REG - British Land Co PLC - Final Results
18/05/2022 07:00
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RNS Number : 8554L British Land Co PLC 18 May 2022
The British Land Company PLC Full Year Results
Delivery against strategy driving strong performance
18 May 2022
Simon Carter, CEO said: "Over the past year we have delivered a strong
performance across all parts of our business as we continue to execute against
our strategy. Our total accounting return for the year was 14.8% driven by a
6.8% increase in the valuation of our portfolio and Underlying Profit is up
24.9%. Our balance sheet remains strong with pro forma loan to value of 28.4%.
Operationally, our leasing volumes across Campuses and Retail & Fulfilment
were the highest in ten years and were ahead of ERV. In London, demand
continues to gravitate towards the best, most sustainable space where our
Campuses are at a distinct advantage. Retail Parks are an attractive,
cost-effective format for our retail customers reflected in our very low
vacancy of 2.6%, so we are particularly pleased with our decision to allocate
capital to this segment, where valuations have increased 20.7%. The
fundamentals of Urban Logistics in London are compelling given the chronic
shortage of space. We have made a good start to building our Urban Logistics
business where we have assembled a c.£1.3bn development pipeline in 12
months.
We are active recyclers of capital, releasing over £1bn since April 2021 to
invest into higher value-creating opportunities in development and growth
segments of the market. We have a wealth of development opportunities across
our London Campuses, including Canada Water and in Urban Logistics which
altogether we expect will generate around £2bn of future profit.
We are mindful of current elevated economic and geo-political uncertainties,
but our strategic advantage in sectors with pricing power means we can look
ahead with confidence."
Performance summary
£2.2bn capital activity - actively recycling capital into areas of growth and value
- £694m from the sale of 75% of majority of assets at Paddington Central to
GIC post year end, crystallising 9% p.a. total property returns
- £290m from the sale of 50% of our share in the Canada Water Masterplan to
AustralianSuper, enabling us to accelerate delivery and returns from the
scheme
- On site with 1.7m sq ft of net zero carbon developments across our
Campuses; 91% of costs fixed
- £102m of acquisitions in Cambridge and Guildford, building exposure to
innovation sectors; on site with first lab enabled scheme
- £350m investment into Retail Parks in the year with a further £49m in
FY21, exploiting the value opportunity
- Assembled an urban logistics development pipeline with a gross development
value of £1.3bn, focused on London where the supply-demand imbalance is most
acute
Strong operational performance - key themes playing out
- Portfolio value up 6.8% with Campuses up 5.4% and Retail & Fulfilment
up 9.9% driven by Retail Parks up 20.7%
- 42bps yield contraction overall; 11 bps yield contraction in Campuses;
151bps yield contraction in Retail Parks
- 1.7m sq ft of Campus leasing, highest volume in 10 years; 5.4% ahead of
ERV; average lease length over 12 years
- 2.2m sq ft Retail & Fulfilment leasing, highest volume in 10 years,
2.8% ahead of ERV; Retail Park vacancy down to 2.6%
- Footfall and sales on our Retail Parks portfolio 99.5% and 100.2% of FY20,
respectively
- Strong rent collection: 97% for the year, nearing pre-pandemic levels,
significantly reducing provisions
Excellent financial performance and strong balance sheet
- 14.8% Total Accounting Return, underpinned by our strategic activity
- Underlying Profit up 24.9% reflecting a significant reduction in
provisions
- EPRA Net Tangible Assets (NTA) up 12.2% to 727p
- FY22 dividend of 21.92p per share
- Pro forma LTV at 28.4% adjusting for the Paddington Central transaction
- £1.3bn undrawn facilities and cash. Interest rate on our debt fully
hedged on a spot basis with no requirement to refinance until late 2025
following the Paddington transaction
- Fitch affirmed senior unsecured credit rating at 'A'
Further good progress against 2030 Sustainability strategy
- Awarded GRESB 5* rating and AAA rating from MSCI
- Delivered our second net zero carbon development at 1 Triton Square, fully
let to Meta (previously Facebook)
- Further accolades for 100 Liverpool Street including Green Building
Project of the Year by BusinessGreen, Project of the Year at the Building
Awards, a Civic Trust Award and Financing Deal of the Year: UK by Real Estate
Capital Europe for 2021.
- Completed net zero audits at our major assets; 70% portfolio now EPC A-C
rated
- First UK REIT to achieve the Disability Smart Standard accreditation from
the Business Disability Forum
Summary performance
Year ended 31 March 2022 31 March 2021 Change
Income statement
Underlying Profit £251m £201m 24.9%
Underlying earnings per share2 27.4p 18.8p 45.7%
IFRS profit/(loss) after tax £960m £(1,083)m
IFRS basic earnings per share 103.3p (111.2)p
Dividend per share 21.92p 15.04p
Total accounting return(2) 14.8% (15.1)%
Balance sheet
Portfolio at valuation (proportionally consolidated) £10,467m £9,132m 6.8%1
EPRA Net Tangible Assets per share(2) 727p 648p 12.2%
IFRS net assets £6,733m £5,983m
Loan to value ratio (proportionally consolidated)(3) 32.9% 32.0%
Fitch senior unsecured rating A A
Operational Statistics
Lettings and renewals over 1 year 2.9m sq ft 1.2m sq ft
Total lettings and renewals 3.9m sq ft 2.2m sq ft
Committed and recently completed development 2.1m sq ft 1.8m sq ft
Sustainability Performance
MSCI ESG AAA rating AAA rating
GRESB 5* and 5* and
Green Star
Green Star
1. Valuation movement during the year (after taking account of capex) of
properties held at the balance sheet date, including developments (classified
by end use), purchases and sales.
2. See Note 2 to the financial statements.
3. Following the sale of a 75% interest in the majority of our assets at
Paddington Central, LTV falls to 28.4% on a pro forma basis.
Results Presentation and Investor Conference Call
A presentation of the results will take place at 9.00am on 18 May 2022 at Peel
Hunt, 100 Liverpool Street, Broadgate and will be broadcast live via webcast
(Britishland.com) and conference call. The details for the conference call and
weblink are as follows:
UK Toll Free Number: 0800 640 6441
Access code: 413285
Click for access: Audio weblink (https://streamstudio.world-television.com/927-1254-32293/en)
A dial in replay will be available later in the day for 7 days. The details
are as follows:
Replay number: 020 3936 3001
Passcode: 452061
Accompanying slides will be made available at britishland.com just prior to
the event starting.
For Information Contact
Investors
Jo Waddingham, British Land 07714 901166
Media
Lizzie King, British Land 07808 912784
Guy Lamming/Gordon Simpson, Finsbury 020 7251 3801
britishland@finsbury.com
Chief Executive's review
Delivery against strategy driving strong performance
We have a clear strategy to exploit our competitive strengths in active
management and sustainable development to drive value for our shareholders
across our Campuses, Retail Parks and London Urban Logistics. Our platform
makes us the partner of choice for institutional investors, enabling us to
recycle capital, earn fees and crystallise returns. The success of this
approach is reflected in the strength of our leasing, where our Campus model
is an important differentiator, and by the exceptional performance of our
Retail Parks. In Urban Logistics, we have assembled a development pipeline
over the last year with a gross development value of £1.3bn focused on London
where the market dynamics are very favourable. Our strategy and operational
performance has delivered a total accounting return of 14.8% for the year.
Operational performance
Campus leasing activity was strong at 1.7m sq ft of lettings and renewals,
5.4% ahead of ERV. This includes letting or placing under option all the
office space at our 1 Broadgate development, securing £13.7m of rent. Post
year end, we were pleased to have placed a further 103,000 sq ft under offer
at our Norton Folgate development, representing another £7.5m of rent. Today,
businesses have high expectations for their workspace with demand focused on
the best space, with an emphasis on sustainability, wellness, shared and
flexible space and excellent transport connections. Our Campus model delivers
against these customer demands making it the premier office portfolio across
London. Campuses were up 5.4% in value, driven by our successful leasing
activity and inwards yield shift of 11bps.
In Retail & Fulfilment, lettings and renewals covered 2.2m sq ft of space,
including 1.5m sq ft of long term deals, overall 2.8% ahead of ERV. Retail
Parks, where we are the UK number 1 owner and operator, accounted for 60% of
that activity. They are the preferred format for retailers, reflecting their
online channel compatibility and affordability, underpinning improved
occupational demand. As a result, Retail Parks delivered 151 bps of yield
compression, driving values up 20.7%. This performance is a strong endorsement
of the value proposition we identified early, following which we agreed £400m
of acquisitions of Retail Parks. Shopping centre values were down 6.1%
although the rate of decline decelerated in the second half.
Progress against the Priorities for our business
A year ago, we identified four clear priorities for our business. We have
delivered strong progress in each area since the start of the financial year
which is summarised below:
Priority Progress in FY22
Realising the potential of our Campuses - New joint venture with AustralianSuper at Canada Water accelerating
delivery and returns from the Masterplan
- Acquired £102m of assets outside of London aligned to growth and
innovation including Peterhouse Technology Park in Cambridge, The Priestley
Centre and Waterside House in Guildford
- Attracted innovative and growing businesses to our Campuses including
lettings of 134,000 sq ft to JLL and 254,000 sq ft to Allen & Overy at 1
Broadgate and 315,000 sq ft to Meta at 1 Triton Square
- Storey occupancy improved to 86%
Progressing value accretive development - Delivered 1 Triton Square, our second net zero development, fully let to
Meta
- On site with 1.7m sq ft of net zero development, with new commitments
including Phase 1 of Canada Water and Phase 2 at Aldgate, our first build to
rent residential development
- On site at The Priestley Centre, Guildford, our first lab enabled office
- 91% of costs fixed across committed developments; benefitting from
excellent, long term relationships with Tier 1 contractors
- 1.3m sq ft planning consents received in the year with a further 2.5m sq
ft under submission (based on gross area)
Targeting the opportunities in Retail & Fulfilment - Assembled an urban logistics development pipeline with a gross
development value of £1.3bn including acquisition of a 12.5 acre site in
Wembley for £157m
- £350m retail park acquisitions in the year including the remaining 22%
in HUT at £148m GAV and NIY of 8% taking our ownership to 100%
- Increased retail park occupancy by 270bps to 97.4%
Active capital recycling - Total capital activity of £2.2bn
- £694m sale of 75% of majority of assets at Paddington Central post year
end
- £290m sale of 50% in the Canada Water Masterplan
- £645m Retail & Fulfilment acquisitions
- £102m additions to our Campuses portfolio
- £1.1bn of financing activity in the year
Strategy
We focus our activities on two strategic themes which play best to our skill
set and where we currently see the most attractive opportunities to drive
future returns:
- Campuses - Dynamic neighbourhoods focused on customers in growth and
innovation sectors including technology, science, engineering and health; and
- Retail & Fulfilment - retail parks and urban logistics aligned to the
growth of convenience, online and last mile fulfilment
Campuses
The key theme underpinning our focus on Campuses is that demand will gravitate
to the best, most sustainable space. Building on our success at Broadgate,
Regent's Place and Paddington Central, we are delivering a fourth Campus at
Canada Water, a 53 acre development opportunity. In order to accelerate the
delivery and returns of that scheme we sold 50% of our share to
AustralianSuper for £290m in March 2022 creating a new joint venture with a
partner who shares our vision for Canada Water. This project will be a key
driver of value for our business; Phase 1 delivers an IRR for British Land of
c.11% and the whole project is expected to deliver c. £2bn of value for
British Land and AustralianSuper, equating to an IRR in the low teens. In
April 2022, we also announced that we had exchanged on the sale of 75% of the
majority of assets in Paddington Central. This has been an excellent
investment for British Land, delivering a total property return of 9% per
annum since acquisition. The proceeds from this transaction will be invested
in value accretive development opportunities across our portfolio, as well as
the other growth areas we have identified.
We continue to evolve our Campus model to align with high growth and
innovation sectors. Our model is particularly attractive to businesses which
like to cluster together, in sectors such as technology, science and
engineering. Regent's Place, given its location in the Knowledge Quarter
provides an exciting opportunity in this regard. We also see the potential to
drive value by taking the Campus model outside of London. We are targeting
development opportunities in innovation hubs such as the Golden Triangle and
made £102m of acquisitions in Cambridge and Guildford in the year. These are
opportunities which play to our Campus skills, including asset management,
development, placemaking and community engagement. We are on site with our
first lab enabled office at The Priestley Centre which is one of two
properties we acquired on Surrey Research Park, together totalling £27m and
in Cambridge, we acquired the Peterhouse Technology Park for £75m in August.
Retail & Fulfilment
In Retail, last year, we identified a value opportunity in Retail Parks
reflecting attractive relative yields coupled with customer preference for
this format. Our portfolio is now valued at £2.1bn which includes
acquisitions of £350m in the year (in addition to the £49m in FY21). This
timely investment meant we benefitted from significant yield compression to
deliver a 31.6% total property return on the retail park portfolio as a whole.
We expect to make further, selective acquisitions given our competitive
advantage in sourcing, underwriting and asset managing but we will maintain
our discipline on returns.
In Urban Logistics, the chronic shortage of space in London is the key theme
underpinning our focus on this part of the market. Demand is strong reflecting
the growth of e-commerce and in particular rising consumer expectations for
same day / next day delivery. This has been supplemented by new sources of
demand such as "quick commerce" and "dark kitchens". Supply of the right kind
of space in London is highly constrained and requires innovative solutions to
increase density and repurpose space which plays well to our skill set in site
assembly, planning and delivering complex developments in Central London.
In the first year of our strategy, we have established a pipeline of urban
logistics development opportunities totalling £1.3bn of gross development
value which focuses on London and will deliver a sizeable platform for British
Land in this exciting growth market. Hannah Close in Wembley, our most recent
acquisition, is an excellent example of how even in a highly competitive
market, we can leverage our skills in planning and development to intensify
existing buildings through multi-storey development to create value. We also
invest in repurposing opportunities including the Finsbury Square car park,
centrally located in the City as well as other opportunities across our
portfolio. Overall, the blended forecast IRR from acquisition for our urban
logistics opportunities is c.15% which is at the top end of our target range
of 10%-15%.
Capital allocation and balance sheet
A key priority for our business is to actively recycle capital. We have
demonstrated our nimble and value driven approach with £1.2bn of asset sales
and £747m of acquisitions. The recent Paddington Central transaction has
further strengthened our balance sheet with pro forma loan to value now at
28.4%, well positioned in current markets. Our performance demonstrates that
we are allocating capital smartly, with strong valuation uplifts on our
developments and our Retail Parks.
We target an average total accounting return of 8-10% through the cycle. This
is based on a total property return of around 7-8%, adjusted for
administration costs and the positive impact of leverage. We seek to create
value through active management and development. We target development IRRs of
10-15% compared to our standing investments where returns and risks are
typically lower. We will remain focused on actively recycling capital and will
look to crystallise value from mature and lower returning assets and reinvest
into higher returning opportunities.
We maintain good long term relationships with debt providers across the
markets and have completed £1.1bn of financing activity in the year. This
included a five year 'Green Loan' in our Broadgate joint venture, secured on
100 Liverpool Street which was voted Financing Deal of the Year: UK by Real
Estate Capital Europe for 2021.
We are pleased to be announcing a full year dividend of 21.92p, in line with
our policy of setting the dividend at 80% of Underlying EPS.
Our people
We are delighted to see our people back in the office. Like so many of our
customers, we continue to recognise the benefits that hybrid working brings
and to support our people with more flexible arrangements, whilst also reaping
the benefits of working more collaboratively when together in the office.
I recognise the important contribution that diversity plays in delivering our
strategy so was pleased that we ranked 15th in the FTSE Women Leadership
Review for FTSE 100 women representation and we have exceeded the
recommendations of the Parker Review on ethnic diversity at Board level. We
were also pleased to be the first UK REIT to achieve Disability Smart
Accreditation from the Business Disability Forum.
Bhavesh Mistry joined us as Chief Financial Officer in July 2021 and we are
already benefitting from the fresh perspective he brings. We were also pleased
to welcome Mark Aedy to the Board as a Non-Executive Director in September
2021. Nicholas Macpherson has decided not to seek re-election as a
Non-Executive Director at the AGM in July 2022, at the conclusion of which he
will stand down from the Board. Nicholas has served with distinction on the
Board since joining it in 2016 and we thank him for his valuable contribution.
Outlook
We are mindful that the year ahead will be impacted by heightened
macroeconomic and geo-political uncertainty. In the context of higher
inflation, we are seeing investors rotate out of bonds and increase their
allocations to real estate, particularly in subsectors with strong pricing
power and affordable rents. We are well positioned in this respect across both
Campuses and in Retail & Fulfilment. In addition, we are pleased with our
financial position and that our strong momentum has continued into the new
financial year.
Our Campus offering provides customers in London with best-in-class space
where we expect demand to remain strong, particularly from the growing,
innovative businesses we are targeting. Rents typically represent a small
proportion of salary costs, meaning demand is less sensitive to price and for
prime London office space, vacancy remains low and new supply is constrained.
Reflecting these dynamics, and continued gravitation to the best space, our
central case is for rental growth on our Campuses of 1-3% with the potential
for some further yield compression.
We expect the strong occupational demand for our Campus developments to
continue, reflecting their market leading sustainability credentials. We
target BREEAM Outstanding ratings on developments and just 1% of available
London office buildings are BREEAM Outstanding. This year construction cost
inflation is likely to be between 8-10% and we are pleased to have fixed 91%
of the cost on our committed development programme of 1.7m sq ft. Forecasting
is difficult with elevated uncertainty, but our base case is for construction
cost inflation to moderate to 4-5% over the next 18 months as commodity,
transportation and energy prices continue to increase but at a lower rate and
capacity in the construction industry slowly increases. The attractive IRRs we
are forecasting on our development pipeline of 10-15% incorporate these levels
of construction cost inflation and additional contingencies. Higher land
values mean that returns from London development are more insulated to cost
inflation than development in other parts of the country and we anticipate
being able to achieve the modest increase in rents needed to offset any
further cost inflation above our base case.
In Retail Parks, we attract a broad tenant base and space is more affordable
than alternative formats, thereby making them attractive for retailers facing
increased margin pressures due to rising input prices and labour costs; supply
is relatively tight, with retail parks accounting for around 10% of the total
retail market and vacancy falling. We expect the value play opportunity in
retail parks to continue and our ability to unlock value through asset
management means we are well placed to make further acquisitions whilst
retaining a strong focus on returns. Overall, we expect rents to be stable
with some growth for smaller, well-located parks with further yield
compression likely. For shopping centres, we have seen ERV decline moderating,
and yields were flat in the second half of the year. We expect that yields
could compress for the best centres, given increasing investor interest
delivering attractive medium term returns.
In Urban Logistics, the market in London is chronically undersupplied and
demand remains strong, underpinned by the continued growth of same day
delivery. We expect strong rental growth of over 5% p.a. with stable yields -
a good backdrop for delivering new space via our repurposing and
intensification strategy.
Market backdrop
Macro-economic context
The UK economy responded well to the lifting of Covid-19 restrictions,
expanding by 7.4% in the calendar year and by March was 1.2% above pre-Covid
levels. However, the combination of Covid, Brexit and rising energy prices has
reduced capacity in the economy, putting pressure on prices towards the end of
the year. Inflation has risen faster than expected, up 7% in March 2022
compared to up 6.2% the previous month and in response, interest rates have
been increased. Consumer confidence has weakened since the summer with
concerns around rising prices and the prospect of a real income squeeze
weighing on sentiment but unemployment has quickly recovered to pre pandemic
levels at under 4 %. Most forecasters are still expecting growth for the 2022
calendar year but with risks to the downside if the economic impact of the war
in Ukraine worsens. Given this broader macro context and with investors
concerned about the impact of rising inflation and interest rates, they are
rotating out of bonds and increasing their allocation to direct real estate,
focused on subsectors with pricing power and affordable rents.
London office market
The investment market has returned to strong volumes with confidence
strengthening as the economy recovers from the pandemic and employees returned
to the office. The period under review saw more than £17bn of investment
activity across the City and the West End with pricing strong reflecting pent
up investor demand and a lack of available stock. Prime yields currently
average 3.5% for the West End, stable over the year and 3.75% for the City, an
inwards shift of 25bps.
In the Central London occupational market, take up remains below its long term
average, but is recovering well following very low levels last year. Take up
for the period was 9.5m sq ft for Central London, more than double the 12
months to March 2021. Technology, Banking & Finance and Professional
Services (most notably legal) were the largest sources of take up. Demand is
clearly gravitating towards the very best space, with an emphasis on
sustainability, wellness, shared and flexible space and excellent transport
connections. This part of the market is achieving premium prices and vacancy
is estimated at under 4% compared to c.8% for the whole market. In the context
of a more uncertain macro environment with elevated input prices, it is
becoming apparent that more projects are being delayed and as a result, the
supply pipeline is tight, with speculative developments committed and under
construction (to 2026) representing 1.8 years average take up. Reflecting the
strong preference for new and high quality refurbished space, 32% of
development under construction is currently pre-let.
Retail market
Investment activity continues to be dominated by retail parks, which have seen
volumes of £4.5bn in the period, compared to £1.7bn in the 12 months to
March 2021. Confidence in the sector is strong, reflecting lower occupancy
costs for retailers and the important role retail parks can play in online
fulfilment. In particular, the market has focused on assets which are
small-to-medium in lot size and offer secure, sustainable income streams. As a
result, average market yields have moved in 200bps over the year to 5%. The
investment market for shopping centres is slowly improving as investors begin
to see value despite continuing weakness in the occupational market. £1.2bn
transacted in the period compared to £430m last year and yields shifted out
25bps to 7.75%.
After a challenging few years reflecting the structural shift to online and
impact of Covid-19 there were signs of a pick up in activity in retail
occupational markets. Activity has been skewed towards retail parks which are
more affordable and where footfall and sales are near pre-pandemic levels, and
in some cases ahead. However, as we move into a more inflationary environment,
consumers will be more focused on value and occupiers will need to mitigate
the impact of higher input costs. This will focus attention on the
affordability of retail space which plays to the retail park proposition.
Logistics market
In logistics, investment volumes remained very high at £18.9bn over the
period, the strongest ever year of investment activity. Strong occupier
demand, underpinned by structural trends in e-commerce has led to attractive
rental growth which continues to appeal to long income investors. In the
occupational market, take up in London and the South East was c.8m sq ft and
in London, demand is particularly broad reflecting the emergence of "quick
commerce" and "dark kitchens", although take up is limited by available stock
with vacancy low at around 1.5%. In these cases, central locations are
critical to the occupiers' business models and are commanding a rental premium
as a result. Forecast rental growth in London is expected to average over 5%
p.a. over the next five years.
Business review
Key metrics
Year ended 31 Mar 2022 31 Mar 2021
Portfolio valuation £10,467m £9,132m
Occupancy(1) 96.5% 94.1%
Weighted average lease length to first break 5.8 yrs 5.3 yrs
Total property return 11.7% (7.0)%
- Yield shift (42) bps +33 bps
- ERV movement (1.2)% (7.6)%
- Valuation movement 6.8% (10.8)%
Lettings/renewals (sq ft) over 1 year 2.9m 1.2m
Lettings/renewals over 1 year vs ERV +4.5% (8.9)%
On a proportionally consolidated basis including the Group's share of joint
ventures
1. Where occupiers have entered CVA or administration but are still liable
for rates, these are treated as occupied. If units in administration are
treated as vacant, then the occupancy rate would reduce from 96.5% to 95.6%.
Portfolio performance
At 31 March 2022 Valuation Valuation movement ERV movement Yield shift Total property return
£m
%
%
bps
%
Campuses 6,967 5.4 0.0 (11) 8.5
Central London 6,460 4.6 (0.1) (11) 7.7
Canada Water & other Campuses 430 12.9 6.4 +1 17.0
Retail & Fulfilment 3,500 9.9 (2.8) (97) 19.1
Retail Parks 2,114 20.7 (2.0) (151) 31.6
Shopping Centres 800 (6.1) (5.2) +3 1.4
Urban Logistics 319 0.0 6.3 (75) 8.3
Total 10,467 6.8 (1.2) (42) 11.7
See supplementary tables for detailed breakdown
The value of the portfolio was up 6.8% driven by an exceptionally strong year
for Retail Parks and a good performance across our Campuses.
Retail Parks delivered a valuation uplift of 20.7% driven by yield compression
of 151bps reflecting a strong investment market and improving occupational
market given their relative affordability and compatibility with online
retail. This fully offset an ERV decline of 2.0% which was weighted towards
the first half. Shopping Centres also saw some mild yield compression in the
second half, reversing the previous trend and there are signs that rents are
stabilising with the rate of ERV decline moderating in the second half;
overall shopping centres were down 6.1% in value. Urban Logistics was flat on
the year with strong yield contraction and ERV growth of 6.3% offsetting
purchasers' costs which drove a negative movement in the first half; excluding
the impact of purchasers' costs, the value of the Urban Logistics portfolio
was up 5.4%.
Campus valuations were up 5.4% with our West End and City portfolios
delivering uplifts of 4.5% and 4.7% respectively. These performances were
driven by our leasing activity, in particular the Meta letting at Regent's
Place and progress on our 1 Broadgate development which is now fully let or
under option on the office space. Both portfolios benefitted from some mild
yield compression with investment markets strengthening post pandemic. Campus
developments were up £201m, (+11.7%) including a very strong performance at
Canada Water of 18.3% reflecting the new joint venture agreed with
AustralianSuper and progress on Phase 1.
Campus offices outperformed the MSCI benchmark for All Offices and Central
London Offices by 150 bps and 100 bps respectively on a total returns basis.
Retail outperformed the MSCI All Retail benchmark on a total returns basis by
510 bps due to our weighting towards retail parks. Reflecting the continued
strength of industrials, our portfolio overall underperformed the MSCI All
Property total return index by 790 bps over the year.
Capital activity
From 1 April 2021 Campuses Retail & Fulfilment Total
£m
£m
£m
Purchases 102 645 747
Sales1 (1,063) (117) (1,180)
Development Spend 205 3 208
Capital Spend 28 10 38
Net Investment (728) 541 (187)
Gross Capital Activity 1,398 775 2,173
On a proportionally consolidated basis including the Group's share of joint
ventures
1. Includes 75% sale of majority of assets in Paddington Central for £694m
which exchanged post year end and St Anne's (£6m) which exchanged prior to 1
April 2021.
The total gross value of our investment activity since 1 April 2021 was
£2,173m. The scale of our activity reflects our strategic priority to more
actively recycle capital and this has been achieved with £1,180m of sales and
£747m invested into acquisitions in retail parks, urban logistics
opportunities and assets aligned to innovation and growth outside of London.
The most significant transaction, which exchanged post year end in April 2022,
was the sale of a 75% interest in the majority of our assets at Paddington
Central to GIC for £694m, this was 1% below September 2021 book value and
represented a net initial yield of 4.5%. The transaction, which is expected to
complete within two months, establishes a new venture, with ownership split
75:25 for GIC and British Land respectively and the partners having joint
control. The 5 Kingdom Street development site and the Novotel at 3 Kingdom
Street currently sit outside the structure but GIC have options over both
assets. At 5 Kingdom Street, their option (which is over a 6 month period)
enables them to acquire 50% of the development, creating a second joint
venture and for 3 Kingdom Street, their option enables them to acquire the
asset at prevailing market value, via the first joint venture within five
years. We will continue to act as development and asset manager for the
campus, earning fees. During the year, we also sold a 50% share in the Canada
Water Masterplan for £290m to AustralianSuper, representing a 12% premium to
the 30 September 2021 book value after taking into account capital
expenditure. Again, this transaction provides the opportunity to leverage our
operational platform as we will act as the asset manager and development
manager for the scheme for which we will earn fees. Other disposals included
£79m of residential sales, of which Wardrobe Court accounted for £70m,
overall 6% ahead of book value and £117m of retail sales of which the Virgin
Active at Chiswick was £54m, overall 9% ahead of book value.
