3rd Quarter Results - Part 1

RNS Number : 0879X

British Land Co PLC

09 February 2012

 



                                                   9 February 2012

THE BRITISH LAND COMPANY PLC THIRD QUARTER RESULTS

Continued resilience in more difficult markets

Chris Grigg, Chief Executive said: "These results reflect the resilience of British Land's business. It is noteworthy that underlying profits are up 6.3% despite the tougher economic environment. At the same time, occupancy, income and ERV all rose in the quarter. We have also made further progress on our office development programme. In total, we have now locked in future annual rent of £32 million through a series of binding pre-lets. These pre-lets mean that our office development programme is already 50% pre-let even though it mainly reaches practical completion between 2013 and 2014. Of course, the current economic outlook is uncertain, but overall our business is defensively positioned today and will benefit further as economic growth returns."

Strong asset management and investment delivering resilient results

·      Q3 UPBT¹ up 6.3% to £68 million versus prior year (last 12 months UPBT¹ +4.7%)

·      Portfolio valuation up to £10.3 billion: +0.1% over 3 months (last 12 months: +4.5%) 

·      EPRA NAV² up 0.3% to 593 pence over 3 months (last 12 months +8.2%)

·      Quarterly dividend of 6.5 pence as previously indicated

·      Total accounting return³ over 12 months of 13.0%

Securing and growing income: occupancy up and lettings ahead of ERV

·      Total portfolio ERV growth of 0.2% over 3 months; (last 12 months +2.3%)

·      £8.7 million pa of new rent from 1.6 million sq ft of leasing activity (including pre-lets) in Q3

·      Lettings and renewals 7.5% above ERV in retail; 9.0% above ERV in offices

·      Occupancy up 20 bps to 98.0%;UK retail ahead at 98.4% and offices up to 97.8%

London office development programme over 50% pre-let on unconditional contracts: secures £32 million of annual income

·      Completed 191,000 sq ft pre-let to Aon at the Leadenhall Building which will be its global HQ 

·      Completed 700,000 sq ft pre-let to UBS at 5 Broadgate (post Q3)

·      All developments well underway and on track; over 70% of costs placed within budget and on time

·      £160 million of valuation uplift from office developments to date; further £184 million estimated by valuers to come

Increasing UK retail development pipeline: over 1 million sq ft committed or in planning

·      Started £64 million development of 300,000 sq ft Whiteley Shopping Centre; already over 50% let

·      45,000 sq ft extension of Glasgow Fort fully let or under offer; construction starting soon

Strong financial position and access to debt finance

·      £1.2 billion of financing activity during 2011

·      LTV broadly unchanged at the end of Q3 at 45.6% (proportionally consolidated) with interest cover at 2.2 times; Group LTV at 28.9%

·      Operational and financial flexibility maintained with diverse funding structure and broad spread of maturities

	Q3 2011/12	Q3 2010/11	Change
Net Asset Value2 per share	593p	548p	+8.2%
IFRS net assets	£5,058m	£4,710m
Underlying pre-tax profit (UPBT)1	£68m	£64m	+6.3%
IFRS pre-tax profit	£67m	£263m
Diluted Underlying EPS2	7.5p	7.0p	+7.1%
Diluted EPS	7.6p	29.5p
Dividends per share	6.5p	6.5p

¹ Underlying pre-tax profit - see Note 1 to the condensed set of financial statements

² See Note 1 to the condensed set of financial statements

³ Growth in EPRA NAV plus dividends paid

Investor Conference Call

British Land will host a conference call at 9.00am today, 9 February 2012.  The details for the conference call are as follows:

UK Toll Free Number:                 0800 279 4992

UK Number:                              [phone]

Passcode:                                 5064682

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

Replay number:                         0800 358 7735

Passcode:                                5064682#

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, among 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 £15.7 billion (British Land share £10.3 billion), as valued at 31 December 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 12 years are among the highest of the major UK REITs.

Retail assets account for 61% 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, 11 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) with 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 have committed £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 a 500,000 sq ft mixed office and residential scheme at Regent's Place in the West End.

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

During the third quarter, British Land continued to deliver against its strategic priorities and objective of generating superior total returns for our shareholders.  During a renewed period of economic uncertainty and squeeze on consumer spending, this reflects the quality of our assets and the continued actions we have taken to strengthen and grow our income and deliver value from our development programme. Our financing position remains strong and a competitive advantage in today's more constrained debt markets.

