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First Quarter Report to 30 June 2008

14/08/2008

Financial summary:

· Underlying earnings per share1 14 pence for the quarter, up 8% on the quarter to March 2008 (Q1 2007:14 pence)

  • Dividend 9.375 pence per share for the quarter, up 7%, payable in November
  • IFRS loss per share 111 pence (Q1 2007: IFRS earnings per share 53 pence)

· Underlying pre-tax profit1 £74 million for the quarter (Q1 2007: £76 million)

  • Underlying profits up 23% excluding the receipt of a Songbird dividend in Q1 2007
  • IFRS pre-tax loss on ordinary activities £572 million (Q1 2007: IFRS pre tax profit £266 million)

· Portfolio valuation down 5.0% this quarter

  • Portfolio net equivalent yield now 5.8% (true equivalent2 yield 6.0%), 22 bps higher than March 2008
  • Gross (top-up)3 initial yield 5.7%

· Net Asset Value4 per share 1212 pence, down 10% for the quarter

  • “Triple Net Asset Value”5 per share 1352 pence (reflecting valuable debt structure: average interest rate 5.3%; maturity 12.9 years), down 6.0%
  • IFRS Net Assets £6.3 billion
  • Properties owned or managed £16.5 billion

Business resilient and activist customer-led strategy capturing value in tough markets:

  • Like-for-like rental income growth 6.3% versus Q1 2007, IPD 3.3%
  • Rental value (ERV) growth for Retail 0.5%, Offices -2.1%. Rent review settlements this quarter averaging 4% higher than applicable ERV
  • Property portfolio 98% let6, with 352,000 sq ft new lettings in the quarter
  • Lease lengths average 13.6 years with just 5% up for renewal in the next 3 years
  • £669 million (gross) additional disposals since March 2008

Investment markets reflect challenging economic and market environment:

  • Economic concerns and inflation tensions on long-term interest rates an important factor
  • Prime property in long-term ‘fair value’ territory; however it is likely that markets overshoot
  • Substantial capital waiting on the sidelines for ‘cheap’ opportunities
  • Value apparent in sector share prices as many investors overreact to near-term news flow

Chris Gibson-Smith, Chairman comments:

“These first quarter results demonstrate British Land’s resilience in the face of a weak economy and gloomy market sentiment. While values are marked down in a thin market, our prime assets – buildings and customer contracts – provide strength in difficult times and opportunity when the cycle turns.”

1 see note 1 to the accounts
2 after notional purchaser’s costs and based on rents received quarterly in advance (reflecting true cash flow profile)
3 yield to British Land (without notional purchaser’s costs) adding back rent frees and contracted rental uplifts
4 EPRA (European Public Real Estate Association) basis - note 1 to the accounts
5 see Table A
6 includes accommodation subject to asset management initiatives and under offer

 

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