In Urban Logistics, we acquired £295m of assets, most significantly Hannah
Close in Wembley for £157m. This is a development-led opportunity where our
plans will intensify usage of the existing buildings to deliver a multi-storey
urban logistics hub for Central and West London. The warehouses, which sit
within the M25, close to the M1 and outside the North Circular, are ideally
located for vehicles coming into London and subsequently out for delivery. We
are working on feasibility options for the site and expect to achieve vacant
possession in 2027. In the meantime, we are working towards outline planning
consent and managing the asset which offers considerable reversionary
potential. We also acquired a development site on Verney Road in Southwark for
£31m. This comprises low rise industrial buildings over two acres and is
located on the Old Kent Road (A2) providing excellent access to Central London
as well as the M25. The site offers immediate redevelopment potential for a
multi-storey urban logistics schemes, subject to planning. This follows
acquisitions in the first half, including Heritage House in Enfield, an
existing warehouse we plan to intensify through redevelopment as well as
Thurrock Shopping Park and Finsbury Square Car Park where we have an
opportunity to repurpose the existing sites into urban logistics hubs. Our
latest acquisitions bring the gross development value of our urban logistics
pipeline to £1.3bn with an average IRR from acquisition of 15%, which is at
the top end of our target range of 10-15%.
We also acquired further assets targeting the value opportunity in Retail
Parks totalling £350m (including Thurrock Shopping Park which has logistics
potential). This includes the remaining units in HUT, acquired for £148m and
three shopping parks in Farnborough, Reading and Enfield (adjacent to our
Heritage House warehouse). These represent opportunities where we expect to
deliver attractive financial returns utilising our asset management expertise
which has played out well this year.
In Campuses, we acquired £102m of assets aligned to innovation sectors
including The Peterhouse Technology Park in Cambridge for £75m representing a
NIY of 4.15%. This 8.25 acre site just outside the centre of Cambridge
comprises four buildings covering 140,000 sq ft and is fully let to technology
business ARM for its global headquarters. The buildings are held on a long
leasehold with significant reversionary potential and benefit from their
location in an emerging part of south Cambridge, close to the Cambridge
Biomedical Campus. We also acquired The Priestley Centre in Guildford on
Surrey Research Park for £12m and adjacent Waterside House for £15m giving
us a combined footprint in Guildford of over 11 acres. This provides an
opportunity to deploy our Campus proposition and development skills to deliver
high quality space for the innovative industries in this affluent town.
Sustainability
We have maintained our firm focus on delivering our 2030 sustainability
ambitions. This year we were delighted to retain our GRESB 5 star rating as
well as our AAA rating from MSCI and A- from CDP. 100 Liverpool Street, our
first net zero carbon development, has continued to pick up industry accolades
for its sustainability credentials including Green Building Project of the
year in the BusinessGreen Leaders awards, Project of the Year at the Building
Awards and most recently a Civic Trust Award.
Net Zero
We are delivering against the commitments we set out in our Pathway to Net
Zero, our roadmap to achieving a net zero carbon portfolio by 2030. We conduct
whole life carbon assessments on all our developments and refurbishments and
we are currently forecasting that embodied carbon on our offices development
pipeline will be 632kg CO(2) per sqm including completed developments. This
compares well to our 2030 target of 500kg CO(2)e per sqm from a baseline of
1000kg CO(2)e per sqm, which was the industry benchmark at the launch of our
strategy. We completed our second net zero carbon development at 1 Triton
Square which achieved a BREEAM Outstanding rating. Like 100 Liverpool Street,
we were able to re-use most of the superstructure, keeping the embodied carbon
on completed developments low at 408kg CO(2) per sqm. Residual embodied carbon
at 1 Triton Square was fully offset through certified, nature-based solutions
- a teak afforestation project in Mexico and a community reforestation project
in Ghana.
We made further development commitments at Canada Water where we are committed
to achieving BREEAM Outstanding on all commercial space, BREEAM Excellent on
retail and a minimum of Home Quality Mark 3* for residential. Canada Water is
a ground-up redevelopment, so our ability to re-use existing materials is
limited and our focus is on using the more sustainable materials and
processes. Our use of Earth Friendly Concrete in the permanent piling works
was a UK industry first and saved 240 tonnes of carbon emissions. Other low
carbon initiatives include the use of cross laminated timber, high recycled
content in concrete, electric arc furnace steel and recycled raised access
floors. As a result, embodied carbon for the offices space at A1 and A2 at
Canada Water is expected to be 682 kg CO(2) per sqm and 666 kg CO(2) per sqm
respectively, in line with our glidepath to 2030.
We are also on site at 1 Broadgate, which is expected to be in line with our
2030 office targets for operational efficiency of 95kWhe per sqm on a whole
building basis and is on track for a NABERS 5 star rating. Embodied carbon on
this building is above our 2030 target at 901 kg CO2 per sqm, but we continue
to make improvements throughout the design and delivery process. At Norton
Folgate, which will be all electric, we are adding roof top solar panels and
like 1 Broadgate, it will be fully smart enabled to optimise performance in
operation, delivering an estimated energy intensity which is in line with the
trajectory to our 2030 energy performance targets. Embodied carbon on this
building is also low at 434kg CO(2)e per sqm, reflecting our ability to reuse
the existing materials.
MEES Legislation and EPCs
In offices, we are already fully compliant with 2023 MEES legislation which
stipulates a minimum EPC rating of E and 46% of our offices space is currently
rated A or B (by ERV). For the whole portfolio, 36% is currently A or B rated,
significantly above the level of 29% in September reflecting a number of
recertifications which have captured improvements delivered in recent years.
70% of the portfolio is now A-C rated. To meet our 2030 objectives and comply
with expected MEES legislation requiring our whole portfolio to be a minimum
EPC B by 2030, we appointed external consultants to conduct net zero audits
identifying opportunities to improve energy efficiency and raise the EPC
rating. These audits, which covered 29 of our major assets have now completed.
We expect that the total cost for retrofitting the portfolio to be in the
region of £100m, which covers the standing portfolio and excludes major
developments and refurbishments where energy efficient fixtures and fittings
are already incorporated within our development briefs. This investment will
be focused on energy efficient interventions which typically have an
attractive payback and in the current environment, with energy prices
escalating, represent a compelling investment for occupiers and we are already
engaged in productive conversations with occupiers across the portfolio.
Overall, we expect that two thirds of the cost will be funded through the
service charge or by customers directly. While we are making good progress, we
are primarily focused on improving energy efficiency and reducing carbon
intensity which is how we will deliver on our 2030 targets of a 25%
improvement in whole building energy efficiency and a 75% reduction in
operational carbon intensity, both against a 2019 baseline.
To fund any outstanding costs relating to these interventions, we have
established our "Transition Vehicle" comprising ring fenced funds financed by
our internal levy of £60 per tonne of embodied carbon in developments
supplemented by an internal float of £5m. Total funding to date within the
Transition Vehicle is £15.6m.
Place Based approach
Our Place Based approach means understanding the most important issues and
opportunities in the communities around our places and focusing our efforts
collaboratively to deliver the biggest impact. Building on the research we
commissioned last year into the social and economic situation around our
assets, this year we identified initiatives which target key local issues at
each of our places. At our Campuses, one of the most effective ways of doing
this is through our Community Funds - a forum for connecting our customers and
local communities and supporting organisations who do vital work locally.
Following the success of the Regent's Place Community Fund, this year we
launched funds at Broadgate and Paddington Central with 15 of our occupiers
pledging £150,000.
One of our key initiatives this year was the launch of the New Diorama Theatre
at Broadgate, helping to bring people together post Covid and supporting the
revival of this part of the City. NDT Broadgate is one of the biggest free
rehearsal and artist support spaces in the UK. The 20,000 sq ft space is
provided completely free of charge for independent and freelance artists to
use and is one of the highest profile artist support projects in recent years.
We also announced a partnership with The National Theatre to bring creative
events and experiences to our Campuses. This involves monthly workshops led by
creative experts focusing on theatrical skills and exploring how these can be
applied to enhance the working day.
This year, Bright Lights, our skills and employment programme reached over 130
people through virtual employment training and one-to-one support at two of
our Campuses and six retail sites. Over 60% of candidates have already gained
employment in a range of sectors. Programmes we piloted this year and plan to
expand include ADcademy with the Brixton Finishing School. Over 110 young
people local to our London Campuses and Ealing Broadway took part in these
online workshops designed to develop skills in the creative, technology and
advertising sectors. Fort Kinnaird's recruitment project with Capital City
Partnership reached 128 beneficiaries with 80% finding employment.
We continued to support the work of the National Literacy Trust, encouraging
7,800 young people to read and bringing the total number of children we have
reached almost 56,000 since the launch of our partnership in 2011. To support
local businesses, we provided affordable space across five of our priority
assets, which included places such as "Thrive" in Canada Water, a community
business hub providing workspace and meeting rooms to help local start ups. At
Regent's Place, through the Triton Café, we provided space to BlackOut UK to
run 5 events that provided peer support, learning and debates for 75 black
queer men.
Reflecting our continued focus on diversity, we were pleased to become the
first real estate organisation to achieve the Disability Smart Standard, which
is awarded by the Business Disability Forum to organisations who can
demonstrate a culture of inclusion for all abilities.
Campuses
Key metrics
31 Mar 2022 31 Mar 2021
Portfolio Valuation (BL share) £6,967m £6,540m
Occupancy 96.7% 94.1%
Weighted average lease length to first break 7.0 yrs 5.6 yrs
Total property return 8.5% (1.0)%
- Yield shift (11) bps +9 bps
- ERV growth 0.0% 0.7%
- Valuation movement 5.4% (4.3)%
Total lettings/renewals (sq ft) 1,654,000 495,000
Lettings/renewals (sq ft) over 1 year 1,243,000 190,000
Lettings/renewals over 1 year vs ERV +5.4% +1.3%
Like-for-like income(1) +2.5% (1.0)%
On a proportionally consolidated basis including the Group's share of joint
ventures
1. Like-for-like excludes the impact of surrender premia, CVAs & admins
and provisions for debtors and tenant incentives. 31 March 2021 comparative
reflects the previous report segment Offices with the exclusion of Canada
Water being the primary difference.
Campus operational and financial highlights
- Campus value of £7.0bn, up 5.4% driven by leasing activity and
development performance. Similar performance from City and West End assets, up
4.7% and 4.5% respectively
- Strong performance from Canada Water up 18.3% reflecting the joint venture
with AustralianSuper and progress on Phase 1
- 11 bps yield contraction, weighted towards the City
- Weighted average lease length extended to 7.0 years reflecting the
completion of 1 Triton Square and our leasing activity
- ERV growth flat. Adjusting for changing valuation treatment underlying ERV
growth on our offices space was 1.5%
- Like-for-like income up 2.5%, driven primarily by strong leasing at
Broadgate and across Storey
- Strong rebound in leasing activity with 1.2m sq ft deals (greater than one
year) driven by development lettings
- Total lettings and renewals at 1.7m sq ft, including 187,000 sq ft Storey
lettings
- Under offer on a further 318,000 sq ft, including a minimum of 103,000 sq
ft at Norton Folgate
- Investment lettings and renewals over one year, 5.4% ahead of ERV
- 555,000 sq ft rent reviews agreed 6.7% ahead of passing rent adding £1.6m
to rents
- Occupancy improved to 96.7%
- Rent collection 100% for FY22
Campus operational review
Campuses comprises our three London Campuses (Broadgate, Regent's Place and
Paddington Central), as well as Canada Water, our recently acquired assets in
Cambridge and Surrey Research Park, standalone offices and residential.
Our London Campuses are located in some of London's most exciting
neighbourhoods and benefit from excellent transport connections with two of
our Campuses directly on the new Elizabeth line which opens this month.
Through our platform, we deliver best in class space which meets the highest
standards of sustainability and wellbeing, provides a wide range of amenities
and an engaging public realm. Our skill set across investment, leasing, asset
management, property management and development is transferable to new
locations with occupiers focusing on space which best supports their business
and people, these advantages position us well to attract a wide range of
innovative, growing businesses to our spaces.
We benefit from a diverse portfolio of high quality occupiers focused on
technology, financial, corporate and media sectors. Occupancy is 96.6%,
improving 270bps since March 2021 and we have collected all our rent for the
year.
Broadgate
Total leasing activity covered 751,000 sq ft in the year, of which 680,000 sq
ft were long term deals. We successfully let (or placed under option) all the
office space at 1 Broadgate four years ahead of completion with Allen &
Overy and JLL taking a minimum of 254,000 sq ft and 134,000 sq ft
respectively. The strong sustainability credentials of this building were a
key attraction and in their press release, A&O commented that the building
"will contribute to an 80% reduction" in their annual London office carbon
emissions. We also completed the office letting at 100 Liverpool Street, with
Hudson River Trading taking 20,300 sq ft on level ten. Newly refurbished space
is letting well with Braze, a customer engagement platform, taking 49,900 sq
ft at Exchange House and Maven Securities, a proprietary trading firm taking
38,000 sq ft at 155 Bishopsgate. Other lettings include legal firm Jenner
& Block at 10 Exchange Square (13,000 sq ft) and financial services
platform Symphony at 135 Bishopsgate (7,200 sq ft).
We have made excellent progress on the food & beverage offer, with the
launch of Revolve at 100 Liverpool Street, an innovative concept with guest
chefs and Shiro, a sushi restaurant , building Broadgate's reputation as a top
culinary destination. We have also let space at 155 Bishopsgate to Neat Burger
(a plant based burger restaurant backed by Lewis Hamilton), Nest (a bar and
restaurant run by Urban Pubs and Bars), Black Sheep coffee and Hawaiian poké
restaurant Honi Poké.
We continue to invest in our buildings and are on site with asset management
initiatives including the refurbishment of 155 Bishopsgate (our share £35m),
Exchange House (our share £12.5m) and 10 Exchange Square (our share £9m),
where the first phase now completed. We take the opportunity provided by lease
events to re-invest in existing buildings, to deliver energy efficient
interventions which raise the EPC rating and refurbish the space, ensuring
that they are well positioned to benefit as demand gravitates towards the
best, most sustainable space. We also completed public realm improvements at
Exchange Square, delivering 1.5 acres of green space, including amphitheatre
style seating and outside events space with a range of tree and plant life to
support biodiversity.
We refreshed our biodiversity framework for Broadgate, establishing our
guiding principles and identifying the key species and habitats of relevance
to the area. As well as the public spaces, we have living roofs at seven
locations with 12,800 sq ft of planted space to come at 1 Broadgate and 3,000
sq ft at Norton Folgate. We also launched an occupier led and funded Community
Fund, replicating the successful Regent's Place Community Fund where we will
work together with our occupiers to identify and address key local issues.
The Campus saw a valuation gain of 5.1% reflecting 16bps of inward yield shift
and flat ERVs. 100 Liverpool Street, which benefited from inward yield shift
and the expiry of rent free periods, and 1 Broadgate, reflecting significant
letting activity, were the key drivers of value. Broadgate occupancy is 96.7%
up from 92.0% 12 months ago.
Regent's Place
The key transaction in the year was the letting of the office space at 1
Triton Square to Meta which accounted for 315,000 sq ft of the 388,000 sq ft
of long term leasing activity. Meta has expanded at Regent's Place and this
deal is a testament to their commitment to the Campus where total occupation
will be 635,000 sq ft. Dentsu International who had previously committed to
taking 1 Triton Square will remain at 10 and 20 Triton Street (180,000 sq ft).
Rent reviews totalled 231,000 sq ft overall, 8.9% ahead of previous passing
rent adding £1.3m to rents.
Regent's Place is well located to attract innovative and growth businesses
looking to cluster around the academic, scientific and research institutions
in London's Knowledge Quarter. Reflecting this we have signed life sciences
business Babylon Health (12,000 sq ft) and Fabricnano (7,000 sq ft) both at
Drummond Street.
In December 2021, we completed the first phase of our public realm improvement
programme and we are underway with the second phase. This will include rolling
out the biodiversity framework following the model established at Broadgate.
The Campus was up 6.7% in value, benefitting from leasing activity at 1 Triton
Square and 10 Triton Street, driving yield compression of 15 bps. ERVs were
marginally down 0.7%, partly driven by a change in valuation assumptions at 10
Triton Street which no longer assume a refurbishment given Dentsu
International has recommitted to the building. Adjusting for changes in
valuation assumptions, underlying ERV growth on our offices was 3.0%.
Occupancy is now 95.2%.
Paddington Central
Total leasing activity covered 154,000 sq ft, of which the re-gear of the
Novotel lease at 3 Kingdom Street accounted for 111,000 sq ft. We also renewed
our lease to Incipio Group, who manage Pergola, the outdoor dining concept at
the 5 Kingdom Street development site, covering 20,000 sq ft.
The Campus saw a valuation increase of 1.7%, benefitting from the regear of
Novotel at 3 Kingdom Street and Vertex at 4 Kingdom Street, offset by decline
at 3 Sheldon Square where leases are coming to an end and we are soon to
commence refurbishment. ERVs saw growth of 1.7% with yields moving in 1bp.
Occupancy is 99.6%.
Post year end we established a new joint venture at Paddington Central, with
GIC owning 75% of the majority of assets and British Land owning the remaining
25%. The Novotel at 3 Kingdom Street and the 5 Kingdom Street development site
sit outside of the structure although GIC have options over both assets. We
will continue to manage the Campus for which we will earn fees and GIC are
committed to our future plans. This includes a comprehensive upgrade of 3
Sheldon Square, where we will deliver an all electric building, targeting a
BREEAM Excellent rating. This is estimated to reduce operational energy
consumption and carbon emissions by over 40% per annum. We are planning an
extensive upgrade to the public realm which will transform the landscaping and
have commenced works at the amphitheatre which will revitalise this central
part of the Campus.
Storey: our flexible workspace offer
Storey is an important part of our Campus proposition, providing occupiers
with the flexibility to expand at short notice or to take ad hoc meeting or
events space. It is present on all our Campuses and is operational across
338,000 sq ft (c.5% of Campuses). Occupancy on stabilised buildings (those two
years' post fit out or fully let) has increased to 86% as we have seen rising
customer demand with confidence improving post Covid driving demand for
flexible space.
Since 1 April 2021, we have agreed leases and renewals on 187,000 sq ft of
space and our retention rate remains high. 100 Liverpool Street is fully let
with online signature service Docusign taking 6,500 sq ft and the Levin Group,
a health tech recruitment business going under offer on the final unit post
year end. Levin also have 7,000 sq ft at 1 Finsbury Avenue and have pre-let of
all the Storey space at 155 Bishopsgate comprising 23,000 sq ft, again post
period end. We are now fully let at Orsman Road, with the Homerton Healthcare
NHS Foundation Trust signing for 18,100 sq ft, representing half of the space
in the building.
Viewings are back to pre pandemic levels and bookings at Storey Club, which
provides ad hoc meeting and events space at 100 Liverpool Street and 4 Kingdom
Street, have increased over the year. Rent collection was 100% reflecting the
strength of Storey's customer base, with the majority of occupiers being UK /
European headquarters, scale up businesses or large multinationals.
Looking forward, Storey will cease operations across 27,000 sq ft at 3
Finsbury Avenue and International House at Ealing as we prepare those sites
for redevelopment. However, we are actively considering opportunities for
Storey on both our standing portfolio and new developments.
Canada Water
In March 2022, we sold 50% of our share in the Canada Water Masterplan, our 53
acre redevelopment scheme in Southwark to AustralianSuper for £290m forming a
50:50 joint venture. Their partnership will accelerate returns and the
delivery of the Masterplan, bringing new homes, workspace, retail and leisure
opportunities and an enhanced public realm to the local community.
The joint venture is committed to developing Phase 1 of the Masterplan
covering 585,000 sq ft and to progressing subsequent phases of the
development, with funding split equally between British Land and
AustralianSuper. The total development cost of the entire project is £3.6bn.
It is expected to take ten years to complete and should deliver a total
development value of £5.6bn of which the commercial element accounts for
£3.4bn and residential the remainder. British Land is targeting development
returns of 11% from commitment for Phase 1 and low teens for the whole
project.
We have outline planning permission for the entire scheme and are on site with
Phase 1, which comprises a mix of workspace, retail, leisure and residential
as set out below. We are targeting rents on the workspace of over £50 psf and
a capital value psf of around £1,000 on the residential, which are both
highly affordable relative to competing schemes.
Sq ft Workspace Retail & leisure Residential units Total
A1 120,000 9,000 186 273,000
A2 185,000 65,000 - 250,000
K1 - - 79 62,000
Total 305,000 74,000 265 585,000
The joint venture's ownership is consolidated into a single 500-year lease
with Southwark Council as the lessor. The London Borough of Southwark have an
initial 20% interest in the scheme and the ability to participate in the
development up to a maximum of 20% with returns pro-rated accordingly. They
have elected not to fully participate in Phase 1 but are pre-purchasing the 79
affordable homes at K1 and have part funded the 55,000 sq ft leisure centre in
A2.
This year, we completed the installation of a modular campus for TEDI-London,
a global partnership with King's College London, Arizona State University and
UNSW Sydney. Each module uses lightweight steel frame boxes clad with
insulation and requires no deep piles or concrete. At the end of its life the
building can be reused on-site, relocated in its entirety or stripped and the
materials recycled. The 15,000 sq ft campus opened to the first cohort of
students in September and we are working with TEDI to deliver a permanent home
for around 1,000 students within the Canada Water Masterplan. We see scope to
expand this modular approach which provides a quicker route to market for
businesses looking to expand without the formal commitment of a long term
lease. We are engaged in discussions to deliver a life sciences enabled
modular campus and have interest from other higher education providers. We are
exploring a range of alternative uses across the Campus, uses which align to
our wider strategy to focus the business on growing sectors. Our permission is
deliberately flexible so as we move forward, we can take account of changes in
demand by amending our offices, residential and retail allocations as
appropriate.
The valuation of the Campus was up 18.3% in the year reflecting the joint
venture agreement and progress on Phase 1.
This has been a challenging year for many of our community partners whom we
have continued to support through the pandemic. We have strengthened our built
environment education and careers partnership with Construction Youth Trust by
bringing in a number of our suppliers on the Masterplan including constructors
Mace Group, Aecom and Gardiner & Theobold. Many of our suppliers have also
contributed their time to building The Paper Garden, a pioneering new
community space for young people. This is managed by Global Generation, one of
our community partners and will be the largest circular economy build in
London.
Retail & Fulfilment
Key metrics
As at 31 Mar 2022 31 Mar 2021
Portfolio valuation (BL share) £3,500m £2,592m
- Of which Retail Parks £2,114m £1,367m
- Of which Shopping Centres £800m £896m
- Of which Urban Logistics £319m -
Occupancy1 96.3% 94.4%
Weighted average lease length to first break 4.6 yrs 5.1 yrs
Total property return 19.1% (19.1)%
- Yield shift (97) bps +81 bps
- ERV growth (2.8)% (16.8)%
- Valuation movement 9.9% (24.7)%
Total lettings/renewals (sq ft) 2,196,000 1,699,000
Lettings/renewals (sq ft) over 1 year 1,523,000 962,000
Lettings/renewals over 1 year vs ERV 2.8% (11.5)%
Like-for-like income(2) (0.8)% (9.2)%
On a proportionally consolidated basis including the Group's share of joint
ventures
1. Where occupiers have entered CVA or administration but are still liable
for rates, these are treated as occupied. If units in administration are
treated as vacant, then the occupancy rate for Retail would reduce from 96.3%
to 94.5%.
2. Like-for-like excludes the impact of surrender premia, CVAs & admins
and provisions for debtors and tenant incentives.
Retail operational and financial highlights
- Retail & Fulfilment portfolio value at £3.5bn, up 9.9%, with Retail
Parks delivering an exceptional 20.7% uplift, more than offsetting a decline
in Shopping Centres (down 6.1%)
- Yield compression of 97bps overall, driven by Retail Parks down 151bps
with yield expansion of 3bps for the year in Shopping Centres, but contraction
of 4bps in the second half
- ERVs down 2.8%; weighted towards Shopping Centres, which are down 5.2%;
Retail Parks down 2.0%
- Like-for-like income down 0.8%. Including the impact of CVAs and
administrations, like-for-like income was down 6.0%
- Like-for-like income up 6.0% on our Retail Parks
- Strong leasing activity, with 1.5m sq ft deals greater than one year; 2.8%
ahead of March 2021 ERV and 21% below previous passing rent
- Total lettings and renewals at 2.2m sq ft
- Strong pipeline with 679,000 sq ft under offer, 2.2% above March 2021 ERV
and 7.6% below passing rent
- Further 555,000 sq ft of rent reviews agreed 0.2% above passing rent
- Retail Parks occupancy 97.4% up 270bps, reflecting strong leasing activity
- Footfall and sales 91.9% and sales 98.4% respectively of same period in
FY20; 99.5% and 100.2% for Retail Parks
- 95% of FY22 rent collected
Retail & Fulfilment operational review
Operational performance
This has been a strong year for leasing volumes, with total activity of 2.2m
sq ft. Deals over one year were 2.8% ahead of March 2021 ERV, with a
particularly strong performance from Retail Parks which were 5.9% ahead of
March 2021 ERV. Total lease renewals covering 949,000 sq ft have tended to
outperform new lettings and were on average 6.5% ahead of March 2021 ERV.
Overall, transactions were 21.2% below previous passing rent as we have
prioritised occupancy to deliver more sustainable rents which are reflective
of the current market. As a result, occupancy levels are high at 96.3%. We
have an encouraging pipeline of deals under offer totalling 679,000 sq ft
overall 2.2% ahead of March 2021 ERV.
Retail Parks, which account for 60% of the Retail & Fulfilment portfolio
have emerged as the preferred format for retailers. They are well connected
and affordable for retailers meaning they play an important role in a
successful online retail strategy facilitating click and collect, returns and
ship from store. Their lower occupancy cost also makes them attractive to a
broad range of retailers. For example, we agreed three deals in our Retail
Parks with TK Maxx covering 64,800 sq ft, three with Asda covering 57,400 sq
ft, two with The Range (30,000 sq ft) and two with Poundland (25,300 sq ft).
Footfall on our Retail Parks was in line with FY20 (which included two weeks
of closure due to Covid) and sales were ahead.
Shopping Centres now account for 23% of our Retail & Fulfilment portfolio,
with open air covered schemes comprising 6% and traditional covered centres
17%. We are encouraged that the rate of ERV decline has notably decelerated
for shopping centres and that yields on our portfolio contracted marginally in
the second half. With more investors targeting prime shopping centres, we
believe the outlook for the best centres is more attractive.
Following the acquisition of Heritage House, Enfield and the Finsbury Square
Car Park and including urban logistics opportunities on our existing
portfolio, Urban Logistics now accounts for 9% of Retail & Fulfilment.
Footfall and sales recovered strongly following the reopening of indoor
hospitality on 17 May 2021 and sales are now close to pre-pandemic levels,
with the shortfall in footfall largely compensated for by an increase in
basket size, as set out below:
1 April 2021 - 31 March 2022
% of FY20(1) Benchmark outperformance2
Footfall
- Portfolio 91.9% +1172bps
- Retail parks 99.5% +369bps
Sales
- Portfolio 98.4% n/a
- Retail parks 100.2% n/a
1. Compared to the equivalent weeks in FY20 which includes two weeks of
closure in March 2020
2. Footfall benchmark: Springboard
With most Covid-19 related restrictions lifted before or during the first
quarter and only short term interruptions as a result of the Omicron variant,
most of our occupiers have been able to operate as normal for the majority of
the period. This is reflected in our rent collection which at 95% of rent for
the year is close to historic levels.
CVAs and administrations
There have been relatively few new CVAs or administrations in the year with
just fifteen units impacted, of which seven were unaffected, three saw rent
reductions and five stores closed. This resulted in £2.5m in lost contracted
rent of which £2m related to the Virgin Active restructuring in May 2021.