Delivering superior total shareholder returns

We measure performance in terms of the returns generated by dividends combined with the growth in our net asset value and our total property returns.

Our total accounting returns were 1.4% for the third quarter, comprising the quarterly dividend of 6.5 pence (1.1% return) and growth in net asset value of 0.3% to 593 pence.  Our total accounting returns for the 12 months was 13.0%, of which dividends contributed 4.8% and 8.2% was generated through growth in net asset value.  At a property level, the portfolio generated a total return of 1.4% for the three months, and 10.1% for the 12 months.

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

1.  Creating sustainable and growing rental income

Focus on high-quality assets capable of generating secure and growing rental income which enable us to pay a significant proportion of our income as dividends and fund the business and its growth.

Our third quarter net rental income at £139 million (proportionally consolidated) was 5.3% ahead of the comparable period last year, driven by a combination of continued demand for our high quality space, successful asset management initiatives and contributions from acquisitions.  The increase in underlying pre-tax profits was slightly higher at 6.3% to £68 million.  

Overall our total occupancy increased over the three month period, by 20 bps to 98.0% with leasing activity (including pre-lets) generating £8.7 million pa of new rent across the group. Estimated rental values for the portfolio rose by 0.2% (12 months: +2.3%), led by growth in our UK Retail portfolio of 0.3% (12 months: +1.1%).  Our Office portfolio ERV was unchanged during the quarter having increased 5.1% over the last 12 months.

In our Retail business, demand for space has remained robust across the UK portfolio during the quarter.  Footfall across our portfolio was ahead by 3.0% in the quarter, significantly outperforming the industry average which fell 1.1%. Occupancy increased by 20 bps to 98.4% with 102 lettings and renewals covering 310,000 sq ft agreed at an average of 7.5% above ERV.  Lettings completed or under offer post the quarter end stand at over 400,000 sq ft on terms in aggregate ahead of ERV. The quality and location of our retail assets continued to attract new retailers to out of town formats including, Swarovski and Jack & Jones at Glasgow Fort, and the on-line fashion retailer Simply Be at Teesside.  Other key lettings during the quarter were the introduction of Urban Outfitters at Meadowhall, and further lettings to M&S, Next and Asda Living. Tenants in administration were unchanged over the quarter at 0.4% of total rent. As at the end of January 2012 it had risen to 0.7% with a significant number of the units expected to continue to trade.  As at 31 December 2011, temporary lettings accounted for only 0.3% of total rent.

In Offices, while leasing activity across the market has remained subdued, we have continued to see encouraging levels of activity across our portfolio and particularly in developments. In our investment portfolio, we agreed 26,000 sq ft of lettings and re-gears at 9% ahead of ERV moving our occupancy ahead further by 10 bps to 97.8%. The completion of our 891,000 sq ft pre-let agreements with Aon and UBS in October and January respectively, are covered below.

As part of our pre-let agreement with UBS, we secured the deferral of breaks on 755,000 sq ft of space they currently occupy at Broadgate. The breaks are deferred until between 18 and 36 months following practical completion to allow their new building to be fitted out. This generates at least £74 million of income (British Land share £37 million). Approximately £32 million of this was agreed by UBS on signing of the conditional agreement in 2010. As a result of this and other re-gears across the office portfolio, we have nearly halved the proportion of our office rent subject to lease break or expiry over the next 3 years, from 14.0% to 5.5%.

2.  Protecting and growing capital value

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

We have seen an overall slowdown in investment market activity across the market in recent months, reflecting the increase in economic uncertainty both in the UK and Europe. Both the retail and office markets continue to polarise. While demand for the highest quality income generating assets remains, values of more secondary assets have started to slip with continued constraints in the debt markets for any but the strongest operators, further impacting demand.

We continued to benefit from the prime nature of our portfolio, the strength of our income flows and our exposure to Central London. The value of our portfolio rose to £10.3 billion at 31 December 2011, an increase of 0.1% in the third quarter and 4.5% over the last 12 months. Over the 12 month period both our UK Retail and Office portfolios have improved in value by 2.1% and 10.1% respectively. In the quarter, Offices continued to be the main contributor to growth, increasing in value by 1.1%, primarily reflecting further gains in the offices development portfolio as we continue to achieve further milestones. Values in our UK Retail portfolio were marginally lower at -0.3% for the quarter, with capital value performance in line with the market.  

