KPIs

Our long term objective

Delivering sustainable long term value

How we measure up

  • Total accounting return is our overall measure of performance. It is the dividend paid plus the growth in EPRA NAV per share
  • During the year, we generated a TAR of 2.7%. Our dividend increased by 3.0% to 29.2 pence per share and our EPRA NAV decreased by 0.4% to 915 pence per share

Risk indicators and incentive measures

Risk indicators we monitor:

  • Forecast GDP
  • The margin between property yields and long term borrowing costs
  • Property capital growth and ERV growth forecasts

Management compensation linked to:

  • Total accounting return relative to relevant comparator groups

Customer Orientation

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Our priorities in the year were

  • Improving understanding of our customers
  • Provide spaces reflecting evolving customer needs

What we have achieved

  • Attracting retailer and leisure occupiers to new formats and new locations
  • Providing the flexibility for existing occupiers to upsize – 30,000 customers surveyed as part of our True Value of Stores research
  • Around 40,000 shopper surveys conducted across our Retail portfolio each year
  • Nearly 4,000 office workers surveyed on their perspectives on the workplace
  • Office Agenda website launched to engage with key decision makers at current and potential occupiers
  • Commenced fit out of 25,000 sq ft of flexible workspace pilot at Broadgate for the digital team of an existing occupier
  • Committed to both the WELL standard for  Wellbeing and the WiredScore Platinum rating for  internet connectivity and infrastructure at 100 Liverpool Street
  • 84% shopper score for perception of wellbeing at our Retail assets and 89% occupier score for sense  of pride in office space at our campuses

How we measure up

We extensively survey the users of our places to assess our performance and identify opportunities for improvement.

  • Dow Jones Sustainability Index World and Europe 2016: 95th percentile
  • FTSE4Good 2016: 95th percentile
  • Global Real Estate Sustainability Benchmark 2016: European Sector Leader Diversified

We use industry-recognised indices to track our sustainability performance. We were pleased to have been awarded the Queen’s Award for Enterprise: Sustainable Development 2016.

Risk indicators and incentive measures

Risk indicators we monitor:

  • Consumer confidence
  • Employment forecasts for relevant sectors
  • Market letting risk (vacancies, expiries, speculative development)

Management compensation linked to:

  • Company reputation with all stakeholders
  • Supporting the delivery of sustainability objectives

Right Places

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Our priorities in the year were

  • Use placemaking to deliver improved customer experience
  • Accelerate delivery of multi-let Regional and Local lifestyle Retail
  • Progress Canada Water vision and masterplan

What we have achieved

  • 1.7m sq ft of leasing across Retail and Offices, 8% ahead of ERV
  • Over 700,000 sq ft of space under offer or in advanced negotiations across office developments
  • 85,000 sq ft of space let on a short term or meanwhile basis, which enliven our campuses and address lease expiries while preserving optionality for redevelopment
  • Progressing our vision at Broadgate: on site at 100 Liverpool Street (520,000 sq ft); planning submitted on  a refurbishment of 1 Finsbury Avenue (288,000 sq ft) and 135 Bishopsgate (325,000 sq ft), with increased retail and leisure provision at both; planning achieved on a redevelopment of 2&3 Finsbury Avenue (563,000 sq ft)
  • Entire 310,000 sq ft of office space under offer for a pre-let at 1 Triton Square redevelopment, Regent’s Place
  • Public realm improvements completed at Paddington Central ahead of launch of 4 Kingdom Street
  • In the West End, office space at our recently completed developments at 4 Kingdom Street, 7 Clarges Street and Yalding House are now around 80% let or under offer at rents ahead of pre-referendum ERVs on a net effective basis
  • Planning submitted on 322,000 sq ft Leisure Hall at Meadowhall; on track to complete £60m refurbishment before the end of 2017
  • Planning achieved for 538,000 sq ft mixed use re-development of Eden Walk, Kingston
  • Completed Glasgow Fort leisure quarter and on site with a leisure extension at New Mersey, Speke
  • Progressing plans at Canada Water with public consultation in May 2017; on track to submit planning around the end of the financial year
  • Applying our Local Charter so our places  become part of their local community
  • £1.7m community programme benefiting 35,600 people (2016: £1.7m and 29,500) including children and jobseekers
  • Augmented reality games across retail portfolio and established programme of  events at our campuses

How we measure up

We have underperformed the IPD benchmark this year reflecting our lack of exposure to Industrial, the strongest performing category. Our Retail and Offices portfolios each outperformed their respective benchmarks by 70 basis points and 10 basis points respectively.

