, after the deduction of the prospective purchaser's costs, including stamp duty land tax, agent and legal fees.

Portfolio valuation uplift is the increase in value of the portfolio (after taking account of capital expenditure and capitalised interest) of properties held at the balance sheet date and sales during the period.

Capital return is calculated as the change in capital value of the UK portfolio, less any capital expenditure incurred, expressed as a percentage of capital employed over the period, as calculated by IPD.  Capital returns are calculated monthly and indexed to provide a return over the relevant period.

DEVELOPMENT

Development construction cost is the total cost of construction of a project to completion, excluding site values and finance costs (finance costs are assumed by the valuers at a notional rate of 6% per annum).

Estimated (Net) Development Value is the estimated end value of a development project as determined by the external valuers for when the building is completed and fully let (taking into account tenant incentives). It is based on the valuers view on ERVs, yields, letting voids and rent frees.

The residual site value of a development is calculated as the estimated (net) development value, less a developer's profit margin, all development construction costs, finance costs (assumed at a notional rate) of a project to completion and notional site acquisition costs. The residual is then determined to be the current site value.

Developer's profit is the profit on cost assumed by the valuers to be required to start a project. The developers profit is typically calculated by the valuers to be a percentage of the estimated total development costs.

EPRA DEFINITIONS

EPRAis the European Public Real Estate Association, the industry body for European REITs.

EPRA earnings is the profit after taxation excluding investment property revaluations and gains/losses on disposals, intangible asset movements and their related taxation.

EPRA net assets (EPRA NAV) are the balance sheet net assets excluding the mark-to-market on effective cash flow hedges and related debt adjustments, deferred taxation on revaluations and diluting for the effect of those shares potentially issuable under employee share schemes.

EPRA NAV per share is EPRA NAV divided by the diluted number of shares at the period end.

EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of debt and derivatives and to include deferred taxation on revaluations.

EPRA vacancy rate is the estimated market rent of value (ERV) of vacant space divided by ERV of the whole portfolio, excluding developments. This is the inverse of the total occupancy rate.

FINANCIAL

Underlying profit before tax (Underlying PBT) is the pre-tax EPRA earnings measure with additional company adjustments, including realisation of cash flow hedges and non-recurring items.

Underlying earnings per share (EPS) consists of underlying profit after tax divided by the diluted weighted average number of shares in issue during the period.

Loan to Value (LTV) is the ratio of gross debt less cash, short-term deposits and liquid investments to the aggregate value of properties and investments.

IFRS are the International Financial Reporting Standards as adopted by the European Union. IFRS profits before tax (IFRS PBT) are as defined by the International Financial Reporting Standards.

Interest cover is the number of times net interest payable is covered by underlying profit before net interest payable and taxation.

Mark-to-market is the difference between the book value of an asset or liability and its market value.

REIT total return (Total accounting return) is the growth in EPRA NAV plus dividends paid, and this can be expressed as a percentage of EPRA NAV per share at the beginning of the period.

REIT income return is underlying profit before tax (as defined above) after deduction of attributable underlying tax.

REIT capital return is REIT total return less REIT income return (as defined above).

Net operating costs are property operating expenses and administrative expenses net of fees and other income.

Weighted average debt maturity each tranche of Group debt is multiplied by the remaining period to its maturity and the result is divided by total Group debt in issue at the period end.

Weighted average interest rate is the Group loan interest and derivative costs per annum at the period end, divided by total Group debt in issue at the period end.

Total shareholder return is the growth in value of a shareholding over a specified period, assuming that dividends are reinvested to purchase additional units of stock.

OTHER

CACI Ltd is a wholly owned subsidiary of Consolidated Analysis Center Incorporated (CACI) providing marketing solutions and informational systems to local and central government and to business from most industry sectors (including retail).

Group is The British Land Company PLC and its subsidiaries and excludes its share of joint ventures and funds on a line-by-line basis (i.e. not proportionally consolidated).

IPD is Investment Property Databank Ltd which produces an independent benchmark of property returns.

 

END

 

 

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