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

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

We have continued to make significant progress on our office development programme, particularly on pre-lets. Over the last 12 months, we have successfully agreed binding pre-let terms on over 50% of our office development space and are now well underway at all of our sites and on schedule for delivery by 2014.  During the quarter, we completed our agreement with Aon to pre-let 191,000 sq ft at The Leadenhall Building for a term of 19 years. Aon have recently announced that this will become their Global Headquarters. Since the quarter end, the remaining conditions on the agreement with UBS to pre-let 5 Broadgate were satisfied. As a result, the lease agreement is now unconditional with construction of the new 700,000 sq ft building securing a major global occupier at Broadgate for a term of 18.2 years and preserving its status as the premier City of London office estate. Over 60% of our developments in the City are successfully pre-let.

The value of our office developments grew by 4.4% to £563 million during the quarter bringing the 12 month increase to 32.6%. The increase in the quarter was principally due to the completion of the Aon pre-let but also the release of some contingencies with further progress made on fixing construction costs. Overall, since the start of the programme, office developments have contributed £160 million to our valuation increase, equivalent to 18 pence to NAV. Our external valuers estimate (at today's market rents and yields) there is an additional £184 million of uplift to come from our office programme.

In Retail, we started construction of the £64 million (British Land share £32 million) Whiteley Shopping Centre in South Hampshire, where terms are agreed with retailers representing over 50% of rental value. Key occupiers include M&S, Next, Tesco, H&M and Boots.  We will shortly be starting a 45,000 sq ft leisure extension at Glasgow Fort comprising a Multiplex cinema let to Vue along with five restaurants. This will be opened in 2013.  As part of our future retail development pipeline, we have submitted a planning application for a major refurbishment and a 100,000 sq ft extension to Surrey Quays shopping centre in London. Additional planning submissions are also being prepared for: a retail extension to our highly successful Glasgow Fort retail park; a large, retail-led mixed use scheme at Power Court in Luton and a 70,000 sq ft retail development on land adjoining Meadowhall Shopping Centre. Our development at Puerto Venecia, Zaragoza, is on schedule for completion in autumn 2012 with the scheme now 51% pre-let or under offer with a further 33% in negotiation. Local and international retailers signing up to the scheme include Primark, Desigual, H&M, Mango, Cinesa and the full line of Inditex brands.

Acquisition and disposal activity during the quarter was focused on the disposal of a range of low growth and non-core assets. £28 million of disposals were agreed above the September 2011 valuation and we have a further £20 million of assets currently under offer also in excess of the September valuation.  There were no acquisitions agreed during the quarter. Looking forward, capital recycling is likely to become a more important part of our investment strategy with a greater balance between asset investments and disposals.  

4.  Controlling our costs

We aim to control our costs so that we maximise the profit generation from our rental activities and retain our cost competitiveness.

Our cost income ratio in the quarter improved on the previous quarter, bringing our year to date cost ratio to 15.2% and maintaining our position as the most cost competitive among our major REIT peers. Net operating costs (representing property outgoings and administrative expenses, net of fees and other income) for the quarter were higher than the comparable quarter last year which benefited from the non-vesting of incentive schemes.  For the financial year to date, our administration costs remained stable at £19 million per quarter (proportionally consolidated).

Within the office development programme just over 70% of our total construction costs have now been contracted and a further 16% tendered.  By committing to schemes early we have succeeded in securing contracts at attractive levels and ahead of our original expectations.

5.   Exploiting our scale and financial strength

Scale is increasingly important in the sector, both 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 on competitive terms.

We have arranged more than £1.2 billion of new financing during the current year. As a result, the Group's financial position remains strong with a diverse source of funds and a broad spread of maturities giving us significant operational and financing security and flexibility.  At the end of the quarter, our loan to value (LTV) ratio was 45.6% (proportionally consolidated), broadly in line with the previous quarter and within the Group's target range of 40-50%.

