Half-year Report - Part 3

RNS Number : 6462W

British Land Co PLC

16 November 2017

 

SUPPLEMENTARY TABLES

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

Since 1 April 2017		Price (100%)	Price       (BL Share)	Annual Passing Rent
Acquisitions	Sector	£m	£m	£m2
Completed
Tesco, Brislington - Tesco exchange transaction1	Retail	46	23	2
Harlech, Newport - Tesco exchange transaction1	Retail	41	20	1
10 - 40 The Broadway, Ealing	Retail	49	49	2
Total		136	92	5
1 Part of a Tesco JV swap transaction resulting in a net £73m disposal of superstore assets
2 BL share of annualised rent topped up for rent frees

Since 1 April 2017		Price (100%)	Price        (BL Share)	Annual Passing Rent
Disposals	Sector	£m	£m	£m6
Completed
The Leadenhall Building1	Offices	1,150	575	17
Superstores2,3	Retail	428	242	15
B&Q, Bury & Grimsby4	Retail	56	56	4
The Hempel Collection	Residential	50	50	-
Exchanged
Clarges, Mayfair5	Residential	66	66	-
The Hempel Collection	Residential	2	2	-
Aldgate Place	Residential	2	1	-
Total		1,754	992	36
1 Exchanged during the year ended 31 March 2017
2 Of which £116m (BL share) was part of a Tesco JV swap transaction resulting in a net £73m disposal of superstore assets
3 Of which £21m of superstores exchanged in period and completed post period end
4 Exchanged in period and completed post period end
5 Exchanged post period end
6 BL share of annualised rent topped up for rent frees

Portfolio Valuation by Sector
At 30 September 2017	Group	JVs & Funds	Total	H1 Change
	£m	£m	£m	%1	£m
Regional	1,121	1,866	2,987	0.1	2
Local	1,745	461	2,206	(0.9)	(21)
Multi-let	2,866	2,327	5,193	(0.4)	(19)
Department Stores and Leisure	588	1	589	2.4	14
Superstores	130	315	445	0.8	5
Solus and Other	365	-	365	5.8	20
Retail	3,949	2,643	6,592	0.3	20
West End	4,137	-	4,137	3.2	128
City	113	2,269	2,382	1.7	50
Offices	4,250	2,269	6,519	2.6	178
Residential2	116	18	134	3.6	7
Offices and Residential	4,366	2,287	6,653	2.6	185
Canada Water	270	-	270	(4.5)	(13)
Total	8,585	4,930	13,515	1.4	192
Standing Investments	7,827	4,587	12,414	1.2	157
Developments	758	343	1,101	3.3	35
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 Stand-alone residential

Retail Portfolio Valuation - Previous Classification Basis
At 30 September 2017	Group		JVs & Funds		Total	H1 Change
	£m	£m		£m		%1	£m
Shopping Parks	2,056	1,154		3,210		(0.1)	(3)
Shopping Centres	1,175	1,169		2,344		0.2	4
Superstores	130	315		445		0.8	5
Department Stores	168	1		169		2.1	4
Leisure	420	4		424		2.5	10
Retail & Leisure	3,949	2,643		6,592		0.3	20
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

Gross Rental Income1
Accounting Basis £m	6 months to 30 September 2017			Annualised as at 30 September 2017
	Group	JVs & Funds	Total	Group	JVs & Funds	Total
Regional	31	44	75	59	87	146
Local	45	15	60	92	27	119
Multi-let	76	59	135	151	114	265
Department Stores and Leisure	23	-	23	38	-	38
Superstores	2	12	14	5	21	26
Solus and Other	10	-	10	21	-	21
Retail	111	71	182	215	135	350
West End	65	-	65	134	-	134
City	3	60	63	5	81	86
Offices	68	60	128	139	81	220
Residential2	2	-	2	4	-	4
Offices and Residential	70	60	130	143	81	224
Canada Water	4	-	4	8	-	8
Total	185	131	316	366	216	582
1 Gross rental income differs from annualised rents due to accounting adjustments for fixed & minimum contracted rental uplifts and lease incentives
2 Stand-alone residential