Developments
At 31 March 2022 Sq ft Current Value Cost to complete ERV ERV
'000
£m
£m
£m
Let & under offer
£m
Recently completed 369 545 - 24.3 23.9
Committed 1,682 487 648 60.4 21.2
Near term 1,925 219 963 76.6 -
Medium term 7,746
Total pipeline (ex. Recently Completed) 11,353 706 1,611 137.0 21.2
On a proportionally consolidated basis including the Group's share of joint
ventures (except area which is shown at 100%)
Portfolio
Progressing value accretive development is one of the four key priorities for
our business and a key driver of returns. We target project IRRs of 10-12% and
altogether, expect our development pipeline to deliver profits of around
£2bn. We actively manage the risk associated with development by pre-letting
space where appropriate. We have made excellent progress this year with our
pre-letting activity securing £13.7m of future rent and post year end, we
placed a further 103,000 sq ft under offer at our Norton Folgate development,
representing another £7.5m of rent. This brings total future rent secured to
£45m across our recently completed and committed pipeline of 2.1m sq ft
representing 53% of total ERV. Excluding build to sell residential and retail
space which we will let closer to completion, we are 60% pre-let or under
offer by ERV. Total development exposure is now 6.2% of portfolio gross asset
value with speculative exposure at 6.4% (which is based on ERV and includes
space under offer), within our internal risk parameter of 12.5%.
The majority of space in our development pipeline is either income producing
or held at low cost, enhancing our flexibility, so we have attractive options
we can progress as and when appropriate.
The construction market has changed significantly over the year. Initial
increases in raw material costs were due to the combination of supply chain
issues, sustained global demand and reduced supply which were primarily
Covid-19 related. Manufacturing closures, reduced production and shipping
provision, combined with increased demand for raw materials, such as iron ore
and timber, from China and the USA as they emerged from the pandemic put
upwards pressure in input costs. These price rises were initially sheltered by
contractors keen to secure pipeline; however, the levels of workload and
magnitude of cost increases have inevitably pushed up tender pricing.
Wholesale energy cost increases, shortage of labour, increased cost of
materials, elongated supply programmes and an increase in construction
activity has resulted in upward inflation pressure. These issues were
beginning to reduce at the end of 2021 and early part of 2022, with both
supply improving and costs decreasing. This changed with the Ukraine war,
which has further destabilised the global supply chain, removing Ukraine and
Russian goods and services from the market. This reduction in supply, together
with the spike in energy prices resulting from the war, elevated tender price
inflation once again.
Our inflation forecast (based on tender price inflation) has increased to
around 8-10% in 2022 from our previous forecast of 4.5%, but we expect that to
moderate over the next 18 months as wages and commodity prices remain elevated
but do not increase at the same rate. Our forecast for 2023 and 2024 is around
4-5% (from 3.5%). We expect the rate of increase to moderate and capacity to
emerge as some development projects in the market are deferred or cancelled.
We review inflation drivers to ensure our contingencies and cost plans are
robust to deal with the market fluctuations. Having maintained momentum on our
development programme throughout the pandemic, we have been able to place
contracts competitively and 91% of costs are fixed on committed developments.
We have built up excellent relationships with Tier 1 contractors and
throughout our supply chain so we are confident of placing mutually attractive
contracts for our near term developments.
Higher land values mean that returns from London developments are more
insulated to cost inflation than development in other parts of the country and
we anticipate being able to achieve the modest increase in rents required to
offset any further cost inflation above our base case.
Completed developments
We reached practical completion of 1 Triton Square (369,000 sq ft) in May.
Embodied carbon was low at 436 kg CO(2)e per sqm and we offset residual
embodied carbon through certified schemes making this our second net zero
carbon development. The offices space is now fully let to Meta.
Committed developments
Our committed pipeline now stands at 1.7m sq ft following commitments at
Canada Water, Phase 2 at Aldgate Place and most recently The Priestley Centre
in Guildford. The Priestley Centre is located on the University of Surrey
Research Park where there is strong demand from innovation sectors and we are
on site with an 81,000 sq ft office development which will be partially lab
enabled.
At Canada Water, we are on site at the first three buildings covering 585,000
sq ft. A1 is a 35 storey tower, including 186 homes and 120,000 sq ft of
workspace; practical completion is targeted for Q4 2024. A2 includes 185,000
sq ft of workspace as well as the new leisure centre and K1 comprises 79
affordable homes. The London Borough of Southwark are not participating in
Phase 1 but will take ownership of the affordable housing on completion and
have part-funded the leisure centre in A2. We expect to sell the residential
units in A1 closer to practical completion.
Phase 2 at Aldgate Place is our first build to rent residential scheme. It
comprises 159 premium apartments with 19,000 sq ft of best-in-class office
space and 8,000 sq ft of retail and leisure space. It is well located,
adjacent to Aldgate East and between the Crossrail stations at Liverpool
Street and Whitechapel. Works have now started on site with completion
expected in Q2 2024.
We are also on site at Norton Folgate and 1 Broadgate. At 1 Broadgate (544,000
sq ft) we are fully pre-let or under option on the office space to JLL and
Allen & Overy. Norton Folgate is a 336,000 sq ft scheme, comprising
302,000 sq ft of office space, alongside retail and leisure space creating a
mixed use development in keeping with the historic fabric of the area. We are
under offer on a minimum of 103,000 sq ft and continue to have encouraging
discussions with a range of occupiers.
Recently Completed and Committed Developments
As at 31 March 2022 Sector BL Share 100% sq ft PC Calendar Year ERV Forecast IRR
%
'000
£m(1)
%
1 Triton Square Office 100 369 Q2 2021 24.3 12
Total Recently Completed 369 24.3
Norton Folgate Office 100 336 Q4 2023 23.1 11
1 Broadgate Office 50 544 Q2 2025 20.2 12
Aldgate Place, Phase 2 Residential 100 136 Q2 2024 6.0 10
Canada Water, Plot A12 Mixed Use 50 273 Q4 2024 3.3 11
blended
Canada Water, Plot A22 Mixed use 50 250 Q3 2024 5.0
Canada Water, Plot K12 Residential 50 62 Q2 2023 -
The Priestley Centre Office 100 81 Q2 2023 2.8 22
Total Committed 1,682 60.4
1. Estimated headline rental value net of rent payable under head leases
(excluding tenant incentives).
2. The London Borough of Southwark has confirmed they will not be investing
in Phase 1, but retain the right to participate in the development of
subsequent plots up to a maximum of 20% with their returns pro-rated
accordingly.
Near Term pipeline
Our near term pipeline covers 1.9m sq ft and includes 2 Finsbury Avenue, where
we have planning for a 718,000 sq ft office scheme. Embodied carbon on this
building is projected to be market leading for a high rise tower below 750kg
CO(2) per sqm benefiting from the use of existing and other recycled
materials. We expect to start on site later this year. At 5 Kingdom Street, we
have consent for a 438,000 sq ft office scheme; our ownership is currently
100% but GIC, our new joint venture partner have an option to acquire 50%.
Start on site is expected in late 2023. At Meadowhall, we have outline
planning permission for our 604,000sq ft logistics scheme which we expect to
progress later this year.
Medium Term Pipeline
The further phases at Canada Water account for 4.5m sq ft of our 7.8m sq ft
pipeline. At Euston Tower (578,000 sq ft) we have an exciting opportunity to
deliver a highly sustainable, substantial redevelopment, targeting life
sciences and other innovation businesses leveraging its location in London's
Knowledge Quarter. We expect to submit planning next year.
Urban logistics opportunities account for 2.3m sq ft of medium term
opportunities. At Thurrock, where we acquired the Thurrock Shopping Park in
the year, we see an opportunity to deliver 559,000 sq ft of logistics space
towards the east of London by repurposing two-thirds of the retail space and
utilising the site topography to facilitate multi-level development. We see
further opportunities to intensify existing buildings at Hannah Close in
Wembley and Heritage House in Enfield, with potential to deliver 668,000 sq ft
and 431,000 sq ft respectively of well located, urban logistics space. Both
are in North London, within the M25 and close to the North Circular. In
addition, we have two centrally located opportunities at Finsbury Square and
Verney Road in Southwark altogether totalling 213,000 sq ft. In addition
opportunities on our existing portfolio include, Teesside where we have
identified 299,000 sq ft of land outside of the retail park we could
potentially repurpose for logistics.
Finance review
Year ended 31 March 2022 31 March 2021
Underlying Profit1,2 £251m £201m
Underlying earning per share1,2 27.4p 18.8p
IFRS profit/(loss) after tax £960m £(1,083)m
Dividend per share 21.92p 15.04p
Total accounting return1 14.8% (15.1)%
EPRA Net Tangible Assets per share1,2 727p 648p
IFRS net assets £6,733m £5,983m
LTV3,4,5 32.9% 32.0%
Weighted average interest rate 2.9% 2.9%
1. See Note 2 within condensed financial statements for definition and
calculation.
2. See Table B within condensed supplementary disclosure for reconciliations
to IFRS metrics.
3. See Note 14 within condensed financial statements for definition,
calculation and reconciliation to IFRS metrics.
4. On a proportionally consolidated basis including the Group's share of
joint ventures.
5. Following the sale of a 75% interest in the majority of our assets at
Paddington Central, LTV falls to 28.4% on a pro forma basis.
Overview
Financial performance has improved significantly following the easing of
Covid-19 restrictions. Underlying Profit is up 24.9% at £251m, while
underlying earnings per share (EPS) is up 45.7% at 27.4p. Based on our policy
of setting the dividend at 80% of Underlying EPS, the Board have proposed a
final dividend of 11.60p per share, resulting in a full year dividend of
21.92p per share.
Underlying Profit
£m
Underlying Profit for the year ended 31 March 2021 201
Like-for-like net rent (incl. CVA and administrations) (8)
Provisions for debtors and tenant incentives(1) 91
Net divestment (8)
Developments (12)
Net administrative expenses & fee income (13)
Underlying Profit for the year ended 31 March 2022 251
1. The year on year impact of provisions for debtors and tenant incentives
was £91m. This reflects the difference between the £8m credit to the income
statement in the year to 31 March 2022 (as disclosed in Note 7 and 10 of
condensed financial statements) and the £83m charge in the year to 31 March
2021.
Underlying Profit increased by £50m, primarily due to the significant
reduction in provisions for debtors and tenant incentives, following improved
rent collection driven by proactive engagement with occupiers and the lifting
of Covid-19 related restrictions. This was partially offset by the impact of
properties entering vacant possession ahead of redevelopment, an increase in
administrative costs and the impact of CVA and administrations that occurred
in the prior year.
Net divestment decreased earnings by £8m in the year. Proceeds from sales
have been deployed into our value accretive acquisitions and our development
pipeline. The recently completed and committed schemes are expected to
generate an ERV of £85m, of which 53% is already pre-let or under offer.
IFRS profit after tax for the year was £960m, compared with a loss after tax
for the prior year of £1,083m. The significant movement year-on-year
primarily reflects the upward valuation movement on the Group's properties and
those of its joint ventures.
Overall valuations have increased by 6.8% on a proportionally consolidated
basis, resulting in an overall EPRA NTA per share increase of 12.2%. Including
dividends of 16.96p per share paid during the year, we have delivered a total
accounting return of 14.8%.
Financing activity included the refinance of 100 Liverpool Street, completed
in June 2021, with the Broadgate joint venture raising a new £420m 5 year
'Green Loan' secured by the property at an initial LTV of c.50%. As part of
the refinance, this BREEAM Outstanding and net zero carbon development was
released from the Broadgate securitisation alongside the redemption of £107m
of bonds.
In the year to 31 March 2022, LTV increased by 90bps to 32.9%. In April 2022,
we exchanged on the sale of a 75% interest in the majority of our assets in
Paddington Central to GIC; following its unconditional completion LTV falls to
28.4% on pro forma basis.
Our weighted average interest rate remains low at 2.9%, in line with 31 March
2021.
Our financial position remains strong with £1.3bn of undrawn facilities and
cash as at 31 March 2022 and, following the completion of the Paddington
Central sale, we have no requirement to refinance until late 2025. We retain
significant headroom to our debt covenants, meaning the Group could withstand
a fall in asset values across the portfolio of 49% prior to taking any
mitigating actions.
Fitch Ratings, as part of their annual review in August 2021, affirmed all our
credit ratings with a Stable Outlook, including the senior unsecured rating at
'A'.
Presentation of financial information and alternative performance measures
The Group financial statements are prepared under IFRS where the Group's
interests in joint ventures are shown as a single line item on the income
statement and balance sheet and all subsidiaries are consolidated at 100%.
Management considers the business principally on a proportionally consolidated
basis when setting the strategy, determining annual priorities, making
investment and financing decisions and reviewing performance. This includes
the Group's share of joint ventures on a line-by-line basis and excludes
non-controlling interests in the Group's subsidiaries. The financial key
performance indicators are also presented on this basis.
A summary income statement and summary balance sheet which reconcile the Group
income statement and balance sheet to British Land's interests on a
proportionally consolidated basis are included in Table A within the
supplementary disclosures.
Management use a number of performance metrics in order to assess the
performance of the Group and allow for greater comparability between periods,
however, do not consider these performance measures to be a substitute for,
IFRS measures.
Management monitors Underlying Profit as it is an additional informative
measure of the underlying recurring performance of our core property rental
activity and excludes the non-cash valuation movement on the property
portfolio when compared to IFRS metrics. It is based on the Best Practices
Recommendations of the European Public Real Estate Association (EPRA) which
are widely used alternate metrics to their IFRS equivalents, with additional
Company adjustments when relevant (see Note 2 in the condensed financial
statements for further detail).
Management monitors EPRA NTA as this provides a transparent and consistent
basis to enable comparison between European property companies. Linked to
this, the use of Total Accounting Return allows management to monitor return
to shareholders based on movements in a consistently applied metric, being
EPRA NTA, and dividends paid.
Loan to value (proportionally consolidated) is also monitored by management as
a key measure of the level of debt employed by the Group to meet its strategic
objectives, along with a measurement of risk. It also allows comparison to
other property companies who similarly monitor and report this measure. The
definition of Loan to value is shown in Note 14 of the consolidated financial
statements.
Income statement
1. Underlying Profit
Underlying Profit is the measure that we use to assess income performance.
This is presented below on a proportionally consolidated basis. In the year to
31 March 2022, a £29m surrender premium payment and a £12m reclassification
of foreign exchange differences were excluded from the calculation of
Underlying Profit (see Note 2 of the condensed financial statements). There
was no tax effect of these Company adjusted items. No Company adjustments were
made in the prior year to 31 March 2021.
Year ended 31 March Section 2022 2021
£m
£m
Gross rental income 490 508
Property operating expenses (61) (141)
Net rental income 1.2 429 367
Net fees and other income 13 11
Administrative expenses 1.3 (89) (74)
Net financing costs 1.4 (102) (103)
Underlying Profit 251 201
Underlying tax credit/(charge) 4 (26)
Non-controlling interests in Underlying Profit 2 3
EPRA and Company adjustments(1) 703 (1,261)
IFRS profit/(loss) after tax 2 960 (1,083)
Underlying EPS 1.1 27.4p 18.8p
IFRS basic EPS 2 103.3p (111.2)p
Dividend per share 3 21.92p 15.04p
1. EPRA adjustments consist of investment and development property
revaluations, gains/losses on investment and trading property disposals,
changes in the fair value of financial instruments and associated close out
costs. Company adjustments consist of items which are considered to be unusual
and/or significant by virtue to their size or nature. These items are
presented in the 'capital and other' column of the consolidated
income statement.
1.1 Underlying EPS
Underlying EPS is 27.4p, up 45.7%. This reflects the Underlying Profit
increase of 24.9% and the £30m movement in underlying tax. Following the
resumption of the dividend in November 2020, our REIT property income
distribution requirements have been satisfied and therefore there has been no
repeat of the underlying tax charge recognised in the prior year.
1.2 Net rental income
£m
Net rental income for the year ended 31 March 2021 367
Disposals (41)
Acquisitions 28
Developments (8)
Like-for-like net rent -
CVA and administrations (8)
Provisions for debtors and tenant incentives(1) 91
Net rental income for the year ended 31 March 2022 429
1. The year on year impact of provisions for debtors and tenant incentives
was £91m. This reflects the difference between the £8m credit to the income
statement in the year to 31 March 2022 (as disclosed in Note 7 and 10 of
condensed financial statements) and the £83m charge in the year to 31 March
2021.
Disposals of income producing assets over the last 24 months reduced net rents
by £41m in the year, where the proceeds from sales are being reinvested into
value accretive acquisitions and developments. Acquisitions have increased net
rents by £28m, primarily as a result of the purchase of the remaining 21.9%
interest of HUT, the acquisition of Heritage House in Enfield and Retail Park
acquisitions at Biggleswade and Thurrock. Developments have reduced net rents
by £8m, driven by the vacant possession of Euston Tower as it moves into
redevelopment. The completed and committed development pipeline is expected to
deliver £85m of ERV in future years.
Campus like-for-like net rental growth was 2.5% in the period. This was driven
by letting activity, including Monzo at Broadwalk House, Braze at Exchange
House and various lettings across our Storey spaces. Excluding the impact of
CVAs and administrations, like-for-like net rental growth for Retail Parks was
6% and declined 6% for Shopping Centres. This reflects improved occupancy on
our Retail Parks, deals on our Shopping Centres transacting at lower passing
rents and normalised car park and turnover income following the lifting of
Covid-19 related restrictions. The impact of CVA and administrations primarily
relates to various retail CVAs that occurred midway through 2020. When
including the impact of CVAs and administrations, like-for-like net rents for
Retail & Fulfilment decreased 6.0%.
Provisions made against debtors and tenant incentives decreased by £91m
compared to the prior year, with a net £8m credit recognised in the year.
We've made good progress on prior year debtors; the £119m of tenant debtors
and accrued income relating to the year ending 31 March 2021 now stands at
£35m, primarily driven by cash collection and negotiations with occupiers. As
of 31 March 2022, tenant debtors and accrued income totalled £72m of which
£61m (or 85%) is provided for, reflecting that the majority of these debtors
relate to amounts billed during Covid-19 related lockdowns for which recovery
is uncertain.
1.3. Administrative expenses
Administrative expenses have increased by £15m in the year to £89m. This
increase is driven by the following key drivers; added lease depreciation on
our offices at York House, following our sale of a 75% interest in January
2021; a one off accelerated depreciation charge of historic IT assets; the
recognition of a credit in the prior year following the closure of the Group's
defined benefit pension scheme to future accrual; and higher variable pay
reflecting strong financial performance this year.
The Group's EPRA operating cost ratio decreased to 24.2% (March 2021: 37.9%)
as a result of a significant decrease in property outgoing expenses due to
provisions made in respect of debtors and tenant incentives. Excluding
provisions made in respect of debtors and tenant incentives, the Group's
operating cost ratio is 26.0% (March 2021: 20.7%) and the increase from the
prior year is a result of lower rental income following sales activity and the
increase in administrative costs noted above. We expect our operating cost
ratio to decrease going forward, reflecting continued cost discipline and the
additional fee income that will be generated from our new Canada Water and
Paddington joint ventures.
1.4 Net financing costs
£m
Net financing costs for the year ended 31 March 2021 (103)
Financing activity 1
Market rates (1)
Net divestment 5
Developments (4)
Net financing costs for the year ended 31 March 2022 (102)
Financing activity undertaken in the year has reduced costs by £1m, including
the impact of the 100 Liverpool Street refinance and associated securitisation
bonds redemption.
The impacts of net divestment and developments have been mostly offset, with
proceeds from sales being used to repay revolving credit facilities, whilst
interest on the funds drawn for our completed developments is no longer
capitalised.
We have a balanced approach to interest rate risk management. At 31 March
2022, the interest rate on our debt was fully hedged on a spot basis.
Following the completion of the Paddington Central transaction, on average
over the next five years we have interest rate hedging on 79% of our projected
debt with 61% fixed (including swaps) and the balance capped. Our finance
costs are affected by market rates which apply to debt which is either
unhedged or where the cap strike rates are above the current rate. The strike
rates are limiting the adverse impact of rising rates on our finance costs.
The use of interest rate caps as part of our hedging means we do not incur
mark to market costs on any repayment of debt which is capped, or on a
floating rate, and the cost of this debt benefits while market rates are below
the strike rate. Our weighted average interest rate remains low at 2.9% (March
2021: 2.9%).
During the year we completed the transition from LIBOR to SONIA as the
reference rate for Sterling under all our debt and derivative agreements, in
line with market practice.
2. IFRS profit after tax
The main differences between IFRS profit after tax and Underlying Profit are
that IFRS includes the valuation movements on investment and trading
properties, fair value movements on financial instruments, capital financing
costs and any Company adjustments. In addition, the Group's investments in
joint ventures are equity accounted in the IFRS income statement but are
included on a proportionally consolidated basis within Underlying Profit.
The IFRS profit after tax for the year was £960m, compared with a loss after
tax for the prior year of £1,083m. IFRS basic EPS was 103.3p per share,
compared to (111.2)p per share in the prior year. The IFRS profit after tax
for the year primarily reflects the upward valuation movement on the Group's
properties of £471m, the capital and other income profit from joint ventures
of £158m and the Underlying Profit of £251m. The Group valuation movement
and capital and other income profit from joint ventures was driven principally
by inward yield shift of 42bps and ERV decline of 1.2% in the portfolio
resulting in a valuation increase of 6.8%.
The basic weighted average number of shares in issue during the year was 927m
(2020/21: 927m).
3. Dividends
In October 2020, we announced our new dividend policy, setting the dividend as
semi-annual and calculated at 80% of Underlying EPS based on the most recently
completed six-month period. Applying this policy, the Board are proposing a
final dividend for the year ended 31 March 2022 of 11.60p per share. Payment
will be made on Friday 29 July 2022 to shareholders on the register at close
of business on Friday 24 June 2022. The dividend will be a Property Income
Distribution and no SCRIP alternative will be offered.
Balance sheet
As at March 21 Section 2022 2021
£m
£m
Property assets 10,476 9,140
Other non-current assets 69 51
10,545 9,191
Other net current liabilities (316) (203)
Adjusted net debt 6 (3,458) (2,938)
Other non-current liabilities - -
EPRA Net Tangible Assets 6,771 6,050
EPRA NTA per share 4 727p 648p
Non-controlling interests 15 59
Other EPRA adjustments1 (53) (126)
IFRS net assets 5 6,733 5,983
Proportionally consolidated basis
1. EPRA Net Tangible Assets NTA is a proportionally consolidated measure
that is based on IFRS net assets excluding the mark-to-market on derivatives
and related debt adjustments, the carrying value of intangibles, the
mark-to-market on the convertible bonds, as well as deferred taxation on
property and derivative valuations. The metric includes the valuation surplus
on trading properties and is adjusted for the dilutive impact of share
options. Details of the EPRA adjustments are included in Table B within the
supplementary disclosures.
4. EPRA Net Tangible Assets per share
pence
EPRA NTA per share at 31 March 2021 648
Valuation performance 70
Underlying Profit 27
Dividend (17)
Finance liability management & other (1)
EPRA NTA per share at 31 March 2022 727
The 12.2% increase in EPRA NTA per share reflects a valuation increase of 6.8%
compounded by the Group's gearing.
Campus valuations were up 5.4%, driven by our actions with strong leasing and
development activity at Regent's Place and Broadgate in particular generating
uplifts of 6.7% and 5.1% respectively. Yields moved in 11bps and ERVs were
flat. Campus developments were up 11.7% reflecting a very strong performance
at Canada Water of 18.3% which now reflects our new joint venture with
AustralianSuper.
Valuations in Retail & Fulfilment were up 9.9% overall, with inward yield
shift of 97bps and ERV decline of 2.8%. There is a significant variance at a
sub-sector level, with Retail Park valuations showing a strong performance of
20.7%, driven by inward yield shift of 151 bps underpinned by strong
investment market and improving occupational market given their relative
affordability and compatibility with online retail. Shopping Centres
valuations were down 6.1% in the year with ERVs down 5.2%; yields have moved
outwards by 3bps in the year, although we saw mild yield compression in the
second half.
5. IFRS net assets
IFRS net assets at 31 March 2022 were £6,733m, an increase of £750m from 31
March 2021. This was primarily due to IFRS profit after tax of £960m, offset
by dividends paid in the year of £157m and the purchase of the remaining
21.9% units in the Hercules Unit Trust from non-controlling interests of
£38m.
Cash flow, net debt and financing
6. Adjusted net debt1
£m
Adjusted net debt at 31 March 2021 (2,938)
Disposals 486
Acquisitions (730)
Development and capex (327)
Net cash from operations 245
Dividend (155)
Other (39)
Adjusted net debt at 31 March 2022 (3,458)
1. Adjusted net debt is a proportionally consolidated measure. It represents
the Group net debt as disclosed in Note 14 to the condensed financial
statements and the Group's share of joint ventures' net debt excluding the
mark-to-market on derivatives, related debt adjustments and non-controlling
interests. A reconciliation between the Group net debt and adjusted net debt
is included in Table A within the supplementary disclosures.
Acquisitions net of disposals increased debt by £244m whilst development
spend totalled £266m with a further £61m on capital expenditure related to
asset management on the standing portfolio. The value of recently completed
and committed developments is £1,032m, with £648m costs to come. Speculative
development exposure is 6.4% of ERV (includes space under offer). There are
1.9m sq ft of developments in our near term pipeline with anticipated cost of
£963m.
7. Financing
Group Proportionally consolidated
2022 2021 2022 2021
Net debt / adjusted net debt1 £2,541m £2,249m £3,458m £2,938m
Principal amount of gross debt £2,562m £2,291m £3,648m £3,183m
Loan to value 26.2% 25.1% 32.9% 32.0%
Weighted average interest rate 2.4% 2.2% 2.9% 2.9%
Interest cover 5.6 4.3 3.5 3.0
Weighted average maturity of drawn debt 6.6 years 7.0 years 6.9 years 7.6 years
1. Group data as presented in Note 14 of the condensed financial statements.
The proportionally consolidated figures include the Group's share of joint
ventures' net debt and exclude the mark-to-market on derivatives and related
debt adjustments and non-controlling interests.
At 31 March 2022, our proportionally consolidated LTV was 32.9%, up from 32.0%
at 31 March 2021. The impact of positive valuation movements decreased LTV by
210 bps. This was offset by acquisitions net of disposals which added 150bps,
as well as development spend which added 200 bps. In April 2022, we exchanged
on the sale of a 75% interest in the majority of our assets in Paddington
Central to GIC; following its completion LTV falls to 28.4% on pro forma
basis. Note 14 of the condensed financial statements sets out the calculation
of the Group and proportionally consolidated LTV.
In June 2021 we completed the refinance of 100 Liverpool Street with the
Broadgate joint venture raising a new £420m 5 year 'Green Loan' secured by
the property at an initial LTV of c.50%. As part of the refinance, this BREEAM
Outstanding and net zero carbon development was released from the Broadgate
securitisation alongside the redemption of £107m of bonds. The new financing
was voted Financing Deal of the Year: UK by Real Estate Capital Europe for
2021.
In September our £138m US Private Placement matured and was repaid as
planned, using committed bank facilities.
In February , we extended our £450m ESG-linked Revolving Credit Facility by a
further year to 2027, with the agreement of all eight banks in that facility.
In March, we signed a new £100m ESG-linked bilateral Revolving Credit
Facility with an initial five year term, which may be extended up to seven
years at British Land's request, subject to the bank's consent. In keeping
with our sustainability strategy, the facility includes two ESG-related KPIs
focused on the BREEAM ratings of our developments and assets under management
(aligned with the KPIs in the £450m RCF). This brings our total Green /
ESG-linked finance to £1bn.
As a result of this financing activity, at 31 March 2022, we had £1.3bn of
undrawn facilities and cash. Based on our current commitments and available
facilities and following the completion of the Paddington sale, the Group has
no requirement to refinance until late 2025.
Our debt and interest rate management approach has enabled us to maintain a
low weighted average interest rate of 2.9%.
Fitch Ratings, as part of their annual review in August 2021 affirmed all our
credit ratings, with a Stable Outlook; senior unsecured credit rating 'A',
long term IDR 'A-' and short term IDR 'F1'.
Our strong balance sheet enables us to deliver on our strategy.
