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 in the period.
  • During the year, we generated a strong TAR of 14.2% bringing the 3 year TAR to 67.9%. Our dividend was increased by 2.5% to 28.36 pence per share and our NAV increased by 10.9% to 919 pence per share.

Risk indicators and incentive measures

Risk indicators we monitor:

  • forecast GDP;
  • the margin between property yields and borrowing costs; and
  • property capital and ERV growth forecasts.

Management compensation linked to:

  • total accounting returns relative to peers.

Customer Orientation

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Our priorities in the year were

  • Getting closer to our occupiers and end users
  • Improving our systems and processes
  • Leveraging Broadgate Estates
  • Innovating to support customer wellbeing
  • Continuing to reposition the Retail portfolio

What we have achieved

  • 1.3m sq ft of leasing activity across Retail and Offices
  • The Leadenhall Building now 98% let/under offer, up from 84% at the start of the year
  • £420m of mature/non-core Retail assets sold, including £122m of superstores, reducing our weighting to 5% Over 43,000 people surveyed in Retail, with sales data on 94% of multi-let assets and footfall data on 99%
  • 4.2/5 visitor score for shopping experience
  • 350 occupier surveys now completed in Offices, with footfall counters piloted at Broadgate
  • Broadgate Estates now managing all of our retail assets, covering over 20m sq ft
  • Partnered with occupiers on initiatives at our properties, including wellbeing and community
  • Internal team strengthened, with improved systems and processes to analyse data

How we measure up

We extensively survey people who use our assets to assess our performance and identify opportunities for improvement.

  • Dow Jones Sustainability Index World and Europe 2015: 94th percentile
  • FTSE4Good 2015: 98th percentile
  • Global Real Estate Sustainability Benchmark 2015: Sector Leader European/Diversified

We track our sustainability impacts on these indices. We are proud 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; and
  • market letting risk (vacancies, expiries, administrations).

Management compensation linked to:

  • Company reputation with all stakeholders; and
  • supporting the delivery of sustainability objectives.

Right Places

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Our priorities in the year were

  • Progressing our strategy for London
  • Progressing committed and near term developments
  • Refreshing medium term strategies for Broadgate, Meadowhall and Canada Water
  • Supporting successful local communities

What we have achieved

  • £280m net investment into London campuses
  • Progressing the Broadgate vision, with planning achieved on 100 Liverpool Street and 1 Finsbury Avenue and submitted at 2 and 3 Finsbury AvenueGood progress at our development at 4 Kingdom Street and Paddington Central
  • Refurbishment of 338 Euston Road, Regent’s Place completed with over 80% of space pre-let to Facebook
  • Circa £80m invested in improvements and extensions to Retail assets. Drawing up plans for a proposed 330,000 sq ft Leisure Hall at Meadowhall
  • £60m refurbishment of Meadowhall under way and progressing well – Progressing our Canada Water development; held a public consultation in February 2016
  • Launch of Local Charter to support successful local communities and develop local skills and opportunities
  • Community programme equivalent to 0.6% of pre-tax profits, benefiting 29,500 people

How we measure up

We have performed in line with the IPD benchmark on total property return this year and outperformed over the last 3 years by 60 bps per annum.

Development supports value and income growth but also adds risk. We aim to keep our committed development exposure at less than 15% of our investment portfolio.

Risk indicators and incentive measures

Risk indicators we monitor:

  • property capital and ERV growth forecasts;
  • total and speculative development exposure; and
  • progress of developments against plan.

Management compensation linked to:

  • total property returns relative to IPD;
  • execution of targeted acquisitions and disposals; and
  • progress on key projects including developments.

Capital Efficiency

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Our priorities in the year were

  • Optimising size and financial structure across the property cycle
  • Balancing trade-off between a cost efficient and higher capability organisation
  • Continuing to build relationships with direct and indirect capital and public bodies
  • Delivering future proofing initiatives

What we have achieved

  • £618m non-core asset/mature sales in the year, with acquisitions and capital investment of £639m
  • Building our relationship with Southwark Council, our partner on Canada Water
  • Completed over £1bn of financing activity since 31 March 2015, including a zero coupon £350m senior unsecured convertible bond due 2020 and the tender offer and purchase of £110m of debenture bonds reducing weighted average interest rate by 50 bps to 3.3%
  • 40% carbon intensity reduction versus 2009 (index score)

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 peak levels.

Our low cost of finance supports performance and is one of the lowest of listed UK REITs.

Risk indicators and incentive measures

Risk indicators we monitor:

  • likelihood of covenant breach;
  • when refinancing is required; and
  • percentage of debt at fixed interest rates.

Management compensation linked to:

  • execution of debt financings;
  • progress on strengthening the dividend; and
  • execution of targeted acquisitions and disposals.

Expert People

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Our priorities in the year were

  • Continuing to improve organisational design and effectiveness
  • Build management capabilities for new as well as traditional skill sets
  • Developing skills and opportunities
  • Creating an inclusive working environment

What we have achieved

  • Appointed Roger Madelin to head up Canada Water development
  • Women’s Network and BL Pride established
  • Participation in the National Equality Standard
  • One Star rating in Best Companies to Work For Survey
  • 87% employee score for our offices supporting their wellbeing
  • 100% of our employees and 72% supplier workforce at our properties paid the Living Wage Foundation wage

How we measure up

The Sunday Times annual survey is one of the most extensive benchmarks of employer engagement.

Risk indicators and incentive measures

Risk indicators we monitor:

  • unplanned executive departures.

Management compensation linked to:

  • quality of people and management renewal; and
  • Company reputation with all stakeholders.