Portfolio Net Yields1,2
At 30 September 2017	EPRA net initial yield %	EPRA topped up net initial yield %3	Overall topped up net initial yield %4	Net equivalent yield %	Net equivalent yield movement bps6	Net reversionary yield %	ERV Growth %5,6
Regional	4.4	4.7	4.8	4.9	4	5.0	1.2
Local	5.1	5.3	5.4	5.5	11	5.6	1.1
Multi-let	4.7	5.0	5.0	5.2	7	5.2	1.1
Department Stores and Leisure	5.8	5.8	7.0	5.8	(11)	4.6	5.9
Superstores	5.8	5.8	5.8	5.5	(7)	5.3	(1.2)
Solus and Other	5.3	5.3	5.3	5.4	16	4.2	(5.8)
Retail	4.9	5.1	5.3	5.3	5	5.1	1.0
West End	3.4	3.8	3.8	4.3	(11)	4.7	1.0
City	4.3	4.3	4.3	4.5	1	4.9	1.3
Offices	3.7	4.0	4.0	4.4	(6)	4.8	1.2
Canada Water	2.8	2.9	2.9	3.6	11	3.7	(1.1)
Total	4.3	4.6	4.7	4.8	-	5.0	1.0
1 Including notional purchaser's costs
2 Excluding committed developments, assets held for development and residential assets
3 Including rent contracted from expiry of rent-free periods and fixed uplifts not in lieu of rental growth
4 Including fixed/minimum uplifts (excluded from EPRA definition)
5 As calculated by IPD; 6 months to 30 September 2017
6 Excludes Euston Tower; as we move closer to tenant break in 2021, valuation now reflects refurbishment assumption which, if included, would distort these movements

Total Property Return (as calculated by IPD)
6 months to 30 September 2017	Retail		Offices		Total
%	British Land	IPD	British Land	IPD	British Land	IPD
Capital Return	0.3	0.9	2.9	2.2	1.5	2.6
- ERV Growth	1.0	0.5	1.2	0.6	1.0	1.0
- Yield Movement1	5 bps	-6 bps	-6 bps	-10 bps	0 bps	-13 bps
Income Return	2.7	2.5	1.9	1.9	2.3	2.3
Total Property Return	3.0	3.4	4.8	4.1	3.8	5.0
1 Net equivalent yield movement

Occupiers Representing over 0.5% of Total Contracted Rent
At 30 September 2017	% of total rent			% of total rent
Tesco	4.6		New Look	1.0
J Sainsbury	4.3		Asda Group	1.0
UBS AG	3.6		Microsoft	1.0
Debenhams	3.5		Sports Direct	0.9
Kingfisher (B&Q)	3.0		Virgin Active	0.9
HM Government	2.8		Deutsche Bank	0.8
Next	2.5		JD Sports	0.8
Facebook	1.9		Reed Smith	0.8
Dentsu Aegis1	1.8		H&M	0.7
M&S	1.7		Mayer Brown	0.7
Spirit Group	1.7		Mothercare	0.7
Wesfarmers (Homebase/Bunnings)	1.6		TGI Fridays	0.6
Alliance Boots	1.6		River Island	0.6
Visa Inc	1.6		NEX Group	0.6
Dixons Carphone	1.5		Primark	0.6
Arcadia Group	1.4		Credit Agricole	0.6
Herbert Smith	1.3		Pets at Home	0.6
TK Maxx	1.2		Henderson	0.5
David Lloyd Leisure	1.1		Aramco	0.5
Gazprom	1.1		House of Fraser	0.5
Vodafone	1.1
1 Represents current occupation of 10 Triton Street covering 118,000 sq ft of space. Taking into account their post period end letting of 310,000 sq ft at 1 Triton Square, % of contracted rent would rise to 5.2%. As part of this new letting, Dentsu Aegis have an option to return their existing space at 10 Triton Street in 2021. If this option is exercised, there is an adjustment to the rent free period in respect of the letting at 1 Triton Square to compensate British Land.