Bhavesh Mistry
Chief Financial Officer
About British Land
Our portfolio of high quality UK commercial property is focused on London
Campuses and Retail & Fulfilment assets throughout the UK. We own or
manage a portfolio valued at £14.3bn (British Land share: £10.5bn) as at 31
March 2022 making us one of Europe's largest listed real estate investment
companies.
We create Places People Prefer, delivering the best, most sustainable places
for our customers and communities. Our strategy is to leverage our best in
class platform and proven expertise in development, repositioning and active
management, investing behind two key themes: Campuses and Retail &
Fulfilment.
Our three Campuses at Broadgate, Paddington Central and Regent's Place are
dynamic neighbourhoods, attracting growth customers and sectors, and offering
some of the best connected, highest quality and most sustainable space in
London. We are delivering our fourth Campus at Canada Water, where we have
planning consent to deliver 5m sq ft of residential, commercial, retail and
community space over 53 acres. Our Campuses account for 67% of our portfolio.
Retail & Fulfilment accounts for 33% of the portfolio and is focused on
retail parks which are aligned to the growth of convenience, online and last
mile fulfilment. We are complementing this with urban logistics primarily in
London, focused on development-led opportunities.
Sustainability is embedded throughout our business. In 2020, we set out our
sustainability strategy which focuses on two time-critical areas where British
Land can create the most benefit: making our whole portfolio net zero carbon
by 2030, and partnering to grow social value and wellbeing in the communities
where we operate.
Further details can be found on the British Land website at
www.britishland.com (http://www.britishland.com)
Risk management and principal risks
Risk Management
We maintain a comprehensive risk management process which serves to identify,
assess and respond to the range of financial and non-financial risks facing
our business, including those risks that could threaten solvency and
liquidity, as well as identifying emerging risks. Our approach is not intended
to eliminate risk entirely, but instead to manage our risk exposures across
the business, whilst at the same time making the most of our opportunities.
Our approach to risk management is centred on being risk-aware, clearly
defining our risk appetite, responding to changes to our risk profile quickly
and having a strong risk management culture among employees with clear roles
and accountability. Our organisational structure ensures close involvement of
senior management in all significant decisions as well as in-house management
of our development, asset and property management activities.
The volatile and uncertain environment created by the Covid-19 pandemic,
coupled with a backdrop of increasing geopolitical and macroeconomic
uncertainty, has, and continues to present an uncertain general risk
environment for our business to navigate, affecting our entire risk landscape.
Looking forward, whilst the removal of all Covid-19 restrictions in England
from April 2022 following the successful vaccination programme reduces the
risks relating to Covid-19, it is likely that Covid-19 will still be prevalent
in society and the risk of further Covid-19 variants, and whether current
vaccines will deal with them effectively or not, remains. There are also wider
concerns that we are potentially entering an extended period of global
volatility with several increasing macroeconomic headwinds including energy
price volatility, supply chain disruption and material and labour shortages.
These are all increasing inflationary pressures, and are being compounded by
the war in Ukraine, and may give rise to further interest rate rises and in
turn serve to dampen UK economic growth. Whilst these headwinds continue to
evolve, we have set out in our principal risks table below the key potential
impacts on our business and how we plan to mitigate these.
Risk management, and the Group's continued ability to be flexible to adjust
and respond to these external risks as they evolve, will be fundamental to the
future performance of our business. The challenges of the last two years have
demonstrated the resilience of our business model, and our robust risk
management approach, to protect our business through this period of
uncertainty and adapt to a rapidly changing environment.
The Board confirms that a robust assessment of the principal and emerging
risks facing the Group, including those that would threaten its business
model, future performance, solvency or liquidity, as well as the Group's
strategic priorities, was carried out during the year taking into account the
evolving Covid-19 risk and the macroeconomic and geopolitical environment.
Following a thorough review exercise involving the Risk and Audit Committees,
we have also refreshed our principal risks to take into account how our
strategy and markets are evolving, together with combining several
interrelated risks. We have also added one new principal risk category being
'Operational and Compliance risks' reflecting the significance of several key
operational risks to our business involving information systems and cyber
security, health and safety, third party relationships and financial crime
compliance.
Our current assessment is that the general external environment in which the
Group operates remains uncertain, albeit several risks to our business have
reduced from their elevated position last year reflecting the lessened impact
of Covid-19; being (i) political, legal and regulatory risks; (ii) property
market outlook risk for our Campuses; (iii) major events/business disruption
risks and (iv} our customer risks. At the same time, our (i) environmental
sustainability and (ii) people and culture risks have increased slightly as
detailed below.
Our principal external and internal risks are summarised below, including an
assessment of how the risks have changed in the year. As usual, a more
comprehensive explanation of the Group's approach to risk management will be
included in the 2022 Annual Report.
External Principal Risks
Risks and impacts How we monitor and mitigate the risks Change in risk assessment in year
1 Macroeconomic Risks
The UK economic climate and changes to fiscal and monetary policy presents - The Board, Executive Committee and Risk Committee regularly assess the ←→ Macroeconomic risk has remained consistent during the year and is considered a
risks and opportunities in property and financing markets and to the Company's strategy in the context of the wider macroeconomic environment in high impact risk with a medium to high probability.
businesses of our customers which can impact both the delivery of our strategy which we operate to assess whether changes to the economic outlook justify a
and our financial performance. reassessment of our strategic priorities, our capital allocation plan and the The UK economy strengthened significantly in the period following the
risk appetite of the business. reopening of the economy with consumer confidence improving over the summer,
however, rising fuel and food prices have affected confidence more recently
- Our strategy team prepare a quarterly dashboard for the Board, Executive and there are concerns that economic momentum slows.
and Risk Committees which tracks key macroeconomic indicators both from
internal and independent external sources (see KRIs), as well as central bank The current economic backdrop remains uncertain reflecting the on-going
guidance and government policy. Covid-19 risk and several macroeconomic headwinds, including inflationary
pressures, which have been compounded by the war in Ukraine, with potential
- Regular stress testing our business plan against a downturn in economic subsequent impacts on interest rates, rental income, construction costs and
outlook to ensure our financial position is sufficiently flexible and property valuations.
resilient.
Opportunity
The strength of our balance sheet, quality of our assets and experienced Board
- Our business model focuses on a high quality portfolio aligned to key and management team put us in a strong position to help us to navigate through
trends in our markets and active capital recycling to maintain a strong these near term challenges and take advantage of opportunities as they rise,
financial position, which helps to protect us against adverse changes in including continuing to invest in growth sectors and our development pipeline.
economic conditions.
KRIs:
- Forecast GDP growth, inflation/deflation and interest rate forecasts
- Consumer confidence and unemployment rates
- Stress testing for downside scenarios to assess the impact of differing
market conditions
Risks and impacts How we monitor and mitigate the risks Change in risk assessment in year
2 Political, Legal, and Regulatory Risks
Significant political events and regulatory changes, including the impact of - Whilst we cannot influence the outcome of significant political events, ↓ The political, legal and regulatory risk outlook has reduced over the year
Government policy response to the pandemic, bring risks principally in four the risks are taken into account when setting our business strategy and when with Covid-19 related political uncertainty eased, but still remains elevated
areas: making strategic investment and financing decisions. with both a medium to high impact and probability.
- Reluctance of investors and businesses to make investment and occupational - Internally we review and monitor proposals and emerging policy and Following the successful vaccination programme, political uncertainty due to
decisions whilst the outcome remains uncertain legislation to ensure that we take the necessary steps to ensure compliance, the national and global response to Covid-19 has lessened, though risks in
if applicable. Additionally, we engage public affairs consultants to ensure response to the economic impact of the Covid-19 pandemic remain, including
- The impact on the case for investment in the UK, and on specific policies that we are properly briefed on the potential policy and regulatory potential tax rises for businesses.
and regulation introduced, particularly those which directly impact real implications of political events.
estate or our customers
The rent moratorium recently came to an end, with the UK Government
- Where appropriate, we act with other industry participants and introducing a binding arbitration scheme for certain arrears built up during
- The potential for a change of leadership or political direction representative bodies to contribute to policy and regulatory debate. We lockdown periods.
monitor and respond to social and political reputational challenges relevant
- The impact on the businesses of our occupiers as well as our own business to the industry and apply our own evidence-based research to engage in thought The global geopolitical environment remains uncertain, heightened by the
leadership discussions. recent war in Ukraine, with potential impacts on security, cyber risks,
KRIs: sanctions compliance, supply chains and reputational risks.
- Monitor changes within the geopolitical environment, UK policies, laws or
Opportunity
regulations
We continue to closely monitor the political outlook and any potential changes
in regulations to ensure changes which may impact the Group, or our customers,
are identified and addressed appropriately. We work closely with Government,
directly and through our membership of key property industry bodies, to input
into regulation as draft proposals are announced. Through this proactive
approach, we view the right kind of regulation and legislation as an
opportunity for our business to outperform.
-
Risks and impacts How we monitor and mitigate the risks Change in risk assessment in year
3 Property Market Risks
Underlying income, rental growth and capital performance could be adversely - The Board, Executive Committee and Risk Committee regularly assess whether ↓ Campuses
affected by a reduction in investor demand or weakening occupier demand in our any current or future changes in the property market outlook present risks and
Our Campus property market risk outlook has reduced in the year and is
property markets. opportunities which should be reflected in the execution of our strategy and considered a medium impact risk with a medium probability.
our capital allocation plan.
Structural changes in consumer and business practices such as the growth of
As the economy strengthened over the last year, both investment and occupier
online retailing and flexible working practices (including more working from - Our strategy team prepare a quarterly dashboard for the Board, Executive markets have improved for London offices, with investment activity
home) could have an adverse impact on demand for our assets. and Risk Committee's which tracks key investment and occupier demand particularly driving yield compression. Take up has been mixed and polarised
indicators both from internal and independent external sources (see KRIs towards best in class space. Availability across the market remains above the
below) which are considered alongside the Committee members' knowledge and long term average but has moderated; and is skewed towards second hand, poorer
experience of market activity and trends. quality space.
- We focus on prime assets or those with repositioning potential and sectors Structural risks remain from increased working from home, accelerated by the
which we believe will be more resilient over the medium term to a reduction in impact of Covid-19, enabling some businesses to reassess their real estate
occupier and investor demand. options.
Opportunity
- We maintain strong relationships with our occupiers, agents and direct
Our Campus model is centred on providing well connected, high quality and
investors active in the market and actively monitor trends in our sectors. sustainable buildings with attractive amenity which aligns to our customers'
needs and expectations and is an important differentiator of our space. We
- We stress test our business plan for the effect of a change in rental have been encouraged by the strength of our leasing activity across our
growth prospects and property yields. Campuses this year.
KRIs:
- Occupier and investor demand indicators in our sectors
- Margin between property yields and borrowing costs
- Online sales trends
- Footfall and retail sales to provide insight into consumer trends
- Campus occupancy to provide insight into occupier trends and people
visiting our Campuses
←→ Retail
Our Retail property market risk outlook has remained consistent and is
considered a medium impact risk with a high probability.
The occupational market for retail has endured a challenging few years
reflecting the structural shift to online which has accelerated through
Covid-19. Retailers' profitability is continuing to be put under pressure due
to increased costs, such as rising input costs, wages, business rates and the
erosion of margins from online competition. Shopping Centres have been
impacted more severely by this, whereas retail parks, which are more
affordable and resilient to online, have fared better.
As in the occupational market, investment activity has been skewed towards
retail parks reflecting lower occupancy costs for retailers and the important
role retail parks can play in online fulfilment; and as a result, yields have
moved in. The investment market for shopping centres has continued to be weak,
although there are signs of renewed investor interest.
Opportunity
Our Retail portfolio focuses on retail parks aligned to the growth of
convenience and supports retailers omnichannel strategy. Despite the
challenges in retail, this has been a strong year for our leasing activity and
retailers continue to recognise we offer some of the best quality space in the
UK. We are focused on maintaining high occupancy, accepting appropriate rents
which are more sustainable in the long term.
- ∆ Urban Logistics
The urban logistics property market risk outlook has been added as one of our
key sectors and is considered a medium impact risk with a low probability.
Both the occupational and investment market outlook remain favourable
underpinned by structural changes in e-commerce. Supply of the right kind of
space remains highly constrained and demand is strong, driving rental growth.
Opportunity
Our Urban Logistics portfolio is focused on a development-led pipeline through
the intensification and repurposing of existing buildings in London.
Risks and impacts How we monitor and mitigate the risks Change in risk assessment in year
4 Major Events/Business Disruption Risks
Major global, regional or national events could cause significant damage and - The Group has comprehensive crisis response plans and incident management ↓ Our major events/business disruption risk outlook has reduced over the year as
disruption to the Group's business, portfolio, customers, people and supply procedures both at head office and asset-level that are regularly reviewed and Covid-19 related disruption to our business has eased following the full
chain. tested opening of our assets and the return to the office of our people, but this
remains a medium to high impact risk with a medium probability.
Such incidents could be caused by a wide range of external events such as - Asset emergency procedures are regularly reviewed and scenario tested.
civil unrest, an act of terrorism, pandemic disease, a cyber-attack, an Physical security measures are in place at properties and development sites This risk was increased last year as the Group's operations were severely
extreme weather occurrence, environmental disaster or a power shortage.
impacted by the Covid-19 pandemic. Our core crisis management team, overseen
- The Group monitors the Home Office terrorism threat level, and we have by the Executive Committee, co-ordinated the Group's operational response to
This could result in sustained asset value or income impairment, liquidity or access to security threat information services to help inform our security the pandemic, and the resilience of our business model, has enabled us to
business continuity challenges, share price volatility or loss of key measures weather the impact since its onset. We remain mindful of the risks posed by
customers or suppliers.
any further Covid-19 variants, and whether current vaccines will deal with
- We have robust IT security systems that support data security, disaster them effectively.
recovery and business continuity plans
We are also aware of the increase in global uncertainty, heightened by the war
- We have comprehensive property damage and business interruption insurance in the Ukraine. Specifically, terrorism remains a threat, as is the risk of
across the portfolio cyber security breaches. Our crisis management team carry out event
KRIs: simulations to test our processes and procedures in response to major
- Security Service National Threat level incidents. We also undertake regular cyber security training and testing.
Opportunity
- Security risk assessments of our assets
The challenges of the last two years have demonstrated the resilience of our
business model and our robust crisis management and business continuity plans.
We remain vigilant to the continued risk from the pandemic and other external
threats.
Internal Principal Risks
Risks and impacts How we monitor and mitigate the risks Change in risk assessment in year
5 Portfolio Strategy Risks
The Group's income and capital performance could underperform in absolute or - The Board carries out an annual review of the overall corporate strategy ←→ Our portfolio strategy risk has remained the same and is considered a medium
relative terms as a result of an inappropriate portfolio strategy and including the current and prospective portfolio strategy so as to meet the impact risk with a medium probability.
subsequent execution. Group's overall objectives
During the year, external impacts discussed in the macroeconomic and property
This could result from: - Our portfolio strategy is determined to be consistent with our target risk market outlook risks have influenced our portfolio strategy and performance.
appetite and is based on the evaluation of the external environment Whilst investment markets are increasingly competitive in certain subsectors,
- incorrect sector selection and weighting
we continue to actively crystalise value from mature and off strategy assets
- Progress against the strategy and continuing alignment with our risk into value accretive acquisitions and development opportunities.
- poor timing of investment and divestment decisions appetite is discussed regularly by both the Executive and Risk Committees with
Opportunity
reference to the property markets and the external economic environment
Our portfolio strategy to actively focus our capital on our competitive
- inappropriate exposure to developments
strengths in development, active asset management and repositioning of assets
- Individual investment decisions are subject to robust risk evaluation is a key opportunity. We remain active in the investment market and continue
- wrong mix of assets, occupiers and region concentration overseen by our Investment Committee including consideration of returns to take advantage of value opportunities and good market pricing of our
relative to risk adjusted hurdle rates. assets, where available. This year has marked the return to growth for both
- overpaying for assets through inadequate due diligence or price
our Campuses and Retail & Fulfilment portfolios.
competition - Review of prospective performance of individual assets and their business
plans
- inappropriate co-investment arrangements
- We foster collaborative relationships with our co-investors and enter into
ownership agreements which balance the interests of the parties
KRIs:
- Execution of targeted acquisitions and disposals in line with capital
allocation plan (overseen by the Investment Committee)
- Annual IRR process which forecasts prospective returns of each asset
- Portfolio liquidity including percentage of our portfolio in joint
ventures and funds
Risks and impacts How we monitor and mitigate the risks Change in risk assessment in year
6 Development Risks
Development provides an opportunity for outperformance but usually involves - We apply a risk-controlled development strategy through managing our ←→ Our development risk has remained the same and is considered a medium impact
elevated risk. This is reflected in our decision making process around which exposure, pre-letting strategy and fixing costs risk with a medium probability.
schemes to develop and the timing of the development, as well as the execution
of these projects. - We manage our levels of total and speculative development exposure within We are on site with 1.7m sq ft of developments, with new commitments including
targeted ranges considering associated risks and the impact on key financial Phase 1 of Canada Water and Phase 2 at Aldgate Place. Our development exposure
Development strategy addresses several development risks that could adversely metrics. This is monitored quarterly by the Risk Committee along with progress remains well within our internal risk parameters of 12.5%; and our total
impact underlying income and capital performance including: of developments against plan. development exposure is 6.2% of portfolio gross asset value with speculative
exposure of 6.4% (which is based on ERV and includes space under offer).
- development letting exposure - Prior to committing to a development, a detailed appraisal is undertaken.
This includes consideration of returns relative to risk adjusted hurdle rates During the year, we saw significant inflationary increases in the construction
- construction timing and costs (including construction cost inflation) and is overseen by our Investment Committee supply chain for certain materials and labour, which have been further
compounded by the war in Ukraine. Our inflation forecast (based on tender
- major contractor or subcontractor failure - Pre-lets are used to reduce development letting risk where considered price inflation) has increased to around 8-10% in 2022 and around 4-5% for
appropriate 2023 and 2024 based on an expectation of ongoing wage pressures for
- adverse planning judgements
construction workers and raw materials prices remaining elevated. This is
- Competitive tendering of construction contracts and, where appropriate, frequently under review to ensure our contingencies and cost plans are robust
fixed price contracts are entered into. We measure inflationary pressure on to deal with the market fluctuations. Having maintained momentum on our
construction materials and labour costs (and sensitise for a range of development programme throughout the pandemic we have been able to place
inflationary scenarios) and make appropriate allowances in our cost estimates contracts competitively and 91% of costs are fixed on committed developments.
and include within our fixed price contracts.
Opportunity
Progressing value accretive development is one of our key priorities for our
- Detailed selection and close monitoring of contractors and key business and is a fundamental driver of value. The strength of our balance
subcontractors including covenant reviews sheet, our relationships with our contractors and the experience of our
management team means we are well positioned to progress our development
- Experienced development management team closely monitors design, pipeline, whilst mitigating the risk through a combination of timing,
construction and overall delivery process pre-lets, fixing costs and use of joint ventures.
- Early engagement and strong relationships with planning authorities. The We will continue to actively monitor the inflationary price increases or any
Board considers the section 172 factors to ensure the impact on the potential delays in the construction supply chain and work with our
environment and communities is adequately addressed contractors to manage such issues. We will also review the impact on
development returns prior to committing to future developments to ensure we
- Through our Place Based approach, we engage with communities where we meet our detailed pre-set criteria subject to approval by the Investment
operate to incorporate stakeholder views in our development activities, as Committee.
detailed in our Sustainability Brief
- We engage with our development suppliers to manage environmental and
social risks, including through our Supplier Code of Conduct, Sustainability
Brief and Health and Safety Policy
- Management of risks across our residential developments in particular fire
and safety requirements
KRIs:
- Total development exposure ≤12.5% of portfolio by value
- Speculative development exposure ≤12.5% of portfolio ERV
- Residential development exposure
- Progress on execution of key development projects against plan (including
evaluating yield on cost)
- Construction costs inflation forecasts
Risks and impacts How we monitor and mitigate the risks Change in risk assessment in year
7 Financing Risks
Failure to adequately manage financing risks may result in a shortage of funds - We regularly review funding requirements for our business plans and ←→ Our financing risks overall have remained consistent and are considered medium
to sustain the operations of the business or repay facilities as they fall commitments. We monitor the period until financing is required, which is a key impact with a low to medium probability.
due. determinant of financing activity. Debt and capital market conditions are
reviewed regularly to identify financing opportunities that meet our The current uncertain environment reinforces the importance of a strong
Financing risks include: requirements. balance sheet. We have continued to closely manage our LTV which has increased
moderately to 32.9% as a result of investment in growth sectors and Campus
- reduced availability of finance - We maintain good long term relationships with our key financing partners. development, offset by sales and valuation increases. However, following the
Paddington Central transaction post year end our LTV falls to 28.4% on a
- increased financing costs - We set appropriate ranges of hedging on the interest rates on our debt, proforma basis.
with a balanced approach to have a higher degree of protection on interest
- leverage magnifying property returns, both positive and negative costs in the short term and achieve market rate finance in the medium to We have retained significant headroom to our Group covenants, which could
longer term. withstand a fall in asset values across the portfolio of 49%, prior to taking
- breach of covenants on borrowing facilities
any mitigating actions.
- We work with industry bodies and relevant organisations to participate in
debate on emerging finance regulations affecting our business. Market interest rates have risen from very low levels and further rises are
anticipated. In line with our interest rate management policy, we have hedging
- We manage our use of debt and equity finance to balance the benefits of on 79% of our projected debt on average over the next five years.
leverage against the risks, including magnification of property valuation
movements. Our strong senior unsecured rating 'A', long-term IDR credit rating 'A-' and
short-term IDR credit rating 'F1' were all affirmed by Fitch during the year,
- We aim to manage our loan to value (LTV) through the property cycle such with a stable outlook.
that our financial position would remain robust in the event of a significant
fall in property values. Alongside LTV, we also consider net debt to EBITDA During the year we have signed a new £100m ESG-linked revolving credit
which measures income against our debt (with recourse to British Land). With facility with an initial 5 year term, extended our £450m ESG-linked revolving
these metrics, we do not adjust our approach to leverage based only on changes credit facility to 2027, and raised a new £420m 'Green loan' for the
in property market yields. Broadgate joint venture, secured on 100 Liverpool Street.
- We manage our investment activity, the size and timing of which can be We expect to continue to be able to access funds from a range of sources in
uneven, as well as our development commitments to ensure that our LTV and net the debt capital markets, as required by the business, for unsecured and
debt to EBITDA levels remain appropriate. secured debt.
Opportunity
- Financial covenant headroom is evaluated regularly and in conjunction with
The scale and quality of our business enables us to access a diverse range of
transaction approval. sources of finance with a spread of repayment dates. Good access to debt
capital markets allows us to support business requirements and take advantage
- We spread risk through joint ventures and funds which may be partly of opportunities as they arise. At 31st March 2022, we have £1.3bn of
financed by debt without recourse to British Land. undrawn, committed, unsecured revolving facilities and cash; and post
KRIs: completion of the Paddington Central transaction we have no requirement to
- Period until refinancing is required (not less than two years) refinance until late 2025.
- LTV
- Net debt to EBITDA
- Financial covenant headroom
- Percentage of debt with interest rate hedging (average over next five
years)
Risks and impacts How we monitor and mitigate the risks Change in risk assessment in year
8 Environmental Sustainability Risks
A failure to anticipate and respond appropriately and sufficiently to (i) - We have a comprehensive ESG programme which is regularly reviewed by the ↑ Our environmental sustainability risk outlook has increased in the year and is
environmental risks or opportunities and (ii) preventative steps taken by Board, Executive Committee and CSR Committee considered a medium impact risk with a medium probability.
government and society could lead to damage to our reputation, disruption in
our operations and stranded assets. - The Risk and Sustainability Committees have overseen our TCFD working Overall, the environmental sustainability risk outlook continues to increase
group to implement the TCFD recommendations including scenario analyses to in prominence and importance to our business, our customers and other key
This risk category includes the: assess our exposure to climate-related physical and transition risks stakeholders. Also, regulatory requirements and expectations of compliance
with best practice have increased and continue to evolve.
- increased exposure of assets to physical environmental hazards, driven by - The Sustainability Committee monitors our performance and management
climate change controls. Underpinned by our SBTi-climate targets, our guiding corporate During the year, we have worked closely with Willis Towers Watson to quantify
policies (the Pathway to Net Zero and the Sustainability Brief) establish a the key physical and transition risks that climate change poses to our
- policy risk from the cost of complying with new climate regulations with series of climate and energy targets to ensure our alignment with a societal business and this is informing our long term strategy. The most material
specific performance and/or technology requirements transition to net zero that limits global warming to 1.5°C issues include: flood risk vulnerability; the increasing price of carbon
offsets; and the costs of complying with minimum EPC standards.
- overall compliance requirements from existing and emerging environmental - Our property management department operates an environmental management
regulation system aligned with ISO 14001. We continue to hold ISO 14001 and 50001 We are continuing to improve the energy efficiency of our standing portfolio
accreditations at our commercial offices and run ISO-aligned management and have completed net zero audits of 29 of our major office and retail
- leasing risk as a result of less sustainable/non-compliant buildings systems at our retail assets assets, identifying energy efficient interventions and action plans. Alongside
this process, we are identifying interventions which improve EPC rating of
- Climate change and sustainability considerations are fully integrated buildings rated C and below to comply with MEES (Minimum Energy Efficiency
within our investment and development decisions and are evaluated by the Standard) legislation, which is expected to require buildings to be A or B
Investment Committee and Board in all investment decisions rated (or valid exemptions registered) by 2030.
Opportunity
- Through our Place Based approach to social impact we understand the most
We have a clear responsibility but also opportunity to manage our business in
important issues and opportunities in the communities around each of our the most environmentally responsible and sustainable way we can. This is
places and focus our efforts collaboratively to ensure we provide places that integral to our strategy; it creates value for our business and drives
meet the needs of all relevant stakeholders positive outcomes for our stakeholders.
- We target BREEAM Outstanding on offices developments, Excellent on retail We have made good progress on our 2030 commitments which include ambitious
and HMQ3* on residential. We have also adopted NABERS UK on all our new office targets to be net zero carbon by 2030 and a focus on environmental leadership.
developments. We were pleased to retain our 5 star rating in GRESB, the global benchmark for
real estate, achieving 5 stars for both Standing Investments and Developments
- We undergo assurance for key data and disclosures across our for the second year running.
Sustainability programme, enhancing the integrity, quality and usefulness of
the information we provide.
KRIs:
- Energy intensity and carbon emissions. Specifically, energy performance
certificates
- Future cost of carbon offsets to meet our 2030 net zero carbon goal
- Portfolio flood risk
Risks and impacts How we monitor and mitigate the risks Change in risk assessment in year
9 People and Culture Risks
Inability to recruit, develop and retain staff and Directors with the right - Our HR strategy is designed to minimise risk through: ↑ Our people and culture risk has increased in the year and is considered a
skills and experience required to achieve the business objectives in a culture
medium impact risk with a medium to high probability.
and environment where employees can thrive, may result in significant - informed and skilled recruitment processes
underperformance or impact the effectiveness of operations and decision
This risk has increased in the year reflecting the challenging operating
making, in turn impacting business performance. - talent performance management and succession planning for key roles environment caused by Covid-19, together with general rising wage expectations
and a recent increase in employee mobility.
- highly competitive compensation and benefits
Following the easing of lockdown restrictions, we have successfully
- people development and training transitioned our people back to the office, whilst supporting individuals with
more flexible working arrangements. We have focused on staff wellbeing and
- our flexible working policy helps retain employees while promoting have actively sought feedback from staff through pulse surveys and taken
work-life balance and helping to improve productivity several steps as a result to promote wellbeing.
