Glossary

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Adjusted net debt

Adjusted net debt is the Group net debt and the Group’s share of joint venture and funds’ net debt excluding the mark-to-market on effective cash flow hedges and related debt adjustments and non-controlling interests. A reconciliation between Group net debt and adjusted net debt is included in Table A within the supplementary disclosures.

Annualised rent

Annualised rent is the gross property rent receivable on a cash basis as at the reporting date. Additionally, it includes the external valuers’ estimate of additional rent in respect of unsettled rent reviews, turnover rent and sundry income such as that from car parks and commercialisation, less any ground rents payable under head leases.

Assets under management

Assets under management is the full value of all assets owned and managed by British Land and includes 100% of the value of all assets owned by joint ventures and funds.

BREEAM

BREEAM (Building Research Establishment Environmental Assessment Method) assesses the sustainability of buildings against a range of social and environmental criteria.

Capital return

Capital return is calculated as the change in capital value of the portfolio, less any capex incurred, expressed as a percentage of capital employed (start value plus capital expenditure) over the period, as calculated by IPD. Capital returns are calculated monthly and indexed to provide a return over the relevant period.

Contracted rent

Contracted rent is the annualised rent adjusting for the inclusion of rent subject to rent free periods.

Customer satisfaction

Customer satisfaction combines survey results on overall experience ratings from decision makers, property directors, store managers and visitors across our retail and office businesses.

Developer's profit

Developer’s profit is the profit on cost estimated by the valuers that a developer would expect. The developer’s profit is typically calculated by the valuers to be a percentage of the estimated total development costs, including land and notional finance costs.

Development cost

Development cost is the total cost of construction of a project to completion, excluding site values and finance costs (finance costs are assumed by the valuers at a notional rate of 5% per annum).

Development uplift

Development uplift is the total increase in the value (after taking account of capex and capitalised interest) of properties held for development during the period. It also includes any developer’s profit recognised by valuers in the period.

EPRA

EPRA is the European Public Real Estate Association, the industry body for European REITs.

EPRA Cost Ratio (including direct vacancy costs)

EPRA cost ratio (including direct vacancy costs) is a proportionally consolidated measure of the ratio of net overheads and operating expenses against gross rental income (with both amounts excluding ground rents payable). Net overheads and operating expenses relate to all administrative and operating expenses, net of any service fees, recharges or other income specifically intended to cover overhead and property expenses.

EPRA Cost Ratio (excluding direct vacancy costs)

EPRA cost ratio (excluding direct vacancy costs) is the ratio calculated above, but with direct vacancy costs removed from the net overheads and operating expenses balance.

EPRA earnings

EPRA earnings 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. These items are presented in the capital and other column of the income statement. A reconciliation between profit attributable to shareholders of the Company and
EPRA earnings is included in Table B within the supplementary disclosures.

EPRA NAV per share

EPRA NAV per share is EPRA NAV divided by the diluted number of shares at the period end.

EPRA net assets (EPRA NAV)

EPRA net asset value (EPRA NAV) is a proportionally consolidated measure, representing the IFRS net assets excluding the mark-to-market on effective cash flow hedges and related debt adjustments, the mark-to-market on the convertible bonds as well as deferred taxation on property and derivative valuations. It includes the valuation surplus on trading properties and is adjusted for the dilutive impact of share options. A reconciliation between IFRS net assets and EPRA NAV is included in Table B within the Supplementary Disclosures.

EPRA Net Initial Yield

EPRA net initial yield is the annualised rents generated by the portfolio, after the deduction of an estimate of annual recurring irrecoverable property outgoings, expressed as a percentage of the portfolio valuation (adding notional purchaser’s costs), excluding development and residential properties.

EPRA NNNAV

EPRA NNNAV is the EPRA NAV adjusted to reflect the fair value of debt and derivatives and to include deferred taxation on revaluations.

EPRA occupancy rate

EPRA occupancy rate is the ERV of occupied space divided by ERV of the whole portfolio, excluding developments and residential property.

EPRA Topped-Up Net Initial Yield

EPRA topped-up net initial yield is the current annualised rent, net of costs, topped up for contracted uplifts, where these are not in lieu of rental growth, expressed as a percentage of capital value (adding notional purchaser’s costs).