Development supports value and future income growth, but adds risk. We keep our committed development exposure at less than 15% of our investment portfolio, with a maximum of 8% developed speculatively.

Risk indicators and incentive measures

Risk indicators we monitor:

  • Property capital return and ERV growth forecasts
  • Total and speculative development exposure
  • Progress of developments against plan

Management compensation linked to:

  • Total property returns relative to IPD
  • Execution of targeted acquisitions and disposals
  • Progress on key projects including developments

Capital Efficiency

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Our priorities in the year were

  • Deliver budget
  • Progress developments alongside material pre-lets
  • Continue to sell single-let and non-core Retail

What we have achieved

  • 7.4% increase in Underlying Profit to £390m
  • £1.5bn of asset sales exchanged 9% ahead of valuation
  • £881m retail disposals including £400m Debenhams Oxford Street and £226m superstores, increasing multi-let % of retail portfolio to 78% (March 2016: 71%)
  • Sale of our 50% interest in The Leadenhall Building, ahead of valuation (£1.15bn, 100%)
  • Acquisition of New George Street Estate, adjacent to Drake Circus and proposed leisure scheme
  • Acquisition of 10-40 The Broadway adjacent to Ealing Broadway Local retail centre
  • Increased our ownership of Hercules Unit Trust to 76.5% (2016: 75.3%)
  • LTV reduced to 29.9% (26.9% proforma for sale of The Leadenhall Building) from 32.1% at March 2016; no requirement to refinance until early 2021
  • 2.3m sq ft of planning consents secured with a further 1.3m sq ft of planning applications submitted
  • 93% of developments on track to achieve BREEAM Excellent for offices and Excellent or Very Good for retail (2016: 82%; 2020 target: 100%)
  • 35% reduction in landlord energy intensity and 44% reduction in carbon intensity versus 2009, index scored (2016: 38% and 40% respectively; 2020 target: 55%)
  • 98% of waste diverted from landfill (2016: 98%; 2020 target: 100%)

How we measure up

We manage our leverage such that LTV should not exceed a maximum threshold if market yields were to rise to previous peaks.

Our low cost of finance supports our financial performance and we have had success in reducing it.

Risk indicators and incentive measures

Risk indicators we monitor:

  • Covenant headroom
  • Period until refinancing is required
  • Percentage of debt at fixed interest rates

Management compensation linked to:

  • Execution of debt financings
  • Progress on strengthening the dividend

Expert People

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Our priorities in the year were

  • Improve Company organisational effectiveness
  • Embed placemaking across the business

What we have achieved

  • Organisational design initiatives and IT improvements implemented to improve efficiency
  • Combining British Land and Broadgate Estates resources into Centres of Excellence for Technology,  HR and finance operations, leveraging best practice  and generating efficiencies
  • Bright Lights skills and employment programme launched, working with our occupiers and suppliers to build people’s skills and help them find employment 
  • 29 people benefited from pitching and negotiating training
  • Continuing focus on creating an inclusive culture which celebrates diversity; successful year for our Women’s Network and BL Pride with Wellbeing Committee formed in the year
  • Ranked in the top 20 of FTSE 100 companies having at least 33% women’s representation across Exco and direct reports, per Hampton-Alexander Review
  • 100% of employees and 72% of supplier workforce at our managed properties paid the Living Wage  Foundation Wage (2016: 100% and 72% respectively)
  • 1.7% apprentices in pilot study of tier 1 suppliers and 3.1% for tier 2 development suppliers (2020 target: 3%)
  • 90% British Land employee volunteering and 16% skills-based volunteering in local communities (2016: 84% and 16%; 2020 targets: 90% and 20% respectively)
  • Policy on Shared Parental Pay updated to provide equal enhanced benefits to all parents

How we measure up

The Best Companies survey published by The Sunday Times provides an extensive and objective measure of employee engagement.

Risk indicators and incentive measures

Risk indicators we monitor:

  • Unplanned executive departures

Management compensation linked to:

  • Quality of people and management renewal