Since 31 March 2011 our average interest rate has been reduced from 4.9% to 4.7% with our interest cover remaining constant at 2.2 times for the 3 months to 31 December 2011. The average debt maturity is 9.6 years on a proportionally consolidated basis which compares to the portfolio's weighted average lease length to first break of 11.5 years.  The Group currently also retains £2.5 billion of available committed banking facilities of which £1.5 billion have a maturity of more than 2.5 years, as well as £255 million of cash, short-term deposits and liquid investments.

Sustainability

Sustainability is a key part of our business. We have five areas of specific focus; managing buildings efficiently, developing sustainable buildings, enhancing biodiversity, exceeding customer expectations and focusing on local communities.

We have made energy savings of £710,000 for our occupiers with 15% reductions in landlord-influenced energy use across our like-for-like office portfolio and 11% across our retail portfolio. We continued to achieve consistently high level environmental certifications for our development programme, securing "BREEAM Excellent" for our two new office buildings at Regent's Place and 10 Portman Square, and an "EcoHomes Excellent" at James Street. We held our top position as the only UK landlord to achieve the platinum standard for service charge management in independent audits by the Property Managers Association, winning two platinum and five gold awards. We were invited by the Considerate Constructors Scheme to become Client Partners and, at Regent's Place, achieved our highest ever Considerate Constructors Score. Following the launch of our Community Charter in July 2011, we are part-funding apprentices at Meadowhall Shopping Centre in Sheffield and Parkgate Shopping in Rotherham, and launched the 2012 British Land Capital Kids Cricket League, providing funding for the sixth year in a row.

Outlook

Our results reflect both the benefits of our strong and resilient business and the actions we have taken to secure and grow value for our shareholders. Looking to the immediate future, with the eurozone issues still unresolved and the impact of austerity adversely affecting consumer spending in the UK, we remain cautious about near-term prospects, particularly in the retail market.  Looking through any near term variability however, with interest rates forecast to remain low and supply for the best space remaining constrained, we believe our high quality portfolio with long and secure leases will continue to generate good returns for our shareholders. Our development programme has an appropriate balance of risk in today's market but is also well-timed to benefit as business confidence begins to return.  Overall, we believe we are in a good place: defensive for today's markets and well positioned for growth tomorrow.

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

FINANCIAL REVIEW

Highlights

·       Q3 Underlying pre tax profit up 6.3% to £68 million compared to prior year comparative quarter

·       EPRA Net Asset Value per share at 593 pence; total accounting return of 1.4% for the three months (2010: 5.6%)

·       Diluted underlying earnings per share 7.5 pence for the three months (2010: 7.0 pence)

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

3 months to 31 December	2011			2010
	Group	JVs &   Funds	Prop Consol	Group	JVs &   Funds	Prop Consol
	£m	£m	£m	£m	£m	£m
Gross rental income	77	68	145	66	70	136
Property outgoings	(4)	(2)	(6)	(1)	(3)	(4)
Net rental income	73	66	139	65	67	132
Fees & other income	3	-	3	3	-	3
JVs & Funds underlying profit	30			30
Administrative expenses	(17)	(2)	(19)	(15)	(1)	(16)
Profit before interest and tax			123			119
Net financing costs	(21)	(34)	(55)	(19)	(36)	(55)
JVs & Funds underlying profit		30			30
Group underlying pre tax profit	68		68	64		64

Gross rental income for the three months ended 31 December 2011 increased by 6.6% to £145 million (including our share of joint ventures and funds), with growth from recent acquisitions adding £11 million.  £1 million net was realised from asset management initiatives - this increase was offset by £3 million in respect of properties which were previously income generating but are now developments. 

Net operating costs (representing property outgoings and administrative expenses, net of fees and other income) increased by £5 million to £22 million compared to the comparative quarter in the previous year.  A significant portion of the movement is due to the non vesting of incentive schemes in the prior period.   

The ratio of net operating costs to gross rental income was 15.2% (third quarter 2010: 12.5%).  Net financing costs are flat compared to the third quarter 2010 and are stated after development interest capitalised of £2 million (£5 million for the 9 months to 31 December 2011). 

Underlying profit before tax for the 9 months ended 31 December 2011 was £200 million compared with £191 million for the previous year, an increase of 4.7%.