EPRA vacancy rate

EPRA vacancy rate is the ERV of vacant space divided by ERV of the whole portfolio, excluding developments and residential property.

Estimated rental value (ERV)

Estimated rental value (ERV) is the external valuers’ opinion of the open market rent which, on the date of valuation, could reasonably be expected to be obtained on a new letting or rent review of a property.

ERV growth

ERV growth is the change in ERV over a period on the standing investment properties expressed as a percentage of the ERV at the start of the period. ERV growth is calculated monthly and compounded for the period subject to measurement, as calculated by IPD.

Fair value movement

Fair value movement is the accounting adjustment to change the book value of an asset or liability to its market value.

Footfall

Footfall is the estimated annualised number of visitors entering our assets.

Footfall growth

Footfall growth is the like-for-like movement in footfall against the same period in the prior year, on properties owned throughout both comparable periods, aggregated at British Land’s ownership share for each asset.

Gross Investment Activity

Gross investment activity is our share of acquisitions, sales and capital expenditure on investments and development.

Gross rental income

Gross rental income is the gross accounting rent receivable (quoted either for the period or on an annualised basis) prepared under IFRS which requires that rental income from fixed / minimum guaranteed rent reviews and tenant incentives is spread on a straight-line basis over the lease period to earliest termination date. This can result in income being recognised ahead of cash flow.

Group

Group is The British Land Company PLC and its subsidiaries and excludes its share of joint ventures and funds (where not treated as a subsidiary) on a line-by-line basis (i.e. not proportionally consolidated).

Headline Rent

Headline rent is the contracted gross rent receivable which becomes payable after all the tenant incentives in the letting have expired.

IFRS

IFRS are the International Financial Reporting Standards as adopted by the European Union.

Income return

Income return is calculated as net income expressed as a percentage of capital employed over the period, as calculated by IPD. Income returns are calculated monthly and indexed to provide a return over the relevant period.

Interest cover

Interest cover is the number of times net financing costs are covered by Underlying Profit before net financing costs and taxation.

IPD

IPD is a brand of real estate indices, owned by MSCI, which produce independent benchmarks of property returns and British Land UK portfolio returns.

Lettings and lease renewals

Lettings and lease renewals are compared both to the previous passing rent as at the start of the financial year and the ERV immediately prior to letting. Letting performance against ERV compares of achieved letting terms on long term lettings and renewals against valuation assumptions on like-for-like space, calculated on a net effective basis, aggregated at British Land’s ownership share for each asset.

Leverage

Leverage see loan to value (LTV).

Like-for-like rental income growth

Like-for-like rental income growth is the growth in net rental income on properties owned throughout the current and previous periods under review. This growth rate includes revenue recognition and lease incentive adjustments but excludes properties held for development in either period and lease accounting adjustments related to fixed and minimum rent reviews.

Loan to value (LTV)

Loan to value (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.

Managed portfolio

Managed portfolio consists of multi-let properties where we have control of facilities and utilities management.

Mark-to-market

Mark-to-market is the difference between the book value of an asset or liability and its market value.

Net Development Value

Net development value is the estimated end value of a development project as determined by the external valuers when the building is completed and fully let (taking into account tenant incentives and notional purchaser’s costs). It is based on the valuer’s view on ERVs, yields, letting voids and tenant incentives.

Net effective rent

Net effective rent is the contracted gross rent receivable taking into account any rent-free period or other tenant incentives. The incentives are treated as a cost-to-rent and spread over the lease period to the earliest termination date.

Net Equivalent Yield

Net equivalent yield (NEY) is the time weighted average return (after adding notional purchasers costs) that a property will produce. In accordance with usual practice, the equivalent yield (as determined by the external valuers) assume rent is received annually in arrears.

Net Initial Yield

Net initial yield (NIY) is the current annualised rent, net of costs, expressed as a percentage of capital value, after adding notional purchaser’s costs.

Net rental income

Net rental income is the rental income receivable in the period after payment of direct property outgoings which typically comprise ground rents payable under head leases, void costs, net service charge expenses and other direct irrecoverable property expenses. Net rental income is quoted on an accounting basis. Net rental income will differ from annualised net cash rents and passing rent due to the effects of income from rent reviews, net property outgoings and accounting adjustments for fixed and minimum contracted rent reviews and lease incentives.