This risk is measured through employee engagement surveys, wellbeing surveys, We are committed to improving the diversity, equality and inclusivity
employee turnover, exit surveys and retention metrics. We engage with our (DE&I) of our business and in November 2021, the CSR Committee approved
employees and suppliers to make clear our requirements in managing key risks our DE&I strategy which sets out our 2030 ambitions for the business.
including health and safety, fraud and bribery, modern slavery and other
Opportunity
social and environmental risks, as detailed in our policies and codes of
We have a broad range of expertise across our business which is critical to
conduct. the successful delivery of our strategy. Our staff turnover remains relatively
KRIs: low. We will assess our employee proposition to ensure it still delivers what
- Voluntary staff turnover people most value in a changing labour market. We have an opportunity to
enhance our good employer brand, but will continue to keep this under review,
- Employee engagement and wellbeing and will actively monitor and promote wellbeing.
- Diversity and inclusion
Risks and impacts How we monitor and mitigate the risks Change in risk assessment in year
10 Customer Risks
The majority of the Group's income is comprised of rent received from our - We have a high quality, diversified customer base and monitor individual ↓ Our customer risk has reduced from its elevated position last year but is
customers. This could be adversely affected by non-payment of rent; occupier exposure to individual occupiers or sectors. still considered both a medium to high impact and probability risk.
failures; inability to anticipate evolving customer needs; inability to re-let
space on equivalent terms; poor customer service as well as potential - We perform rigorous occupier covenant checks ahead of approving deals and Our customer risk was heightened at last year end as most of our customers
structural changes to lease obligations. on an ongoing basis so that we can be proactive in managing exposure to weaker were unable to operate their businesses due to Covid-19 related restrictions,
occupiers. An occupier watchlist is maintained and regularly reviewed by Risk impacting their ability to pay rent. Whilst our performance continued to be
Committee and property teams. impacted, our rent collection has recovered to close to pre-pandemic levels as
the UK economy recovered across the year.
- We work with our customers to find ways to best meet their evolving needs.
We have continued to work closely with our customers to maximise occupancy and
- We take a proactive asset management approach to maintain a strong rent collection whilst monitoring their covenant strength and taking actions
occupier line-up. We are proactive in addressing key lease breaks and expiries appropriately. This is reflected in our rent collection which is 97% for the
to minimise periods of vacancy year.
- We regularly measure customer satisfaction across our customer base As our markets have continued to polarise, customers demand more from the
through customer surveys. places where they work and shop. We are well positioned across both our
KRIs: Campuses and Retail & Fulfillment portfolios where we focus on providing
- Market letting risk including vacancies, upcoming expiries and breaks, and best-in-class-space; and this has been evidenced by our strong leasing
speculative development activity.
- Occupier covenant strength and concentration (including percentage of rent Looking forward, we are mindful that higher input prices may impact the
classified as 'High Risk') profitability of our customers, particularly on the retail side.
Opportunity
- Occupancy and weighted average unexpired lease term
Successful customer relationships are vital to our business and continued
growth. Our business model is centred around our customers and aims to
provides them with modern and sustainable space which aligns to their evolving
needs and that of our markets.
Risks and impacts How we monitor and mitigate the risks Change in risk assessment in year
11 Operational and Compliance Risks
The Group's ability to protect its reputation, income and capital values could - The Executive and Risk Committees maintain a strong focus on the range of ∆ Our Operational and Compliance risks have been elevated to a new principal
be damaged by a failure to manage several key operational risks to our operational and compliance risks to our business. risk which is considered a medium impact risk with a medium probability. Key
business including:
Information Systems and Cyber Security risks include Information Systems & Cyber Security, Health & Safety,
- The InfoSec Steering Committee chaired by the Head of Strategy, Digital Third Party Relationships and Financial Crime Compliance.
- Information Systems & Cyber Security and Technology, oversees our IT infrastructure, cyber security and key IT
controls and reports to the Risk Committee and Audit Committee. The wider use of digital technology across the Group increases the risks
- Health & Safety
associated with information systems and cyber security such as ransomware,
- Cyber security risk is managed using a recognised security framework, phishing, malware and social engineering. In the wider market, cyber risks
- Third Party relationships supported by best practice security tools across our technology continue to be heightened due to the rise in attempted cyber attacks, in some
infrastructure, IT security policies, third party risk assessments and cases exploiting changes in working patterns due to Covid-19.
- Financial crime compliance mandatory user cyber awareness training
Health & Safety During the year, our Health & Safety team have continued to prioritise the
Compliance failures such as breaches in regulations, third party agreements,
- The Health, Safety and Environment Committee is chaired by the Head of safety of our people whilst working away from the office at times as well as
loan agreements or tax legislation could also damage reputation and our Property Services and governs the Health & Safety management systems, the management of our assets and developments to ensure the business is
financial performance. processes and performance in terms of KPIs and reports to the Risk, Audit and operating in a safe and compliant manner. We continue to closely monitor the
CSR Committees regulatory environment and respond to any new requirements, for instance fire
safety improvements, to ensure compliance.
- All our properties have general and fire risk assessments undertaken
annually and any required improvements are implemented within defined time The Group provides third party services to a number of key joint venture
frames depending on the category of risk partners, the number of which has expanded in the year, and ensuring that the
provision of those services is at an appropriate level continues to be a key
- All our employees must attend H&S training relevant to their roles focus for the business.
Third Party Relationships
Opportunity
- We have a robust selection process for our key partners and suppliers; and
Our business is set up to navigate and deal with complexity. Our ability to
contracts contain service level agreements which are monitored regularly. manage and operate large complex property portfolios and developments is a key
differentiator and allows us to work with selected joint venture partners who
- We maintain a portfolio of approved suppliers to ensure resilience within value our expertise. We will continue to invest in and develop our platform to
our supply chain. deliver these services.
Financial Crime Compliance
- We operate a zero tolerance approach for bribery, corruption and fraud and
have policies in place to manage and monitor these risks.
- All employees must undertake mandatory training in these areas.
KRIs
- Information Systems Vulnerability Score
- Cyber Security Breaches
- H&S Risk Assessments
- H&S Incidents
Key: Change in risk assessment from last year
↑ Increase ←→ No change ↓ Decrease ∆ New risk
Directors' Responsibilities Statement
The Directors' Responsibilities Statement below has been prepared in
connection with the full Annual Report and financial statements for the year
ended 31 March 2022. Certain parts of the Annual Report and financial
statements have not been included in this announcement as set out in Note 1 to
the condensed financial information.
The Directors are responsible for preparing the Annual Report and the
financial statements and the financial statements in accordance with
applicable law and regulation.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors have prepared the group financial
statements in accordance with UK-adopted international accounting standards
and the company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 "Reduced Disclosure Framework", and applicable law).
Under company law, Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Group and Company and of the profit or loss of the Group and Company
for that period. In preparing the financial statements, the directors are
required to:
- select suitable accounting policies and then apply them consistently;
- state whether applicable UK-adopted international accounting standards
have been followed for the group financial statements and United Kingdom
Accounting Standards, comprising FRS 101 have been followed for the company
financial statements, subject to any material departures disclosed and
explained in the financial statements;
- make judgements and accounting estimates that are reasonable and prudent;
and
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and Company will continue in business.
The Directors are responsible for safeguarding the assets of the Group and
Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are also responsible for keeping adequate accounting records
that are sufficient to show and explain the Group's and Company's transactions
and disclose with reasonable accuracy at any time the financial position of
the Group and Company and enable them to ensure that the financial statements
and the Directors' Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the
company's website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
Directors' confirmations
The Directors consider that the Annual Report and Accounts, taken as a whole,
is fair, balanced and understandable and provides the information necessary
for shareholders to assess the Group's and Company's position and performance,
business model and strategy.
Each of the Directors, whose names and functions are listed in Corporate
Governance report, confirms that, to the best of their knowledge:
- the Group financial statements, which have been prepared in accordance
with UK-adopted international accounting standards and IFRSs issued by IASB,
give a true and fair view of the assets, liabilities, financial position and
profit of the Group;
- the Company financial statements, which have been prepared in accordance
with United Kingdom Accounting Standards, comprising FRS 101, give a true and
fair view of the assets, liabilities and financial position of the company and
profit of the Company; and
- the Annual Report and Accounts includes a fair review of the development
and performance of the business and the position of the Group and Company,
together with a description of the principal risks and uncertainties that it
faces.
In the case of each director in office at the date the Directors' report is
approved:
- so far as the Director is aware, there is no relevant audit information of
which the Group's and Company's auditors are unaware; and
- they have taken all the steps that they ought to have taken as a Director
in order to make themselves aware of any relevant audit information and to
establish that the Group's and Company's auditors are aware of that
information.
By order of the Board.
Bhavesh Mistry
Chief Financial Officer
17 May 2022
Consolidated Income Statement
For the year ended 31 March 2022
Note 2022 2021
Underlying1 Capital Total Underlying1 Capital Total
£m
and other
£m
£m
and other
£m
£m
£m
Revenue 3 430 (20) 410 468 - 468
Costs2 3 (120) (9) (129) (180) - (180)
3 310 (29) 281 288 - 288
Joint ventures (see also below)3 8 86 158 244 52 (409) (357)
Administrative expenses (88) - (88) (74) - (74)
Valuation movement 4 - 471 471 - (888) (888)
Profit on disposal of investment properties and investments - 45 45 - 28 28
Net financing costs
financing income 5 - 67 67 - 15 15
financing charges 5 (55) (7) (62) (62) (3) (65)
(55) 60 5 (62) 12 (50)
Profit (loss) on ordinary activities before taxation 253 705 958 204 (1,257) (1,053)
Taxation 6 4 (2) 2 (26) (4) (30)
Profit (loss) for the year after taxation 257 703 960 178 (1,261) (1,083)
Attributable to non-controlling interests 2 - 2 3 (55) (52)
Attributable to shareholders of the Company 255 703 958 175 (1,206) (1,031)
Earnings per share:
basic 2 103.3p (111.2)p
diluted 2 103.0p (111.2)p
All results derive from continuing operations.
Note 2022 2021
Underlying1 Capital Total Underlying1 Capital Total
£m
and other
£m
£m
and other
£m
£m
£m
Results of joint ventures accounted
for using the equity method
Underlying Profit 86 - 86 52 - 52
Valuation movement(4) 4 - 162 162 - (409) (409)
Capital financing costs - (4) (4) - - -
Loss on disposal of investment properties, - - - - (1) (1)
trading properties and investments
Taxation 6 - - - - 1 1
8 86 158 244 52 (409) (357)
1. See definition in Note 2 and a reconciliation between Underlying Profit
and IFRS profit in Note 17.
2. Included within 'Costs' is a credit relating to provisions for impairment
of tenant debtors, accrued income and tenant incentives and contracted rent
increases of £6m (2020/21: charge of £60m). This is disclosed in further
detail in Note 7 and Note 10.
3. Included within 'Joint ventures' is a charge relating to provision for
impairment of equity investments and loans to joint ventures of £22m
(2020/21: £144m), disclosed in further detail in Note 8.
4. Included within the 'Valuation movement' of £162m is a net valuation
movement of £110m and the realisation of gain on disposal of assets into
joint ventures of £52m, disclosed in further detail in Note 8.
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2022
2022 2021
£m
£m
Profit (loss) for the year after taxation 960 (1,083)
Other comprehensive income (expense):
Items that will not be reclassified subsequently to profit or loss:
Net actuarial loss on pension scheme - (13)
Valuation movement on owner-occupied properties - (1)
- (14)
Items that may be reclassified subsequently to profit or loss:
Gains on cash flow hedges
- Group - 2
- Joint ventures 1 1
1 3
Reclassification of foreign exchange differences on disposal of subsidiary net (12) -
investment to the income statement
Deferred tax on items of other comprehensive income - 6
Other comprehensive expense for the year (11) (5)
Total comprehensive income (expense) for the year 949 (1,088)
Attributable to non-controlling interests 2 (52)
Attributable to shareholders of the Company 947 (1,036)
Consolidated Balance Sheet
As at 31 March 2022
Note 2022 2021
£m
£m
ASSETS
Non-current assets
Investment and development properties 7 7,032 6,326
Owner-occupied properties 7 - 2
7,032 6,328
Other non-current assets
Investments in joint ventures 8 2,511 2,120
Other investments 9 41 20
Property, plant and equipment 27 30
Interest rate and currency derivative assets 14 97 135
Debtors - 6
9,708 8,639
Current assets
Trading properties 7 18 26
Debtors 10 39 56
Corporation tax 3 -
Cash and short term deposits 14 74 154
134 236
Total assets 9,842 8,875
LIABILITIES
Current liabilities
Short term borrowings and overdrafts 14 (189) (161)
Creditors 11 (245) (219)
Corporation tax - (7)
(434) (387)
Non-current liabilities
Debentures and loans 14 (2,427) (2,249)
Other non-current liabilities1 12 (152) (128)
Interest rate and currency derivative liabilities 14 (96) (128)
(2,675) (2,505)
Total liabilities (3,109) (2,892)
Net assets 6,733 5,983
EQUITY
Share capital 234 234
Share premium 1,307 1,307
Merger reserve 213 213
Other reserves 5 16
Retained earnings 4,959 4,154
Equity attributable to shareholders of the Company 6,718 5,924
Non-controlling interests 15 59
Total equity 6,733 5,983
EPRA Net Tangible Assets per share2 2 727p 648p
1. See footnote 1 in Note 3.
2. See definition in Note 2.
Consolidated Statement of Cash Flows
For the year ended 31 March 2022
Note 2022 2021
£m
£m
Rental income received from tenants 358 320
Fees and other income received 30 38
Operating expenses paid to suppliers and employees (140) (125)
Indirect taxes paid in respect of operating activities - (15)
Sale of trading properties 8 -
Cash generated from operations 256 218
Interest paid (62) (70)
Corporation taxation payments (6) (33)
Distributions and other receivables from joint ventures 8 57 34
Net cash inflow from operating activities 245 149
Cash flows from investing activities
Development and other capital expenditure (259) (172)
Purchase of investment properties (596) (52)
Sale of investment properties 187 1,073
Sale of investment properties to Canada Water Joint Venture 290 -
Purchase of investments (14) (5)
Sale of investments - 108
Indirect taxes paid in respect of investing activities (5) (2)
Loan repayments from joint ventures 133 40
Investment in and loans to joint ventures (121) (84)
Capital distributions from joint ventures - 4
Net cash (outflow) inflow from investing activities (385) 910
Cash flows from financing activities
Dividends paid 15 (155) (76)
Dividends paid to non-controlling interests (6) (1)
Capital payments in respect of interest rate derivatives (7) (10)
Purchase of non-controlling interests in Hercules Unit Trust (38) -
Decrease in lease liabilities (4) (7)
Decrease in bank and other borrowings (213) (1,218)
Drawdowns on bank and other borrowings 483 214
Net cash inflow (outflow) from financing activities 60 (1,098)
Net decrease in cash and cash equivalents (80) (39)
Cash and cash equivalents at 1 April 154 193
Cash and cash equivalents at 31 March 74 154
Cash and cash equivalents consists of:
Cash and short term deposits 14 74 154
Consolidated Statement of Changes in Equity
For the year ended 31 March 2022
Share Share Hedging Re- Merger Retained Total Non- Total
capital
premium
and
valuation
reserve
earnings
£m
controlling
equity
£m
£m
translation
reserve
£m
£m
interests
£m
reserve1
£m
£m
£m
Balance at 1 April 2021 234 1,307 14 2 213 4,154 5,924 59 5,983
Profit for the year after taxation - - - - - 958 958 2 960
Gains on cash flow hedges - joint ventures - - - 1 - - 1 - 1
Reclassification of foreign exchange differences on disposal of subsidiary net (12) (12) (12)
investment
- - - - - -
Other comprehensive income - - (12) 1 - - (11) - (11)
Total comprehensive (expense) income for the year - - (12) 1 - 958 947 2 949
Fair value of share and share option awards - - - - - 2 2 - 2
Purchase of the units from non-controlling interests(2) - - - - - 2 2 (40) (38)
Dividends payable in year (16.96p per share) - - - - - (157) (157) - (157)
Dividends payable by subsidiaries - - - - - - - (6) (6)
Balance at 31 March 2022 234 1,307 2 3 213 4,959 6,718 15 6,733
Balance at 1 April 2020 234 1,307 12 26 213 5,243 7,035 112 7,147
Loss for the year after taxation - - - - - (1,031) (1,031) (52) (1,083)
Revaluation of owner-occupied property - - - (1) - - (1) - (1)
Gains on cash flow hedges - Group - - 2 - - - 2 - 2
Gains on cash flow hedges - joint ventures - - - 1 - - 1 - 1
Reserves transfer on disposal of owner-occupied property - - - (30) - 30 - - -
Net actuarial loss on pension scheme - - - - - (13) (13) - (13)
Deferred tax on items of other comprehensive income - - - 6 - - 6 - 6
Other comprehensive income - - 2 (24) - 17 (5) - (5)
Total comprehensive income (expense) for the year - - 2 (24) - (1,014) (1,036) (52) (1,088)
Fair value of share and share option awards - - - - - 3 3 - 3
Dividends payable in year (8.40p per share) - - - - - (78) (78) - (78)
Dividends payable by subsidiaries - - - - - - - (1) (1)
Balance at 31 March 2021 234 1,307 14 2 213 4,154 5,924 59 5,983
1. The balance at the beginning of the current year includes £15m in
relation to translation and (£1m) in relation to hedging (2020/21: £15m and
(£3m)). Opening and closing balances in relation to hedging relate to
continuing hedges only.
2. On 5 July 2021, the Group completed the acquisition of the remaining
21.9% units of Hercules Unit Trust that the Group did not already own for a
consideration of £38m. Whilst the transaction was completed on 5 July 2021,
the Group obtained the risks and rewards of ownership of the 21.9% of Hercules
Unit Trust on 1 April 2021 and therefore, the change in ownership percentage
and resulting non-controlling interests were reflected at this date in the
financial information. The book value of the net assets purchased at 1 April
2021 were £40m and consequently £40m has been transferred from
non-controlling interests to shareholders equity.
Notes to the Accounts
1 Basis of preparation, significant accounting policies and accounting judgements
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 March 2022 or 2021, but is derived
from those accounts. Statutory accounts for 2021 have been delivered to the
Registrar of Companies and those for 2022 will be delivered following the
Company's Annual General Meeting. The auditor has reported on those accounts
and their reports on those accounts were unqualified. The auditors' report did
not contain statements under section 498(2) or (3) of the Companies Act 2006.
The financial statements for the year ended 31 March 2022 have been prepared
on the historical cost basis, except for the revaluation of properties,
investments classified as fair value through profit or loss and derivatives.
The financial statements are prepared in accordance with UK-adopted
International Accounting Standards and the applicable legal requirements of
the Companies Act 2006 ('IFRS').
On 31 December 2020 EU-adopted IFRS was brought into UK law and became
UK-adopted International Accounting Standards, with future changes to IFRS
being subject to endorsement by the UK Endorsement Board. The consolidated
financial statements have transitioned to UK-adopted International Accounting
Standards for the year ended 31 March 2022. This change constitutes a change
in accounting framework. However, there is no impact on recognition,
measurement or disclosure in the year reported as a result of the change in
framework.
While the information included in this preliminary announcement has been
prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards ('IFRSs'), this announcement does
not itself contain sufficient information to comply with IFRSs. The Company
expects to publish full financial statements that comply with IFRSs in June
2022.
In the current financial year the Group has adopted a number of minor
amendments to standards effective in the year, none of which have had a
material impact on the Group.
These amendments include IFRS 16 'Leases' - Covid-19-Related Rent Concessions,
and amendments to IFRS 9, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark
Reform - Phase 2.
A number of new standards and amendments to standards and interpretations
have been issued but are not yet effective for the current accounting period.
These amendments include amendments to IAS 1 'Presentation of Financial
Statements' on classification of liabilities, a number of narrow-scope
amendments to IFRS 3, IAS 16, IAS 17, IAS 37, IAS 1, IAS 8, IAS 12, IFRS 10
and IAS 28 and some annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16.
The above amendments are not expected to have a significant impact on the
Group's results.
Going concern
The financial information is prepared on a going concern basis. The balance
sheet shows that the Group is in a net current liability position,
predominantly due to short term borrowings and overdrafts of £189m and other
creditors of £245m. The Group has access to £1.3bn of undrawn facilities and
cash, which provides the Directors with a reasonable expectation that the
Group will be able to meet these current liabilities as they fall due. In
making this assessment the Directors took into account forecast cash flows and
covenant compliance, including stress testing through the impact of
sensitivities as part of a 'severe downside scenario'. Before factoring in any
income receivable, the undrawn facilities and cash would also be sufficient
to cover forecast capital expenditure, property operating costs,
administrative expenses, maturing debt and interest over the next 12 months.
Having assessed the Principal risks, the Directors believe that the Group is
well placed to manage its financing and other business risks satisfactorily
despite the uncertain economic climate, and have a reasonable expectation that
the Company and the Group have adequate resources to continue in operation.
Accordingly, they believe the going concern basis is an appropriate one.
Critical accounting judgements and key sources of estimation uncertainty
In applying the Group's accounting policies, the Directors are required
to make critical accounting judgements and assess key sources of estimation
uncertainty that affect the financial information.
The general risk environment in which the Group operates has remained
heightened during the period due to the continued impact of Covid-19, and the
emergence of the UK economy from the pandemic, including related challenges in
parts of the UK retail market and macroeconomic headwinds through rising
inflation. Despite this the general risk environment is considered to have
improved during the year, with the lifting of lockdown restrictions resulting
in improvement in activity across the Group's segments, rents stabilising,
improved rental collection rates and footfall and sales in retail parks
returning close to, and in some cases above, pre-pandemic levels.
The emergence of the conflict in Ukraine in February 2022 has led to increased
global economic uncertainty with sanctions imposed upon Russia and heightened
political and diplomatic tensions. The Directors do not consider the conflict
at this stage to have had a material impact on the Group's financial
information owing to the nature of the Group's UK focused operations and
limited exposure to Ukrainian and Russian businesses. Additionally, our
valuers consider there to be no current evident impact of the conflict on the
UK property sector. The Directors and our valuers are closely monitoring the
conflict for any future developments that may change the risk environment in
which the Group operates.
Key sources of estimation uncertainty
Valuation of investment, development, trading and owner-occupied properties:
The Group uses external professional valuers to determine the relevant
amounts. The primary source of evidence for property valuations should be
recent, comparable market transactions on an arm's length basis. However,
the valuation of the Group's property portfolio are inherently subjective, as
they are based upon valuer assumptions and estimations, that form part of the
key unobservable inputs of the valuation, which may prove to be inaccurate.
Impairment provisioning of lease debtors (including accrued income) and lease
incentives, which are presented within investment properties: The impact of
and emergence from Covid-19 has given rise to an increase in lease debtors
due from tenants along with higher loss rates, however these are continuing to
decrease as the impact of the pandemic recedes. Consequently, for the year
ended 31 March 2022 the impairment provisions calculated using the expected
credit loss model under IFRS 9 against these balances are lower than in the
prior year.
The key assumptions within the expected credit loss model include the tenants'
credit risk rating and the related loss rates assumed for each risk rating
depending on the historical experience collection rate and the ageing profile.
Tenant risk ratings are determined by management, taking into consideration
information available surrounding a tenant's credit rating, financial position
and historical loss rates. Tenants are classified as being in Administration
or CVA, high, medium or low risk based on this information. The assigned loss
rates for these risk categories are reviewed at each balance sheet date and
are based on historical experience collection rates and future expectations of
collection rates. The same key assumptions are applied in the expected credit
loss model for tenant incentives, without the consideration of the ageing
profile which is not relevant for these balances. The loss rates attributed to
each credit risk rating for tenant incentives tends to be lower than that
attributed to lease debtors on the basis that the associated credit risk on
these balances, which relate to the tenant's future lease liabilities, is
lower than that associated to tenant debtors outstanding as a result
of Covid-19.
Other sources of estimation uncertainty that are not key include the valuation
of interest rate derivatives, the determination of share-based payments, the
actuarial assumptions used in calculating the Group's retirement benefit
obligations and taxation provisions.
Critical accounting judgements
The Directors do not consider there to be any critical accounting judgements
in the preparation of the Group's financial information.
The following items are ongoing areas of accounting judgement, however, the
Directors do not consider these accounting judgements to be critical and
significant accounting judgement has not been required for any of these items
in the current financial year.
REIT status: British Land is a Real Estate Investment Trust ('REIT') and does
not pay tax on its property income or gains on property sales, provided that
at least 90% of the Group's property income is distributed as a dividend to
shareholders, which becomes taxable in their hands. In addition, the Group
has to meet certain conditions such as ensuring the property rental business
represents more than 75% of total profits and assets. Any potential or
proposed changes to the REIT legislation are monitored and discussed with
HMRC. It is management's intention that the Group will continue as a REIT for
the foreseeable future.
Accounting for joint ventures: In accordance with IFRS 10 'Consolidated
Financial Statements', IFRS 11 'Joint Arrangements', and IFRS 12 'Disclosure
of Interests in Other Entities' an assessment is required to determine the
degree of control or influence the Group exercises and the form of any
control to ensure that the financial statement treatment is appropriate. The
assessment undertaken by management includes consideration of the structure,
legal form, contractual terms and other facts and circumstances relating to
the relevant entity. This assessment is updated annually and there have been
no changes in the judgement reached in relation to the degree of control the
Group exercises within the current or prior year. An assessment was performed
in respect of the Canada Water Joint Venture transaction that occurred in the
year ended 31 March 2022 (see Note 8].
Joint ventures are accounted for under the equity method, whereby the
consolidated balance sheet incorporates the Group's share of the net assets of
its joint ventures and associates. The consolidated income statement
incorporates the Group's share of joint venture and associate profits after
tax.
Accounting for transactions: Property transactions are complex in nature and
can be material to the financial statements. Judgements made in relation to
transactions include whether an acquisition is a business combination or an
asset; whether held for sale criteria have been met for transactions not yet
completed; accounting for transaction costs and contingent consideration; and
application of the concept of linked accounting. Management consider each
transaction separately in order to determine the most appropriate accounting
treatment, and, when considered necessary, seek independent advice. In this
regard, management have considered the accounting of the Canada Water Joint
Venture transaction in the year ended 31 March 2022 (see Note 8).
2 Performance measures
Earnings per share
The Group measures financial performance with reference to underlying earnings
per share, the European Public Real Estate Association ('EPRA') earnings per
share and IFRS earnings per share. The relevant earnings and weighted average
number of shares (including dilution adjustments) for each performance measure
are shown below, and a reconciliation between these is shown within
the supplementary disclosures (Table B).
EPRA earnings per share is calculated using EPRA earnings, which 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.
Underlying earnings per share is calculated using Underlying Profit adjusted
for underlying taxation (see Note 6), with the dilutive measure being the
primary disclosure measure used. Underlying Profit is the pre-tax EPRA
earnings measure, with additional Company adjustments for items which are
considered to be unusual and/or significant by virtue of their size and
nature. In the current year to 31 March 2022, a £29m surrender premium
payment and a £12m reclassification of foreign exchange differences were
excluded from the calculation of Underlying Profit (see Note 3 and Note 5,
respectively, for further details). There was no tax effect of these Company
adjusted items. No Company adjustments were made in the prior year to 31 March
2021.
Earnings per share 2022 2021
Relevant Relevant Earnings Relevant Relevant Earnings
earnings
number
per share
earnings
number
per share
£m
of shares
pence
£m
of shares
pence
million
million
Underlying
Underlying basic 255 927 27.5 175 927 18.9
Underlying diluted 255 930 27.4 175 930 18.8
EPRA
EPRA basic 238 927 25.7 175 927 18.9
EPRA diluted 238 930 25.6 175 930 18.8
IFRS
Basic 958 927 103.3 (1,031) 927 (111.2)
Diluted 958 930 103.0 (1,031) 927 (111.2)
Net asset value
The Group measures financial position with reference to EPRA Net Tangible
Assets ('NTA'), Net Reinvestment Value ('NRV') and Net Disposal Value ('NDV').