Major Holdings
At 30 September 2017	BL Share	Sq ft		Rent		Occupancy		Lease
	%	'000		£m pa1		rate %2,4		Length  yrs3,4
Broadgate	50	4,850		180		98.4		8.3
Regent's Place	100	1,740		75		97.2		7.7
Paddington Central	100	958		41		93.8		6.8
Meadowhall, Sheffield	50	1,500		85		97.8		6.7
Teesside, Stockton	100	569		17		95.5		5.5
Drake's Circus, Plymouth	100	1,082		20		97.9		8.8
Sainsbury's Superstores5	51	1,742		40		100.0		9.8
Ealing Broadway6	100	540		14		94.9		5.2
Glasgow Fort	77	510		21		99.0		6.2
10 Portman Square	100	134		10		100.0		7.6
1 Annualised EPRA contracted rent including 100% of Joint Ventures & Funds
2 Including accommodation under offer or subject to asset management
3 Weighted average to first break
4 Excludes committed and near term developments
5 Comprises stand-alone stores
6 Includes 10-40 The Broadway acquired during the period

Lease Length & Occupancy
At 30 September 2017	Average lease length yrs		Occupancy rate %1
	To expiry	To break	EPRA Occupancy	Occupancy2
Regional	7.9	6.8	96.9	97.4
Local	7.7	6.7	97.6	98.4
Multi-let	7.8	6.7	97.2	97.9
Department Stores and Leisure	16.9	16.9	99.7	99.7
Superstores	10.7	10.0	100.0	100.0
Solus and Other	12.1	12.0	100.0	100.0
Retail	9.2	8.3	97.7	98.3
West End	8.9	7.3	95.8	96.1
City	9.4	8.2	97.2	98.1
Offices	9.1	7.7	96.3	96.9
Canada Water	6.4	6.3	95.5	97.3
Total	9.1	8.0	97.1	97.6
1 Space allocated to Storey is shown as occupied where there is a Storey tenant in place otherwise it is shown as vacant. Offices occupancy would rise from 96.9% to 97.5% and total occupancy would rise from 97.6% to 97.9% if Storey space were assumed to be fully let.
2 Includes accommodation under offer or subject to asset management

Portfolio Weighting
At 30 September	2016	2017	2017	2017
		(current)	(current)	(pro-forma1)
	%	%	£m	%
Regional	20.7	22.1	2,987	20.8
Local	16.3	16.3	2,206	15.4
Multi-let	37.0	38.4	5,193	36.2
Department Stores and Leisure	4.6	4.4	589	4.1
Superstores	4.9	3.3	445	3.1
Solus and Other	2.5	2.7	365	2.5
Retail	49.0	48.8	6,592	45.9
West End	27.8	30.6	4,137	32.2
City	19.8	17.6	2,382	19.1
Offices	47.6	48.2	6,519	51.3
Residential2	1.4	1.0	134	0.9
Offices and Residential	49.0	49.2	6,653	52.2
Canada Water	2.0	2.0	270	1.9
Total	100.0	100.0	13,515	100.0
Of which London	58%	57%	8,627	60%
1 Pro forma for developments under construction and committed developments at estimated end value (as determined by the Group's external valuers)
2 Stand-alone residential

Annualised Rent & Estimated Rental Value (ERV)
At 30 September 2017	Annualised rent (valuation basis) £m1			ERV £m	Average rent £psf
	Group	JVs & Funds	Total	Total	Contracted2	ERV
Regional	61	86	147	166	31.5	33.7
Local	95	26	121	132	25.3	26.5
Multi-let	156	112	268	298	28.4	30.0
Department Stores and Leisure	36	-	36	29	14.8	12.0
Superstores	7	19	26	24	21.3	19.7
Solus and Other	21	-	21	16	20.1	16.0
Retail	220	131	351	367	24.9	25.2
West End3	128	-	128	176	57.8	61.6
City3	5	89	94	108	51.1	57.2
Offices3	133	89	222	284	54.8	59.7
Residential4	5	-	5	4
Offices and Residential	138	89	227	288
Canada Water	8	-	8	10	16.1	20.8
Total	366	220	586	665	31.0	33.3
1 Gross rents plus, where rent reviews are outstanding, any increases to ERV (as determined by the Group's external valuers), less any ground rents payable under head leases, excludes contracted rent subject to rent free and future uplift
2 Annualised rent, plus rent subject to rent free
3 £psf metrics shown for office space only
4 Stand-alone residential