Net reversionary yield

Net reversionary yield (NRY) is the anticipated yield to which the initial yield will rise (or fall) once the rent reaches the estimated rental value.

Occupancy rate

Occupancy rate is the estimated rental value of let units as a percentage of the total estimated rental value of the portfolio, excluding development and residential properties. It includes accommodation under offer, subject to asset management (where they have been taken back for refurbishment and are not available to let as at the measurement date) or occupied by the Group.

Omni-channel retailing

Omni-channel retailing seeks to provide the customer with a seamless shopping experience across channels, including stores, online and mobile. This empowers customers to switch between channels during the shopper journey according to their preferences. For example, they can use mobile in-store to research or make a purchase, buy online and collect in-store, or they can buy in-store and initiate a return online.

Over rented

Over rented is the term used to describe when the contracted rent is above the estimated rental value.

Overall 'topped-up' Net Initial Yield

Overall topped-up net initial yield (TUNIY) is the EPRA topped-up net initial yield, adding all contracted uplifts to the annualised rents.

Passing rent

Passing rent is the gross rent, less any ground rent payable under head leases.

Property Income Distributions (PIDs)

Property income distributions (PIDs) are profits distributed to shareholders which are subject to tax in the hands of the shareholders as property income. PIDs are normally paid net of withholding tax, currently at 20%, which the REIT pays to the tax authorities on behalf of the shareholder. Certain types of shareholder (e.g. pension funds) are tax exempt and receive PIDs without withholding tax. REITs also pay out normal dividends, called non-PIDs, which are taxed in the same way as dividends received from non REIT companies; these are not subject to withholding tax and for UK individual shareholders qualify for the tax free dividend allowance.

Portfolio valuation

Portfolio valuation is reported by the Group’s external valuers. In accordance with usual practice, they report valuations net, after the deduction of notional purchaser’s costs, including stamp duty land tax, agent and legal fees.

Proportionally consolidated

Proportionally consolidated measures include the Group’s share of joint ventures and funds and exclude non-controlling interests in the Group’s subsidiaries.

Rack rented

Rack rented is the term used to describe when the contracted rent is in line with the estimated rental value, implying nil reversion.

Rent free period

Rent-free period see Tenant (or lease) incentives.

REITs

REITs are property companies that allow people and organisations to invest in commercial property and receive benefits as if they directly owned the properties themselves. The rental income, after costs, is passed directly to shareholders in the form of dividends. In the UK REITs are required to distribute at least 90% of their tax exempt property income to shareholders as dividends. As a result, over time, a significant proportion of the total return for shareholders is likely to come from dividends. The effect is that taxation is moved from the corporate level to the investor level as investors are liable for tax as if they owned the property directly. British Land became a REIT in January 2007.

Rent reviews

Rent reviews take place at intervals agreed in the lease (typically every five years) and their purpose is usually to adjust the rent to the current market level at the review date. For upwards-only rent reviews, the rent will either remain at the same level or increase (if market rents have increased) at the review date.

Rents with fixed and minimum uplifts

Rents with fixed and minimum uplifts are either where rents are subject to contracted uplifts at a level agreed at the time of letting; or where the rent is subject to an agreed minimum level of uplift at the specified rent review.

Retailer sales growth

Retailer sales growth is the like-for-like movement in retailer in-store sales against the same period in the prior year, on occupiers remaining in the same unit, providing sales data throughout both comparable periods, aggregated at British Land’s ownership share for each asset.

Retail planning consents

Retail planning consents are separated between A1, A2 and A3 – as set out in The Town and Country Planning (Use Classes) Order. Within the A1 category, Open A1 permission allows for the majority of types of retail including fashion to be accommodated, while Restricted A1 permission places limits on the types of retail that can operate (for example, a restriction that only bulky goods operators are allowed to trade at that site).

Class Description Use for all/any of the following purposes

A1

Shops

Shops, retail warehouses, hairdressers, undertakers, travel and ticket agencies, post offices, pet shops, sandwich bars, showrooms, domestic hire shops dry cleaners, funeral directors and internet cafes.