The net assets and number of shares for each performance measure is shown
below. A reconciliation between IFRS net assets and the three EPRA net asset
valuation metrics, and the relevant number of shares for each performance
measure, is shown within the supplementary disclosures (Table B). EPRA NTA is
a measure that is based on IFRS net assets excluding the mark-to-market on
derivatives and related debt adjustments, the carrying value of intangibles,
the mark-to-market on the convertible bonds, as well as deferred taxation on
property and derivative valuations. The metric includes the valuation surplus
on trading properties and is adjusted for the dilutive impact of share
options.
Net asset value per share 2022 2021
Relevant Relevant Net asset Relevant Relevant Net asset
net assets
number
value per
net assets
number of
value per
£m
of shares
share
£m
shares
share
million
pence
million
pence
EPRA
EPRA NTA 6,771 932 727 6,050 933 648
EPRA NRV 7,403 932 794 6,599 933 707
EPRA NDV 6,542 932 702 5,678 933 609
IFRS
Basic 6,733 927 726 5,983 927 645
Diluted 6,733 932 722 5,983 933 641
Total accounting return
The Group also measures financial performance with reference to total
accounting return. This is calculated as the movement in EPRA NTA per share
and dividend paid in the year as a percentage of the EPRA NTA per share at the
start of the year.
2022 2021
Increase in Dividend per Total Decrease in Dividend per Total
NTA per share
share paid
accounting
NTA per share
share paid
accounting
pence
pence
return
pence
pence
return
Total accounting return 79 16.96 14.8% (125) 8.40 (15.1%)
3 Revenue and costs
2022 2021
Underlying Capital Total Underlying Capital Total
£m
and other
£m
£m
and other
£m
£m
£m
Rent receivable 332 - 332 370 - 370
Spreading of tenant incentives and contracted rent increases 5 - 5 7 - 7
Surrender premia(1) 1 (29) (28) - - -
Gross rental income 338 (29) 309 377 - 377
Trading property sales proceeds - 9 9 - - -
Service charge income 62 - 62 64 - 64
Management and performance fees (from joint ventures) 9 - 9 7 - 7
Other fees and commissions 21 - 21 20 - 20
Revenue 430 (20) 410 468 - 468
Trading property cost of sales - (9) (9) - - -
Service charge expenses (55) - (55) (59) - (59)
Property operating expenses (54) - (54) (45) - (45)
Release (provisions) for impairment of trade debtors and accrued income 7 - 7 (52) - (52)
Provisions for impairment of tenant incentives and contracted rent increases (1) - (1) (8) - (8)
Other fees and commissions expenses (17) - (17) (16) - (16)
Costs (120) (9) (129) (180) - (180)
310 (29) 281 288 - 288
1. On 31 August 2021, the Group undertook a leasing transaction with two
unrelated parties in relation to one of its investment properties. The
transaction was commercially beneficial and resulted in an overall increase in
the net assets of the Group. It involved a £29m payment to one party for the
surrender of an agreement for lease, with a subsequent premium of £29m
received for the grant of a new agreement for lease for the same property with
another party meaning the transaction was cash neutral. In line with the
requirements of IFRS 16, and due to the unrelated parties in the transaction,
the Group is required to account for the elements of the transaction
separately, and as such an associated £29m surrender premium payment was
recognised in full through the income statement in the year. Owing to the
unusual and significant size and nature of the payment and in line with the
Group's accounting policies the payment has been included within the Capital
and other column of the income statement. The £29m surrender premium received
was initially recognised as deferred income on the balance sheet, with the
remeasured amount as at 31 March 2022 principally within other non-current
liabilities (see Note 12).
The cash element of net rental income (gross rental income less property
operating expenses) recognised during the year ended 31 March 2022 from
properties which were not subject to a security interest was £232m (2020/21:
£202m). Property operating expenses relating to investment properties that
did not generate any rental income were £nil (2020/21: £nil). Contingent
rents of £6m (2020/21: £5m) that contain a variable lease payment were
recognised in the year.
Further detail on the provision for impairment of trade debtors, accrued
income, tenant incentives and contracted rent increases is disclosed in Note 7
and Note 10.
4 Valuation movements on property
2022 2021
£m
£m
Consolidated income statement
Revaluation of properties 471 (886)
Revaluation of owner-occupied properties - (2)
Revaluation of properties held by joint ventures accounted for using the 162 (409)
equity method(1)
633 (1,297)
Consolidated statement of comprehensive income
Revaluation of owner-occupied properties - (1)
633 (1,298)
1. Comprises net valuation movement of £110m and realisation of gain on
disposal of assets into joint ventures of £52m, disclosed in further detail
in Note 8.
5 Net financing costs
2022 2021
£m
£m
Underlying
Financing charges
Facilities and overdrafts (20) (22)
Derivatives 29 31
Other loans (68) (74)
Obligations under head leases (3) (4)
(62) (69)
Development interest capitalised 7 7
(55) (62)
Financing income
Deposits, securities and liquid investments - -
- -
Net financing charges - Underlying (55) (62)
Capital and other
Financing charges
Valuation movement on fair value hedge accounted derivatives1 (67) (83)
Valuation movement on fair value hedge accounted debt1 61 83
Fair value movement on convertible bonds - (3)
Valuation movement on non-hedge accounted derivatives (1) -
(7) (3)
Financing income
Reclassification of foreign exchange differences on disposal of subsidiary net 12 -
investment from equity(2)
Valuation movement on non-hedge accounted derivatives 55 15
67 15
Net financing charges - Capital and other 60 12
Net financing costs
Total financing income 67 15
Total financing charges (62) (65)
Net financing costs 5 (50)
1. The difference between valuation movement on designated fair value hedge
accounted derivatives (hedging instruments) and the valuation movement on fair
value hedge accounted debt (hedged item) represents hedge ineffectiveness for
the year of £6m (2020/21: £nil).
2. £12m has been reclassified from the hedging and translation reserve to
the income statement in the year ended 31 March 2022, relating to cumulative
foreign exchange gains on disposal of the net investment in a foreign
subsidiary.
Interest payable on unsecured bank loans and related interest rate derivatives
was £13m (2020/21: £11m). Interest on development expenditure is capitalised
at the Group's weighted average interest rate of 2.4% (2020/21: 2.2%). The
weighted average interest rate on a proportionately consolidated basis at 31
March 2022 was 2.9% (2020/21: 2.9%).
6 Taxation
2022 2021
£m
£m
Taxation income (expense)
Current taxation
Underlying Profit
Current period UK corporation taxation (2021/22: 19%; 2020/21: 19%) (2) (2)
Underlying Profit adjustments in respect of prior periods1, 2 6 (24)
Total current Underlying Profit taxation income (expense) 4 (26)
Capital and other profit - -
Current period UK corporation taxation (2021/22: 19%; 2020/21: 19%)
Capital and other profit adjustments in respect of prior periods (2) 1
Total current Capital and other profit taxation income (2) 1
Total current taxation income (expense) 2 (25)
Deferred taxation on revaluations and derivatives - (5)
Group total taxation income (expense) 2 (30)
Attributable to joint ventures3 - 1
Total taxation income (expense) 2 (29)
Taxation reconciliation
Profit (loss) on ordinary activities before taxation 958 (1,053)
Less: (profit) loss attributable to joint ventures (244) 358
Group profit (loss) on ordinary activities before taxation 714 (695)
Taxation on (profit) loss on ordinary activities at UK corporation taxation (136) 132
rate of 19% (2020/21: 19%)
Effects of:
- REIT exempt income and gains 126 (134)
- Taxation losses 9 -
- Deferred taxation on revaluations and derivatives - (5)
- Adjustments in respect of prior years 3 (23)
Group total taxation income (expense) 2 (30)
1. The credit in the current year includes £4m as an adjustment to the tax
due in respect of the suspension on the dividend in 2020/21 and other credits
relating to prior periods of £2m relating to tax provisions in respect of
historic taxation matters and points of uncertainty.
2. The charge in the prior year includes the £28m corporation tax charge in
relation to the year ended 31 March 2020 of the agreed payment with HMRC for
temporarily suspending the dividend due to Covid-19, offset by other credits
in respect of prior periods of £4m relating to tax provisions in respect of
historic taxation matters and points of uncertainty.
3. A current taxation income of £nil (2020/21: £1m) and a deferred
taxation credit of £nil (2020/21: £nil) arose on profits attributable to
joint ventures.
Taxation income attributable to Underlying Profit for the year ended 31 March
2022 was £4m (2020/21: £26m expense). Taxation expense attributable to
Capital and other profit was £2m (2020/21: £1m income). Corporation tax
receivable as at 31 March 2022 was £3m (2020/21: £7m payable) as shown on
the balance sheet.
A REIT is required to pay Property Income Distributions ('PIDs') of at least
90% of the taxable profits from its UK property rental business within 12
months of the end of each accounting period.
7 Property
Property reconciliation for the year ended 31 March 2022
Campuses Retail & Fulfilment Developments Investment Trading Owner- Total
Level 3
Level 3
Level 3
and
Properties
Occupied
£m
£m
£m
£m
development
£m
Level 3
properties
£m
Level 3
£m
Carrying value at 1 April 2021 3,465 2,139 722 6,326 26 2 6,354
Additions
- property purchases 110 486 - 596 - - 596
- development expenditure1 64 3 124 191 - - 191
- capitalised interest and staff costs 2 - 6 8 - - 8
- capital expenditure on asset management initiatives 5 13 - 18 - - 18
- right-of-use assets 4 - - 4 - - 4
185 502 130 817 - - 817
Disposals (501) (104) - (605) (8) (2) (615)
Reclassifications 181 - (181) - - - -
Revaluations included in income statement 126 311 34 471 - - 471
Movement in tenant incentives and contracted rent uplift balances 21 2 - 23 - - 23
Carrying value at 31 March 2022 3,477 2,850 705 7,032 18 - 7,050
Lease liabilities (Notes 11 and 12)2 (105)
Less valuation surplus on right-of-use assets3 (9)
Valuation surplus on trading properties 8
Group property portfolio valuation at 31 March 2022 6,944
Non-controlling interests (15)
Group property portfolio valuation at 31 March 2022 attributable to 6,929
shareholders
1. Development expenditure includes government grants received for the
development of affordable and social housing of £4m.
2. The £26m difference between lease liabilities of £105m and £131m per
Notes 11 and 12 relates to a £26m lease liability where the right-of-use
asset is classified as property, plant and equipment.
3. Relates to properties held under leasing agreements. The fair value of
right-of-use assets is determined by calculating the present value of net
rental cash flows over the term of the lease agreements. IFRS 16 right-of-use
assets are not externally valued, their fair values are determined by
management, and are therefore not included in the Group property portfolio
valuation of £6,944m above.
The Group entered into a Joint Venture agreement with AustralianSuper on 7
March 2022 in relation to the Canada Water Campus, resulting in the Group
disposing of £474m of investment and development properties and a resulting
gain in the Capital and other column of the consolidated income statement of
£44m.
As further explained in Note 17, from 1 April 2021, the Group now reports
under two operating segments, Campuses and Retail & Fulfilment, in
addition to Development properties which are disclosed separately due to the
differing basis of valuation as discussed in further detail within this note.
Property valuation
The different valuation method levels are defined below:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
These levels are specified in accordance with IFRS 13 'Fair Value
Measurement'. Property valuations are inherently subjective as
they are made on the basis of assumptions made by the valuer which may not
prove to be accurate. For these reasons, and consistent with EPRA's guidance,
we have classified the valuations of our property portfolio as Level 3 as
defined by IFRS 13. The inputs to the valuations are defined
as 'unobservable' by IFRS 13. These key unobservable inputs are net
equivalent yield and estimated rental values for investment and owner-occupied
properties, and costs to complete for development properties. Further analysis
and sensitivity disclosures of these key unobservable inputs have been
included on the following pages. There were no transfers between levels in the
year.
The Group's total property portfolio was valued by external valuers on the
basis of fair value, in accordance with the RICS Valuation - Global Standards
2022, published by The Royal Institution of Chartered Surveyors.
The general risk environment in which the Group operates has remained
heightened during the period due to the continued impact of Covid-19, and the
emergence of the UK economy from the pandemic, including related challenges in
parts of the UK retail market and macroeconomic headwinds through rising
inflation. Despite this the general risk environment is considered to have
improved during the year, with the lifting of lockdown restrictions resulting
in improvement in activity across the Group's segments, rents stabilising,
improved rental collection rates and footfall and sales in retail parks
returning close to, and in some cases above, pre-pandemic levels.
The emergence of the conflict in Ukraine in February 2022 has led to increased
global economic uncertainty with sanctions imposed upon Russia and heightened
political and diplomatic tensions. The Directors do not consider the conflict
at this stage to have had a material impact on the Group's financial
information, owing to the nature of the Group's UK focused operations and
limited exposure to Ukrainian and Russian businesses. Additionally, our
valuers consider there to be no current evident impact of the conflict on the
UK property sector. The Directors and our valuers are closely monitoring the
conflict for any future developments that may change the risk environment in
which the Group operates.
In preparing their valuations during the pandemic lockdown periods in 2020/21,
our valuers had considered the impact of concessions agreed with tenants at
the relevant balance sheet date, which mainly related to rent deferrals and
rent-free periods, on valuations, primarily of retail assets. With the lifting
of lockdown restrictions during 2021/22, the number of concessions agreed with
tenants has decreased and following the cessation of the general moratorium on
commercial evictions and restrictions on commercial rent arrears recovery on
25 March 2022, the valuers have assumed that rental income will be received,
unless there are specific concession agreements in place. The valuers have
also given consideration to occupiers in higher risk sectors, and those
assumed to be at risk of default, in determining the appropriate yields to
apply.
The information provided to the valuers, and the assumptions and valuation
models used by the valuers, are reviewed by the property portfolio team, the
Head of Real Estate and the Chief Financial Officer. The valuers meet with the
external auditors and also present directly to the Audit Committee at the
interim and year-end review of results.
Investment properties, excluding properties held for development, are valued
by adopting the 'investment method' of valuation.
This approach involves applying capitalisation yields to current and future
rental streams net of income voids arising from vacancies or rent-free periods
and associated running costs. These capitalisation yields and future rental
values are based on comparable property and leasing transactions in the market
using the valuers' professional judgement and market observation. Other
factors taken into account in the valuations include the tenure of the
property, tenancy details and ground and structural conditions.
In the case of ongoing developments, the approach applied is the 'residual
method' of valuation, which is the investment method of valuation as described
above, with a deduction for all costs necessary to complete the development,
including a notional finance cost, together with a further allowance for
remaining risk. Properties held for development are generally valued by
adopting the higher of the residual method of valuation, allowing for all
associated risks, or the investment method of valuation for the existing
asset.
The valuers of the Group's property portfolio have a working knowledge of the
various ways that sustainability and Environmental, Social and Governance
factors can impact value and have considered these, and how market
participants are reflecting these in their pricing, in arriving at their
Opinion of Value and resulting valuations as at the balance sheet date. These
may be:
- physical risks;
- transition risk related to policy or legislation to achieve sustainability
and Environmental, Social and Governance targets; and
- risks reflecting the views and needs of market participants.
The Group has shared recently conducted physical climate and transitional risk
assessments with the valuers which they have reviewed and taken into
consideration to the extent that current market participants would.
Valuers observe, assess and monitor evidence from market activities, including
market (investor) sentiment on issues such as longer-term obsolescence and,
where known, future Environmental, Social and Governance related risks and
issues which may include, for example, the market's approach to capital
expenditure required to maintain the utility of the asset. In the absence of
reliable benchmarking data and indices for estimating costs, specialist advice
on cost management may be required which is usually agreed with the valuer in
the terms of engagement and without which reasonable estimates/assumptions may
be needed to properly reflect market expectations in arriving at the Opinion
of Value.
Copies of the valuation certificates of Knight Frank LLP, CBRE, Jones Lang
LaSalle and Cushman & Wakefield can be found at
britishland.com/reports.
A breakdown of valuations split between the Group and its share of joint
ventures is shown below:
2022 2021
Group Joint Total Group Joint Total
£m
ventures
£m
£m
ventures
£m
£m
£m
Knight Frank LLP 1,387 37 1,424 1,375 40 1,415
CBRE 1,906 448 2,354 1,642 124 1,766
Jones Lang LaSalle 3,330 638 3,968 849 506 1,355
Cushman & Wakefield 321 2,415 2,736 2,381 2,378 4,759
Total property portfolio valuation 6,944 3,538 10,482 6,247 3,048 9,295
Non-controlling interests (15) - (15) (137) (26) (163)
Total property portfolio valuation attributable to shareholders(1) 6,929 3,538 10,467 6,110 3,022 9,132
1. The total property portfolio valuation for joint ventures is £3,538m,
compared to the total investment and trading properties of £3,545 disclosed
in Note 8. The £3,545m includes £12m of trading properties and excludes
£19m of headleases, both at Group share.
Information about fair value measurements using unobservable inputs (Level 3)
for the year ended 31 March 2022
Investment Fair value at Valuation ERV per sq ft Equivalent yield Costs to complete per sq ft
31 March 2022
technique
£m
Min Max Average Min Max Average Min Max Average
£
£
£
%
%
%
£
£
£
Campuses 3,419 Investment methodology 9 159 56 3 7 4 - 234 24
Retail & Fulfilment 2,794 Investment methodology 2 30 17 2 13 6 - 36 7
Developments 705 Residual methodology 27 88 75 4 5 4 214 812 391
Total 6,918
Trading properties 26
at fair value
Group property 6,944
portfolio valuation
Provisions for impairment of tenant incentives and contracted rent increases
A provision of £23m (31 March 2021: £23m) has been made for impairment of
tenant incentives and contracted rent uplift balances (contracted rents). The
charge to the income statement in relation to write-offs and provisions for
impairment for tenant incentives and contracted rents was £1m (2020/21:
£8m) (see Note 3). The Directors consider that the carrying amount of tenant
incentives is approximate to their fair value.
The table below shows the movement in provisions for impairment of tenant
incentives during the year ended 31 March 2022 on a Group and on a
proportionally consolidated basis.
Movement in provisions for impairment of tenant incentives Group Proportionally consolidated
£m
£m
Provisions for impairment of tenant incentives as at 31 March 2021(1) 23 29
Increase in provisions for impairment of tenant incentives due to acquisition - 2
on 1 April 2021(1)
Provisions for impairment of tenant incentives as at 1 April 2021(1) 23 31
Write-offs of tenant incentives (1) (4)
Movement in provisions for impairment of tenant incentives 1 5
Total provision movement recognised in income statement 1 5
Provisions for impairment of tenant incentives as at 31 March 2022 23 32
1. The provisions for impairment of tenant incentives as at 1 April 2021 on
a proportionately consolidated basis is £2m higher than the proportionately
consolidated provision recognised as at 31 March 2021. This is as a result of
the acquisition of the remaining 21.9% units of Hercules Unit Trust on 1 April
2021.
8 Joint ventures
Summary movement for the year of the investments in joint ventures
Equity Loans Total
£m
£m
£m
At 1 April 2021 1,459 661 2,120
Additions 252 57 309
Disposals (34) (70) (104)
Share of profit on ordinary activities after taxation1 264 (20) 244
Distributions and dividends:
- Capital - - -
- Revenue (59) - (59)
Hedging and exchange movements 1 - 1
At 31 March 2022 1,883 628 2,511
1. The share of profit on ordinary activities after taxation comprises
equity accounted profits of £266m and IFRS 9 impairment charges against
equity investments and loans of £22m, relating to MSC Property Intermediate
Holdings Limited (loan impairment of £17m), WOSC Partners Limited Partnership
(loan impairment of £3m) and The Southgate Limited Partnership (equity
impairment of £2m). In accordance with IFRS 9, management has assessed the
recoverability of loans to joint ventures and assessed the carrying value of
investments in joint ventures against the net asset value. Amounts due are
expected to be recovered by a joint venture selling its properties and
investments and settling financial assets, net of financial liabilities. The
net asset value of a joint venture is considered to be a reasonable
approximation of the available assets that could be realised to recover the
amounts due and the requirement to recognise expected credit losses.
The Group entered into a new Joint Venture agreement with AustralianSuper on 7
March 2022 in relation to the Canada Water Campus. The Group has recognised a
share of the joint venture's loss of £6m in addition to the realisation of
the gain on disposal of assets into the joint venture of £52m. Therefore the
Group has recognised a share of total comprehensive income of £46m and share
of net assets less shareholders loans of £294m in relation to this new joint
venture in the year.
The summarised income statements and balance sheets below and on the following
page show 100% of the results, assets and liabilities of joint ventures. Where
necessary, these have been restated to the Group's accounting policies.
Joint ventures' summary financial statements for the year ended 31 March 2022
Broadgate MSC Property WOSC Partners Limited Partnership5 BL West End
REIT
Intermediate
Offices Limited
Ltd
Holdings Ltd5
Partners Euro Bluebell LLP Norges Bank Investment Norges Bank Investment Allianz SE
(GIC)
Management
Management
Property sector City Offices Shopping Centres West End West End
Broadgate
Meadowhall
Offices
Offices
Group share 50% 50% 25% 25%
Summarised income statements
Revenue4 228 75 10 26
Costs (76) (16) (4) (7)
152 59 6 19
Administrative expenses (1) - - -
Net interest payable (62) (27) - (5)
Underlying Profit 89 32 6 14
Net valuation movement 220 (20) (15) 4
Capital financing (costs) income (13) - - 9
Profit (loss) on disposal of investment properties and investments - - - -
Profit (loss) on ordinary activities before taxation 296 12 (9) 27
Taxation - - - -
Profit (loss) on ordinary activities after taxation 296 12 (9) 27
Other comprehensive income - 3 - -
Total comprehensive income (expense) 296 15 (9) 27
Realisation of gain on disposal of assets into joint ventures - - - -
British Land share of total comprehensive income (expense) 148 6 (2) 7
British Land share of distributions payable 34 2 - 4
Summarised balance sheets
Investment and trading properties 4,829 760 149 525
Other non-current assets 30 - - 9
Current assets 17 8 3 3
Cash and deposits 126 34 4 7
Gross assets 5,002 802 156 544
Current liabilities (89) (45) (4) (11)
Bank and securitised debt (1,570) (517) - (159)
Loans from joint venture partners (845) (523) (211) (15)
Other non-current liabilities - (12) (4) (11)
Gross liabilities (2,504) (1,097) (219) (196)
Net assets (liabilities) 2,498 (295) (63) 348
British Land share of net assets less shareholder loans 1,249 - - 87
1. USS joint ventures include the Eden Walk Shopping Centre Unit Trust and
the Fareham Property Partnership.
2. Hercules Unit Trust joint ventures includes 50% of the results of
Deepdale Co-Ownership Trust, Fort Kinnaird Limited Partnership and Valentine
Co-Ownership Trust and 41.25% of Birstall Co-Ownership Trust. The balance
sheet shows 50% of the assets of these joint ventures.
3. Included in the column headed 'Other joint ventures' are contributions
from the following: BL Goodman Limited Partnership, Bluebutton Property
Management UK Limited, City of London Office Unit Trust, BL Sainsbury's
Superstores Limited and Reading Gate Retail Park Co-Ownership. The Reading
Gate Retail Park Co-Ownership was acquired during the year ended 31 March
2022, with the Group acquiring a 50% share from Reassure Limited, and The
National Farmers Union Mutual Insurance Society Limited owning the remaining
50% share.
4. Revenue includes gross rental income at 100% share of £290m (2020/21:
£262m).
5. In accordance with the Group's accounting policies detailed in Note 1,
the Group recognises a nil equity investment in joint ventures in a net
liability position at period end.
6. The Group entered into a new Joint Venture agreement with AustralianSuper
on 7 March 2022 in relation to the Canada Water Campus. The transaction value
of the assets transferred by the Group on formation of the joint venture at
100% was £580m. On disposal of the assets into the joint venture and in
accordance with IAS 28, the Group recognised a gain of £44m (net of
transaction costs of £9m) representing the gain realised to the extent of
AustralianSuper's interest in the joint venture. At the disposal date, the
remaining gain of £52m relating to the Group's interest in the joint venture
was unrealised and included within the Group's investment in the joint venture
which was based on the carrying value of the assets transferred at the
disposal date. As the assets transferred relate to investment property
measured at fair value, this gain was subsequently realised and recognised
when the joint venture remeasured these assets to fair value at 31 March 2022.
The Group has also recognised its share of the joint venture's loss of £6m
compared to the joint venture's total loss of £12m, from 7 March 2022 to 31
March 2022.
7. Total Group share of £245m comprises of the Group's share of total
comprehensive income of £193m and the realisation of gain on disposal of
assets into joint ventures of £52m.
BL CW Upper Limited Partnership(6) The SouthGate Limited USS Hercules Unit Trust Other Total Total
Partnership
joint
joint ventures2
joint ventures3
2022
Group share
ventures1
2022(7)
AustralianSuper Aviva Universities
Investors
Superannuation
Scheme Group PLC
Canada Water Campus Shopping Shopping Retail
Centres
Centres
Parks
50% 50% 50% Various
1 13 12 26 2 393 189
(1) (3) (2) (5) - (114) (55)
- 10 10 21 2 279 134
- - - - - (1) (1)
- (1) - - - (95) (47)
- 9 10 21 2 183 86
(12) (7) 9 23 15 217 110
- - - - - (4) (4)
- - - - - - -
(12) 2 19 44 17 396 192
- - - - - - -
(12) 2 19 44 17 396 192
- - - - - 3 1
(12) 2 19 44 17 399 193
52 - - - - 52 52
46 1 10 22 8 245
- 3 4 12 - 59
565 139 140 261 83 7,451 3,545
- - - - - 39 17
6 2 - 1 1 41 31
39 8 7 12 3 240 117
610 149 147 274 87 7,771 3,710
(23) (6) (6) (6) - (190) (93)
- - - - - (2,246) (1,083)
- - (31) - (71) (1,696) (792)
- (28) - - - (55) (23)
(23) (34) (37) (6) (71) (4,187) (1,991)
587 115 110 268 16 3,584 1,719
294 58 55 133 7 1,883
The borrowings of joint ventures and their subsidiaries are non-recourse to
the Group. All joint ventures are incorporated in the United Kingdom, with the
exception
of Broadgate REIT Limited, the Eden Walk Shopping Centre Unit Trust and the
Hercules Unit Trust joint ventures which are incorporated in Jersey.
Operating cash flows of joint ventures (Group share)
2022 2021
£m
£m
Rental income received from tenants 153 119
Operating expenses paid to suppliers and employees (28) (26)
Cash generated from operations 125 93
Interest paid (44) (47)
Interest received - -
UK corporation tax received (paid) 2 (2)
Cash inflow from operating activities 83 44
Cash inflow from operating activities deployed as:
Surplus cash retained within joint ventures 26 10
Revenue distributions per consolidated statement of cash flows 57 34
Revenue distributions split between controlling and non-controlling interests
Attributable to non-controlling interests - 2
Attributable to shareholders of the Company 57 32
9 Other investments
2022 2021
Fair value Amortised Intangible Total Fair value Amortised Intangible Total
through
cost
assets
£m
through
cost
assets
£m
profit or loss
£m
£m
profit or loss
£m
£m
£m
£m
At 1 April 6 2 12 20 111 3 11 125
Additions 14 2 2 18 3 - 5 8
Transfers / disposals - - - - (109) (1) - (110)
Revaluation 8 - - 8 1 - - 1
Amortisation - - (5) (5) - - (4) (4)
At 31 March 28 4 9 41 6 2 12 20
The amount included in the fair value through profit or loss relates to
private equity/venture capital investments of £28m (2020/21: £6m) which are
categorised as Level 3 in the fair value hierarchy. The fair values of private
equity/venture capital investments are determined by the Directors.
10 Debtors
2022 2021
£m
£m
Trade and other debtors 24 38
Prepayments and accrued income 11 14
Rental deposits 4 4
39 56
Trade and other debtors are shown after deducting a provision for impairment
against tenant debtors of £47m (2020/21: £57m). Accrued income is shown
after deducting a provision for impairment of £1m (2020/21: £5m). The
provision for impairment is calculated as an expected credit loss on trade and
other debtors in accordance with IFRS 9 as set out in Note 1.