Underlying diluted earnings per share for the third quarter was 7.5 pence (third quarter 2010: 7.0 pence), giving 22.1 pence for the 9 months to 31 December 2011 (9 months ended 31 December 2010: 21.2 pence), with the diluted weighted average number of shares for the quarter being 893 million (third quarter 2010: 886 million).  The underlying tax rate for the quarter is 1.5% (December 2010: 3.1%). 

Balance Sheet

EPRA net asset value per share at 31 December 2011 was 593 pence representing an increase of 0.3% since 30 September 2011.  This contributed to a total return of 13.0% for the 12 months ended 31 December 2011. 

	As at 31 December 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	5,398	4,882	10,280	4,783	4,789	9,572
Investment in JVs & Funds	2,180			2,066
Other non-current assets	16	(4)	12	51		51
	7,594	4,878	10,292	6,900	4,789	9,623
Other net current liabilities	(208)	(56)	(264)	(205)	(4)	(209)
Net debt	(2,291)	(2,616)	(4,907)	(1,714)	(2,697)	(4,411)
Other non-current liabilities	(37)	(26)	(63)	(51)	(22)	(73)
JVs & Funds net assets		2,180			2,066
IFRS net assets	5,058		5,058	4,930		4,930
EPRA adjustments	307		307	171		171
EPRA net assets1	5,365		5,365	5,101		5,101
EPRA NAV per share	593p		593p	567p		567p

¹ EPRA net assets exclude mark-to-market on effective cash flow hedges and related debt adjustments, as well as deferred taxation on revaluations. See note 1.

Property and other investments at the end of the third quarter were £10.3 billion, up from £9.6 billion in March, largely due to acquisitions of £378 million and development capital spend of £153 million in the period and a net valuation movement of £205 million.

Net debt at 31 December 2011 was £4,907 million (31 March 2011: £4,411 million).  The increase from March was principally due to purchases and capital expenditure.

The Group currently retains £2.5 billion of available committed banking facilities of which £1.5 billion have a maturity of more than 2.5 years, as well as £255 million of cash, short-term deposits and liquid investments.

The table below details key financing statistics on both the Group and Proportionally Consolidated bases.

Financing statistics 31 December 2011	Group	Prop Consol
IFRS Net debt	£2,291m	£4,907m
Weighted average debt maturity	9.7 yrs	9.6 yrs
Weighted average interest rate	4.3%	4.7%
% of debt at fixed/capped rates	87%	95%
Interest cover1	3.1 times	2.2 times
Loan to value2	28.9%	45.6%

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 three months was £58 million including receipts from joint ventures and funds of £17 million. 

Investing activity absorbed a net £73 million, of which £20 million was spent on acquisitions completed in the quarter and £25 million on development expenditure. 

Dividends

The 2012 third quarter dividend of 6.5 pence per share, totalling £58 million is payable on 9 May 2012 to shareholders on the register at close of business on 30 March 2012.

The Board will announce whether a Scrip Alternative is being offered 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 28 March 2012.  The Board expects to announce the split between PID and non-PID income at that time. 

The second quarter dividend of 6.5 pence per share, totalling £58 million, is payable on 17 February 2012.

Principal Risks and Uncertainties for the remaining three months of the financial year

The Annual Report published in May 2011 set out the principal risks facing the Group. Since then, the economic outlook, exacerbated by problems surrounding the Euro, continues to lead to uncertainty going forward. The Outlook statement in the Business Review, describes how the company is defensively positioned.

Further details on the 2011 principal risks are set out on pages 102 to 105 of the Annual Report where the risks are categorised under Performance (strategy, development, cost of finance, investor demand and office and retail occupier markets), Operational (financing availability and credit risk) and Legal and other (people, health & safety and political).