Rent Subject to Open Market Rent Review
For period to 31 March	2018	2019	2020	2021	2022	2018-20	2018-22
At 30 September 2017	£m	£m	£m	£m	£m	£m	£m
Regional	7	17	11	17	14	35	66
Local	16	17	11	12	6	44	62
Multi-let	23	34	22	29	20	79	128
Department Stores and Leisure	-	-	-	-	-	-	-
Superstores	3	5	8	7	1	16	24
Solus and Other	-	-	-	-	-	-	-
Retail and Leisure	26	39	30	36	21	95	152
West End	12	27	15	10	9	54	73
City	2	13	4	9	-	19	28
Offices	14	40	19	19	9	73	101
Canada Water	1	1	-	-	-	2	2
Total	41	80	49	55	30	170	255

Rent Subject to Lease Break or Expiry
For period to 31 March	2018	2019	2020	2021	2022	2018-20	2018-22
At 30 September 2017	£m	£m	£m	£m	£m	£m	£m
Regional	10	10	13	10	15	33	58
Local	7	8	10	9	12	25	46
Multi-let	17	18	23	19	27	58	104
Department Stores and Leisure	-	-	-	-	-	-	-
Superstores	-	-	-	-	-	-	-
Solus and Other	-	1	-	-	-	1	1
Retail	17	19	23	19	27	59	105
West End	2	4	4	17	21	10	48
City	-	13	9	8	1	22	31
Offices	2	17	13	25	22	32	79
Canada Water	1	1	1	1	-	3	4
Total	20	37	37	45	49	94	188
% of contracted rent	3.2%	6.0%	6.0%	7.3%	8.0%	15.2%	30.5%

Committed Developments
At 30 September 17	Sector	BL Share	100% sq ft	PC Calendar Year	Current Value	Cost to come	ERV	Let & Under Offer
		%	'000		£m	£m1	£m2	£m
Clarges Mayfair - Retail & Residential3	Mixed Use	100	104	Q4 2017	402	26	0.8	-
100 Liverpool Street	Office	50	522	Q4 2019	132	136	18.8	5.1
1 Triton Square4	Office	100	366	Q4 2020	182	196	23.1	21.8
1 Finsbury Avenue	Office	50	288	Q1 2019	85	32	7.8	2.2
Speke (Leisure)	Retail	67	66	Q3 2018	9	8	1.1	0.9
Plymouth (Leisure)	Retail	100	107	Q4 2019	-	48	3.1	1.5
Total Committed			1,453		810	446	54.7	31.5
Retail Capex5						79
1 From 1 October 2017. Cost to come excludes notional interest as interest is capitalised individually on each development at our capitalisation rate
2 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives)
3 Current value includes units exchanged and not completed of £278m. Further sales of £66m exchanged post period end.
4 ERV let & under offer of £21.8m represents space taken by Dentsu Aegis. As part of this letting, Dentsu Aegis have an option to return their existing space at 10 Triton Street in 2021. If this option is exercised, there is an adjustment to the rent free period in respect of the letting at 1 Triton Square to compensate British Land
5 Capex committed and underway within our investment portfolio relating to leasing and asset management

Near Term Development Pipeline
At 30 September 17	Sector	BL Share	100% sq ft	Expected Start On Site	Current Value	Cost to Come	ERV	Let & Under Offer	Planning Status
		%	'000		£m	£m1	£m2	£m
135 Bishopsgate	Office	50	325	Q4 2017	89	49	9.1	4.4	Consented
Gateway Building	Leisure	100	105	Q3 2018	7	105	6.0	-	Res to Grant
Bradford (Leisure)	Retail	100	49	Q3 2018	1	16	0.9	-	Pre-submission
Teesside (Leisure)	Retail	100	83	Q3 2018	34	48	4.6	-	Res to Grant
Total Near-Term			562		131	218	20.6	4.4
Retail Capex 3						95
1 From 1 October 2017. Cost to come excludes notional interest as interest is capitalised individually on each development at our capitalisation rate
2 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives)
3 Forecast capital commitments within our investment portfolio over the next 12 months relating to leasing and asset enhancement