A2

Financial and professional Services

Financial services such as banks and building societies, professional services (other than health and medical services) and including estate and employment agencies. It does not include betting offices or pay day loan shops – these are now classed as “sui generis” uses.

A3

Restaurants and cafes

For the sale of food and drink for consumption on the premises – restaurants, snack bars and cafes.

D2

Assembly and leisure

Cinemas, music and concert halls, bingo and dance halls (but not night clubs), swimming baths, skating rinks, gymnasiums or areas for indoor or outdoor sports and recreations.

Reversion

Reversion is change in rent estimated by the external valuers, where the passing rent is different to the estimated rental value. The increase or decrease of rent arises on rent reviews and letting of vacant space or re-letting of expiries.

Scrip dividend

Scrip dividend For certain periods, British Land offers its shareholders the opportunity to receive dividends in the form of shares instead of cash. This is known as a Scrip dividend.

Standing investments

Standing investments are assets which are not in the course of, or held for, development.

Tenant (or lease) incentives

Tenant (or lease) incentives are incentives offered to occupiers to enter into a lease.
Typically this will be an initial rent-free period, or a cash contribution to fit-out. Under accounting rules the value of lease incentives is amortised through the income statement on a straight line basis to the earliest lease termination date.

The residual site value

The residual site value of a development is calculated as the estimated net development  value, less development profit, all development construction costs, finance costs (assumed at a notional rate) of a project to completion and notional site acquisition costs. The residual is determined to be the current site value.

Topping out

Topping out is a traditional construction ceremony to mark the occasion when the structure of the building reaches the highest point.

Total Property Return

Total property return is calculated as the change in capital value, less any capex incurred, plus net income, expressed as a percentage of capital employed over the period, as calculated by IPD. Total property returns are calculated monthly and indexed to provide a return over the relevant period.

Total Accounting return

Total accounting return is the growth in EPRA NAV per share plus dividends paid, and this can be expressed as a percentage of EPRA NAV per share at the beginning of the period.

Total Shareholder Return

Total shareholder return is the growth in value of a shareholding over a specified period, assuming dividends are reinvested to purchase additional units of stock.

Total Tax Contribution

Total tax contribution is a more comprehensive view of tax contributions than the accountancy-defined tax figure quoted in most financial statements. It comprises taxes and levies paid directly, as well as taxes collected from others which we administered.

Turnover rents

Turnover rent is where all or a portion of the rent is linked to the sales or turnover of the occupier.

Under rented

Under rented is the term used to describe when the contracted rent is below the estimated rental value (ERV), implying a positive reversion.

Underlying Earnings Per Share (EPS)

Underlying earnings per share (EPS) consists of Underlying Profit after tax divided by the diluted weighted average number of shares in issue during the period.

Underlying Profit

Underlying Profit is the pre-tax EPRA earnings measure with additional Company adjustments. No Company adjustments were made in either the current or prior period.

Valuation Movement

Valuation movement is the change in the portfolio valuation and sales receipts of properties sold during the period, net of capital expenditure, capitalised interest and development team costs, and transaction costs incurred, expressed as a percentage of the portfolio valuation at the start of the period plus net capex, capitalised interest and development team costs, and transaction costs.

Virtual freehold

Virtual freehold represents a long leasehold tenure for a period of up to 999 years. A ‘peppercorn’, or nominal, rent is paid annually.

Weighted average debt maturity

Weighted average debt maturity is calculated by multiplying each tranche of debt by the remaining period to its maturity, with the sum of the results being divided by total debt in issue at the period end.

Weighted average interest rate

Weighted average interest rate is the loan interest and net derivative costs per annum at the period end, divided by total debt in issue at the period end.

Weighted average unexpired lease term

Weighted average unexpired lease term is the average lease term remaining to first break, or expiry, across the portfolio weighted by contracted rental income (including rent-frees). The calculation excludes residential leases and properties allocated as developments.

Yield on cost

Yield on cost is the estimated annual rent of a completed development divided by the total cost of development including site value and notional finance costs to the point of assumed rent commencement, expressed as a percentage return.

Yield shift

Yield shift is a movement (usually expressed in bps) in the net equivalent yield of a property asset, or like-for-like portfolio, over a given period, weighted by net capital value.