The credit to the income statement for the year in relation to provisions for
impairment of trade debtors and accrued income was £7m (2020/21: £52m
charge), as disclosed in Note 3. Within this credit, £8m (2020/21: £9m)
represents a charge for provisions for impairment made against receivable
balances related to billed rental income due on 25 March rent quarter day.
Rental income is recognised on a straight-line basis over the lease term in
accordance with IFRS 16. The majority of rental income relating to 25 March
rent quarter day has, therefore, not yet been recognised in the income
statement in the current year and is instead recognised as deferred income,
within current liabilities as at 31 March 2022. As the rent due on 25 March
has been billed to the tenant, however, the Group is required to provide
for expected credit losses at the balance sheet date in accordance with IFRS
9. This creates a mismatch in the period between the recognition of rental
income and the impairment of the associated rent receivable.
The decrease in provisions for impairment of trade debtors and accrued income
of £15m (2020/21: £48m increase) is equal to the release to the income
statement of £7m (2020/21: £52m charge), less write-offs of trade debtors of
£8m (2020/21: £4m).
For the year ended 31 March 2022, the Group has made amendments in the
expected credit loss model that calculates the provision for tenant debtors.
As the UK economy emerges from the impact of the Covid-19 pandemic, the
amended model places greater emphasis on the historical experience collection
rate, in addition to the ageing profile and tenant risk ratings. This
amendment has led to a release in the tenant debtor provision of £7m.
The Directors consider that the carrying amount of trade and other debtors is
approximate to their fair value.
The table below summarises the movement in provisioning for impairment of
tenant debtors and accrued income during the year ended 31 March 2022.
Movement in provisions for impairment of tenant debtors and accrued income Group Proportionally consolidated
£m
£m
Provisions for impairment of tenant debtors and accrued income as at 31 March 62 78
2021(1)
Increase in provisions for impairment of tenant debtors and accrued income due - 5
to acquisition on 1 April 2021(1)
Provisions for impairment of tenant debtors and accrued income as at 1 April 62 83
2021(1)
Write-offs of tenant debtors (8) (9)
Movement in provisions for impairment of tenant debtors (6) (12)
Movement in provisions for impairment of accrued income (1) (1)
Total provision movement recognised in income statement (7) (13)
Provisions for impairment of tenant debtors and accrued income as at 31 March 47 61
2022
1. The provisions for impairment of tenant debtors and accrued income as at 1
April 2021 on a proportionately consolidated basis is £5m higher than the
proportionately consolidated provision recognised as at 31 March 2021. This is
as a result of the acquisition of the remaining 21.9% units of Hercules Unit
Trust on 1 April 2021.
11 Creditors
2022 2021
£m
£m
Trade creditors 74 55
Accruals 70 68
Deferred income 66 62
Other taxation and social security 25 25
Lease liabilities 6 5
Rental deposits due to tenants 4 4
245 219
Trade creditors are interest-free and have settlement dates within one year.
The Directors consider that the carrying amount of trade and other creditors
is approximate to their fair value.
12 Other non-current liabilities
2022 2021
£m
£m
Lease liabilities 125 128
Deferred income 27 -
152 128
13 Deferred tax
The movement on deferred tax is as shown below:
Deferred tax assets year ended 31 March 2022
1 April Debited to Credited 31 March
2021
income
to equity
2022
£m
£m
£m
£m
Temporary differences - - - -
Deferred tax liabilities year ended 31 March 2022
£m £m £m £m
Property and investment revaluations - - - -
Net deferred tax liabilities - - - -
Deferred tax assets year ended 31 March 2021
1 April Debited to Credited 31 March
2020
income1
to equity2
2021
£m
£m
£m
£m
Temporary differences 5 (5) - -
5 (5) - -
Deferred tax liabilities year ended 31 March 2021
£m £m £m £m
Property and investment revaluations (6) - 6 -
(6) - 6 -
Net deferred tax assets (liabilities) (1) (5) 6 -
The following corporation tax rates have been substantively enacted; 19%
effective from 1 April 2017 and 25% effective 1 April 2023. The deferred tax
assets and liabilities have been calculated at the tax rate effective in the
period that the tax is expected to crystallise.
The Group has recognised a deferred tax asset calculated at 19% (2020/21: 19%)
of £nil (2020/21: £nil) in respect of capital losses from previous years
available for offset against future capital profit. Further unrecognised
deferred tax assets in respect of capital losses of £137m (2020/21: £137m)
exist at 31 March 2022.
The Group has recognised deferred tax assets on derivative revaluations to the
extent that future matching taxable profits are expected to arise of £nil
(2020/21: £nil). At 31 March 2022 the Group had an unrecognised deferred tax
asset calculated at 19% (2020/21: 19%) of £47m (2020/21: £45m) in respect of
UK revenue tax losses from previous years.
Under the REIT regime development properties which are sold within three years
of completion do not benefit from tax exemption. At 31 March 2022 the value of
such properties is £1,429m (2020/21: £801m) and if these properties were to
be sold and no tax exemption was available the tax arising would be £21m
(2020/21: £0.3m).
14 Net debt
Footnote 2022 2021
£m
£m
Secured on the assets of the Group
5.264% First Mortgage Debenture Bonds 2035 347 361
5.0055% First Mortgage Amortising Debentures 2035 88 89
5.357% First Mortgage Debenture Bonds 2028 227 241
Bank loans 1 347 358
1,009 1,049
Unsecured
4.635% Senior US Dollar Notes 2021 2 - 157
4.766% Senior US Dollar Notes 2023 2 101 102
5.003% Senior US Dollar Notes 2026 2 66 67
3.81% Senior Notes 2026 102 111
3.97% Senior Notes 2026 103 112
2.375% Sterling Unsecured Bond 2029 298 298
4.16% Senior US Dollar Notes 2025 2 77 77
2.67% Senior Notes 2025 37 37
2.75% Senior Notes 2026 37 37
Floating Rate Senior Notes 2028 80 80
Floating Rate Senior Notes 2034 102 102
Facilities and overdrafts 604 181
1,607 1,361
Gross debt 3 2,616 2,410
Interest rate and currency derivative liabilities 96 128
Interest rate and currency derivative assets (97) (135)
Cash and short term deposits 4,5 (74) (154)
Total net debt 2,541 2,249
Net debt attributable to non-controlling interests 1 (70)
Net debt attributable to shareholders of the Company 2,542 2,179
Total net debt 2,541 2,249
Amounts payable under leases (Notes 11 and 12) 131 133
Total net debt (including lease liabilities) 2,672 2,382
Net debt attributable to non-controlling interests (including lease 4 1 (75)
liabilities)
Net debt attributable to shareholders of the Company (including lease 2,673 2,307
liabilities)
1. These are non-recourse borrowings with no recourse for repayment to other
companies or assets in the Group.
2022 2021
£m
£m
Hercules Unit Trust 347 358
347 358
2. Principal and interest on these borrowings were fully hedged into
Sterling at a floating rate at the time of issue.
3. The principal amount of gross debt at 31 March 2022 was £2,562m
(2020/21: £2,291m). Included in this is the principal amount of secured
borrowings and other borrowings of non-recourse companies of £985m.
4. Included in cash and short term deposits is the cash and short term
deposits of Hercules Unit Trust, of which £1m is the proportion not
beneficially owned by the Group.
5. Cash and deposits not subject to a security interest amount to £64m
(2020/21: £145m).
Maturity analysis of net debt
2022 2021
£m
£m
Repayable: within one year and on demand 189 161
Between: one and two years 279 169
two and five years 854 846
five and ten years 659 738
ten and fifteen years 485 496
fifteen and twenty years 150 -
2,427 2,249
Gross debt 2,616 2,410
Interest rate and currency derivatives (1) (7)
Cash and short term deposits (74) (154)
Net debt 2,541 2,249
Fair value and book value of net debt
2022 2021
Fair value Book value Difference Fair value Book value Difference
£m
£m
£m
£m
£m
£m
Debentures and unsecured bonds 1,745 1,665 80 1,978 1,871 107
Bank debt and other floating rate debt 955 951 4 546 539 7
Gross debt 2,700 2,616 84 2,524 2,410 114
Interest rate and currency derivative liabilities 96 96 - 128 128 -
Interest rate and currency derivative assets (97) (97) - (135) (135) -
Cash and short term deposits (74) (74) - (154) (154) -
Net debt 2,625 2,541 84 2,363 2,249 114
Net debt attributable to non-controlling interests 1 1 - (70) (70) -
Net debt attributable to shareholders of the Company 2,626 2,542 84 2,293 2,179 114
The fair values of debentures and unsecured bonds have been established by
obtaining quoted market prices from brokers.
The bank debt and other floating rate debt has been valued assuming it could
be renegotiated at contracted margins. The derivatives have been valued by
calculating the present value of expected future cash flows, using appropriate
market discount rates, by an independent treasury adviser.
Short term debtors and creditors and other investments have been excluded from
the disclosures on the basis that the fair value is equivalent to the book
value. The fair value hierarchy level of debt held at amortised cost is Level
2 (as defined in Note 7).
Loan to Value (LTV)
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, excluding non-controlling interests.
Group LTV
2022 2021
£m
£m
Group LTV 26.2% 25.1%
Principal amount of gross debt 2,562 2,291
Less debt attributable to non-controlling interests - (79)
Less cash and short term deposits (balance sheet) (74) (154)
Plus cash attributable to non-controlling interests 1 8
Total net debt for LTV calculation 2,489 2,066
Group property portfolio valuation (Note 7) 6,944 6,247
Investments in joint ventures (Note 8) 2,511 2,120
Other investments and property, plant and equipment (balance sheet)1 46 26
Less property and investments attributable to non-controlling interests (15) (163)
Total assets for LTV calculation 9,486 8,230
1. The £22m difference between other investments and plant, property and
equipment per the balance sheet totalling £68m, relates to a right-of-use
asset recognised under a lease which is classified as property, plant and
equipment which is not included within Total assets for the purposes of the
LTV calculation.
Proportionally consolidated LTV
2022 2021
£m
£m
Proportionally consolidated LTV 32.9% 32.0%
Principal amount of gross debt 3,648 3,262
Less debt attributable to non-controlling interests - (79)
Less cash and short term deposits (191) (258)
Plus cash attributable to non-controlling interests 1 10
Total net debt for proportional LTV calculation 3,458 2,935
Group property portfolio valuation (Note 7) 6,944 6,247
Share of property of joint ventures (Note 7) 3,538 3,048
Other investments and property, plant and equipment (balance sheet)1 46 26
Less property attributable to non-controlling interests (15) (163)
Total assets for proportional LTV calculation 10,513 9,158
1. The £22m difference between other investments and plant, property and
equipment per the balance sheet totalling £68m, relates to a right-of-use
asset recognised under a lease which is classified as property, plant and
equipment which is not included within Total assets for the purposes of the
LTV calculation.
British Land Unsecured Financial Covenants
The two financial covenants applicable to the Group unsecured debt are shown
below:
2022 2021
£m
£m
Net Borrowings not to exceed 175% of Adjusted Capital and Reserves 36% 33%
Principal amount of gross debt 2,562 2,291
Less the relevant proportion of borrowings of the partly owned - (79)
subsidiary/non-controlling interests
Less cash and deposits (balance sheet) (74) (154)
Plus the relevant proportion of cash and deposits of the partly owned 1 8
subsidiary/non-controlling interests
Net Borrowings 2,489 2,066
Share capital and reserves (balance sheet) 6,733 5,983
Trading property surpluses (EPRA Table A) 8 9
Exceptional refinancing charges (see below) 174 188
Fair value adjustments of financial instruments (EPRA Table A) 46 115
Less reserves attributable to non-controlling interests (balance sheet) (15) (59)
Adjusted Capital and Reserves 6,946 6,236
In calculating Adjusted Capital and Reserves for the purpose of the unsecured
debt financial covenants, there is an adjustment of £174m (2020/21: £188m)
to reflect the cumulative net amortised exceptional items relating to the
refinancing's in the years ended 31 March 2005, 2006 and 2007.
2022 2021
£m
£m
Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets 30% 25%
Principal amount of gross debt 2,562 2,291
Less cash and deposits not subject to a security interest (64) (139)
Less principal amount of secured and non-recourse borrowings (985) (998)
Net Unsecured Borrowings 1,513 1,154
Group property portfolio valuation (Note 7) 6,944 6,247
Investments in joint ventures and funds (Note 8) 2,511 2,120
Other investments and property, plant and equipment (balance sheet)1 46 26
Less investments in joint ventures (2,511) (2,120)
Less encumbered assets (Note 7) (1,915) (1,592)
Unencumbered Assets 5,075 4,681
1. The £22m difference between other investments and plant, property and
equipment per the balance sheet totalling £68m, relates to a right-of-use
asset recognised under a lease which is classified as property, plant and
equipment which is not included within Total assets for the purposes of the
LTV calculation.
Reconciliation of movement in Group net debt for the year ended 31 March 2022
2021 Cash flows Transfers3 Foreign Fair value Arrangement 2022
£m
£m
£m
exchange
£m
costs
£m
£m
amortisation
£m
Short term borrowings 161 (159) 189 - (4) 2 189
Long term borrowings 2,249 429 (189) 17 (76) (3) 2,427
Derivatives1 (7) 7 - (17) 16 - (1)
Total liabilities from financing activities4 2,403 277 - - (64) (1) 2,615
Cash and cash equivalents (154) 80 - - - - (74)
Net debt 2,249 357 - - (64) (1) 2,541
Reconciliation of movement in Group net debt for the year ended 31 March 2021
2020 Cash flows Transfers3 Foreign Fair value Arrangement 2021
£m
£m
£m
exchange
£m
costs
£m
£m
amortisation
£m
Short term borrowings 637 (637) 161 - (2) 2 161
Long term borrowings 2,865 (367) (161) (44) (46) 2 2,249
Derivatives2 (62) 14 - 44 (3) - (7)
Total liabilities from financing activities5 3,440 (990) - - (51) 4 2,403
Cash and cash equivalents (193) 39 - - - - (154)
Net debt 3,247 (951) - - (51) 4 2,249
1. Cash flows on derivatives include £15m of net receipts on derivative
interest.
2. Cash flows on derivatives include £24m of net receipts on derivative
interest.
3. Transfers comprises debt maturing from long term to short term
borrowings.
4. Cash flows of £277m shown above represents net cash flows on capital
payments in respect of interest rate derivatives of £8m, decrease in bank and
other borrowings of £213m and drawdowns on bank and other borrowings of
£483m shown in the consolidated statement of cash flows, along with £15m of
net receipts on derivative interest.
5. Cash flows of £990m shown above represents net cash flows on capital
payments in respect of interest rate derivatives of £10m, decrease in bank
and other borrowings of £1,218m and drawdowns on bank and other borrowings of
£214m shown in the consolidated statement of cash flows, along with £24m of
net receipts on derivative interest.
Fair value hierarchy
The table below provides an analysis of financial instruments carried at fair
value, by the valuation method. The fair value hierarchy levels are defined in
Note 7.
2022 2021
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£m
£m
£m
£m
£m
£m
£m
£m
Interest rate and currency derivative assets - (97) - (97) - (135) - (135)
Other investments - fair value through profit or loss (Note 9) - - (28) (28) - - (6) (6)
Assets - (97) (28) (125) - (135) (6) (141)
Interest rate and currency derivative liabilities - 96 - 96 - 128 - 128
Liabilities - 96 - 96 - 128 - 128
Total - (1) (28) (29) - (7) (6) (13)
Categories of financial instruments
2022 2021
£m
£m
Financial assets
Amortised cost
Cash and short term deposits 74 154
Trade and other debtors (Note 10) 28 42
Other investments (Note 9) 4 2
Fair value through profit or loss
Derivatives in designated fair value hedge accounting relationships1,2 59 126
Derivatives not in designated hedge accounting relationships 38 9
Other investments (Note 9) 28 6
231 339
Financial liabilities
Amortised cost
Creditors (Note 11) (157) (141)
Gross debt (2,616) (2,410)
Lease liabilities (Notes 11 and 12) (131) (133)
Fair value through profit or loss
Derivatives not in designated accounting relationships (96) (128)
(3,000) (2,812)
Total (2,769) (2,473)
1. Derivative assets and liabilities in designated hedge accounting
relationships sit within the derivative assets and derivative liabilities
balances of the consolidated balance sheet.
2. The fair value of derivative assets in designated hedge accounting
relationships represents the accumulated amount of fair value hedge
adjustments on hedged items.
Gains and losses on financial instruments, as classed above, are disclosed in
Note 5 (net financing costs), Note 10 (debtors),
the consolidated income statement and the consolidated statement of
comprehensive income. The Directors consider that the
carrying amounts of other investments are approximate to their fair value, and
that the carrying amounts are recoverable.
Maturity of committed undrawn borrowing facilities
2022 2021
£m
£m
Maturity date: over five years 70 347
between four and five years 401 1,049
between three and four years 406 294
Total facilities available for more than three years 877 1,690
Between two and three years 360 -
Between one and two years 50 -
Within one year - -
Total 1,287 1,690
The undrawn facilities are comprised of British Land undrawn facilities of
£1,287m.
15 Dividends
The Final dividend payment for the six-month period ended 31 March 2022 will
be 11.60p. Payment will be made on 29 July 2022 to shareholders on the
register at close of business on 24 June 2022. The Final dividend will be a
Property Income Distribution and no SCRIP alternative will be offered.
PID dividends are paid, as required by REIT legislation, after deduction of
withholding tax at the basic rate (currently 20%), where appropriate. Certain
classes of shareholders may be able to elect to receive dividends gross.
Please refer to our website britishland.com/dividends for details.
Payment date Dividend Pence per 2022 2021
share
£m
£m
Current year dividends
29.07.2022 2022 Final 11.60
07.01.2022 2022 Interim 10.32 95
21.92
Prior year dividends
06.08.2021 2021 Final 6.64 62
19.02.2021 2021 Interim 8.40 78
15.04
Dividends in consolidated statement of changes in equity 157 78
Dividends settled in shares - -
Dividends settled in cash 157 78
Timing difference relating to payment of withholding tax (2) (2)
Dividends in cash flow statement 155 (76]
16 Share capital and reserves
2022 2021
Number of ordinary shares in issue at 1 April 937,981,992 937,938,097
Share issues 127,441 43,895
At 31 March 938,109,433 937,981,992
Of the issued 25p ordinary shares, 7,376 shares were held in the ESOP trust
(2020/21: 7,376), 11,266,245 shares were held as treasury shares (2020/21:
11,266,245) and 926,835,812 shares were in free issue (2020/21: 926,709,543).
No treasury shares were acquired by the ESOP trust during the year. All issued
shares are fully paid.
17 Segment information
The Group allocates resources to investment and asset management according to
the sectors it expects to perform over the medium term. The Group previously
reported under three operating segments, being Offices, Retail and Canada
Water. From 1 April 2021, the Group changed its reporting, to report under two
operating segments, Campuses and Retail & Fulfilment. The Campuses sector
includes the former segments of Offices and Canada Water in addition to
residential properties. These changes are in line with our revised strategy
and how Management now reviews the performance of the business. Due to the
changes in the segments, the comparative figures have been restated in the
below segmental disclosures.
The relevant gross rental income, net rental income, operating result and
property assets, being the measures of segment revenue, segment result and
segment assets used by the management of the business, are set out on the
following page. Management reviews the performance of the business principally
on a proportionally consolidated basis, which includes the Group's share of
joint ventures on a line-by-line basis and excludes non-controlling interests
in the Group's subsidiaries. The chief operating decision maker for the
purpose of segment information is the Executive Committee.
Gross rental income is derived from the rental of buildings. Operating result
is the net of net rental income, fee income and administrative expenses. No
customer exceeded 10% of the Group's revenues in either year.
Segment result
Campuses Retail & Fulfilment Unallocated Total
2022 Restated 2022 Restated 2022 Restated 2022 Restated
£m
2021
£m
2021
£m
2021
£m
2021
£m
£m
£m
£m
Gross rental income
British Land Group 143 166 193 195 - - 336 361
Share of joint ventures 91 86 56 56 - - 147 142
Total 234 252 249 251 - - 483 503
Net rental income
British Land Group 117 139 176 126 - - 293 265
Share of joint ventures 77 69 52 28 - - 129 97
Total 194 208 228 154 - - 422 362
Operating result
British Land Group 120 134 171 121 (60) (48) 231 207
Share of joint ventures 73 69 51 28 (2) - 122 97
Total 193 203 222 149 (62) (48) 353 304
Reconciliation to Underlying Profit 2022 2021
£m
£m
Operating result 353 304
Net financing costs (102) (103)
Underlying Profit 251 201
Reconciliation to profit (loss) on ordinary activities before taxation
Underlying Profit 251 201
Capital and other 705 (1,257)
Underlying Profit attributable to non-controlling interests 2 3
Total profit (loss) on ordinary activities before taxation 958 (1,053)
Reconciliation to Group revenue
Gross rental income per operating segment result 483 503
Less share of gross rental income of joint ventures (147) (142)
Plus share of gross rental income attributable to non-controlling interests 2 16
Gross rental income (Note 3) 338 377
Trading property sales proceeds 9 -
Service charge income 62 64
Management and performance fees (from joint ventures) 9 7
Other fees and commissions 21 20
Surrender premium payable (29) -
Revenue (consolidated income statement) 410 468
A reconciliation between net financing costs in the consolidated income
statement and net financing costs of £102m (2020/21: £103m) in the
segmental disclosures above can be found within Table A in the supplementary
disclosures. Of the total revenues above, £nil (2020/21: £nil) was derived
from outside the UK.
Segment assets
Campuses Retail & Fulfilment Total
2022 Restated 2022 Restated 2022 Restated
£m
2021
£m
2021
£m
2021
£m
£m
£m
Property assets
British Land Group 4,150 4,130 2,788 1,988 6,938 6,118
Share of joint ventures 2,826 2,418 712 604 3,538 3,022
Total 6,976 6,548 3,500 2,592 10,476 9,140
Reconciliation to net assets
British Land Group 2022 2021
£m
£m
Property assets 10,476 9,140
Other non-current assets 69 51
Non-current assets 10,545 9,191
Other net current liabilities (316) (203)
Adjusted net debt (3,458) (2,938)
Other non-current liabilities - -
EPRA NTA (diluted) 6,771 6,050
Non-controlling interests 15 59
EPRA adjustments (53) (126)
Net assets 6,733 5,983
18 Subsequent events
In April 2022, post year end, the Group exchanged contracts on the sale of a
75% interest in the majority of the Paddington Central campus to GIC, forming
a new joint venture with an ownership split 75:25 for GIC and British Land,
respectively. Completion is unconditional and will occur within three months
of the exchange date. The total consideration of £694m is marginally below
the associated investment property carrying value as at 31 March 2022, but not
materially so.
On completion, two investment properties on the campus, 3 Kingdom Street and 5
Kingdom Street, will remain outside the joint venture but will be subject to
two different option agreements.
Firstly, upon completion the joint venture will be granted an unconditional
option to acquire 3 Kingdom Street at the prevailing market rate, which
expires five years from the completion date.
A second unconditional option to acquire the 5 Kingdom Street development site
will also be granted on completion, via a separate 50:50 joint venture with
GIC, for a consideration of £68.5m, which expires six months from the
completion date. This amount includes elements of contingent consideration
and so the expected gain or loss on sale is subject to future events.
Supplementary disclosures
Unaudited unless otherwise stated
Table A: Summary income statement and balance sheet (Unaudited)
Summary income statement based on proportional consolidation for the year ended 31 March 2022
The following pro forma information is unaudited and does not form part of the
consolidated primary statements or the notes thereto. It presents the results
of the Group, with its share of the results of joint ventures included on a
line-by-line basis and excluding non-controlling interests.
Year ended 31 March 2022 Year ended 31 March 2021
Group Joint Less non- Proportionally Group Joint Less non- Proportionally
£m
ventures
controlling
consolidated
£m
ventures
controlling
consolidated
£m
interests
£m
£m
interests
£m
£m
£m
Gross rental income1 345 147 (2) 490 382 142 (16) 508
Property operating expenses (48) (13) - (61) (105) (45) 9 (141)
Net rental income 297 134 (2) 429 277 97 (7) 367
Administrative expenses (88) (1) - (89) (74) - - (74)
Net fees and other income 13 - - 13 11 - - 11
Ungeared income return 222 133 (2) 353 214 97 (7) 304
Net financing costs (55) (47) - (102) (62) (45) 4 (103)
Underlying Profit 167 86 (2) 251 152 52 (3) 201
Underlying taxation 4 - - 4 (26) - - (26)
Underlying Profit after taxation 171 86 (2) 255 126 52 (3) 175
Valuation movement (see Note 4) 633 (1,298)
Other capital and taxation (net)2 59 87
Result attributable to 947 (1,036)
shareholders of the Company
1. Group gross rental income includes £7m (2020/21: £5m) of all-inclusive
rents relating to service charge income and excludes the £29m (2020/21:
£nil) surrender premium payable within the Capital and other column of the
income statement.
2. Includes other comprehensive income, movement in dilution of share
options and the movement in items excluded for EPRA NTA.
Summary balance sheet based on proportional consolidation as at 31 March 2022
The following pro forma information is unaudited and does not form part of the
consolidated primary statements or the notes thereto. It presents the
composition of the EPRA NTA of the Group, with its share of the net assets of
the joint venture included on a line-by-line basis, and excluding
non-controlling interests, and assuming full dilution.
Group Share Less non- Share Mark-to- Lease liabilities Valuation Intangibles £m EPRA Restated
£m
of joint
controlling
options
market on
£m
surplus on
NTA
EPRA
ventures
interests
£m
derivatives and related debt
trading
31 March
NTA
£m
£m
adjustments
properties
2022
31 March
£m
£m
£m
2021(2)
£m
Campuses properties 4,191 2,829 - - - (52) 8 - 6,976 6,548
Retail & Fulfilment properties 2,859 728 (15) - - (72) - - 3,500 2,592
Total properties1 7,050 3,557 (15) - - (124) 8 - 10,476 9,140
Investments in joint ventures 2,511 (2,511) - - - - - - - -
Other investments 41 16 - - - - - (9) 48 38
Other net (liabilities) assets (328) (100) 1 8 - 124 - - (295) (190)
Net debt (2,541) (962) (1) - 46 - - - (3,458) (2,938)
Net assets 6,733 - (15) 8 46 - 8 (9) 6,771 6,050
EPRA NTA per share (Note 2) 727p 648p
1. Included within the total property value of £10,476m (31 March 2020/21:
£9,140m) are right-of-use assets net of lease liabilities of £9m (31 March
2020/21: £8m), which in substance, relate to properties held under leasing
agreements. The fair values of right-of-use assets are determined by
calculating the present value of net rental cash flows over the term of the
lease agreements.
2. As explained in Note 17, from 1 April 2021, the Group now reports under
two operating segments, Campuses and Retail & Fulfilment. Within this
table, the comparative figures have been restated in the relevant disclosures.