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

Portfolio Valuation
At 31 December 2011	Group	JVs & Funds1	Total	Change %2
	£m	£m	£m	3 mths		9 mths	12 mths
Retail3:
Retail warehouses	1,874	841	2,715	(0.6)		0.3	2.9
Superstores	143	1,216	1,359	0.2		1.4	1.9
Shopping centres	491	1,028	1,519	(0.3)		0.3	0.6
Department stores	448	-	448	-		0.1	3.0
UK Retail	2,956	3,085	6,041	(0.3)		0.5	2.1
Europe Retail	-	272	272	(1.8)		(3.7)	(2.7)
All Retail	2,956	3,357	6,313	(0.4)		0.4	1.9
Offices4:
City	520	1,512	2,032	0.8		5.8	8.3
West End	1,361	-	1,361	1.6		7.9	13.9
Provincial	90	7	97	(1.2)		(3.1)	(2.9)
All Offices	1,971	1,519	3,490	1.1		6.4	10.1
Other	471	6	477	(0.5)		0.8	1.4
Total	5,398	4,882	10,280	0.1		2.3	4.5
1 group's share of properties in joint ventures and funds
2 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
3 including committed and prospective developments of £85 million, up 3.5% in the 3 months to December 2011
4 including committed and prospective developments of £563 million, up 4.4% in the 3 months to December 2011

Portfolio Net Yields
At 31 December 2011 (excluding developments)	EPRA initial yield %	EPRA topped up initial yield %1	Overall topped up initial yield %2	Reversionary yield %	Equivalent yield %
Retail:
Retail warehouses	5.5	5.6	5.7	5.7	5.7
Superstores	5.0	5.0	5.0	5.0	5.1
Shopping centres	5.6	5.8	5.8	6.0	5.8
Department stores	5.7	5.8	8.9	4.6	6.5
UK Retail	5.4	5.5	5.8	5.5	5.7
Europe Retail	7.1	7.1	7.1	7.4	8.0
All Retail	5.5	5.6	5.9	5.6	5.8
Offices:
City	4.6	6.2	6.2	6.0	5.7
West End	3.5	5.5	5.8	5.8	5.6
Provincial	7.1	7.1	7.1	5.8	6.4
All Offices	4.3	6.0	6.1	5.9	5.7
Other	7.6	7.6	9.7	6.2	8.5
Total	5.2	5.8	6.1	5.7	5.8
1 including rent contracted from expiry of rent free periods and fixed uplifts not in lieu of growth
2 including fixed/minimum uplifts (excluded from EPRA definition)

Portfolio Yield & ERV Movements
At 31 December 2011	Net equivalent yield movement bps1						ERV Growth %
(excluding developments)	3 mths		9 mths		12 mths		3 mths		9 mths		12 mths
Retail:
Retail warehouses	4		1		(12)		0.1		0.8		1.2
Superstores	-		(2)		(3)		0.8		1.1		1.9
Shopping centres	1		(7)		(11)		0.2		0.8		0.5
Department stores	1		3		(16)		-		-		(0.2)
UK Retail	2		(2)		(10)		0.3		0.8		1.1
Europe Retail	19		30		28		n/a		n/a		n/a
All Retail	3		-		(9)		0.3		0.8		1.1
Offices:
City	-		(7)		(11)		-		2.9		4.6
West End	-		(3)		(2)		0.1		2.9		5.5
Provincial	-		47		22		(0.3)		7.6		(0.3)
All Offices	-		(6)		(8)		-		3.0		5.1
Other	3		2		(7)		-		-		(0.1)
Total	1		(2)		(9)		0.2		1.5		2.3
1 including notional purchaser's costs

Annualised Rent & Estimated Rental Value (ERV)
At 31 December 2011 (excluding developments)	Annualised rent                                   (cash flow basis) £m1			ERV £m	Average rent £psf
	Group	JVs & Funds	Total	Total	Contracted	ERV
Retail:
Retail warehouses	109	46	155	162	23	23
Superstores	8	64	72	72	21	21
Shopping centres	35	58	93	99	28	29
Department stores	27	-	27	22	12	9
UK Retail	179	168	347	355	22	22
Europe Retail	-	17	17	19	8	10
All Retail	179	185	364	374	20	21
Offices:
City	5	83	88	114	46	44
West End	39	-	39	64	42	43
Provincial	6	-	6	5	21	17
All Offices	50	83	133	183	43	42
Other	31	-	31	24	12	10
Total	260	268	528	581	23	23
1 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