Medium Term Development Pipeline
At 30 September 17	Sector	BL Share %	100% Sq ft	Planning Status
			'000
2-3 Finsbury Avenue	Office	50	563	Resolution to Grant
1-2 Broadgate	Office	50	471	Pre-submission
Blossom Street	Office	100	340	Consented
5 Kingdom Street1	Office	100	332	Consented
Meadowhall (Leisure)	Retail	50	330	Resolution to Grant
Peterborough (Leisure)	Retail	100	204	Submitted
Ealing - 10-40 The Broadway	Retail	100	298	Pre-submission
Aldgate Place Phase 2	Residential	50	145	Consented
Eden Walk Retail & Residential	Mixed Use	50	533	Consented
Total Medium Term excl. Canada Water			3,216
Canada Water - Phase 12	Mixed Use	100	1,835	Pre-submission
1  Planning consent for previous 240,000 sq ft scheme
2 Canada Water site covers 5.5m sq ft in total based on net area based on gross area of up to 7m sq ft

GLOSSARY

Adjusted net debt is the Group net debt and the Group's share of joint venture and funds' net debt excluding the mark-to-market on effective cash flow hedges and related debt adjustments and non-controlling interests. A reconciliation between Group net debt and adjusted net debt is included in Table A within the supplementary disclosures.

Annualised rent is the gross property rent receivable on a cash basis as at the reporting date. Additionally, it includes the external valuers' estimate of additional rent in respect of unsettled rent reviews, turnover rent and sundry income such as that from car parks and commercialisation, less any ground rents payable under head leases.

Assets under management is the full value of all assets owned and managed by British Land and includes 100% of the value of all assets owned by joint ventures and funds.

BREEAM (Building Research Establishment Environmental Assessment Method) assesses the sustainability of buildings against a range of social and environmental criteria.

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

Contracted rent is the annualised rent adjusting for the inclusion of rent subject to rent free periods.

Customer satisfaction combines survey results on overall experience ratings from decision makers, property directors, store managers and visitors across our retail and office businesses.

Developer's profit is the profit on cost estimated by the valuers that a developer would expect. The developer's profit is typically calculated by the valuers to be a percentage of the estimated total development costs, including land and notional finance costs.

Development 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 5% per annum).

Development uplift is the total increase in the value (after taking account of capex and capitalised interest) of properties held for development during the period. It also includes any developer's profit recognised by valuers in the period.

Dividend yield is calculated as dividends per share expressed as a percentage of EPRA NAV per share.

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

EPRA cost ratio (including direct vacancy costs) is a proportionally consolidated measure of the ratio of net overheads and operating expenses against gross rental income (with both amounts excluding ground rents payable). Net overheads and operating expenses relate to all administrative and operating expenses, net of any service fees, recharges or other income specifically intended to cover overhead and property expenses.

EPRA cost ratio (excluding direct vacancy costs) is the ratio calculated above, but with direct vacancy costs removed from the net overheads and operating expenses balance.

EPRA earnings is the IFRS profit after taxation attributable to shareholders of the Company excluding investment and development property revaluations, gains/losses on investing and trading property disposals, changes in the fair value of financial instruments and associated close-out costs and their related taxation. These items are presented in the capital and other column of the income statement. A reconciliation between profit attributable to shareholders of the Company and EPRA earnings is included in Table B within the supplementary disclosures.

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

EPRA net asset value (EPRA NAV) is a proportionally consolidated measure, representing the IFRS net assets excluding the mark-to-market on effective cash flow hedges and related debt adjustments, the mark-to-market on the convertible bonds as well as deferred taxation on property and derivative valuations. It includes the valuation surplus on trading properties and is adjusted for the dilutive impact of share options. A reconciliation between IFRS net assets and EPRA NAV is included in Table B within the Supplementary Disclosures.

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 (adding notional purchaser's costs), excluding development and residential properties.