EPRA Net Tangible Assets movement
Year ended Year ended
31 March 2022
31 March 2021
£m Pence £m Pence
per share
per share
Opening EPRA NTA 6,050 648 7,202 773
Income return 255 27 175 19
Capital return 623 69 (1,249) (136)
Dividend paid (157) (17) (78) (8)
Closing EPRA NTA 6,771 727 6,050 648
Table B: EPRA Performance measures
EPRA Performance measures summary table
2022 2021
£m Pence £m Pence
per share
per share
EPRA Earnings - basic 238 25.7 175 18.9
- diluted 238 25.6 175 18.8
EPRA Net Initial Yield 4.3% 4.6%
EPRA 'topped-up' Net Initial Yield 4.9% 5.2%
EPRA Vacancy Rate 6.3% 8.3%
2022 2021
Net assets Net asset Net assets Net asset
£m
value per
£m
value per
share
share
(pence)
(pence)
EPRA NTA 6,771 727 6,050 648
EPRA NRV 7,403 794 6,599 707
EPRA NDV 6.542 702 5,678 609
Calculation and reconciliation of Underlying/EPRA/IFRS Earnings and
Underlying/EPRA/IFRS Earnings per share (Audited)
2022 2021
£m
£m
Profit (loss) attributable to the shareholders of the Company 958 (1,031)
Exclude:
Group - current taxation (2) 25
Group - deferred taxation - 5
Joint ventures - taxation - (1)
Group - valuation movement (471) 888
Group - profit on disposal of investment properties and investments (45) (28)
Group - capital and other surrender premia payable (see Note 3) 29 -
Joint ventures - net valuation movement (including result on disposals) (see (162) 410
Note 4)
Joint ventures - capital financing costs 4 -
Changes in fair value of financial instruments and associated close-out costs (60) (12)
Non-controlling interests in respect of the above - (55)
Underlying Profit 251 201
Group - underlying current taxation 4 (26)
Underlying Earnings - basic and diluted 255 175
Group - capital and other surrender premia payable (see Note 3) (29) -
Group - reclassification of foreign exchange differences (see Note 5) 12 -
EPRA Earnings - basic and diluted 238 175
Profit (loss) attributable to the shareholders of the Company 958 (1,031)
IFRS Earnings - basic and diluted 958 (1,031)
2022 2021
Number
Number
million
million
Weighted average number of shares 938 938
Adjustment for treasury shares (11) (11)
IFRS/EPRA/Underlying Weighted average number of shares (basic) 927 927
Dilutive effect of share options - -
Dilutive effect of ESOP shares 3 3
EPRA/Underlying Weighted average number of shares (diluted) 930 930
Remove anti-dilutive effect - (3)
IFRS Weighted average number of shares (diluted) 930 927
Net assets per share (Audited)
2022 2021
£m Pence £m Pence
per share
per share
Balance sheet net assets 6,733 5,983
Deferred tax arising on revaluation movements - -
Mark-to-market on derivatives and related debt adjustments 46 115
Dilution effect of share options 8 14
Surplus on trading properties 8 9
Intangible assets (9) (12)
Less non-controlling interests (15) (59)
EPRA NTA 6,771 727 6,050 648
Intangible assets 9 12
Purchasers' costs 623 537
EPRA NRV 7,403 794 6,599 707
Deferred tax arising on revaluation movements (2) (1)
Purchasers' costs (623) (537)
Mark-to-market on derivatives and related debt adjustments (46) (115)
Mark-to-market on debt (190) (268)
EPRA NDV 6,542 702 5,678 609
EPRA NTA is considered to be the most relevant measure for the Group and is
now the primary measure of net assets. EPRA NTA assumes that entities buy and
sell assets, thereby crystallising certain levels of unavoidable deferred tax.
Due to the Group's REIT status, deferred tax is only provided at each balance
sheet date on properties outside the REIT regime. As a result deferred taxes
are excluded from EPRA NTA for properties within the REIT regime. For
properties outside of the REIT regime, deferred tax is included to the extent
that it is expected to crystallise, based on the Group's track record and tax
structuring. EPRA NRV reflects what would be needed to recreate the Group
through the investment markets based on its current capital and financing
structure. EPRA NDV reflects shareholders' value which would be recoverable
under a disposal scenario, with deferred tax and financial instruments
recognised at the full extent of their liability.
2022 2021
Number
Number
million
million
Number of shares at year end 938 938
Adjustment for treasury shares (11) (11)
IFRS/EPRA number of shares (basic) 927 927
Dilutive effect of share options 3 3
Dilutive effect of ESOP shares 2 3
IFRS/EPRA number of shares (diluted) 932 933
EPRA Net Initial Yield and 'topped-up' Net Initial Yield (Unaudited)
2022 2021
£m
£m
Investment property - wholly owned 6,929 6,118
Investment property - share of joint ventures 3,538 3,022
Less developments, residential and land (1,168) (1,224)
Completed property portfolio 9,299 7,916
Allowance for estimated purchasers' costs 672 648
Gross up completed property portfolio valuation (A) 9,971 8,564
Annualised cash passing rental income 457 425
Property outgoings (33) (29)
Annualised net rents (B) 424 396
Rent expiration of rent-free periods and fixed uplifts1 61 51
'Topped-up' net annualised rent (C) 485 447
EPRA Net Initial Yield (B/A) 4.3% 4.6%
EPRA 'topped-up' Net Initial Yield (C/A) 4.9% 5.2%
Including fixed/minimum uplifts received in lieu of rental growth 5 5
Total 'topped-up' net rents (D) 490 452
Overall 'topped-up' Net Initial Yield (D/A) 4.9% 5.3%
'Topped-up' net annualised rent 485 447
ERV vacant space 33 42
Reversions 4 12
Total ERV (E) 522 501
Net Reversionary Yield (E/A) 5.2% 5.9%
1. The weighted average period over which rent-free periods expire is one
year (2020/21: one year).
EPRA Net Initial Yield (NIY) basis of calculation
EPRA NIY is calculated as the annualised net rent (on a cash flow basis),
divided by the gross value of the completed property portfolio. The valuation
of our completed property portfolio is determined by our external valuers as
at 31 March 2022, plus an allowance for estimated purchasers' costs. Estimated
purchasers' costs are determined by the relevant stamp duty liability, plus an
estimate by our valuers of agent and legal fees on notional acquisition. The
net rent deduction allowed for property outgoings is based on our valuers'
assumptions on future recurring non-recoverable revenue expenditure.
In calculating the EPRA 'topped-up' NIY, the annualised net rent is increased
by the total contracted rent from expiry of rent-free periods and future
contracted rental uplifts where defined as not in lieu of growth. Overall
'topped-up' NIY is calculated by adding any other contracted future uplift to
the 'topped-up' net annualised rent.
The net reversionary yield is calculated by dividing the total estimated
rental value (ERV) for the completed property portfolio, as determined by our
external valuers, by the gross completed property portfolio valuation.
The EPRA Vacancy Rate is calculated as the ERV of the unrented, lettable space
as a proportion of the total rental value of the completed property portfolio.
EPRA Vacancy Rate (Unaudited)
31 March 31 March
2022
2021
£m
£m
Annualised potential rental value of vacant premises 33 42
Annualised potential rental value for the completed property portfolio 526 507
EPRA Vacancy Rate 6.3% 8.3%
EPRA Cost Ratios (Unaudited)
2022 2021
£m
£m
Property operating expenses 48 96
Administrative expenses 88 74
Share of joint ventures expenses 14 45
Less: Performance and management fees (from joint ventures) (9) (7)
Net other fees and commissions (4) (4)
Ground rent costs and operating expenses de facto included in rents (25) (21)
EPRA Costs (including direct vacancy costs) (A) 112 183
Direct vacancy costs (42) (31)
EPRA Costs (excluding direct vacancy costs) (B) 70 152
Gross Rental Income less ground rent costs and operating expenses de facto 323 341
included in rents
Share of joint ventures (GRI less ground rent costs) 139 142
Total Gross rental income less ground rent costs (C) 462 483
EPRA Cost Ratio (including direct vacancy costs) (A/C) 24.2% 37.9%
EPRA Cost Ratio (excluding direct vacancy costs) (B/C) 15.2% 31.5%
Impairment of tenant debtors, tenant incentives and accrued income (D) (8) 83
Adjusted EPRA Cost Ratio (including direct vacancy costs and excluding 26.0% 20.7%
impairment of tenant debtors, accrued income, tenant incentives and contracted
rent increases) (A-D)/C
Adjusted EPRA Cost Ratio (excluding direct vacancy costs and excluding 16.9% 14.3%
impairment of tenant debtors, accrued income, tenant incentives and contracted
rent increases) (B-D)/C
Overhead and operating expenses capitalised (including share of joint 7 6
ventures)
In the current year, employee costs in relation to staff time on development
projects have been capitalised into the base cost of relevant development
assets. In addition to the standard EPRA Cost Ratios (both including and
excluding direct vacancy costs), adjusted versions of these ratios have also
been presented which remove the impact of the impairment of tenant debtors,
tenant incentives and accrued income which are exceptional items in the
current year, to show the impact of these items on the ratios.
Table C: Gross rental income (Audited)
2022 2021
£m
£m
Rent receivable1 479 493
Spreading of tenant incentives and contracted rent increases 8 11
Surrender premia 3 4
Gross rental income 490 508
1. Group gross rental income includes £7m (2020/21: £5m) of all-inclusive
rents relating to service charge income.
The current and prior year information is presented on a proportionally
consolidated basis, excluding non-controlling interests.
Table D: Property related capital expenditure (Unaudited)
Year ended 31 March 2022 Year ended 31 March 2021
Group Joint ventures Total Group Joint Total
£m
£m
£m
£m
ventures
£m
£m
Acquisitions 596 34 630 52 - 52
Development 175 33 208 104 25 129
Investment properties
Incremental lettable space 1 - 1 1 - 1
No incremental lettable space 12 25 37 31 28 59
Tenant incentives 21 3 24 2 5 7
Other material non-allocated types of expenditure 2 3 5 5 1 6
Capitalised interest 6 1 7 6 2 8
Total property related capital expenditure 813 99 912 201 61 262
Conversion from accrual to cash basis 42 (7) 35 34 14 48
Total property related capital expenditure on cash basis 855 92 947 235 75 310
The above is presented on a proportionally consolidated basis, excluding
non-controlling interests and business combinations. The 'Other material
non-allocated types of expenditure' category contains capitalised staff costs
of £5m (2020/21: £6m).
Supplementary Tables
Data includes Group's share of Joint Ventures
FY22 rent collection1
Rent due between 25 March 2021 and 24 March 2022 Offices Retail2 Total
Received 100% 95% 97%
Rent forgiven - 1% 1%
Outstanding - 4% 2%
Total 100% 100% 100%
£196m £270m £466m
March quarter 2022 rent collection1
Rent due between 25 March 2022 and 10 May 2022 Offices Retail2 Total
Received 98% 92% 96%
Rent forgiven - - -
Customer paid monthly - 2% 1%
Outstanding 2% 6% 3%
Total 100% 100% 100%
£44m £31m £75m
1. As at 10 May 2022
2. Includes non-office customers located within our London campuses
Purchases
Since 1 April 2021 Sector Price Price Annualised
Purchases
(100%)
(BL Share)
Net Rents
£m
£m
£m1
Completed
Hercules Unit Trust units Retail 148 148 12
Thurrock Retail Park Retail 82 82 5
Reading Gate Retail Park Retail 68 34 2
Blackwater Shopping Park, Farnborough Retail 38 38 2
B&Q, Cambridge Retail 24 24 1
De Mandeville Retail Park Retail 24 24 -
Hannah Close, Wembley Logistics 157 157 4
Heritage House, Enfield Logistics 87 87 2
Verney Road Logistics 31 31 -
Finsbury Square car park, London Logistics 20 20 1
Peterhouse Technology Park, Cambridge Campuses 75 75 3
Waterside House, Guildford Campuses 15 15 1
The Priestley Centre, Guildford Campuses 12 12 -
Total 781 747 33
1. BL share of annualised rent topped up for rent frees
Sales
Since 1 April 2021 Sector Price Price Annualised
Sales
(100%)
(BL Share)
Net Rents
£m
£m
£m1
Completed
Virgin Active, Chiswick Retail 54 54 2
Woodfields Retail Park, Bury (part-sale) Retail 36 36 2
Beaumont Leys (Fletcher Mall) Retail 9 9 1
Virgin Active, Brighton Retail 14 14 2
Debenhams, Plymouth Retail 4 4 -
Wardrobe Court Residential 70 70 -
St Anne's, Regents Place2 Residential 6 6 -
Clarges, Mayfair Residential 3 3 -
Canada Water (50% sale) Campuses 580 290 1
Exchanged
Paddington Central (75% sale)(3) Campuses 934 694 27
Total 1,710 1,180 35
1. BL share of annualised rent topped up for rent frees
2. Exchanged prior to 1 April 2021
3. Exchanged post year end
Portfolio Valuation by Sector
Change %1
At 31 March 2022 Group Joint ventures Total H1 H2 FY
£m
£m
£m
West End 3,479 128 3,607 2.8 1.6 4.5
City 438 2,415 2,853 2.6 2.1 4.7
Canada Water & other Campuses 147 283 430 6.9 6.4 12.9
Residential(2) 77 - 77 (0.8) 14.7 6.4
Campuses 4,141 2,826 6,967 3.0 2.4 5.4
Retail Parks 1,891 223 2,114 7.1 13.6 20.7
Shopping Centre 332 468 800 (4.2) (2.1) (6.1)
Urban Logistics 314 5 319 (0.9) 0.4 -
Other Retail 251 16 267 (0.4) 3.5 2.5
Retail & Fulfilment 2,788 712 3,500 2.7 7.5 9.9
Total 6,929 3,538 10,467 2.9 4.0 6.8
Standing Investments 6,224 3,099 9,323 2.2 3.5 5.5
Developments 705 439 1,144 6.3 7.8 11.7
On a proportionally consolidated basis including the Group's share of joint
ventures
1. Valuation movement during the year (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
Gross Rental Income1
12 months to 31 March 2022 Annualised as at 31 March 2022
Accounting Basis £m Group Joint ventures Total Group Joint ventures Total
West End 123 6 129 123 5 128
City 13 85 98 7 79 86
Canada Water & other Campuses 8 5 13 6 - 6
Residential(2) 1 - 1 1 - 1
Campuses 145 96 241 137 84 221
Retail Parks 131 15 146 129 16 145
Shopping Centre 47 33 80 42 32 74
Urban Logistics 3 - 3 7 - 7
Other Retail 19 1 20 18 1 19
Retail & Fulfilment 200 49 249 196 49 245
Total 345 145 490 333 133 466
On a proportionally consolidated basis including the Group's share of joint
ventures
1. Gross rental income will differ from annualised valuation rents due to
accounting adjustments for fixed & minimum contracted rental uplifts and
lease incentives
2. Stand-alone residential
Portfolio Net Yields1,2
As at 31 March 2022 EPRA net EPRA topped up net initial yield Overall topped up net initial yield Net equivalent yield Net equivalent yield movement Net reversionary yield ERV Growth
initial yield
%3
%4
%
bps
%
%5
%
West End 3.4 4.1 4.1 4.3 (7) 4.7 0.4
City 2.9 3.8 3.8 4.3 (15) 4.7 (0.6)
Other Campuses 4.9 4.9 4.9 5.2 1 5.6 6.4
Residential 3.8 3.8 3.8 4.0 - 3.1 (11.7)
Campuses 3.2 4.0 4.0 4.3 (11) 4.7 0.0
Retail Parks 6.2 6.5 6.6 5.9 (151) 5.9 (2.0)
Shopping Centre 7.1 7.6 7.8 7.6 3 8.0 (5.2)
Urban Logistics 2.0 2.0 2.0 2.5 (75) 2.6 6.3
Other Retail 5.2 5.6 6.1 6.4 (16) 6.4 0.8
Retail & Fulfilment 6.0 6.3 6.4 6.0 (97) 6.1 (2.8)
Total 4.3 4.9 4.9 4.9 (42) 5.2 (1.2)
On a proportionally consolidated basis including the Group's share of joint
ventures
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 MSCI
Total Property Return (as calculated by MSCI)
12 months to 31 March 2022 Offices Retail Total
% British Land MSCI British Land MSCI British Land MSCI
Capital Return 5.8 3.2 11.6 8.8 7.4 14.9
- ERV Growth 0.1 1.4 (2.9) (2.0) (1.2) 3.1
- Yield Movement1 (11) bps (23) bps (97) bps (82) bps (42) bps (67) bps
Income Return 2.6 3.7 7.6 5.6 4.0 4.2
Total Property Return 8.5 7.0 20.0 14.9 11.7 19.6
On a proportionally consolidated basis including the Group's share of joint
ventures
1. Net equivalent yield movement
Top 20 Tenants by Sector
As at 31 March 2022 % of As at 31 March 2022 % of
Retail & Fulfilment rent Campuses rent
Retail & Fulfilment Campuses
Next 4.9 Meta (Facebook) 17.4
Walgreens (Boots) 4.8 Dentsu international 4.7
M&S 4.1 Visa 4.0
JD Sports 3.2 Herbert Smith Freehills 2.9
Currys Plc 3.1 Gazprom 2.6
J Sainsbury 2.8 Microsoft Corp 2.5
TJX (TK Maxx) 2.8 SMBC 2.2
Frasers Group 2.5 Vodafone 2.0
Asda Group 2.2 Deutsche Bank 1.9
Kingfisher 2.0 Henderson 1.7
Tesco plc 2.0 Reed Smith 1.6
DFS Furniture 1.8 TP ICAP 1.6
Hutchison Whampoa 1.8 The Interpublic Group (McCann) 1.6
TGI Friday's 1.8 Softbank Group 1.5
River Island 1.6 Mayer Brown 1.4
Homebase 1.5 Mimecast 1.3
Primark 1.5 Credit Agricole 1.2
H&M 1.4 Kingfisher 1.2
Wilkinson 1.3 Milbank LLP 1.1
Pets at Home 1.2 Monzo Bank 1.1
Total top 20 48.3 Total top 20 55.5
Major Holdings
As at 31 March 2022 BL Share Sq ft Rent (100%) Occupancy Lease
%
'000
£m pa1,4
rate %2,4
length yrs3,4
Broadgate 50 4,468 189 96.7 6.4
Regent's Place 100 1,740 85 95.2 8.7
Paddington Central(5) 100 958 47 99.6 5.2
Meadowhall, Sheffield 50 1,500 67 95.9 4.1
Glasgow Fort, Glasgow 100 510 17 94.7 5.2
Teesside, Stockton 100 569 15 95.0 2.6
Hannah Close, Wembley 100 246 3 100.0 3.4
Ealing Broadway, London 100 540 11 95.0 3.7
Drake's Circus, Plymouth 100 1,190 16 91.9 4.9
Giltbrook, Nottingham 100 198 7 100.0 4.7
1. Annualised EPRA contracted rent including 100% of joint ventures
2. Includes accommodation under offer or subject to asset management
3. Weighted average to first break
4. Excludes committed and near term developments
5. Post year end, exchanged on the sale of 75% of the majority of assets in
Paddington Central
Lease Length & Occupancy
Average lease length yrs Occupancy rate %
As at 31 March 2022 To expiry To break EPRA Occupancy Occupancy1,2,3
West End 7.8 7.2 95.7 96.8
City 7.4 6.5 90.2 96.2
Other Campuses 7.7 6.8 100.0 100.0
Residential 16.5 16.2 100.0 100.0
Campuses 7.7 7.0 93.5 96.7
Retail Parks 6.0 4.4 94.6 97.4
Shopping Centre 5.6 4.3 92.0 93.9
Urban Logistics 5.4 4.5 99.8 99.8
Other Retail 8.2 7.7 94.2 95.9
Retail & Fulfilment 6.0 4.6 94.0 96.3
Total 6.8 5.8 93.7 96.5
1. Space allocated to Storey is shown as occupied where there is a Storey
tenant in place otherwise it is shown as vacant. Total occupancy would rise
from 96.7% to 97.2% if Storey space were assumed to be fully let
2. Includes accommodation under offer or subject to asset management
3. Where occupiers have entered administration or CVA but are still liable
for rates, these are treated as occupied. If units in administration are
treated as vacant, then the occupancy rate for Retail & Fulfilment would
reduce from 96.3% to 94.5%, and total occupancy would reduce from 96.5% to
95.6%
Portfolio Weighting
As at 31 March 2021 2022 2022
%
%
£m
West End 35.9 34.5 3,607
City 27.5 27.3 2,853
Canada Water & other Campuses 6.1 4.1 430
Residential(1) 0.6 0.7 77
Campuses 70.1 66.6 6,967
Retail Parks 17.6 20.2 2,114
Shopping Centre 8.3 7.6 800
Urban Logistics 1.2 3.0 319
Other Retail 2.8 2.6 267
Retail & Fulfilment 29.9 33.4 3,500
Total 100 100 10,467
London Weighting 77% 73% 7,604
On a proportionally consolidated basis including the Group's share of joint
ventures
1. Stand-alone residential
Annualised Rent & Estimated Rental Value (ERV)
Annualised rent (valuation basis) ERV £m Average rent
£m1
£psf
As at 31 March 2022 Group Joint ventures Total Total Contracted2 ERV
West End(3) 114 5 119 161 63.9 69.4
City(3) 7 72 79 123 53.5 56.4
Canada Water & other Campuses 6 - 6 8 27.2 34.5
Residential(4) 1 - 1 1 41.7 30.9
Campuses 128 77 205 293 52.9 57.8
Retail Parks 133 17 150 136 22.3 19.2
Shopping Centre 39 39 78 76 23.9 22.4
Urban Logistics 7 - 7 9 11.9 15.6
Other Retail 17 1 18 19 11.0 11.2
Retail & Fulfilment 196 57 253 240 20.7 18.8
Total 324 134 458 533 29.5 29.9
On a proportionally consolidated basis including the group's share of joint
ventures and funds, excluding committed, near term and assets held for
development
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 year to 31 March 2023 2024 2025 2026 2027 2023-25 2023-27
As at 31 March 2022
£m
£m
£m
£m
£m
£m
£m
West End 23 4 15 9 22 42 73
City 1 15 8 26 4 24 54
Canada Water & other Campuses - - 1 - - 1 1
Residential - - - - 1 - 1
Campuses 24 19 24 35 27 67 129
Retail Parks 9 8 9 8 7 26 41
Shopping Centre 8 3 3 2 3 14 19
Urban Logistics - - 1 - - 1 1
Other Retail 1 2 1 - 1 4 5
Retail & Fulfilment 18 13 14 10 11 45 66
Total 42 32 38 45 38 112 195
On a proportionally consolidated basis including the Group's share of joint
ventures excluding committed, near term and assets held for development
Rent Subject to Lease Break or Expiry
For year to 31 March 2023 2024 2025 2026 2027 2023-25 2023-27
As at 31 March 2022
£m
£m
£m
£m
£m
£m
£m
West End 19 15 11 13 8 45 66
City 7 16 4 17 3 27 47
Other Campuses 1 2 - - 1 3 4
Residential - - - - - - -
Campuses 27 33 15 30 12 75 117
Retail Parks 23 28 19 21 18 70 109
Shopping Centre 16 12 9 12 7 37 56
Urban Logistics - - 2 4 - 2 6
Other Retail 4 1 1 1 1 6 8
Retail & Fulfilment 43 41 31 38 26 115 179
Total 70 74 46 68 38 190 296
% of contracted rent 13.7 14.0 8.9 13.2 7.2 36.6 57.0
On a proportionally consolidated basis including the Group's share of joint
ventures
Recently Completed and Committed Developments
As at 31 March 2022 Sector BL Share 100% sq ft PC Calendar Year Current Value Cost to come ERV Pre-let & under offer Forecast IRR %
%
'000
£m
£m1
£m2
£m(5)
1 Triton Square Office 100 369 Q2 2021 545 - 24.3 23.9 12
Total Recently Completed 369 545 - 24.3 23.9
Norton Folgate Office 100 336 Q4 2023 235 157 23.1 7.5 11
Aldgate Place, Phase 2 Residential 100 136 Q2 2024 48 86 6.0 - 10
1 Broadgate(5) Office 50 544 Q2 2025 147 210 20.2 13.7 12
The Priestley Centre, Guildford Office 100 81 Q2 2023 13 19 2.8 - 22
Canada Water, Plot A13 Mixed Use 50 273 Q3 2024 26 103 3.3 - 11
Canada Water, Plot A23 Mixed use 50 250 Q3 2024 16 60 5.0 - Blended
Canada Water, Plot K13 Residential 50 62 Q2 2023 2 13 - -
Total Committed 1,682 487 648 60.4 21.2
Other Capital Expenditure4 23
On a proportionally consolidated basis including the group's share of joint
ventures and funds (except area which is shown at 100%)
1. From 31 March 2022. 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. The London Borough of Southwark has confirmed they will not be investing
in Phase 1, but retain the right to participate in the development of
subsequent plots up to a maximum of 20% with their returns pro-rated
accordingly
4. Capex committed and underway within our investment portfolio relating to
leasing, infrastructure and asset management
5. Pre-let & under offer excludes 114,000 sq ft of office space under
option
Near Term Development Pipeline
As at 31 March 2022 Sector BL Share 100% sq ft Earliest Start on Site Current Value Cost to come ERV Let & Under Offer Planning Status
%
'000
£m
£m1
£m2
£m
2-3 Finsbury Avenue Office 50 718 Q3 2022 71 433 31.0 - Consented
5 Kingdom Street Office 100 438 Q4 2022 122 397 33.9 - Consented
Meadowhall RDD Urban Logistics 50 604 Q3 2022 6 37 2.4 - Consented
Ealing - International House Office 100 165 Q3 2022 20 96 9.3 - Consented
Total Near Term 1,925 219 963 76.6 -
Other Capital Expenditure3 167
On a proportionally consolidated basis including the group's share of joint
ventures and funds (except area which is shown at 100%)
1. From 31 March 2022. 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
As at 31 March 2022 Sector BL Share 100% Sq ft Planning Status
%
'000
Thurrock Urban Logistics 100 559 Pre-submission
Enfield, Heritage House Urban Logistics 100 431 Pre-submission
Hannah Close, Wembley Urban Logistics 100 668 Pre-submission
Verney Road Urban Logistics 100 166 Pre-submission
Teesside, Logistics Urban Logistics 100 299 Pre-submission
Euston Tower Office 100 578 Pre-submission
West One Development Office 25 73 Pre-submission
Finsbury Square Urban Logistics 100 47 Pre-submission
Ealing - 10-40, The Broadway Mixed Use 100 325 Pre-submission
Gateway Building Office 100 105 Consented
Canada Water - Future phases1 Mixed Use 50 4,495 Consented
Total Medium Term 7,746
On a proportionally consolidated basis including the group's share of joint
ventures and funds (except area which is shown at 100%)
1. The London Borough of Southwark has the right to invest in up to 20% of
the completed development. The ownership share of the joint venture between
British Land and AustralianSuper will change over time depending on the level
of contributions made, but will be no less than 80%
Forward-looking statements
This Press Release contains certain (and we may make other verbal or written)
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Recipients should not place reliance on, and are cautioned about relying on,
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Important factors that could cause actual results (including the payment of
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from any outcomes or results expressed or implied by such forward-looking
statements include, among other things, changes and/or developments as
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globally, (b) the United Kingdom's withdrawal from, and evolving relationship
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competition, (e) the behaviour of other market participants, (f) government,
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consumer confidence, (h) labour relations, work stoppages and increased costs
for, or shortages of, talent, (i) climate change, natural disasters and
adverse weather conditions, (j) terrorism, conflicts or acts of war, (k)
British Land's overall business strategy, risk appetite and investment choices
in its portfolio management, (l) legal or other proceedings against or
affecting British Land, (m) cyber-attacks and other disruptions and
reliability and security of IT infrastructure, (n) occupier demand and tenant
default, (o) financial and equity markets including interest and exchange rate
fluctuations, (p) accounting practices and the interpretation of accounting
standards (q) the availability and cost of finances, (r) public health crises
(including but not limited to the covid-19 pandemic), (s) changes in
construction supplies and labour availability or cost inflation and (t) the
Ukraine conflict and its impact on supply chains and the macroeconomic
outlook. The Company's principal risks are described in greater detail in the
section of this Press Release headed "Risk Management and Principal Risks" and
in the Company's latest annual report and accounts (which can be found at
www.britishland.com). Forward-looking statements in this Press Release, or the
British Land website or made subsequently, which are attributable to British
Land or persons acting on its behalf, should therefore be construed in light
of all such factors.
Information contained in this Press Release relating to British Land or its
share price or the yield on its shares are not guarantees of, and should not
be relied upon as an indicator of, future performance, and nothing in this
Press Release should be construed as a profit forecast or profit estimate, or
be taken as implying that the earnings of British Land for the current year or
future years will necessarily match or exceed the historical or published
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under the UK Financial Conduct Authority's Listing Rules, Disclosure Guidance
and Transparency Rules, the UK Market Abuse Regulation, and the requirements
of the Financial Conduct Authority and the London Stock Exchange), British
Land does not intend or undertake any obligation to update or revise publicly
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has been no change in the business or affairs of British Land since the date
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