Gross Rental Income
(Accounting Basis) £m	9mths to 31 December 20111			Annualised as at 31 December 2011
	Group	JVs & Funds	Total	Group	JVs & Funds	Total
Retail:
Retail warehouses	79	32	111	107	44	151
Superstores	6	47	53	8	64	72
Shopping centres	27	45	72	35	61	96
Department stores	25	-	25	33	-	33
UK Retail	137	124	261	183	169	352
Europe Retail	-	19	19	-	16	16
All Retail	137	143	280	183	185	368
Offices:
City	19	62	81	25	82	107
West End	42	-	42	53	-	53
Provincial	3	-	3	6	-	6
All Offices	64	62	126	84	82	166
Other	22	-	22	36	-	36
Total	223	205	428	303	267	570
1 gross rental income will differ from annualised rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives

Lease Length & Occupancy
At 31 December 2011	Average lease length yrs		Occupancy rate %
(excluding developments)	To expiry	To break	Occupancy	Occupancy (overall)1
Retail:
Retail warehouses	10.8	9.8	97.7	98.4
Superstores	16.1	16.0	100.0	100.0
Shopping centres	10.1	9.3	96.4	97.1
Department stores	28.9	25.4	99.7	99.7
UK Retail	13.1	12.2	98.0	98.4
Europe Retail	11.7	5.2	90.2	90.2
All Retail	13.0	11.8	97.6	98.0
Offices:
City	11.1	9.1	97.2	97.3
West End	10.8	8.5	98.6	98.6
Provincial	11.0	10.7	100.0	100.0
All Offices	11.0	8.9	97.7	97.8
Other	22.8	22.4	99.1	99.1
Total	12.9	11.5	97.7	98.0
1 including accommodation under offer or subject to asset management

Rent Subject to Lease Break or Expiry
At 31 December 2011	2012	2013	2014	2015	2016	2012-14	2012-16
	£m	£m	£m	£m	£m	£m	£m
Retail:
Retail warehouses	4	4	5	9	7	13	29
Superstores	-	-	-	-	-	-	-
Shopping centres	6	6	3	5	8	15	28
Department stores	-	-	-	-	-	-	-
UK Retail	10	10	8	14	15	28	57
Europe Retail	2	3	3	2	1	8	11
All Retail	12	13	11	16	16	36	68
Offices:
City1	1	3	1	1	19	5	25
West End	2	2	2	3	-	6	9
Provincial	-	-	-	-	-	-	-
All Offices1	3	5	3	4	19	11	34
Other	-	1	1	-	-	2	2
Total1	15	19	15	20	35	49	104
% of contracted rent	2.4%	3.1%	2.4%	3.3%	5.8%	7.8%	16.9%
Potential uplift at current ERV	1	1	-	-	-	2	2
1 pro forma for 755,000 sq ft of extensions on existing UBS leases

Rent Subject to Open Market Rent Review
12 months to 31 December	2012	2013	2014	2015	2016	2012-14	2012-16
	£m	£m	£m	£m	£m	£m	£m
Retail:
Retail warehouses	22	26	22	21	22	70	113
Superstores	4	2	17	18	14	23	55
Shopping centres	17	11	7	16	13	35	64
Department stores	-	-	-	-	5	-	5
UK Retail	43	39	46	55	54	128	237
Europe Retail	-	-	-	-	-	-	-
All Retail	43	39	46	55	54	128	237
Offices:
City	13	24	33	28	2	70	100
West End	11	4	1	12	4	16	32
Provincial	-	-	-	6	-	-	6
All Offices	24	28	34	46	6	86	138
Other	-	-	-	1	1	-	2
Total	67	67	80	102	61	214	377
Potential uplift at current ERV	3	3	2	4	2	8	14

Top 10 Properties by British Land Share of Value
At 31 December 2011	BL Share	Sq ft	Rent	Occupancy	Lease
(excluding developments)	%	'000	£m pa1	rate %2	length yrs3
Broadgate, EC2	50	4,009	173	97.3	7.5
Regent's Place, NW1,	100	1,210	49	98.3	9.0
Meadowhall Shopping Centre	50	1,374	83	98.6	10.0
Ropemaker Place, EC2	100	594	27	99.3	14.5
Teesside Shopping Park	100	460	14	100.0	8.8
Drake Circus Shopping Centre	100	560	16	97.8	7.5
Debenhams, Oxford Street	100	367	16	100.0	27.2
York House, W1	100	132	5	100.0	5.9
Glasgow Fort Shopping Park	41	393	17	98.7	7.1
St Stephens Shopping Centre	100	410	8	97.8	8.6
1 annualised contracted rent including 100% of Joint Ventures & Funds
2 includes accommodation under offer or subject to asset management
3 to first break