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

EPRA occupancy rate is the ERV of occupied space divided by ERV of the whole portfolio, excluding developments and residential property.

EPRA topped-up net initial yield is the current annualised rent, net of costs, topped up for contracted uplifts, where these are not in lieu of rental growth, expressed as a percentage of capital value (adding notional purchasers costs).

EPRA vacancy rate is the ERV of vacant space divided by ERV of the whole portfolio, excluding developments and residential property.

Estimated rental value (ERV) is the external valuers' opinion of 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.

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. ERV growth is calculated monthly and compounded for the period subject to measurement, as calculated by IPD.

Fair value movement is the accounting adjustment to change the book value of an asset or liability to its market value.

Footfall is the estimated annualised number of visitors entering our assets.

Footfall growth is the like-for-like movement in footfall against the same period in the prior year, on properties owned throughout both comparable periods, aggregated at British Land's ownership share for each asset.

Gross investment activity as measured by our share of acquisitions, sales and capital expectations on investments and development.

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.

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

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

IFRS are the International Financial Reporting Standards as adopted by the European Union.

Income return is calculated as net income expressed as a percentage of capital employed over the period, as calculated by IPD. Income returns are calculated monthly and indexed to provide a return over the relevant period.

Interest cover is the number of times net financing costs are covered by underlying profit before net financing costs and taxation.

IPD is a brand of real estate indices, owned by MSCI, which produce independent benchmarks of property returns and British Land UK portfolio returns.

Lettings and lease renewals are compared both to the previous passing rent as at the start of the financial year and the ERV immediately prior to letting. Letting performance against ERV comparison of achieved letting terms on long term lettings and renewals against valuation assumptions on like-for-like space, calculated on a net effective basis, aggregated at British Land's ownership share for each asset.

Leverage see loan to value (LTV).

Like-for-like rental income growth is the growth in net rental income on properties owned throughout the current and previous periods under review. This growth rate includes revenue recognition and lease incentive adjustments but excludes properties held for development in either period and lease accounting adjustments related to fixed and minimum rent reviews.

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

Managed portfolio consists of multi-let properties where we have control of facilities and utilities management.

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

Multi-channel retailing is the use of a variety of channels in a customer's shopping experience, including research, before a purchase. Such channels include: retail stores, online stores, mobile stores, mobile app stores, telephone sales and any other method of transacting with a customer. Transacting includes browsing, collecting, buying, returning as well as pre and post-sale service.

Net development value is the estimated end value of a development project as determined by the external valuers when the building is completed and fully let (taking into account tenant incentives and notional purchaser's costs). It is based on the valuer's view on ERVs, yields, letting voids and tenant incentives.

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

Net equivalent yield (NEY) is the time weighted average return (after adding notional purchasers costs) that a property will produce. In accordance with usual practice, the equivalent yield (as determined by the external valuers) assume rent is received annually in arrears.

Net initial yield (NIY) is the current annualised rent, net of costs, expressed as a percentage of capital value, after adding notional purchaser's costs.

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.

Net reversionary yield (NRY) is the anticipated yield to which the initial yield will rise (or fall) once the rent reaches the estimated rental value.

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

Omni-channel retailing seeks to provide the customer with a seamless shopping experience across channels, including stores, online and mobile.  This empowers customers to switch between channels during the shopper journey according to their preferences. For example, they can use mobile in-store to research or make a purchase, buy online and collect in-store, or they can buy in-store and initiate a return online.

Over rented is the term used to describe when the contracted rent is above the estimated rental value.

Overall 'topped-up' net initial yield (TUNIY) is the EPRA 'topped-up' net initial yield, adding all contracted uplifts to the annualised rents.

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

Property income distributions (PIDs) are profits distributed to shareholders which 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 (e.g. pension funds) are tax exempt and receive PIDs without withholding tax. REITs also pay out normal dividends, called non-PIDs, which are taxed in the same way as dividends received from non REIT companies; these are not subject to withholding tax and for UK individual shareholders qualify for the tax free dividend allowance.

