Our history
1980's to early 1990's
In 1971, the acquisition of Plantation House had been one of John Ritblat’s earliest initiatives. For many years it served the dual purpose of being a major provider of rental income and a highly regarded source of security for lenders.
In the 1980s the City of London was undergoing extensive redevelopment and Plantation House clearly offered enormous potential. The Company bought the adjoining freehold buildings and expanded the site to 2.1 acres. Save for a listed Wren church, this completed British Land’s ownership of the entire island site. This process opened the way for construction of Plantation Place, some 30 years after the original acquisition. The new development was completed in 2004, with Plantation Place South a little after, together providing some 700,000 sq ft of modern office and retail space. In 2006 Plantation Place was sold by the Company for £527 million, while Plantation Place South remains part of the British Land portfolio.
During the redevelopment process there was an unexpected cash bonus, when preliminary archaeological surveys of the site uncovered a spectacular find of Roman gold coins in mint condition, bearing the heads of Roman emperors who were rulers for an entire century. They are now on permanent display at the Museum of London.
Purely property
By 1986 the Company was substantial, with gross assets of £631 million and with net assets per share of 217p. Pre-tax profits were £21.1 million, having almost doubled over the previous year. British Land underwent a further phase of its evolution, as of this point most of the industrial division was sold, the Company now being able to earn its keep solely as a property company. The Company’s share price responded rapidly to the change, rising from 161p at the start of 1987 to 307p six months later.
The focus of the Company was being further refined and the 1988 Accounts reported the sale of the last industrial company as well as the French and Dutch interests. Much of the Company’s interests in the former Growth Realty Company, which had been renamed British Land of America in 1983, were sold to Medical Management of America. British Land of America was listed on the New York Stock Exchange. British Land itself retained the two principal New York properties in addition to a continuing interest in MMA.
There was also a strong development thrust in Ireland, where the Company was behind the construction of the prestigious new St Stephen’s Green Shopping Centre in Dublin. In 1988, British Land in partnership with the Irish developer, Hardwicke, won the competition to design and build the new International Finance Services Centre in Dublin, better known as the Custom House development.
New business was otherwise mainly confined to the United Kingdom, but in the meantime there had been a number of Board changes. Stanley Berwin, long-time friend, solicitor and Deputy Chairman, died on the day after the 1988 Annual General Meeting. That same year Peter Simon joined as a non-executive director, followed a year later by John Spink, who was very experienced as a chartered surveyor. In 1989 David Cohen retired, to be succeeded as Finance Director by John Weston Smith, and Stephen Kalman joined the Board as Development Director. Two years later, in 1991, Nicholas Ritblat, who had joined the Company in 1987 was appointed an executive director. The executive directors operated as a close team, taking on different responsibilities as the needs of the business demanded.
Something new
Property is a cyclical business. The start of the 1970s had seen British Land achieve enormous success before running into difficulties in the horrendous economic circumstances of the decade’s middle years. In the 1980s it continued its recovery and was growing rapidly again, to the extent that between 1987 and 1989 net assets per share rose 96%, from 271p to 531p. By late 1989, however, there were indications that the property market was becoming overly exuberant once more. British Land saw this challenge as a major decision-point. Having survived the pressures of the 1970s, the Company was wary. It foresaw the importance of liquidity in this climate and had built up over £500 million of committed unsecured bank facilities – and ceased all physical building activity. Such indebtedness as there was, was largely insulated against variable interest rates. The Board of British Land also foresaw a potential opportunity arising from its own preparedness for a downturn. To maximise advantages for shareholders, it had concluded that the best route forward was to divide the Company into two by realising the existing, largely freehold portfolio and distributing the cash to shareholders. At the same time, shareholders were to receive an investment in an entirely new “sister” company, named New British Land, to be run by the same management.
New British Land would start out with a strong balance sheet and no contingent capital gains tax liability. It would have a smaller asset base and thus a greater potential for increasing net asset growth at the rapid rate achieved by “old” British Land when it was smaller. The proposals were highly tax efficient. Initially, this imaginative proposal was widely welcomed, but it was essential that just over 50% of New British Land was conditionally owned by management. This proved a breaking point, even though some 74% of the management shares were to be subject to a “claw-back” arrangement in favour of old British Land.
The attractive prospects did not succeed in persuading shareholders to withdraw their objections. The proposal could not be altered to offer concessions without seriously affecting the tax structure from which investing institutions were to benefit, and so the proposals were, regrettably, withdrawn by the Board. Ironically the New British Land transaction had offered investors a unique opportunity
to cash in at a peak in the market.
British Land’s management team was disappointed by this outcome but retained its drive, and indeed the opportunities which it had foreseen were now actually being provided by the recession. For a cash-rich company these were exceptional. Once more adapting to circumstance, the Company redirected its thrust to the supermarkets. No less than 40% of the Group’s total rents was subject to guaranteed uplifts as a result of those new investments.
During the downturn the Company was able to add about £900 million of high quality property with excellent potential, nearly all of it freehold and modern, and on terms which were not achievable at any time during the previous decade. In addition to the large retail acquisitions there were substantial purchases at 1, 2 & 3 Finsbury Avenue, Broadgate, where previously only a minority interest in 1 Finsbury Avenue had been owned. Profits were again moving upwards after two years of decline in 1990 and 1991.
The company's history to 2006 was extracted from:
'No Stone Unturned. A History of The British Land Company 1856 - 2006' John Weston Smith (2006)
The light wall at Plantation Place, by SImon Patterson
St Stephen's Green, Dublin
Exchange Square, Broadgate