Occupiers Representing over 0.5% of Rent
At 31 December 2011	% of total rent			% of total rent
Tesco	7.2		TK Maxx	0.9
Sainsbury's	6.1		Aegis Group	0.9
Debenhams	4.2		JP Morgan	0.9
UBS AG	3.6		Reed Smith	0.8
Home Retail Group	3.0		Gazprom	0.8
Virgin Active	2.4		Deutsche Bank	0.8
Kingfisher (B&Q)	2.2		KESA (Comet)	0.8
HM Government	2.1		Mayer Brown	0.8
Next	1.9		Cable & Wireless	0.7
Arcadia Group	1.9		Mothercare	0.7
Spirit Group	1.7		ICAP	0.7
Bank of Tokyo-Mitsubishi UFJ Ltd	1.6		Lend Lease	0.7
Macquarie Group	1.5		Markit Group	0.6
DSG International	1.4		SportsDirect	0.6
Herbert Smith	1.4		Credit Lyonnais	0.6
Alliance Boots	1.3		Pets at Home	0.6
Asda (inc. Asda Living)	1.3		H&M	0.6
RBS	1.2		JD Sports (inc. Bank Fashion)	0.6
M&S	1.1		Henderson Global Investors	0.6
Hutchison 3G	1.1		Carpetright	0.5
House of Fraser	1.0		Carlson	0.5
New Look	0.9

Committed Developments
At 31 December 2011	BL Share	Sq ft			PC (Calendar		Current Value		Cost to complete		Notional interest1		ERV2		Pre- let		Resi End Value3
	%	'000			Year)		£m		£m		£m		£m		£m		£m
Offices:
5 Broadgate	50	700			Q4 2014		107		149		27		19.1		19.1		-
The Leadenhall Building4	50	610			Q2 2014		77		146		20		18.6		5.6		-
199 Bishopsgate	50	142			Q4 2012		31		13		1		3.5		-		-
NEQ, Regent's Place5	100	500			Q2 2013		180		151		16		19.0		7.7		113
10 Portman Square6	100	159			Q2 2013		79		48		5		8.4		-		17
Marble Arch House7	100	86			Q4 2013		25		32		4		3.9		-		13
Total Offices		2,197					499		539		73		72.5		32.4		143
Retail:
Puerto Venecia, Zaragoza	50	1,360			Q4 2012		46		43		8		8.0		3.8		-
Whitely Village, Fareham	50	302			Q2 2013		8		22		2		2.4		0.9		-
Glasgow Fort (Cinema)	41	45			Q1 2013		-		5		-		0.5		0.2		-
Superstore Extensions	50	34			2013		-		10		-		0.3		0.3		-
Total Retail		1,741					54		80		10		11.2		5.2		-
Total Committed		3,938					553		619		83		83.7		37.6		143
Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%)
1 from 1 January 2012 to practical completion (PC) 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 residential development expected to be sold, no rent allocated - of which £94 million exchanged
4 Aon have an option to take a further 85,000 sq ft
5 includes 120,000 sq ft of residential
6 includes 25,000 sq ft of off-site residential and retail (95-99 Baker Street)
7 includes 10,000 sq ft of residential
Prospective Developments
At 31 December 2011							BL Share %		Sq ft '000
Offices:
39 Victoria Street							100		90			Pending
6-9 Eldon Street							100		33			Pre-submission
Colmore Row							100		280			Detailed
Meadowhall Metropolitan							100		2,200			Outline
New Century Park							50		1,000			Outline
Total Offices									3,603
Retail:
Fort Kinnaird, Edinburgh							21		93			Planning pending
Glasgow Fort, Glasgow							41		185			Detailed planning consent
Kingston Centre, Milton Keynes							50		21			Detailed planning consent
Broughton Park, Chester							41		54			Planning pending
Surrey Quays							50		100			Planning pending
Power Court, Luton							100		200			Planning pending
Superstore Extensions							50		99			Board Commitment to Fund
Deepdale Retail Park, Preston							21		76			Planning pending
Meadowhall Surrounding Land							50		142			Planning pending
Total Retail									970
Total Prospective									4,573

 

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