Portfolio valuation is reported by the Group's external valuers. In accordance with usual practice, they report valuations net, after the deduction of notional purchaser's costs, including stamp duty land tax, agent and legal fees.

Proportionally consolidated measures include the Group's share of joint ventures and funds and exclude non-controlling interests in the Group's subsidiaries.

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

Rent-free period see Tenant (or lease) incentives.

REITs are property companies that allow people and organisations to invest in commercial property and receive benefits as if they directly owned the properties themselves. The rental income, after costs, is passed directly to shareholders in the form of dividends. In the UK REITs are required to distribute at least 90% of their tax exempt property income to shareholders as dividends. As a result, over time, a significant proportion of the total return for shareholders is likely to come from dividends. The effect is that taxation is moved from the corporate level to the investor level as investors are liable for tax as if they owned the property directly. British Land became a REIT in January 2007.

Rent reviews take place at intervals agreed in the lease (typically every five years) and their purpose is usually to adjust the rent to the current market level at the review date. For upwards-only rent reviews, the rent will either remain at the same level or increase (if market rents have increased) at the review date.

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.

Retailer sales growth is the like-for-like movement in retailer in-store sales against the same period in the prior year, on occupiers providing sales data throughout both comparable periods, aggregated at British Land's ownership share for each asset.

Retail planning consents are separated between A1, A2 and A3 - as set out in The Town and Country Planning (Use Classes) Order. Within the A1 category, Open A1 permission allows for the majority of types of retail including fashion to be accommodated, while Restricted A1 permission places limits on the types of retail that can operate (for example, 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	Shops, retail warehouses, hairdressers, undertakers, travel and ticket agencies, post offices, pet shops, sandwich bars, showrooms, domestic hire shops dry cleaners, funeral directors and internet cafes.
A2	Financial and professional services	Financial services such as banks and building societies, professional services (other than health and medical services) and including estate and employment agencies. It does not include betting offices or pay day loan shops - these are now classed as "sui generis" uses.
A3	Restaurants and cafes	For the sale of food and drink for consumption on the premises - restaurants, snack bars and cafes.
D2	Assembly and leisure	Cinemas, music and concert halls, bingo and dance halls (but not night clubs), swimming baths, skating rinks, gymnasiums or areas for indoor or outdoor sports and recreations.

Reversion is change in rent estimated by the external valuers, where the passing rent is different to the estimated rental value. The increase or decrease of rent arises on rent reviews and letting of vacant space or re letting of expiries.

Scrip dividend For certain periods, British Land offers its shareholders the opportunity to receive dividends in the form of shares instead of cash. This is known as a Scrip dividend.

Standing investments are assets which are not in the course of, or held for, development.

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

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

Topping out is a traditional construction ceremony to mark the occasion when the structure of the building reaches the highest point.

Total property return is calculated as the change in capital value, less any capex incurred, plus net income, expressed as a percentage of capital employed over the period, as calculated by IPD. Total property returns are calculated monthly and indexed to provide a return over the relevant period.

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

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

Total tax contribution is a more comprehensive view of tax contributions than the accountancy-defined tax figure quoted in most financial statements. It comprises taxes and levies paid directly, as well as taxes collected from others which we administered.

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

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

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.

Underlying Profit is the pre-tax EPRA earnings measure with additional Company adjustments. No Company adjustments were made in either the current or prior period.

Valuation uplift is the increase in the portfolio valuation and sales receipts of properties sold during the period, net of capital expenditure, capitalised interest and development team costs, and transaction costs incurred, expressed as a percentage of the portfolio valuation at the start of the period plus net capex, capitalised interest and development team costs, and transaction costs.

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

Weighted average debt maturity is calculated by multiplying each tranche of Group debt by the remaining period to its maturity, with the sum of the results being divided by total Group debt in issue at the period end.

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

Weighted average unexpired 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 residential leases and properties allocated as developments.

Yield on cost is the estimated annual rent of a completed development divided by the total cost of development including site value and notional finance costs to the point of assumed rent commencement, expressed as a percentage return.

Yield shift is a movement (usually expressed in bps) in the net equivalent yield of a property asset, or like-for-like portfolio, over a given period, weighted by net capital value.

 

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